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Note 5 - Stockholders' Equity
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Jan. 31, 2014
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
5. STOCKHOLDERS’ EQUITY
Stock Repurchase Plan
On December 17, 2012, the Company announced a share repurchase program by which the Company planned to repurchase up to 10% of the Company’s outstanding common shares, or approximately 400,000 shares, from time to time at prevailing market prices through the open market or privately negotiated transactions. The program has no expiration date and purchases are funded from available cash resources.
For accounting purposes, the common stock repurchased under the Repurchase Plan is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method.
For the three-month period ended January 31, 2014, the Company repurchased 27,407 shares at a cost of approximately $220,000 (average cost of $8.03 per share). For the nine-month period ended January 31, 2014, the Company repurchased 98,767 shares at a cost of approximately $703,000 (average cost of $7.14 per share).
Stock-Based Compensation
At January 31, 2014, the Company had two equity-based compensation plans from which stock-based compensation awards are granted to eligible employees and consultants of the Company. These stock-based compensation plans include the: (i) 1991 Stock Option Plan (the “1991 Plan”) and (ii) 2010 Equity Incentive Plan (the “2010 Plan”).
According to the terms of the Company’s original 1991 stock option plan for which the Company originally reserved 675,000 shares of common stock, both incentive stock options and non-qualified stock options to purchase common stock of the Company may be granted to key employees, directors and consultants to the Company, at the discretion of the Board of Directors. Incentive stock options were not granted at prices that were less than the fair market value on the date of grant. Non-qualified options may be granted at prices determined appropriate by the Board of Directors of the Company, but have not been granted at less than the fair market value on the date of grant. Generally, these options become exercisable and vest over one to five years and expire within 10 years of the date of grant. The 1991 Plan also provides for accelerated vesting if there is a change in
control of the Company. As of January 31, 2014, there were options remaining outstanding to acquire 93,000 shares of common stock under the 1991 Plan.
The 2010 Plan is an omnibus plan that allows for equity awards including stock options (including incentive stock options and non-qualified options), stock appreciation rights, restricted shares, restricted share units, performance shares, performance units, and other equity-based awards payable in cash or stock to officers, directors, key employees and other service providers. Under the 2010 Plan, the Company has the ability to grant up to 380,000 shares of common stock. The number of shares granted to eligible participants will be determined by the Board of Directors on an annual basis based on Company and individual performance and a Compensation Committee analysis. The awards under the 2010 Plan will include vesting provisions that will require participants (other than non-employee directors) to remain at the Company for a defined period of time. Options
and stock appreciation rights will expire 10 years after the grant date. The 2010 Plan also includes a change of control provision which allows for accelerated vesting if there is a change of control of the Company. As of January 31, 2014, there were options outstanding to acquire 167,967 shares of common stock and 11,146 shares of common stock awards granted under the 2010 Plan and still subject to restriction.
The Company accounts for its stock-based compensation plan in accordance with ASC Topic 718, Compensation-Stock Compensation. ASC Topic 718 requires the measurement and recognition of compensation expense for all stock-based payment awards based on estimated fair value. It further requires companies to estimate the fair value of stock-based payment awards on the date of the grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model, which uses the following weighted-average assumptions for the nine-month periods ended January 31, 2014 and 2013:
The Company uses historical data to estimate option exercises and employee terminations used in the model. Expected volatility is based on monthly historical fluctuations of the Company’s common stock using the closing market value for the number of months of the expected term immediately preceding the grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for a bond with a similar term.
The Company receives a tax deduction for certain stock option exercises and disqualifying stock dispositions generally for the excess of the price at which the options are sold over the exercise prices of the options. In accordance with ASC Topic 718, the Company reports any tax benefit from the exercise of stock options as financing cash flows. For the nine-month period ended January 31, 2014, exercises of stock options triggered tax benefits totaling approximately $61,000. There were no exercises of stock options which triggered tax benefits for the nine-month period ended January 31, 2013.
At January 31, 2014, there was approximately $340,000 of unrecognized compensation cost related to share-based payments that is expected to be recognized over a weighted-average period of 2.10 years.
The following tables represent equity award activity for the nine-month period ended January 31, 2014:
Shares available for future equity awards to employees, officers, directors and consultants of the Company under the existing 1991 Plan and 2010 Plan were 27,000 and 189,651, respectively, at January 31, 2014. At January 31, 2014 the aggregate intrinsic value of options and restricted stock outstanding was approximately $2,320,000, and the aggregate intrinsic value of exercisable options was approximately $1,268,000. The Company recognized share-based compensation expense of $142,000 for the nine-month period ended January 31, 2014 and $89,000 for the nine-month period ended January 31, 2013. The weighted-average fair value of the options and restricted stock granted in the nine-month period ended January 31, 2014 was $4.84 per stock option and $5.86 per restricted stock award.
The following table summarizes information about equity awards outstanding at January 31, 2014:
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