Note 9 - Stockholders' Equity

3 Months Ended

May 31, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 9 - STOCKHOLDERS’ EQUITY

Warrants

In consideration of Edible entering into the exclusive supplier agreement and the performance of its obligations therein, on December 20, 2019, the Company issued Edible a warrant (the “Warrant”) to purchase up to 960,677 shares of the Company’s common stock (the “Warrant Shares”) at an exercise price of $8.76 per share. The Warrant Shares vest in annual tranches in varying amounts following each contract year under the exclusive supplier agreement, subject to, and only upon, Edible’s achievement of certain revenue thresholds on an annual or cumulative five-year basis in connection with its performance under the exclusive supplier agreement. The Warrant expires six months after the final and conclusive determination of revenue thresholds for the fifth contract year and the cumulative revenue determination in accordance with the terms of the Warrant. As of May 31, 2022 no warrants have vested.

The Company determined that the grant date fair value of the warrants was de minimis and did not record any amount in consideration of the warrants. The Company utilized a Monte Carlo model for purposes of determining the grant date fair value.

Stock-Based Compensation

Under the Company’s 2007 Equity Incentive Plan (as amended and restated) (the “2007 Plan”), the Company may authorize and grant stock awards to employees, non-employee directors and certain other eligible participants, including stock options, restricted stock and restricted stock units.

The Company recognized $131,597 of stock-based compensation expense during the three months ended May 31, 2022 compared with $146,157 during the three months ended May 31, 2021. Compensation costs related to stock-based compensation are generally amortized over the vesting period of the stock awards.

The following table summarizes non-vested restricted stock unit transactions for common stock during the three months ended May 31, 2022 and 2021:

	Three Months Ended
	May 31,
	2022			2021
Outstanding non-vested restricted stock units as of February 28 or 29:		105,978			209,450
Granted		55,336			-
Vested		(27,326	)		(37,702	)
Cancelled/forfeited		-			(900	)
Outstanding non-vested restricted stock units as of May 31:		133,988			170,848
Weighted average grant date fair value	$	6.65		$	9.40
Weighted average remaining vesting period (in years)		2.36			3.41

The following table summarizes stock option activity during during the three months ended May 31, 2022 and 2021:

	Three Months Ended
	May 31,
	2022		2021
Outstanding stock options as of February 28:		-		-
Granted		27,668		-
Exercised		-		-
Cancelled/forfeited		-		-
Outstanding stock options as of May 31:		27,668		-
Weighted average exercise price		6.38		n/a
Weighted average remaining contractual term (in years)		9.95		n/a

The Company did not issue any unrestricted shares of stock to non-employee directors during the three months ended May 31, 2022 compared with 7,000 shares issued during the three months ended May 31, 2021. In connection with these non-employee director stock issuances, the Company recognized $0 and $34,650 of stock-based compensation expense during the three months ended May 31, 2022 and 2021, respectively.

During the three months ended May 31, 2022, the Company issued 27,668 stock options and issued up to 55,336 performance-based restricted stock units subject to vesting based on the achievement of performance goals. These issuances were made to the Company’s new Chief Executive Officer as a part of the incentive compensation structure for Mr. Sarlls. The stock options were issued with an aggregate grant date fair value of $58,213 or $2.10 per share. The performance-based restricted stock units were issued with an aggregate grant date fair value of $168,304 or $6.08 per share, based upon a target issuance of 27,668 shares. The stock options granted vest with respect to one-third of the shares on the last day of the Company’s current fiscal year ending February 28, 2023, and vest as to remaining shares in equal quarterly increments on the last day of each quarter thereafter. The performance-based restricted stock units will vest following the end of the Company’s fiscal year ending February 2025 with respect to the target number of performance-based restricted stock units if the Company achieves an annualized total shareholder return of 12.5% during the performance period, subject to continued service through the end of the performance period. The Compensation Committee has discretion to determine the number of performance-based restricted stock units between 0-200% of the target number that will vest based on achievement of performance below or above the target performance goal.

During the three months ended May 31, 2022, the Company recognized $131,597 of stock-based compensation expense related to outstanding restricted stock units and stock options, compared to $111,507 during the three months ended May 31, 2021. Except as noted above, restricted stock units generally vest in equal annual installments over a period of five to six years. Total unrecognized stock-based compensation expense of non-vested, non-forfeited restricted stock units, as of May 31, 2022, was $865,549, which is expected to be recognized over the weighted average period of 2.36 years.