Note 14 - Stockholders’ equity

Controlled Equity Offering

In May 2023, the Company entered into a sales agreement (the “Sales Agreement”) with B. Riley Securities, Inc. as sales agent (“Riley”). Under the Sales Agreement, the Company may offer and sell, from time to time, through Riley, shares of the Company’s common stock, par value $0.01 per share (“Shares”) having an aggregate offering price of up to $30 million. The Company pays Riley 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 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 Riley or the Company, as permitted therein. In May 2023, the Company filed with the SEC a “shelf” registration and sales agreement prospectus covering the Sales Agreement. A total of $150 million of securities, including those covered by the Sales Agreement, may be sold under the shelf registration which was declared effective in July 2023. During the fourth quarter of the fiscal year ended July 31, 2023, the Company sold 276,479 shares for net proceeds of $386.

Common stock issuances

In fiscal 2023, the Company issued 843,100 shares of common stock pursuant to its employees’ 401(k) matching contribution obligation of $1,079. In fiscal 2022, the Company issued 237,383 shares of common stock pursuant to its employees’ 401(k) matching contribution obligation of $814.

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. 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 July 31, 2023, there were approximately 4,014,000 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 or the fair value of our stock at the date of grant. 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. Performance stock awards are not recognized until it is probable they will be earned. At such time, their expense is then recognized over the requisite service period, including that portion of the service period already elapsed.

Effective November 8, 2021, the Company granted equity awards to its CEO comprised of options to purchase 700,000 shares of common stock of the Company and restricted stock units (RSUs) for 260,000 shares of the common stock of the Company.

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 or three year period. A summary of the option activity pursuant to the Company’s stock option plan for the years ended July 31, 2023 and 2022:

The intrinsic value of stock option awards 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 are outstanding. Total intrinsic value of outstanding options that were exercisable at July 31, 2023 and 2022 was $0 and $68, respectively. The intrinsic value of options outstanding at July 31, 2023 and 2022 was $0 and $193, respectively. The intrinsic value of the options exercised in fiscal 2023 and 2022 was $3 and $4, respectively.

Listed below are the assumptions used to determine the fair value of options granted during fiscal years 2023 and 2022:

The following table summarizes information for stock options outstanding at July 31, 2023:

The following table summarizes information for stock options exercisable at July 31, 2023:

Restricted Stock Units

During fiscal year 2023, the Company awarded to its CEO 100,000 RSUs which cliff vest annually over three years whose fair market value was $197 at the time of grant. During fiscal year 2023, the Company awarded to its 3 independent directors 225,564 RSUs which vest over one year whose fair market value was $300. During fiscal year 2023, the Company recognized share based compensation expense of $918 for all RSUs.

In November 2021, 260,000 RSUs were awarded to our CEO 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 awarded to its 3 independent directors 117,189 RSUs in April 2022 which cliff vest annually over two years whose fair market value was $300. In July 2022, the Company awarded to its 3 independent directors 124,998 RSUs which vest in one year and whose fair market value was $300. During fiscal year 2022, the Company recognized shared based compensation expense of $295 for these RSUs.

The following table summarizes RSU activity for the fiscal year ended July 31, 2023:

Certain directors had not taken their vested RSU shares, totaling 144,530, as of July 31, 2023. As of July 31, 2023, there was $2,855 of total unrecognized compensation cost related to non-vested share-based payment arrangements granted under the Company’s 2011 Incentive Plan, which will be recognized over a weighted average remaining life of approximately one and a half years.

The following table summarizes RSU activity for the fiscal year ended July 31, 2022:

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 are based on revenue and adjusted EBITDA goals met at threshold, target or maximum levels and will be modified based on Total Shareholder Return (“TSR”) performance relative to Enzo’s peer group. The PSUs awarded to executive officers in fiscal year 2018 expired in fiscal year 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 revenue growth and adjusted EBITDA growth goals met at threshold, target or maximum levels over the respective period.

For the fiscal year ended July 31, 2023, the Company reversed net total PSU accruals of $82 for former officers who forfeited 28,300 PSUs from the fiscal 2020 award, resulting in net PSU compensation expense of $2. For the fiscal year ended July 31, 2022, the Company reversed net total PSU accruals of $124 for a former officer who forfeited 25,300 and 20,000 PSUs from the fiscal year 2020 and fiscal year 2019 awards, respectively, resulting in net PSU compensation expense of $70.

During the fiscal year ended July 31, 2023, the Company issued 25,200 shares for awards made in fiscal year 2019 and vested at the end of fiscal 2022.

The following table summarizes PSU’s granted and outstanding through July 31, 2023: