R F INDUSTRIES LTD Stock Compensation Disclosure

Note 8 – Stock options

 

Incentive and non-qualified stock option plans

 

On July 22, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”). In September 2020, the Company’s stockholders approved the 2020 Plan by vote as required by NASDAQ. An aggregate of 1,250,000 shares of common stock was set aside and reserved for issuance under the 2020 Plan. At its annual meeting held on September 5, 2024, the Company’s stockholders approved an amendment to the 2020 Plan to increase the number of shares of common stock available for issuance under the plan by 1,000,000 shares. As of October 31, 2025, 974,022 shares of common stock were remaining for future grants of stock options under the 2020 Plan.

 

Additional disclosures related to stock option plans  

 

On January 11, 2024, we granted incentive stock options to Mr. Dawson for the purchase of 116,667 shares, Mr. Yin for the purchase of 41,667 shares, and Mr. Bibisi for the purchase of 41,667 shares. The incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest on January 11, 2025 and (ii) the remaining options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire 10 years from the date of grant.

 

On April 16, 2024, we granted a total of 25,000 incentive stock options to three managers. The shares of incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest on April 16, 2025 and (ii) the remaining and options shall vest in 12 equal quarterly installments over the next three years.

 

On December 2, 2024, we granted a total of 47,500 incentive stock options to seven managers. The shares of incentive stock options vest equally over four years as follows: (i) one-quarter of the options shall vest on December 2, 2025 and (ii) the remaining options shall vest in three equal annual installments over the next three years.

 

On January 13, 2025, we granted incentive stock options to Mr. Dawson for the purchase of 87,500 shares, Mr. Yin for the purchase of 31,250 shares, Mr. Bibisi for the purchase of 31,250 shares, and to two managers for a the purchase of 15,000 shares. The incentive stock options vest over four years as follows: (i) one-quarter of the options shall vest on January 13, 2026 and (ii) the remaining options shall vest in 12 equal quarterly installments over the next three years.

 

No other shares or options were granted to Company employees during fiscal 2025.

 

The fair value of each option granted in 2025 and 2024 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

 

		2025				2024
Weighted average volatility			44.37	%			53.16	%
Expected dividends			0.00	%			0.00	%
Expected term (in years)			6.1				7.0
Risk-free interest rate			4.54	%			4.00	%
Weighted average fair value of options granted during the year		$	1.85			$	1.76
Weighted average fair value of options vested during the year		$	2.32			$	2.88

 

Expected volatilities are based on historical volatility of our stock price and other factors. We used the historical method to calculate the expected life of the 2025 and 2024 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield on the Company’s common stock.

 

Additional information regarding all of our outstanding stock options at October 31, 2025 and 2024 and changes in outstanding stock options in 2025 and 2024 follows:

 

		2025								2024
		Shares or				Weighted				Shares or				Weighted
		Price Per				Average				Price Per				Average
		Share				Exercise Price				Share				Exercise Price
Outstanding at beginning of year			874,816			$	5.10				754,186			$	6.04
Options granted			212,500			$	3.97				245,001			$	3.01
Options exercised			(56,623	)		$	4.32				-			$	-
Options canceled or expired			(25,000	)		$	8.69				(124,371	)		$	6.42
Options outstanding at end of year			1,005,693			$	4.81				874,816			$	5.10
Options exercisable at end of year			573,431			$	5.44				478,986			$	5.95
Options vested and expected to vest at end of year			1,005,693			$	4.81				874,816			$	5.10
Option price range at end of year		$1.90 - $8.69								$1.90 - $8.69
Aggregate intrinsic value of options exercised during year		$	57,756							$	-

 

Weighted average remaining contractual life of options outstanding as of October 31, 2025: 6.66 years

 

Weighted average remaining contractual life of options exercisable as of October 31, 2025: 5.48 years

 

Weighted average remaining contractual life of options vested and expected to vest as of October 31, 2025: 6.66 years

 

Aggregate intrinsic value of options outstanding at October 31, 2025: $3,068,000

 

Aggregate intrinsic value of options exercisable at October 31, 2025: $1,406,000

 

Aggregate intrinsic value of options vested and expected to vest at October 31, 2025: $3,068,000

 

As of October 31, 2025, $888,000 and $904,000 of expense with respect to nonvested stock options and restricted shares, respectively, has yet to be recognized but is expected to be recognized over a weighted average period of 1.2 and 1.1 years, respectively.