5. SHAREHOLDERS' EQUITY

6 Months Ended

Feb. 28, 2014

Equity [Abstract]

Note 5. SHAREHOLDERS' EQUITY

Dividend

The Board of Directors declared cash dividends during fiscal year 2013. The details of dividends paid are in the following table:

Record Date	Distribution Date	Number of Shares Outstanding on Record Date		Dividend per Share		Total Amount
11/8/2012	11/13/2012		15,927,806	$	0.05	$	796,390
12/24/2012	12/28/2012		16,021,309	$	0.14	$	2,242,983
5/7/2013	5/10/2013		16,030,433	$	0.03	$	480,913
8/12/2013	8/15/2013		16,030,894	$	0.03	$	480,926
Total						$	4,001,212

The Board of Directors has also declared cash dividends during fiscal year 2014. The details of dividends paid are in the following table:

Record Date	Distribution Date	Number of Shares Outstanding on Record Date		Dividend per Share		Total Amount
11/08/2013	11/15/2013		16,073,894	$	0.04	$	642,956
2/17/2014	2/24/2014		16,149,460	$	0.05	$	807,473
Total						$	1,450,429

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. On February 25, 2014 the shareholders approved an additional 1,000,000 shares increasing the total number of shares that may be granted under the Option Plan to 2,000,000.

Qualified Incentive Stock Options (Qualified ISO)

As of February 28, 2014, employees hold Qualified ISO to purchase 479,000 shares of common stock at exercise prices ranging from $1.00 to $5.61 which were granted prior to February 28, 2014.

Transactions in FY14	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2013	532,000	$	1.82	3.95
Granted	100,000	$	5.61
Exercised	(147,000)	$	1.29
Cancelled/Forfeited	(6,000)	$	1.00
Outstanding, February 28, 2014	479,000	$	2.78	3.88
Exercisable,  February 28, 2014	289,600	$	1.85	3.43

The fair value of the options, including both ISO and NQSO options, granted during the six months ended February 28, 2014 is estimated at $130,781. 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 FQE February 28, 2014: dividend yield of 3.14%, pre-vest forfeiture rate of 6.25%, expected volatility of 38.95%, risk-free interest rate of 1.36%, and expected life of 5.0 years.

Non-Qualified Stock Options (Non-Qualified ISO)

As of February 28, 2014, the outside members of the Board of Directors hold options to purchase 45,600 shares of common stock at exercise prices ranging from $1.67 to $6.68, which were granted prior to February 28, 2014.

Transactions in FY14	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2013	48,600	$	3.79	7.85
Exercised	(3,000)	$	1.80
Outstanding, February 28, 2014	45,600	$	3.92	7.54
Exercisable,  February 28, 2014	25,200	$	3.45	6.37

The weighted-average remaining contractual life of options outstanding issued under the Plan, both Qualified ISO and Non-Qualified SO, was 4.19 years at February 28, 2014. The exercise prices for the options outstanding at February 28, 2014 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		215,100	3.81	$ 1.05		187,700	3.62	$1.06
$1.51	$3.00		31,600	6.12	$ 2.35		11,600	3.08	$2.11
$3.01	$4.50		141,900	3.63	$ 3.28		103,500	3.49	$3.22
$4.51	$6.68		136,000	4.95	$ 5.49		12,000	3.52	$5.59
			524,600	4.19	$ 2.88		314,800	3.67	$1.98