Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.21.1
Stockholders' Equity
12 Months Ended
Jan. 31, 2021
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 7 - STOCKHOLDERS’ EQUITY

 

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, with similar assumptions to the June 2018 warrants. 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 the Company’s historical volatility and comparable Companies’ historical volatility for periods when there is not sufficient historical pricing to base the estimate of 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 fiscal 2021 and 2020:  

 

    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       (46,521 )     (2.15 )
Warrants outstanding at February 2, 2020     16.83       1,039,120       1.93  
Warrants issued    
-
     
-
     
-
 
Expired and canceled    
-
     
-
     
-
 
Exercised     16.00       (745,147 )     (0.41 )
Outstanding at January 31, 2021   $ 19.07       293,973       2.57  

 

In fiscal 2021, 738,897 warrants exercised were cashless, whereby the holders received fewer shares of common stock in lieu of a cash payment to the Company. Warrants exercised in fiscal 2021resulted in the issuance of 439,447 common shares. Warrants exercised in fiscal 2020 resulted in the issuance of 27,246 common shares.

 

EQUITY INCENTIVE PLANS

 

The Company adopted the 2017 Equity 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.

 

On June 5, 2019, the stockholders approved an amendment and restatement of the 2017 Equity Plan that among other things increased the number of shares of common stock reserved for issuance from 615,066 to 1,414,889 share of common stock.

 

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. The 495,366 stock options were modified to extend the term of the options through June 5, 2024. This resulted in additional compensation of approximately $874,000, of which, $315,000 was recorded upon modification and the remaining expense was recognized over the remaining expected term.

 

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 2017 Equity Plan and withheld 73,507 shares to satisfy taxes associated with the issuance.  

 

In June 2020, the stockholders of the Company approved an amendment to the 2017 Equity Plan that increased the number of shares of common stock reserved for issuance under the 2017 Equity Plan by 690,000 shares of common stock. The number of shares of common stock reserved for issuance under the 2017 Equity Plan increased from 1,414,889 to 2,104,889 shares of common stock.

 

A summary of the status of our stock options as of January 31, 2021 and February 2, 2020, and changes during fiscal years then ended, is presented below:

 

    For the years ended January 31, 2021 and February 2, 2020  
    Number of options     Weighted average exercise price     Weighted  average  remaining contractual life (in years)     Average intrinsic value  
Outstanding at February 3, 2019    
-
    $
-
      -       -  
Granted     495,366       38.10                  
Exercised    
-
      -                  
Expired and canceled    
-
      -                  
Vested    
-
      -                  
Outstanding at February 2, 2020     495,366     $ 38.10       2.34      
       -
 
Granted    
-
    $
-
                 
Exercised    
-
     
-
                 
Expired and canceled    
-
     
-
                 
Vested    
-
     
-
                 
Outstanding at January 31, 2021     495,366     $ 38.10       3.35      
-
 
Exercisable at the end of the period    
-
     
-
      -      
-
 

 

A summary of the status of our unvested restricted stock units as of January 31, 2021 and February 2, 2020, and changes during fiscal years then ended, is presented below:

 

    Number of shares     Weighted average grant date fair value  
Unvested at February 3, 2019     377,286     $ 11.16  
Granted     130,898       23.63  
Forfeited     (20,470 )     16.21  
Vested     (304,661 )     12.75  
Unvested at February 2, 2020     183,053       21.34  
Granted     627,940       16.94  
Forfeited     (5,701 )     11.86  
Vested     (149,734 )     16.24  
Unvested at January 31, 2021     655,558     $ 18.86  

 

Equity-based compensation expense was approximately $4.7 and $4.9 million for fiscal 2021 and 2020, respectively. In fiscal 2020, all the unvested restricted stock units for certain senior executives of the Company that were granted prior to the  accelerated vesting trigger, 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 lock-up period. This accelerated vesting resulted in equity based compensation in the amount of $2.9 million. In December 2019, the exchange and modification of options that were held at SAC LLC resulted in approximately $313,000 of equity-based compensation expense.

 

The total unrecognized equity based compensation cost related to unvested stock option and restricted unit awards was approximately $5.3 million as of January 31, 2021 and will be recognized in operations over a weighted average period of 2.65 years.