2017 Plan

The Company has granted stock options and other stock-based awards under its 2017 Stock Option Plan (the “2017 Plan”). The maximum number of shares of common stock which could have been reserved for issuance under the 2017 plan was 1,899,327. The 2017 Plan was administered by the Compensation Committee of the Board. The Compensation Committee determined the persons to whom options to purchase shares of common stock, and other stock-based awards may be granted. Persons eligible to receive awards under the 2017 Plan were employees, officers, directors, and consultants of the Company. Awards were at the discretion of the Compensation Committee. On February 24, 2021 the Company terminated the 2017 Plan and adopted the 2020 Equity Incentive Plan (defined below). In connection with the adoption of the 2020 Plan, the Company cancelled outstanding option awards granted under the 2017 Plan and replaced them with new award agreements evidencing an equivalent award under the 2020 Equity Incentive Plan with no change to any of the material provisions of the 2017 Plan option.

2020 Plan

On October 23, 2020, the Board approved and on November 19, 2020 the stockholders approved the Byrna Technologies Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”). The aggregate number of shares of common stock available for issuance in connection with options and other awards granted under the 2020 Plan is 2,500,000. On September 15, 2021, the Company’s Board of Directors approved to increase the number of shares of commons stock available for issuance under the 2020 Plan by 1,400,000 shares. The 2020 Plan is administered by the Compensation Committee of the Board. The Compensation Committee determines the persons to whom options to purchase shares of common stock, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), and restricted or unrestricted shares of common stock may be granted. Persons eligible to receive awards under the 2020 Equity Incentive Plan are employees, officers, directors, consultants, advisors and other individual service providers of the Company. Awards are at the discretion of the Compensation Committee.

On February 24, 2021, following the termination of the 2017 Plan, the Company replaced outstanding options under the 2017 Plan with options under the 2020 Equity Incentive Plan. There were no substantive changes to the rights of any holder of options granted under the 2017 plan by replacing their award certificates with award agreements under the 2020 plan. The grant dates, exercise prices, expiration dates, and vesting provisions of any of the new award agreements under the 2020 plan that replace the certificates issued under the 2017 plan are identical for each grant and no change in valuation or accounting was required. The Board also amended the definition of Disability in the 2020 Plan to provide that “Disability” has the meaning assigned to such term in any individual employment agreement or award agreement with a plan participant and that if no such definition is provided in an award or employment agreement “Disability” is defined as in the 2020 Plan.

Restricted Stock Units

During the nine months ended August 31, 2021 and 2020, the Company granted 174,493 and 0 RSUs, respectively. There were no RSUs granted during the three months ended August 31, 2021 and 2020. 

Stock-based compensation expense for the RSUs for the three months ended August 31, 2021 and 2020 was $0.9 million and $0, respectively. Stock-based compensation expense for the RSUs for the nine months ended August 31, 2021 and 2020 was $2.3 million and $0, respectively. The Company recorded stock-based compensation expense for restricted stock units granted to non-employees of approximately $0.1 million and $0.07 million during the three and nine months ended August 31, 2021, respectively. The Company recorded no stock-based compensation expense for restricted stock units granted to non-employees during the three and nine months ended August 31, 2020, respectively.

As of August 31, 2021, there was $7.5 million of unrecognized stock-based compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted average period of 2.3 years. As of August 31, 2021, there was $0.1 million of unrecognized stock-based compensation cost related to unvested restricted stock units granted to non-employees which is expected to be recognized over a weighted average period of 0.5 years. During the nine months ended August 31, 2021, no shares subject to previously granted restricted stock units vested. 

The following table summarizes the RSU activity during the nine months ended August 31, 2021:

Stock Options

During the nine months ended August 31, 2021 and 2020, the Company granted options to employees and directors to purchase 41,000 and 391,750 shares of common stock, respectively. The options issued during the nine months ended August 31, 2021 vest over three years. The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.07 million and $0.6 million during the nine months ended August 31, 2021 and 2020, respectively. The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.05 million and $0.01 million during the three months ended August 31, 2021 and 2020, respectively.

During the nine months ended August 31, 2021, 94,683 stock options were forfeited resulting in net benefit of stock-based compensation of approximately $0.1 million. During the three months ended August 31, 2021, 12,433 stock options were forfeited resulting in net benefit of stock-based compensation of approximately $0.07 million.

During the nine months ended August 31, 2021 and 2020, the Company granted options to purchase 0 and 11,000, shares of common stock to non-employee contractors, respectively. The Company recorded no stock-based compensation expense for options granted to non-employees during the three months ended August 31, 2021 and 2020. During the nine months ended August 31, 2021 and 2020, the Company recorded $0.04 and $0.02, respectively, of stock-based compensation expense for options granted to non-employees. 

As of August 31, 2021, there was $0.3 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 2.5 years.

Stock Option Valuation

The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and non-employees for the nine months ended August 31, 2021 were as follows:

Black-Scholes option pricing model

The following table summarizes option activity under the 2017 and 2020 Plan during the nine months ended August 31, 2021:

Incentive Warrants

During the nine months ended August 31, 2021 and 2020, the Company issued 0 and 15,000 of warrants in exchange for services to a marketing consultant to purchase common shares, respectively. The warrants were issued outside of the 2017 Plan and were not included under the 2020 Plan. Stock-based compensation expense for the nine months ended August 31, 2021 and 2020 was $0 and $0.02 million, respectively. Stock-based compensation expense for the three months ended August 31, 2021 and 2020 was $0.

Stock-Based Compensation Expense

Total stock-based compensation expense was $2.5 million and $0.7 million for the nine months ended August 31, 2021 and 2020, respectively. Total stock-based compensation expense was $1.0 million and $0.01 million for the three months ended August 31, 2021 and 2020, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.