7. SHAREHOLDERS' EQUITY

12 Months Ended

Aug. 31, 2017

Equity [Abstract]

SHAREHOLDERS' EQUITY

Dividend

The Company’s Board of Directors declared cash dividends during fiscal year 2017, 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	2/02/2015	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	2/05/2016	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

FY2017

Record Date	Distribution Date	Number of Shares Outstanding on Record Date	Dividend per Share		Total Amount
11/10/2016	11/17/2016	17,226,478	$	0.05	$	861,324
1/30/2017	2/06/2017	17,233,758	$	0.05	$	861,688
5/08/2017	5/15/2017	17,240,626	$	0.05	$	862,031
7/28/2017	8/04/2017	17,268,920	$	0.05	$	863,446
Total					$	3,448,489

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 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. This plan terminated in February 2017 by its term.

On December 23, 2016 the Board of Directors adopted, and on February 23, 2017 the shareholders approved, the 2017 Equity Incentive Plan under which a total of 1,000,000 shares of common stock has been reserved for issuance. This plan will terminate in December 2026.

Incentive Stock Options (“ISOs”)

As of August 31, 2017, employees hold ISOs to purchase in the aggregate 1,194,042 shares of the Company’s common stock at exercise prices ranging from $1.00 to $14.50 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

Transactions in FY17 (ISO’s)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2016		894,750		$	7.54		7.72
Granted		409,582		$	10.10
Exercised		(40,142	)	$	3.01
Cancelled/Forfeited		(70,148	)	$	8.92
Outstanding, August 31, 2017		1,194,042		$	8.49		7.70
Exercisable, August 31, 2017		380,360		$	6.45		5.49
Vested and Expected to Vest, August 31, 2017		1,091,981		$	8.38		7.59

Non-Qualified Stock Options (“NQSOs”)

As of August 31, 2017, the outside members of the Company’s Board of Directors hold NQSOs to purchase in the aggregate 55,084 shares of the Company’s common stock at exercise prices ranging from $1.67 to $14.50 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

Transactions in FY17 (NQSOs)	Number of Options			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life
Outstanding, August 31, 2016		52,750		$	6.88		8.07
Granted		25,334		$	11.44
Exercised		(9,500	)	$	5.88
Cancelled/Forfeited		(13,500	)	$	7.43
Outstanding, August 31, 2017		55,084		$	9.02		8.59
Exercisable, August 31, 2017		21,125		$	6.51		7.29

The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2017 is estimated at $1,294,826. 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 2.15%, pre-vest forfeiture rate of 6.17%, expected volatility of 32.93%, risk-free interest rate of 2.16%, and expected life of 6.78 years. The total fair value of non-vested stock options as of August 31, 2017 was $1,866,395 and is amortizable over a weighted average period of 7.59 years.

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
FY17	$	7,479,068	$	3,232,356	$	479,713

The weighted-average remaining contractual life of options outstanding issued under the 2007 and 2017 Plan was 7.74 years at August 31, 2017. The exercise prices for the options outstanding at August 31, 2017 ranged from $1.00 to $14.50 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	42,000	1.6 years	$ 1.00	42,000	1.6 years	$1.00
$3.01	$ 4.50	14,000	1.0 years	$ 3.22	14,000	1.1 years	$3.22
$4.51	$ 6.00	70,000	1.4 years	$ 5.52	70,000	1.4 years	$5.52
$6.01	$ 7.50	327,510	7.0 years	$ 6.86	194,905	7.0 years	$6.86
$7.51	$ 9.00	10,000	9.0 years	$ 8.62	4,000	9.0 years	$9.72
$9.01	$ 10.50	772,700	9.0 years	$ 9.88	76,580	8.5 years	$0.00
$13.01	$ 14.50	12,916	10.0 years	$14.44	0
		1,249,126	7.74 years	$8.51	401,485	5.6 years	$6.45