7. SHAREHOLDERS' EQUITY

12 Months Ended

Aug. 31, 2016

Equity [Abstract]

SHAREHOLDERS' EQUITY

Dividend

The Company’s Board of Directors declared cash dividends during fiscal year 2016 and 2015. The details of dividend paid are in the following tables:

FY2015

Record Date	Distribution Date	Number of Shares Outstanding on Record Date	Dividend per Share		Total Amount
11/7/2014	11/14/2014	16,841,114	$	0.05	$	842,056
1/26/2015	2/2/2015	16,852,117	$	0.05	$	842,606
5/11/2015	5/18/2015	16,875,117	$	0.05	$	843,754
7/23/2015	7/30/2015	16,943,001	$	0.05	$	847,150
Total					$	3,375,566

FY2016

Record Date	Distribution Date	Number of Shares Outstanding on Record Date	Dividend per Share		Total Amount
11/09/2015	11/16/2015	16,996,001	$	0.05	$	849,800
1/29/2016	02/05/2016	17,018,001	$	0.05	$	850,900
5/02/2016	5/09/2016	17,029,501	$	0.05	$	851,475
8/11/2016	8/18/2016	17,221,978	$	0.05	$	861,099
Total					$	3,413,274

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, 2016, employees hold ISOs to purchase in the aggregate 894,750 shares of the Company’s common stock at exercise prices ranging from $1.00 to $9.82 per share.

Transactions in FY15 (ISOs)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2014		798,500		$	4.59		6.27
Granted		37,000		$	6.99
Exercised		(95,384	)	$	2.49
Canceled/Forfeited		(119,116	)	$	4.86
Outstanding, August 31, 2015		621,000		$	5.01		6.01
Vested and Exercisable, August 31, 2015		265,700		$	2.81		4.40
Vested and Expected to Vest, August 31, 2015		576,952		$	4.87		6.32

Transactions in FY16 (ISOs)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2015		621,000		$	5.01		6.01
Granted		412,100		$	9.71
Exercised		(100,863	)	$	1.45
Canceled/Forfeited		(27,487	)	$	7.66
Expired		(10,000	)	$	1.13
Outstanding, August 31, 2016		894,750		$	7.54		7.72
Vested and Exercisable, August 31, 2016		253,380		$	4.85		5.26
Vested and Expected to Vest, August 31, 2016		812,458		$	7.40		7.58

Non-Qualified Stock Options (“NQSOs”)

As of August 31, 2016, the outside members of the Company’s Board of Directors hold NQSOs to purchase in the aggregate 52,750 shares of the Company’s common stock at exercise prices ranging from $1.78 to $8.62 per share.

Transactions in FY15 (NQSOs)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2014		56,600		$	4.82		7.96
Granted		13,750		$	6.75
Exercised		(6,503	)	$	3.28
Cancelled/Forfeited		(14,497	)	$	4.97
Outstanding, August 31, 2015		49,350		$	5.52		7.75
Exercisable, August 31, 2015		27,200		$	4.70		6.31

Transactions in FY16 (NQSOs)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2015		49,350		$	5.52		7.75
Granted		15,000		$	8.62
Exercised		(11,600	)	$	3.33
Cancelled/Forfeited		(0	)	$	–
Outstanding, August 31, 2016		52,750		$	6.88		8.07
Exercisable, August 31, 2016		26,500		$	5.95		6.70

The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2016 is estimated at $1,189,730. 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 2.32%, pre-vest forfeiture rate of 6.31%, expected volatility of 34.22%, risk-free interest rate of 1.42%, and expected life of 6.80 years. The total fair value of non-vested stock options as of August 31, 2016 was $1,366,269 and is amortizable over a weighted average period of 7.58 years.

The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2015 was estimated at $113,435. 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 3.03%, pre-vest forfeiture rate of 6.20%, expected volatility of 47.13%, risk-free interest rate of 2.09%, and expected life of 6.89 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
FY15	$	1,182,797	$	1,109,489	$	396,485
FY16	$	1,500,659	$	1,025,718	$	853,423

The weighted-average remaining contractual life of options outstanding issued under the 1996 and 2007 Plan was 7.74 years at August 31, 2016. The exercise prices for the options outstanding at August 31, 2016 ranged from $1.00 to $9.82 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	67,000	3.0 years	$ 1.00	67,000	3.0 years	$1.03
$1.51	$ 3.00	–	–	–	–	–	–-
$3.01	$ 4.50	20,000	1.9 years	$ 3.16	20,000	1.9 years	$3.16
$4.51	$ 6.00	74,000	2.7 years	$ 5.48	44,000	2.9 years	$5.38
$6.01	$ 7.50	367,200	8.0 years	$ 6.85	148,880	7.9 years	$6.85
$7.51	$ 9.00	15,000	10.0 years	$ 8.62	0
$9.01	$ 9.82	404,300	9.5 years	$ 9.71	0
		947,500			279,880