|9 Months Ended|
Apr. 30, 2022
|Stockholders' Equity Note [Abstract]|
Note 10 – Stockholders’ Equity
Controlled Equity Offering
The Company has a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”). Under the Sales Agreement, the Company may offer and sell, from time to time, through Cantor, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). The Company pays Cantor a commission of 3% of the aggregate gross proceeds received under the Sale Agreement. The Company is not obligated to make any sales of the Shares under the Sales Agreement. The offering of Shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the Shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. The initial agreement contemplated the sale of shares of the Company’s common stock having an aggregate offering price of up to $20.0 million.
In December 2014, the Sales Agreement was amended in order for the Company to offer and sell additional shares of Common Stock having an aggregate offering price of $20.0 million.
In September 2017, the Company filed with the SEC a Form S-3 “shelf” registration and sales agreement prospectus covering the offering, issuance and sale of our Common Stock that may be issued and sold under the existing Sales Agreement in an aggregate amount of up to $19.2 million. A total of $150 million of securities could have been sold under this shelf registration, which was declared effective September 15, 2017. The Form S-3 expired in October 2020 but may be refiled at any time at the discretion of the Company. During the nine months ended April 30, 2021, the Company did not sell any shares of Common Stock under the Sales Agreement.
In January 2011, the Company’s stockholders approved the adoption of the 2011 Incentive Plan (the “2011 Plan”) for the issuance of equity awards, including, among others, options, restricted stock, restricted stock units and performance stock units for up to 3,000,000 shares of common stock. In January 2018, the Company’s stockholders approved the amendment and restatement of the 2011 Plan (the “Amended and Restated 2011 Plan”) to increase the number of shares of common stock available for grant under the 2011 Plan by 2,000,000 shares of common stock bringing the total number of shares available for grant to 5,000,000 shares of common stock. On October 7, 2020, the Company’s Board of Directors approved the amendment and restatement of the Amended and Restated 2011 Plan, with an effective date of October 7, 2020 and subject to approval by the Company’s stockholders at the 2020 annual meeting of stockholders of the Company. The amendment and restatement of the Amended and Restated 2011 Plan was for purposes of, among other things, (i) increasing the shares of common stock available for grant under the Amended and Restated 2011 Plan by an additional 4,000,000 shares of common stock bringing the total number of shares available for grant to 9,000,000 shares of common stock and (ii) extending the term of the Amended and Restated 2011 Plan until October 7, 2030. In January 2021, the Company’s stockholders approved the amendment and restatement of the Amended and Restated 2011 Plan.
The exercise price of options granted under the Amended and Restated 2011 Plan, as amended and restated, is equal to or greater than fair market value of the common stock on the date of grant. The Amended and Restated 2011 Plan, as amended and restated, will terminate at the earliest of (a) such time as no shares of common stock remain available for issuance under the plan, (b) termination of the plan by the Company’s Board of Directors, or (c) October 7, 2030. Awards outstanding upon expiration of the Amended and Restated 2011 Plan, as amended and restated, will remain in effect until they have been exercised or terminated, or have expired. As of April 30, 2022, there were approximately 4,955,000 shares of common stock available for grant under the Amended and Restated 2011 Plan, as amended and restated.
The amounts of share-based compensation expense recognized in the periods presented are as follows:
The following table sets forth the amount of expense related to share-based payment arrangements included in specific line items in the accompanying statements of operations:
During the nine months ended April 30, 2022, the Company recognized additional share-based compensation expense of $225 included in Selling, general and administrative expenses, for the modification of options awards affecting two members of the board of directors who resigned in January 2022. During the three and nine months ended April 30, 2022, the Company reversed $124 of share based compensation expense related to performance stock units awarded to a former executive officer, as vesting in the units is not probable.
No excess tax benefits were recognized during the three and nine month periods ended April 30, 2022 and 2021.
Stock Option Plans
The following table summarizes stock option activity during the nine month period ended April 30, 2022:
As of April 30, 2022, the total future compensation cost related to non-vested options, not yet recognized in the statements of operations, was $1,954 and the weighted average period over which the remaining expense of these awards is expected to be recognized is approximately twenty six months.
The intrinsic value of in the money stock option awards at the end of the period represents the Company’s closing stock price on the last trading day of the period in excess of the exercise price multiplied by the number of outstanding options.
Performance Stock Units
To better align the long-term interest of executives with growing U.S. practices, beginning in fiscal 2018, the Company granted long-term incentive awards in the form of time-based stock options and performance-based stock units (“Performance Stock Units” or “PSUs”). The PSUs earned will be determined over a three-year performance period. The primary performance metrics will be revenue and Adjusted EBITDA growth. Payouts based on revenue and adjusted EBITDA goals will be modified based on Total Shareholder Return (“TSR”) performance relative to Enzo’s peer group. The PSU’s award to executive officers in fiscal 2018 expired in fiscal 2021 as the 3 year growth goals were not achieved.
During the fiscal years ended 2020 and 2019, the Company awarded additional PSUs to its executive officers. These awards provide for the grant of shares of our common stock at the end of a three–year period based on the achievement of average revenue growth and adjusted EBITDA growth over the respective period. For the three and nine months ended April 30, 2022, the Company reversed cumulative accruals of $124 for a former officer whose vesting in the PSU is not considered probable, resulting in net PSU compensation (credit) expense of ($105) and $57, respectively. For the three and nine months ended April 30, 2021, the Company did not accrue any compensation expense for these PSUs as the achievement of the growth goals was deemed not probable at that time. As of April 30, 2022, two former officers forfeited a total of 14,500 PSUs awarded in fiscal 2019.
The following table summarizes PSU’s granted and outstanding as of April 30, 2022:
Restricted Stock Units
The Company awarded restricted stock units (“RSUs”) to our CEO who was appointed in November 2021. The award was for 260,000 RSUs which vest over three years on the anniversary of his hiring. The fair market value of these RSUs at the date of grant was $881. The Company also awarded 117,189 RSUs to its 3 independent directors in April 2022 whose fair market value was $300. During the three and nine months ended April 30, 2022, the Company recognized shared based compensation expense of $86 and $159, respectively for these RSUs.
The following table summarizes RSU activity during the nine month period ended April 30, 2022:
See Note 13 for more information with respect to the appointment of the CEO.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef