Employee Benefit Plans

12 Months Ended

Apr. 30, 2023

Disclosure Text Block Supplement [Abstract]

Compensation and Employee Benefit Plans [Text Block]

11. Employee Benefit Plans

Profit Sharing Plan:

The Company provides its U.S.-based employees with a profit-sharing plan and trust under § 401(k) of the IRC. This plan allows all eligible employees to defer a portion of their income through voluntary contributions to the plan. In accordance with the provisions of the plan, the Company can make discretionary matching contributions in the form of cash or common stock. For the fiscal years ended April 30, 2023 and 2022, the Company contributed 61,897 and 44,224 shares of common stock, respectively. The approximate value of these shares at the date of contribution was $413,000 and $426,000 in fiscal years 2023 and 2022, respectively. Contributed shares are drawn from the Company’s common stock and during fiscal years 2023 and 2022, such transactions increased additional paid in capital by $351,000 and $382,000, respectively. As of April 30, 2023, the plan held a total of 499,328 shares, which were allocated to the accounts of the individual participants. As of April 30, 2022, the plan held a total of 499,738 shares, which were allocated to the accounts of the individual participants.

Income Incentive Pool:

The Company maintains incentive bonus programs for certain employees that are based on operating profits of the individual subsidiaries to which the employees are assigned. The Company also adopted a plan for the President and Chief Executive Officer of the Company, which the formula is based on consolidated pre-tax profits. The incentive bonus recorded for the fiscal year ended April 30, 2023 was $175,000. The incentive bonus recorded for the fiscal year ended April 30, 2022 was $100,000.

Employee Stock Plans:

The Company has various stock plans, some of which have been approved by the Company’s stockholders, for key management employees, including officers and directors who are employees, certain consultants and independent members of the Board of Directors. The plans are Nonqualified Stock Options (“NQSO”) plans, Incentive Stock Option (“ISO”) plans, and SAR plans. Under these plans, options or SARs are granted at the discretion of the Stock Option Committee at an exercise price not less than the fair market value of the Company’s common stock on the date of grant.

Typically, options and SARs vest over a four-year period from the date of grant. The options and SARs generally expire ten years after the date of grant (the most recent SARs awards, beginning in fiscal year 2017, expire in five years) and are subject to certain restrictions on transferability of the shares obtained on exercise. Under the Company’s 2005 Stock Award Plan (“Plan”) the Company provided option holders the opportunity to exercise stock options either by paying the exercise price for the shares or to do a cashless exercise whereby the individual receives the net number of shares of stock equal in value to the exercised number of shares times the difference between the current market value of the Company’s stock and the exercise price. Under the Plan, instruments granted under other plans which expire, are canceled, or are tendered in the exercise of such instruments, increase the shares available under the Plan.

As of April 30, 2023, eligible employees and directors had been granted total SARs representing approximately 2,385,000 shares of the Company’s common stock, of which approximately 244,000 shares were outstanding and approximately 244,000 shares with a weighted average exercise price of $10.77 were exercisable. There were no SARs granted during the fiscal year 2023. When the SARs become exercisable, the Company will settle the SARs by issuing to exercising recipients the number of shares of stock from common stock or treasury stock, if available, equal to the appreciated value of the Company’s stock between the grant date and exercise date. At the time of exercise, the quantity of shares under the SARs grant equal to the exercise value divided by the then market value of the shares will be returned to the pool of available shares for future grant under the Plan. During the fiscal year ended April 30, 2023, no employees exercised SARs and no shares were granted. There were 185,500 shares returned to the pool of available shares and may be used for future grants under the Plan. Forfeitures are recorded as they occur.

The excess of the consideration received over the par value of the common stock or cost of treasury stock issued under both types of option plans is recognized as an increase in additional paid-in capital.

The following table summarizes information about stock option and SARs activity for the years ended April 30, 2023 and 2022:

						Stock Options and Stock Appreciation Rights
									Weighted Average
				Weighted-Average		Grant Date			Remaining	Aggregate
	Shares			Exercise Price		Fair Value			Contractual Term	Intrinsic Value
Outstanding – April 30, 2021		615,000		$	9.88	$	6,076,105		1.8 years	$	2,141,905
Granted		-			-		-
Exercised		(42,875	)		7.30		(313,056	)			34,660
Expired or Canceled		(143,000	)		10.48		(1,498,300	)
Outstanding – April 30, 2022		429,125		$	9.94	$	4,264,749		1.3 years	$	2,141,905
Granted		-			-		-
Exercised		-			-		-				-
Expired or Canceled		(185,500	)		8.84		(1,639,970	)
Outstanding – April 30, 2023		243,625		$	10.77	$	2,624,779		0.8 years	$	1,592,089
Exercisable		243,625		$	10.77	$	2,624,779		0.8 years	$	1,592,089
Available for future grants		851,965

As of April 30, 2022, exercisable shares related to options and SARs under the plans totaled 393,500, weighted-average exercise price was $10.06, grant date fair value was $3,956,845, weighted average remaining contractual term was 1.4 years, and the aggregate intrinsic value was $2,989,785.

As of April 30, 2023, there was no unrecognized compensation cost related to non-vested options and SARs under the plans. As of April 30, 2022, total unrecognized compensation cost related to non-vested options and SARs under the plans was approximately $7,000.

