Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

Stockholders' Equity
3 Months Ended
May 03, 2020
Stockholders' Equity Note [Abstract]  


Common Stock Warrants

In fiscal 2020, the Company issued 18,166 warrants to a third party in connection with previous equity raise. These warrants were valued using the Black-Scholes model. The warrants had a fair value of approximately $130,000. Of these warrants, 17,396 were exercised on May 14, 2019.

The warrants may be exercised at any time following the date of issuance during the period prior to their expiration date. The fair value of each warrant is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on comparable Companies’ historical volatility, with consideration of the Company’s volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current circumstances. The risk-free rate is based on the U.S. treasury yield in effect at the time of the grant.

    May 2019  
Warrants     18,166  
Expected volatility     44 %
Expected dividend yield     0 %
Expected term (in years)     3.00  
Risk-free interest rate     2.69 %
Exercise price   $ 16.00  
Calculated fair value of warrant   $ 7.16  

The following represents warrant activity during the thirteen weeks ended May 3, 2020 and May 5, 2019:

    Average exercise price     Number of warrants     Weighted average remaining contractual life (in years)  
Warrants Outstanding at February 3, 2019   $ 16.83       1,067,475       2.93  
Warrants issued     16.00       18,166       2.40  
Expired and canceled     -       -       -  
Exercised     16.00       (10,625 )     (2.40 )
Warrants Outstanding at May 5, 2019   $ 16.83       1,075,016       2.68  
Warrants Outstanding at February 2, 2020   $ 16.83       1,039,120       1.93  
Warrants issued     -       -       -  
Expired and canceled     -       -       -  
Exercised     -       -       -  
Outstanding at May 3, 2020   $ 16.83       1,039,120       1.68  

The majority of the 10,625 warrants exercised in fiscal 2020 were cashless, whereby the holders received less shares of common stock in lieu of a cash payment the Company, which resulted in the issuance of 5,138 common shares.

Equity Incentive Plans

The Company adopted the 2017 Equity Incentive Plan (the “Plan”) which provides for Awards in the form of Options, Stock Appreciation rights, Restricted Stock Awards, Restricted Stock Units, Performance shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards. All awards shall be granted within 10 years from the effective date of the Plan. The Plan, as amended, reserves 1,414,889 shares of common stock for issuance.

In June 2019, the Company granted 495,366 non-statutory stock options to certain officers of the Company with an option price of $38.10 per share. 100% of the stock options are subject to vesting on the first trading day after the date on which the closing price of the Company’s stock price has been at least $75 for 60 consecutive trading days so long as this goal has been attained by June 5, 2022 or the options will terminate. These options were valued using a Monte Carlo simulation model to account for the path dependent market conditions that stipulate when and whether or not the options shall vest. 

In December 2019, SAC LLC distributed the shares of the Company’s common stock it held. In connection with the distribution officers of the Company agreed to exchange and modify options that were held at SAC LLC for shares of vested common stock of the Company. Pursuant to the exchange SAC LLC transferred 175,478 shares of common stock to the Company and the Company immediately cancelled these shares. The Company then issued to the former option holders the number of those shares pursuant to the Plan and withheld 73,507 shares to satisfy taxes associated with the issuance.  

A summary of the status of our stock options as of May 3, 2020, and the changes during the thirteen weeks ended May 3, 2020 is presented below:

    Thirteen weeks ended May 3, 2020  
    Number of options     Weighted average exercise price     Weighted average remaining contractual life (in years)     Average intrinsic value  
Outstanding at February 2, 2020     495,366     $ 38.10       2.34       -  
Granted     -                          
Exercised     -                          
Canceled and forfeited     -                          
Expired and canceled     -                          
Vested     -                          
Outstanding at May 3, 2020     495,366     $ 38.10       2.09       -  
Exercisable at the end of the period     -       -       -       -  

A summary of the status of our unvested restricted stock units as of May 3, 2020, and changes during the thirteen weeks then ended, is presented below:

    Number of shares     Weighted average grant date fair value  
Unvested at February 3, 2019     377,286     $ 11.16  
Granted     8,780       30.07  
Forfeited     (2,060 )     30.07  
Vested     (279,325 )     12.52  
Unvested at May 5, 2019     104,681     $ 17.24  

    Number of shares     Weighted average grant date fair value  
Unvested at February 2, 2020     183,053     $ 21.34  
Granted     93,290       6.77  
Forfeited     (265 )     14.83  
Vested     (50,319 )     6.47  
Unvested at May 3, 2020     225,759     $ 18.65  

Equity based compensation expense was approximately $0.9 million and $3.2 million for the thirteen weeks ended May 3, 2020 and for the thirteen weeks ended May 5, 2019, respectively. In the thirteen weeks ended May 5, 2019, all the unvested restricted stock units for certain senior executives of the Company vested according to the accelerated vesting trigger in their restricted stock unit agreements. The triggering event was the market capitalization of the Company post IPO, exceeding $300 million for 60 consecutive trading days and the expiration of the lockup period. This accelerated vesting resulted in equity-based compensation in the amount of $2.9 million.

The total unrecognized restricted stock unit compensation cost related to non-vested awards was $4,113,742 as of May 3, 2020 and will be recognized in operations over a weighted average period of 1.95 years.