Note 12 - Stockholders’ equity

Controlled Equity Offering

The Company has a Controlled Equity Offering^SM 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 3.0% 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.

On September 1, 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 may be 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.

For the years ended July 31, 2021, 2020, and 2019 the Company did not sell any shares of common stock under the Sales Agreement.

Common stock

In fiscal 2021, the Company issued 208,537 shares of common stock in settlement of its employees’ 401(k) matching contribution obligation of $780. In January 2021, the Company issued 332,700 shares of common stock in payment of accrued executive bonuses of $875.

In fiscal 2020, the Company issued 333,265 shares of common stock in settlement of its employees’ 401(k) matching contribution obligation of $839. The Company also issued 4,167 shares of common stock as employee compensation and recorded an expense of $10.

In fiscal 2019, the Company issued 315,472 shares of common stock in settlement of its employees’ 401(k) matching contribution obligation of $832.

Incentive stock plans

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. On January 5, 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 July 31, 2021, there were approximately 5,066,000 shares of common stock available for grant under the Amended and Restated 2011 Plan, as amended and restated.

The Company estimates the fair value of each stock option award on the measurement date using a Black-Scholes option pricing model. The fair value of awards is amortized to expense on a straight-line basis over the requisite service period. The Company expenses restricted stock awards based on vesting requirements, primarily time elapsed.

Options granted pursuant to the plans may be either incentive stock options or non-statutory options. The 2011 Plan provides for the issuance of stock options, restricted stock and restricted stock unit awards which generally vest over a two to four year period. A summary of the option activity pursuant to the Company’s stock option plans for the years ended July 31, 2021, 2020, and 2019 is as follows:

The intrinsic value of stock option awards that vested during the fiscal year represents the value of the Company’s closing stock price on the last trading day of the fiscal year in excess of the exercise price multiplied by the number of options that vested.

Total intrinsic value of outstanding options that vested and were exercisable during the fiscal years ended July 31, 2021, 2020, and 2019 was $488, $0 and $159, respectively.

The intrinsic value of options outstanding at July 31, 2021, 2020, and 2019 was $1,323, $79 and $955, respectively.

The intrinsic value of the options exercised in fiscal 2021, 2020 and 2019 was $38, $0 and $117, respectively.

During the fiscal year ended July 31, 2019 certain directors and officers of the Company exercised 203,511 stock options in non-cash transactions. The officers and directors received 23,376 net shares of common stock. The Company did not receive any proceeds from this exercise. The net shares issued represent the difference between the fair market value of the options on the date of exercise less the strike price cost to exercise the options.

Listed below are the assumptions used to determine the fair value of options granted during fiscal years 2021, 2020 and 2019:

The following table summarizes information for stock options outstanding at July 31, 2021:

The following table summarizes information for stock options exercisable at July 31, 2021:

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 restricted 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.

During the fiscal years ended July 31, 2020, 2019 and 2018, the Company awarded 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 that period.

During the fiscal year 2020, a former executive forfeited 4,000 and 10,500 PSUs from the fiscal 2019 and fiscal 2020 awards, respectively. During fiscal year 2021, a former executive forfeited 2,000 and 4,000 PSUs from the fiscal 2018 and fiscal 2019 awards, respectively. During fiscal year 2021, 26,000 remaining PSU’s awarded in fiscal 2018 to current executives with a grant date of July 31, 2018 expired as the growth goals were not achieved by July 31, 2021. During the fiscal year 2021, the Company accrued compensation expense of $272 for the outstanding PSUs awarded during fiscal years 2020 and 2019 as the achievement of certain growth goals is deemed probable.

The following table summarizes PSU’s granted and outstanding through July 31, 2021:

Restricted Stock Awards

The fair value of a restricted stock award is determined based on the closing stock price on the award date. There were no awards made during the fiscal years ended July 31, 2021, 2020 or 2019. During the fiscal year ended July 31, 2021, a total of 817 restricted stock awards vested. The fair value of the awards that vested during the years ended July 31, 2021, 2020 and 2019 was $2, $2 and $4. As of July 31, 2021, there were no shares of unvested restricted stock outstanding.