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6. SHAREHOLDERS' EQUITY
 12 Months Ended
Aug. 31, 2014
Equity [Abstract]  
SHAREHOLDERS' EQUITY

Dividend

The Company’s Board of Directors declared cash dividends during fiscal year 2014 and 2013. The details of dividend paid are in the following tables:

 

FY2014

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 
5/09/2014  5/16/2014   16,165,171   $0.05  $808,259 
8/04/2014  8/11/2014   16,337,955   $0.05  $816,897 
Total               $3,075,585 

 

FY2013

Record Date  Distribution Date 

Number of Shares

Outstanding on

Record Date

   Dividend per Share   Total Amount 
11/08/2012  11/13/2012   15,927,806   $0.05   $796,390 
12/24/2012  12/28/2012   16,021,309   $0.14*  $2,242,983 
05/07/2013  05/10/2013   16,030,433   $0.03**  $480,913 
08/12/2013  08/15/2013   16,030,894   $0.03**  $480,926 
Total               $4,001,212 

 

*As a tax benefit to our shareholders considering the increase in federal income tax for capital gains in 2013, the Company’s Board of Directors declared an accelerated cash dividend, $0.14 per share, on December 14, 2012, consisting of all of the planned February 2013 distribution of $0.05 per share, plus $0.03 per share of the planned $0.05 per quarter per share for the remaining three fiscal quarters ending in calendar year 2013.

 

** The Company’s Board of Directors decided to increase the May, August, and November 2013 dividend distribution from the planned $0.02 per share to $0.03 per share, and in November 2013 they increased the amount to $0.04 per share.

 

Although dividend distributions are currently expected to continue on a quarterly basis, the Company’s Board of Directors reserves the right to discontinue the dividend distribution any time.

 

Stock Option Plan

In September 1996, the Company’s Board of Directors adopted, and the Company’s shareholders approved, the 1996 Stock Option Plan (the "1996 Plan") under which a total of 1,000,000 shares of common stock had been reserved for issuance. The total number of shares that may be granted under the 1996 Plan was increased to 2,000,000 in March 1999, to 4,000,000 in February 2000, to 5,000,000 in December 2000 and to 6,000,000 in February 2005. All such increases were approved by the Company’s Board of Directors and the Company’s shareholders. The 1996 Plan terminated in September 2006 in accordance with its terms.

 

On February 23, 2007, the Company’s Board of Directors adopted and the Company’s shareholders approved the 2007 Stock Option Plan (the “2007 Plan”) under which a total of 1,000,000 shares of common stock had been reserved for issuance. On February 25, 2014, the Company’s Board of Directors and the Company’s shareholders approved an increase of the total number of shares that may be granted under the 2007 Plan to 2,000,000.

 

Incentive Stock Options (“ISOs”)

As of August 31, 2014, employees hold ISOs to purchase in the aggregate 532,000 shares of the Company’s common stock at exercise prices ranging from $1.00 to $6.85 per share.

 

Transactions in FY13
(ISOs)		  Number of Options  

Weighted-Average

Exercise Price

Per Share

   Weighted-Average Remaining Contractual Life(Years) 
                
Outstanding, August 31, 2012   689,800   $1.74    4.52 
Granted   20,000   $5.06      
Exercised   (175,800)  $1.90      
Canceled/Forfeited   (2,000)  $1.00      
Outstanding, August 31, 2013   532,000   $1.82    3.95 
Vested and Exercisable, August 31, 2013   392,600   $1.45    3.79 
Vested and Expected to Vest, August 31, 2013   519,600   $1.79    3.91 

 

Transactions in FY14
(ISOs)		  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   447,500   $6.57      
Exercised   (175,000)  $1.34      
Canceled/Forfeited   (6,000)  $1.00      
Outstanding, August 31, 2014   798,500   $4.59    6.27 
Vested and Exercisable, August 31, 2014   299,000   $1.82    3.16 
Vested and Expected to Vest, August 31, 2014   728,079   $4.41    5.99 

 

Non-Qualified Stock Options (“NQSOs”)

As of August 31, 2014, the outside members of the Company’s Board of Directors hold NQSOs to purchase in the aggregate 48,600 shares of the Company’s common stock at exercise prices ranging from $1.67 to $6.68 per share.

 

Transactions in FY13
(NQSOs)		  Number of Options  

Weighted-Average

Exercise Price
Per Share

   Weighted-Average Remaining Contractual Life 
                
Outstanding, August 31, 2012   36,600   $             3.47        8.14 
Granted   12,000   $4.78      
Outstanding, August 31, 2013   48,600   $3.79    7.85 
Exercisable, August 31, 2013   28,200   $3.28    6.67 

 

Transactions in FY14
(NQSOs)		  Number of Options  

Weighted-Average

Exercise Price
Per Share

   Weighted-Average Remaining Contractual Life 
                
Outstanding, August 31, 2013   48,600   $             3.79        7.85 
Granted   15,000   $6.72      
Exercised   (7,000)  $1.30      
Outstanding, August 31, 2014   56,600   $4.82    7.96 
Exercisable,  August 31, 2014   31,400   $3.96    6.74 

 

The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2014 is estimated at $1,103,600. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 3.01%, pre-vest forfeiture rate of 6.25%, expected volatility of 46.18%, risk-free interest rate of 1.80%, and expected life of 6.27 years. The total fair value of non-vested stock options as of August 31, 2014 was $1,133,865 and is amortizable over a weighted average period of 4.58 years.

 

During the fiscal year ended August 31, 2013, the fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 4.35%, pre-vest forfeiture rate of 6.13%, expected volatility of 57.65%, risk-free interest rate of 0.66%, and expected life of 5 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 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 stock options.

 

Intrinsic Value of options outstanding and options exercisable

 

   Intrinsic Value of Options Outstanding   Intrinsic Value of Options Exercisable   Intrinsic Value of Options Exercised 
FY13  $1,636,422   $1,357,870   $402,406 
FY14  $1,850,239   $1,552,171   $737,266 

 

The weighted-average remaining contractual life of options outstanding issued under the 1996 and 2007 Plan was 6.38 years at August 31, 2014. The exercise prices for the options outstanding at August 31, 2014 ranged from $1.00 to $6.85 per share, 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   197,500   3.5 years  $1.05   197,500   3.5 years  $1.05
$1.51  $3.00   17,600   5.7 years  $2.42   7,600   5.9 years  $2.34
$3.01  $4.50   141,500   3.1 years  $3.28   108,500   3.2 years  $3.26
$4.51  $6.85   498,500   8.5 years  $6.47   16,800   4.7 years  $5.36
       855,100          330,400