Note 18 - Stock Option Plans

12 Months Ended

Jan. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

18. Stock Option Plans

At January 31, 2023, the Company had stock-based compensation plans as described in more detail below. The total compensation expense related to stock-based awards granted under these plans during fiscal 2023 and 2022 was approximately $654,000 and $643,000, respectively. The Company recognizes stock-based compensation costs net of a forfeiture rate for only those awards expected to vest over the requisite service period of the award. The Company estimates the forfeiture rate based on its historical experience regarding employee terminations and forfeitures.

The fair value of each option award is estimated as of the date of grant using a Black-Scholes-Merton option pricing formula. Expected volatility is based on historical volatility of the Company’s stock over a preceding period commensurate with the expected term of the option. The expected term is based upon historical exercise patterns. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yield was not considered in the option pricing formula since the Company does not pay dividends and has not paid any dividends since its incorporation. The weighted average grant-date fair value of options granted during fiscal 2023 and 2022 were $0.51 and $1.04, respectively. The assumptions for the periods indicated are noted in the following table.

Weighted average Black-Scholes-Merton fair value assumptions

	Year Ended January 31,
	2023			2022
Risk free interest rate		2.69% - 3.03%			0.72% - 0.72%
Expected life (in years)		5.50 - 6.50			3.97 - 5.97
Expected volatility		68% -70%			63% - 63%
Expected dividend yield		0.00	%		0.00	%

Cash flows resulting from tax benefits attributable to tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) are classified as financing out-flows and operating in-flows. The Company had no excess tax benefits during fiscal 2023 and 2022.

The Company has share-based awards outstanding under, the MIND Technology, Inc. Stock Awards Plan (“the Plan”). Stock options granted and outstanding under the Plan generally vest evenly over three years and have a 10-year contractual term. The exercise price of a stock option generally is equal to the fair market value of the Company’s Common Stock on the option grant date. As of January 31, 2023, there were approximately 180,000 shares available for grant under the Plan. The Plan provides for awards of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units and phantom stock. New shares are issued upon vesting for restricted stock and upon exercise for options.

Stock Based Compensation Activity

The following table presents a summary of the Company’s stock option activity for the fiscal year ended January 31, 2023:

						Weighted
						Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic
	Shares			Exercise		Term		Value
	(in thousands)			Price		(in years)		(in thousands)
Outstanding, January 31, 2022		3,425		$	3.53		6.58	$	100
Granted		895			0.81
Exercised		—			—
Forfeited		—			—
Expired		(225	)		5.30
Outstanding, January 31, 2023		4,095		$	2.84		5.91	$	—
Exercisable at January 31, 2023		2,693		$	3.68		4.25	$	—
Nonvested at January 31, 2023		1,402		$	1.23		9.11	$	—

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the fourth quarter of fiscal 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on January 31, 2023. This amount changes based upon the market value of the Company’s Common Stock. No options were exercised during fiscal 2023 and 2022. The fair value of options that vested during the fiscal years ended  January 31, 2023 and 2022 was approximately $1.4 million and $700,000, respectively. For fiscal 2023 and fiscal 2022 approximately 1.1 million and 500,000 options vested, respectively.

As of January 31, 2023, there was approximately $1.3 million of total unrecognized compensation expense related to unvested stock options granted under the Company’s share-based compensation plans. That expense is expected to be recognized over a weighted average period of 1.5 years.

Restricted stock as of January 31, 2023, and changes during fiscal 2023 were as follows:

	Year Ended January 31, 2023
	Number of			Weighted Average
	Shares			Grant Date Fair
	(in thousands)			Value
Unvested, beginning of period		19		$	2.51
Granted		11			1.00
Vested		(19	)		2.51
Canceled		—			—
Unvested, end of period		11		$	1.00

As of January 31, 2023, there was approximately no unrecognized stock-based compensation expense related to unvested restricted stock awards.