Note 8 - Stock Options

12 Months Ended

Oct. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 8 – Stock options

Incentive and non-qualified stock option plans

On July 22, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”). In September 2020, the Company’s stockholders approved the 2020 Plan by vote as required by NASDAQ. An aggregate of 1,250,000 shares of common stock was set aside and reserved for issuance under the 2020 Plan. At its annual meeting held on September 5, 2024, the Company’s stockholders approved an amendment to the 2020 Plan to increase the number of shares of common stock available for issuance under the plan by 1,000,000 shares. As of October 31, 2024, 1,299,269 shares of common stock were remaining for future grants of stock options under the 2020 Plan.

Additional disclosures related to stock option plans  

On January 11, 2023, we granted a total of 54,092 shares of restricted stock and 108,181 incentive stock options to one manager and three officers, respectively. The shares of restricted stock and incentive stock options vest over four years as follows: (i) one-quarter of the restricted shares and options shall vest on January 10, 2024 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years. Also on January 11, 2023, we granted another manager 50,000 incentive stock options. As of October 31, 2023, the 50,000 incentive stock options granted to manager were cancelled and forfeited as the manager was no longer employed. All incentive stock options expire 10 years from the date of grant.

On August 29, 2023, we granted one employee 10,000 incentive stock options. These options vested with respect to 2,500 shares on the date of grant, and the remaining shares vests in equal installments thereafter on each of the next three anniversaries of August 29, 2023. The options expire 10 years from the date of grant.

On January 11, 2024, we granted incentive stock options to Mr. Dawson for the purchase of 116,667 shares, Mr. Yin for the purchase of 41,667 shares, and Mr. Bibisi for the purchase of 41,667 shares. The incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest on January 11, 2025 and (ii) the remaining options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire 10 years from the date of grant. No other options were granted to the named executive officers during the year ended October 31, 2024.

On April 16, 2024, we granted a total of 25,000 incentive stock options to three managers. The shares of incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest on April 16, 2025 and (ii) the remaining and options shall vest in 12 equal quarterly installments over the next three years.

No other shares or options were granted to Company employees during fiscal 2024.

The fair value of each option granted in 2024 and 2023 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

	2024			2023
Weighted average volatility		53.16	%		54.27	%
Expected dividends		0.00	%		0.00	%
Expected term (in years)		7.0			7.0
Risk-free interest rate		4.00	%		3.78	%
Weighted average fair value of options granted during the year	$	1.76		$	3.15
Weighted average fair value of options vested during the year	$	2.88		$	2.80

Expected volatilities are based on historical volatility of our stock price and other factors. We used the historical method to calculate the expected life of the 2024 and 2023 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield on the Company’s common stock.

Additional information regarding all of our outstanding stock options at October 31, 2024 and 2023 and changes in outstanding stock options in 2024 and 2023 follows:

	2024							2023
	Shares or					Weighted		Shares or					Weighted
	Price Per					Average		Price Per					Average
	Share					Exercise Price		Share					Exercise Price
Outstanding at beginning of year		754,186				$	6.04		691,005				$	5.87
Options granted		245,001				$	3.01		168,181				$	5.36
Options exercised		-				$	-		(45,000			)	$	1.90
Options canceled or expired		(124,371			)	$	6.42		(60,000			)	$	5.33
Options outstanding at end of year		874,816				$	5.10		754,186				$	6.04
Options exercisable at end of year		478,986				$	5.95		479,588				$	6.10
Options vested and expected to vest at end of year		874,816				$	5.10		748,358				$	6.13
Option price range at end of year		$1.90	-	$8.69					$1.90	-	$8.69
Aggregate intrinsic value of options exercised during year	$	-						$	144,005

Weighted average remaining contractual life of options outstanding as of October 31, 2024: 6.42 years

Weighted average remaining contractual life of options exercisable as of October 31, 2024: 4.91 years

Weighted average remaining contractual life of options vested and expected to vest as of October 31, 2024: 6.42 years

Aggregate intrinsic value of options outstanding at October 31, 2024: $73,000

Aggregate intrinsic value of options exercisable at October 31, 2024: $50,000

Aggregate intrinsic value of options vested and expected to vest at October 31, 2024: $73,000

As of October 31, 2024, $904,000 and $704,000 of expense with respect to nonvested stock options and restricted shares, respectively, has yet to be recognized but is expected to be recognized over a weighted average period of 1.2 and 1.1 years, respectively.