MEXCO ENERGY CORP Stock Compensation Disclosure

10. Stock-based Compensation

 

In September 2019, the Company adopted the 2019 Employee Incentive Stock Plan (the “2019 Plan”). The 2019 Plan provides for the award of stock options up to 200,000 shares and includes option awards as well as stock awards. Option awards are granted with the restriction of requiring payment for the shares. Stock awards are granted without restrictions and without payment by the recipient. Neither option awards nor stock awards may exceed 25,000 shares granted to any one individual in any fiscal year. Stock options may be an incentive stock option or a nonqualified stock option. Options to purchase common stock under the plan are granted at the fair market value of the common stock at the date of grant, become exercisable to the extent of 25% of the shares optioned on each of four anniversaries of the date of grant, expire ten years from the date of grant and are subject to forfeiture if employment terminates. The 2019 Plan expires ten years from the date of adoption. According to the Company’s employee stock incentive plan, new shares will be issued upon the exercise of stock options and the Company can repurchase shares exercised under the plan.

 

During the year ended March 31, 2025, there were no stock options granted. During the year ended March 31, 2024, the Compensation Committee of the Board of Directors approved and the Company granted 32,000 stock options.

 

The plan also provides for the granting of stock awards. No stock awards were granted during fiscal 2025 and 2024.

 

The Company recognized compensation expense of $205,639 and $229,799 related to vesting stock options in general and administrative expense in the Consolidated Statements of Operations for fiscal 2025 and 2024, respectively. The total cost related to non-vested awards not yet recognized at March 31, 2025 totals $280,173, which is expected to be recognized over a weighted average of 1.54 years.

 

The fair value of each stock option is estimated on the date of grant using the Binomial valuation model. Expected volatilities are based on historical volatility of the Company’s stock over the contractual term of 120 months and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. No dividend yield was used in the calculation on current options outstanding because at the time of the last issuance of stock options, either no dividend had been declared or the Company had only declared a special one-time dividend. Actual value realized, if any, is dependent on the future performance of the Company’s common stock and overall stock market conditions. There is no assurance the value realized by an optionee will be at or near the value estimated by the Binomial model.

 

Included in the following table is a summary of the grant-date fair value of stock options granted and the related assumptions used in the Binomial models for stock options granted in fiscal 2025 and 2024. All such amounts represent the weighted average amounts for each period.

Schedule of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binominal Models 

		For the year ended March 31,
		2025				2024
Grant-date fair value			-			$	8.73
Volatility factor			-				56.5	%
Dividend yield			-				-
Risk-free interest rate			-				3.44	%
Expected term (in years)			-				6.25

 

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards. During the year ended March 31, 2025, 2,500 unvested stock options were forfeited due to the resignation of an employee. During the year ended March 31, 2024, there were no stock options forfeited or expired.

 

 

The following table is a summary of activity of stock options for the years ended March 31, 2025 and 2024:

Schedule of Activity of Stock Options 

		Number of Shares				Weighted Average Exercise Price Per Share				Weighted Aggregate Average Remaining Contract Life in Years				Intrinsic Value
Outstanding at April 1, 2023			139,250			$	8.36				7.04			$	419,853
Granted			32,000				12.68
Exercised			(5,500	)			3.58
Forfeited or Expired			-				-
Outstanding at March 31, 2024			165,750			$	9.36				6.62			$	103,275
Granted			-				-
Exercised			(12,367	)			6.28
Forfeited or Expired			(2,500	)			14.83
Outstanding at March 31, 2025			150,883			$	9.52				5.98			$	-
Vested at March 31, 2025			105,508			$	7.69				5.31			$	50,431
Exercisable at March 31, 2025			105,508			$	7.69				5.31			$	50,431

 

During the year ended March 31, 2025, stock options covering 12,367 shares were exercised with a total intrinsic value of $92,316. The Company received proceeds of $77,641 from these exercises. During the year ended March 31, 2025, stock options covering 5,500 shares were exercised with a total intrinsic value of $37,566. The Company received proceeds of $19,662 from these exercises.

 

Other information pertaining to option activity was as follows during the year ended March 31:

Schedule of Other Information Pertaining to Option Activity 

		2025				2024
Weighted average grant-date fair value of stock options granted (per share)		$	-			$	8.73
Total fair value of options vested		$	205,241			$	234,025
Total intrinsic value of options exercised		$	92,316			$	37,566

 

The following table summarizes information about options outstanding at March 31, 2025:

Schedule of Information About Options Outstanding 

Range of Exercise Prices				Number of Options				Weighted Average Exercise Price Per Share				Weighted Average Remaining Contract Life in Years				Aggregate Intrinsic Value
$	3.34 – 4.83				25,677			$	3.34
	4.84 – 5.97				35,000				4.84
	5.98 – 8.51				29,706				8.51
	8.52 – 18.05				60,500				15.34
$	3.34 – 18.05				150,883			$	9.52				5.98			$	-

 

Outstanding options at March 31, 2025 expire between September 2028 and April 2033 and have exercise prices ranging from $3.34 to $18.05.