Stock-Based Compensation

9 Months Ended

Apr. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

            3.     Stock-Based Compensation

As of April 30, 2012, the Company had three stockholder-approved stock incentive plans under which shares and options exercisable for shares of common stock have been or may be granted to employees, directors, consultants and advisors. A total of 2,000,000 shares of common stock are reserved for issuance under the 2000 Stock Option Plan (the “2000 Plan”), a total of 12,000,000 shares of common stock are reserved for issuance under the 2001 Stock Option Plan (the “2001 Plan”) and 30,000,000 shares of common stock are reserved for issuance under the 2006 Stock Plan (the “2006 Plan”). Restricted shares can only be issued under the 2006 Plan. At April 30, 2012, there were 2,000,000, 3,739,444 and 14,726,577 shares of common stock reserved for future awards under the 2000 Plan, 2001 Plan and 2006 Plan, respectively.

The 2000, 2001 and 2006 Plans (the “Plans”) are administered by the Board of Directors (the “Board”). The Board is authorized to select from among eligible employees, directors, advisors and consultants those individuals to whom options are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Board is also authorized to prescribe, amend and rescind terms relating to options granted under the Plans. Generally, the interpretation and construction of any provision of the Plans or any options granted hereunder are within the discretion of the Board.

The Plans provide that options may or may not be Incentive Stock Options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code. Only employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are eligible to receive options which are not ISOs, i.e. “Non-Qualified Options.” The options granted by the Board in connection with its adoption of the Plans were Non-Qualified Options. In addition, the 2006 Plan also provides for restricted stock grants.

The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model which takes into account as of the grant date the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the term of the option.

In the case of restricted stock grants under the 2006 Plan, fair market value of the shares is established as the market price on the date of the stock grant.

The following is a summary of the common stock options granted, forfeited or expired and exercised under the Plans for the nine months ended April 30, 2012:

				Weighted
				Average
				Exercise		Aggregate
				Price		Intrinsic
	Options			Share		Value
Outstanding, August 1, 2011		7,340,182		$	0.465
Granted		—			n/a
Forfeited or expired		(327,250	)		0.716
Exercised		—			n/a
Outstanding, April 30, 2012		7,012,932		$	0.453	$	54,758
Exercisable, April 30, 2012		6,740,432		$	0.445	$	54,758

The 7,012,932 outstanding options at April 30, 2012 had a weighted average remaining contractual term of 3.8 years.

The following is a summary of the non-vested common stock options granted, vested and forfeited under the Plan for the nine months ended April 30, 2012:

				Weighted Average
				Grant Date
	Options			Fair Value
Outstanding, August 1, 2011		845,836		$	0.50
Granted		—			0.00
Vested		(470,836	)		0.53
Forfeited		(102,500	)		0.46
Outstanding, April 30, 2012		272,500		$	0.46

As of April 30, 2012, the Company had $73,604 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.45 years.