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 Plan”). The aggregate number of shares of common stock available for issuance in connection with options and other awards granted under the 2020 Plan was 2,500,000. On April 26, 2022, the Company’s Board of Directors approved and on June 17, 2022 the Company's stockholders approved the increase of the number of shares of common stock available for issuance under the 2020 Plan by 1,300,000 shares to a total of 3,800,000 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 Plan are employees, officers, directors, consultants, advisors and other individual service providers of the Company. Awards are at the discretion of the Compensation Committee.

Stock-Based Compensation Expense

Total stock-based compensation expense was $5.4 million and $5.4 million for the years ended November 30, 2023 and 2022, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss.

During the first half of 2022, the Board of Directors authorized granting of RSUs in excess of the limit stipulated under the 2020 Plan. Additionally, the Company agreed to grant 200,000 RSUs to the former Chief Technology Officer ("CTO") in exchange for his waiver of rights to future royalty payments. See Note 19, "Commitments and Contingencies - Royalty Payments," for additional information. Because these awards were then contingent on shareholder approval at the next annual shareholder meeting, these RSUs were not considered granted under Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation ("ASC 718") and were treated as obligation to issue RSU's and were remeasured at the end of each reporting period until the settlement date on June 17, 2022 and August 3, 2022, which were the dates that the plan limit was increased (for the RSUs to the former CTO).  

Additionally, on March 23, 2022, the Board of Directors approved the issuance of RSU Amendment Agreements to each grantee of the double trigger RSUs in which 50% of the RSUs (778,750 RSUs) were exchanged for stock options. The original RSUs that were cancelled were issued in 2020 and 2021.  In accordance with ASC 718, a cancellation of an award accompanied by the concurrent grant of a replacement award shall be accounted for as a modification of the terms of the cancelled award.  Similarly, because these stock options were then not considered granted under ASC 718, they were therefore treated as obligation to issue stock options and were remeasured at the end of each reporting period until the settlement date on June 17, 2022.  

On June 17, 2022, the Company settled the obligation to issue RSUs and options by issuing the related RSUs and stock options and reclassified the fair value of the issuances at June 17, 2022 of $1.0 million from accounts payable and accrued liabilities to additional paid-in capital.  Additionally, the amounts recognized as employee incentive expense totaling $1.4 million during fiscal year end 2022 was reclassified to stock compensation expense.  The non-cash expense associated with these rewards were valued at the grant date of June 17, 2022, using a Monte Carlo model for double trigger RSUs and a Black Scholes model for simple employment period vesting stock options. 

Restricted Stock Units

During the years ended November 30, 2023 and 2022, the Company granted 102,720 and 536,805 RSUs, respectively. Stock-based compensation expense for the RSUs for the years  November 30, 2023 and 2022, was $3.6 million and $2.6 million, respectively. 

During the year ended November 30, 2023, the Company accelerated the vesting of 200,000 RSUs held by the Company's former CTO.  The acceleration of these 200,000 RSUs resulted in $0.5 million of a tax payment for which the Company withheld 89,182 shares from the former CTO in exchange.  The acceleration of these RSUs was considered an equity award modification and resulted in an immaterial stock-based compensation expense.    

During the year ended November 30, 2022, the Company accelerated the vesting of 3,874 RSUs to a former director and 8,392 RSUs to current board members for 2021 services.  The acceleration of these RSUs were considered an equity award modification and resulted in an immaterial stock-based compensation expense.   

As of  November 30, 2023, there was $1.1 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 1.1 years. 

RSU Valuation

The assumptions that the Company used to determine the grant-date fair value of RSUs granted for the year ended  November 30, 2022 are presented in the table below.  The Company did not grant RSUs for the year ended November 30, 2023 that required a Monte Carlo simulation model.     

(Monte Carlo simulation model)

The following table summarizes the RSU activity during the year ended November 30, 2023:

Of the 213,636 restricted stock units issued, 89,234 units were returned to the Company in exchange for the Company paying for the payroll withholding taxes.  For the twelve months ended November 30, 2023, restricted stock units of 124,402, net, were issued.  

Stock Options

During the years ended  November 30, 2023 and 2022, the Company granted options to employees and directors to purchase 249,999 and 994,750 shares of common stock, respectively. The Company recorded stock-based compensation expense for options granted to its employees and directors of $1.8 million and $2.8 million during the years ended  November 30, 2023 and 2022, respectively.

As of  November 30, 2023, there was $2.9 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 1.6 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 years ended  November 30, 2023 and 2022 were as follows:

The following table summarizes option activity under the 2020 Plan during the years ended  November 30, 2023 and 2022:

The stock options outstanding at the end of the year had weighted-average contractual life as follows: