5. SHAREHOLDERS' EQUITY

12 Months Ended

Aug. 31, 2012

Equity [Abstract]

Note 5. SHAREHOLDERS' EQUITY

Dividend

The Board of Directors declared cash dividend during fiscal year 2012. The details of dividend paid are in the following table:

Record Date	Distribution Date	Number of Shares Outstanding on Record Date		Dividend per Share	Total Amount
02/21/2012	03/01/2012		15,813,844	$0.05	$	790,692.20
04/27/2012	05/08/2012		15,923.019	$0.05	$	796,150.95
08/07/2012	08/10/2012		15,923.019	$0.05	$	796,150.95
Total					$	2,382,994.10

Stock Repurchase

On January 10, 2010, the Board of Directors authorized a renewed share repurchase program (Phase II) effective as of February 15, 2010. The renewed program enabled the Company to buy back up to one million shares during a 12-month period.

The details of repurchases made under Phase II are listed in the following table:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Remaining Shares Authorized for Repurchase Under the Share Repurchase Plan – Phase II
04/01/10 to 04/30/10		86,976	$	2.2237		913,024
05/01/10 to 05/31/10		170,101	$	2.3515		742,923
06/01/10 to 06/30/10		33,665	$	2.3670		709,258
07/01/10 to 07/31/10		18,789	$	2.4433		690,469
08/01/10 to 08/31/10		10,878	$	2.4283		679,591
09/01/10 to 09/30/10		81,070	$	2.6969		598,521
10/01/10 to 10/31/10		170,494	$	3.1671		428,027
11/01/10 to 11/30/10		146,116	$	2.9523		281,911
12/01/10 to 12/31/10		41,214	$	2.5716		240,697
01/01/11 to 01/31/11		119,469	$	2.9028		121,228
02/01/11 to 02/28/11		117,476	$	3.4510		3,752
Phase II Total		996,248	$	2.8041

*Phase II repurchase program ended on 02/14/2011.

Stock Option Plan

In September 1996, the Board of Directors adopted, and the shareholders approved, the 1996 Stock Option Plan (the "Option Plan") under which a total of 1,000,000 shares of common stock had been reserved for issuance. In March 1999, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 2,000,000. In February 2000, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 4,000,000. In December 2000, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 5,000,000. Furthermore, in February 2005, the shareholders approved an additional 1,000,000 shares, resulting in the total number of shares that may be granted under the Option Plan to 6,000,000. The 1996 Stock Option Plan terminated in September 2006 by its term.

On February 23, 2007, the Board of Directors adopted and the shareholders approved the 2007 Stock Option Plan under which a total of 1,000,000 shares of common stock had been reserved for issuance.

The following table summarizes the stock option transactions.

TRANSACTIONS IN FY 2012 AND 2011

Transactions in FY11 (Incentive Stock Option Plan)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2010		1,493,902		$	1.13
Granted		20,000		$	3.27
Exercised		(442,300	)	$	0.54
Canceled/Forfeited		(107,066	)	$	1.61
Expired		(6,900	)	$	0.88
Outstanding, August 31, 2011		957,636		$	1.40		5.22
Vested and Exercisable, August 31, 2011		687,102		$	1.27		4.522
Vested and Expected to Vest, August 31, 2011		931,883		$	1.37		5.132

Transactions in FY12 (Incentive Stock Option Plan)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2011		957,636		$	1.40		–
Granted		100,000		$	3.25		–
Exercised		(360,736	)	$	1.22		–
Expired		(7,100	)	$	2.54		–
Outstanding, August 31, 2012		689,800		$	1.74		4.523
Vested and Exercisable, August 31, 2012		467,100		$	1.42		4.071
Vested and Expected to Vest, August 31, 2012		666,789		$	1.71		4.451

The fair value of the options, including options to outside board members, granted during the year ended August 31, 2012 is estimated at $167,124. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions for the fiscal year ended August 31, 2012: dividend yield of 0.41%, pre-vest forfeiture rate of 5.61% to 6.09%, expected volatility of 62.27% to 69.87%, risk-free interest rate of 0.82% to 1.01%, and expected life of 5.0 years to 7.0 years. The total fair value of non-vested stock options as of August 31, 2012 was $292,426 and is amortizable over a weighted average period of 2.03 years.

During the previous fiscal year ended August 31, 2011, the fair value of the options granted is estimated at $57,384. The assumptions were dividend yield of 0%, pre-vest forfeiture rate of 2.32% to 40.71%, expected volatility of 54.71% to 79.91%, risk-free interest rate of 1.42% to 2.66%, and expected life of 4.0 years. The total fair value of non-vested stock options as of August 31, 2011 was $270,387 and is amortizable over a weighted average period of 2.18 years.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The weighted-average remaining contractual life of options outstanding issued under the Plan was 4.17 years at August 31, 2012. The exercise prices for the options outstanding at August 31, 2012 ranged from $1.00 to $6.68, and the information relating to these options is as follows:

Exercise Price		Awards Outstanding				Awards Exercisable
Low	High	Quantity		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Quantity		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$1.00	$1.50		382,700	4.8 years	$1.07		311,900	4.4 years	$1.08
$1.51	$3.00		154,600	4.1 years	$1.88		199,800	3.1 years	$1.73
$3.01	$4.50		185,100	5.0 years	$3.26		48,400	5.3 years	$3.08
$4.51	$6.68		4,000	5.0 years	$6.68		4,000	5.0 years	$6.68
			726,400				484,100

Intrinsic Value of options outstanding and options exercisable

	Intrinsic Value of Options Outstanding		Intrinsic Value of Options Exercisable		Intrinsic Value of Options Exercised
FY11	$	1,755,674	$	1,348,809	$	1,092,176
FY12	$	1,918,904	$	1,447,900	$	982,786

Other Stock Options

As of August 31, 2012, the outside members of the Board of Directors hold options to purchase 79,000 shares of common stock at exercise prices ranging from $0.38 to $6.68.

Transactions in FY11	Number of Options			Weighted-Average Exercise Price Per Share
Outstanding, August 31, 2010		71,000		$	2.02
Granted		12,000
Exercised		(4,000	)
Outstanding, August 31, 2011		79,000		$	2.29
Exercisable, August 31, 2011		50,950		$	2.15

Transactions in FY12	Number of Options			Weighted-Average Exercise Price Per Share
Outstanding, August 31, 2011		79,000		$	2.29
Granted		10,000		$	4.46
Exercised		(40,800	)	$	1.25
Canceled/Forfeited		(11,600	)	$	4.10
Outstanding, August 31, 2012		36,600		$	3.47
Exercisable, August 31, 2012		17,000		$	3.35