During the fiscal years ended April 30, 2023 and 2022, 35,625 shares and 41,875 shares, respectively, vested, the fair value of which was approximately $106,000 and $123,000, respectively.

Stock-based compensation costs, for options and SARs, included in the cost of revenues of programs on which the Company recognizes revenue under the POC method were approximately $2,000 and $9,000 for the fiscal years ended April 30, 2023 and 2022, respectively. Stock-based compensation expense included in selling and administrative expenses, related to options and SARs, during the fiscal years ended April 30, 2023 and 2022 were approximately $0 and $45,000, respectively.

The Company classifies cash flows resulting from the tax benefits from tax deductions recognized upon the exercise of stock options or SARs (tax benefits) as operating cash flows. The Company did not recognize any tax benefits from the exercise of stock options and SARs for the fiscal years presented.

Restricted Stock Plan and Other Issuances:

During fiscal year 1990, the Company adopted a Restricted Stock Plan which provided that key management employees could be granted rights to purchase an aggregate of 375,000 shares of the Company’s common stock. The grants, transferability restrictions and purchase price were determined at the discretion of a special committee of the Board of Directors. The purchase price could not be less than the par value of the common stock. Transferability of shares is restricted for a four-year period, except in the event of a change in control as defined therein. As a result of the adoption by the Company’s stockholders of the 2005 Stock Award Plan, the Restricted Stock Plan was discontinued. No additional grants will be made under this plan. As of April 30, 2023, there are no outstanding shares available for purchase.

Under the 2005 Stock Award Plan the Company began issuing Restricted Stock Units (“RSUs”) to eligible employees in fiscal year 2020. The fair value of these awards is equivalent to the market value of the Company’s common stock on the grant date and vests over a period of time. On the applicable vesting date, the holder of an RSU becomes entitled to share of the Company’s common stock. A portion of the RSUs awarded will vest annually until fiscal year 2026. Forfeitures are recorded as they occur.

During the fiscal year ended April 30, 2023 and 2022, the Company issued 1,300 shares from common stock and 1,150 shares from common stock, respectively, to select employees for milestone years of service to the Company. These shares were issued under the 2005 Stock Award Plan, are shares of the Company’s common stock, and are fully vested at time of issuance.

In fiscal year 2021 the Company elected to issue Performance Stock Units (“PSUs”) to an officer of the Company. The fair value of these awards is equivalent to the market value of the Company’s common stock on the grant date and requires an assessment of the probability that the specified performance criteria will be achieved, which is updated at each reporting date. PSUs are not shares of the Company’s common stock and do not have any rights or privileges thereof, including voting or dividend rights. On the applicable vesting date, subject to the attainment of the specified performance criteria, the holder of a PSU becomes entitled to a share of the Company’s common stock. PSUs are subject to certain restrictions and forfeiture provisions, in addition to performance vesting conditions, prior to vesting. A portion of the PSUs awarded will vest, subject to specified performance criteria, annually until fiscal year 2025. Forfeitures are recorded as they occur.

Stock-based compensation costs, related to RSUs and PSUs, included in the cost of revenues of programs on which the Company recognizes revenue under the POC method were approximately $186,000 and $83,000 for the fiscal years ended April 30, 2023 and 2022, respectively. Stock-based compensation expense, for RSUs and PSUs, included in selling and administrative expenses were approximately $200 and $99,000 for the fiscal years ended April 30, 2023 and 2022, respectively. The fair value of RSUs and PSUs vested were approximately $124,000 and $78,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

The following table summarizes activity for the RSUs and PSUs awards that reduce available capacity under the 2005 Stock Award Plan for the fiscal years ended April 30, 2023 and 2022:

				Weighted-Average
	Shares			Grant Date Fair Value
Balance – April 30, 2021		57,000			10.26
Granted		26,250			9.84
Vested		(15,066	)		10.32
Forfeited		(2,575	)		9.97
Balance – April 30, 2022		65,609			10.26
Granted		265,000			6.29
Vested		(12,401	)		10.01
Forfeited		(24,812	)		9.90
Balance – April 30, 2023		293,396			6.64

Deferred Compensation Agreements:

The Company has a series of agreements with key employees providing for the payment of benefits upon retirement or death. Under these agreements, each key employee receives specified retirement payments for the remainder of the employee’s life with a minimum payment of ten years’ benefits to either the employee or his or her beneficiaries. The agreements also provide for lump sum payments upon termination of employment without cause and reduced benefits upon early retirement. The Company pays the benefits out of its working capital but has also purchased whole life or term life insurance policies on the lives of certain of the participants to cover the optional lump sum obligations of the agreements upon the death of the participant. Deferred compensation expense charged to selling and administrative expenses during the fiscal year ended April 30, 2023 was approximately $643,000. Deferred compensation expense charged to selling and administrative expenses during the fiscal year ended April 30, 2022 was approximately $1.1 million.

Life Insurance Policies and Cash Held in Trust:

The whole-life insurance policies on the lives of certain participants covered by deferred compensation agreements have been placed in a trust. Upon the death of any insured participant, cash received from life insurance policies in excess of the Company’s deferred compensation obligations to the estate or beneficiaries of the deceased, are also placed in the trust. These assets belong to the Company until a change of control event, as defined in the trust agreement, should occur. At that time, the Company is required to add sufficient cash to the trust so as to match the deferred compensation liability described above. Such funds will be used to continue the deferred compensation arrangements following a change of control.