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). 

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 common 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. In connection with the adoption of the 2020 Plan, the Company cancelled outstanding option awards granted under the 2017 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.

Stock-Based Compensation Expense

Total stock-based compensation expense was $0.8 million and $0.7 million for the three months ended February 28, 2022 and 2021, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

During the first quarter of 2022, the Board of Directors authorized granting of certain RSUs in excess of the limit stipulated under the 2020 Plan. Additionally, the Company agreed to grant 200,000 RSUs to the CTO in exchange for his waiver of rights to future royalty payments. See Note 21, "Commitments and Contingencies - Royalty Payments," for additional information. These RSUs will be issued upon Stockholder's approval at the next Stockholder's meeting of the increase in the number of shares of common stock available for issuance under the 2020 Plan.  Because these awards are contingent on shareholder approval at the next annual shareholder meeting, these RSUs are not considered granted under Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation and are treated as obligation to issue RSU's.  The non-cash expense associated with these awards for the first quarter of 2022 has been estimated at $0.5 million based on the Board resolution date as the grant date, along with a Monte Carlo model for double trigger RSUs and a Black Scholes model for simple employment period vesting stock options.  The expense is recognized as employee incentive expense within operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.  The obligation is included in accounts payable and accrued liabilities within the Condensed Consolidated Balance Sheets.

Restricted Stock Units

During the year ended November 30, 2020, the Company granted employees 1,573,500 restricted stock unit awards (“RSUs”) under the 2020 Equity Incentive Plan.  The employee must remain employed by the Company for three years from the effective date for the RSUs to vest.

During year ended November 30, 2021, the Company granted 174,493 RSUs under the 2020 Equity Incentive Plan. 150,000 of the RSUs have a “double trigger” for vesting based on stock price and time.  The employee must remain employed by the Company for three years from the effective date for the RSUs to vest. 15,493 of the RSUs vest in one year. During the year ended November 30, 2021, 3,873 RSUs were forfeited and canceled.

In November 2021, the Company entered into a severance agreement with an employee. Based on the terms of the agreement, the employee’s previously granted RSUs were reduced to 62,500 RSUs, which vested immediately.  27,500 RSUs and $0.4 million was withheld from the total proceeds for payment of taxes, resulting in net shares granted of 35,000. 87,500 RSUs previously granted but not vested were forfeited and canceled as a result of the severance agreement. The Company recorded total severance expense of $0.9 million.

During the three months ended February 28, 2022 and 2021, the Company granted 0 and 1,573,500 RSUs, respectively. Stock-based compensation expense for the RSUs for the three months ended February 28, 2022 and 2021, was $0.7 million and $0.6 million, respectively. 

During the three months ended February 28, 2022, the Company settled 3,873 RSUs to a former board of director.  The Company also forfeited 25,000 RSUs to a former employee who was terminated for cause.  These RSU's did not vest, as they were based on triggers and performance that were not met.  As a result, no expenses were reversed, and going forward no expenses will be recognized.  The forfeited RSUs are returned to the pool. 

As of  February 28, 2022, there was $4.9 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 1.7 years. 

The following table summarizes the RSU activity during the three months ended February 28, 2022:

Stock Options

During the three months ended February 28, 2022 and 2021, the Company granted options to employees and directors to purchase 0 and 12,000 shares of common stock, respectively.  The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.1 million and $0.1 million during the three months ended February 28, 2022 and 2021, respectively. 

As of February 28, 2022, there was $0.4 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 2.1 years.

The following table summarizes option activity under the 2020 Plan during the three months ended February 28, 2022: