Stock Based Compensation

6 Months Ended

Jan. 31, 2012

Stock Based Compensation [Abstract]

Stock Based Compensation

2. Stock Based Compensation

Equity Incentive Plans

The Company's Equity Incentive Plans, adopted in fiscal years 1997, 1999 and 2001, authorize the granting of incentive stock options, supplemental stock options, stock bonuses, and restricted stock purchase agreements to officers, directors, and employees of the Company and to non-employee consultants. The board of directors has declared that no future grants will be made under the plan adopted in 1997. Incentive stock options are granted only to employees and are issued at prices not less than the fair market value of the stock at the date of grant. The options generally vest over a four-year period and the term of any option cannot be greater than ten years from the date of grant. Restricted stock purchase agreements are issued at prices not less than 85% of the fair market value of the stock at the date of grant. During the six months ended January 31, 2012, there were no options to purchase shares of common stock and no restricted stock granted by the Company.

The Company's majority-owned subsidiary, CSPR, issued previously held treasury stock to management and directors of CSPR as compensation in the six months ended January 31, 2011. The stock, valued at $36,000, is recorded as expense in the six months ended January 31, 2011.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan permits employees to purchase up to 200,000 shares of the Company's common stock. The purchase price under this plan is 85% of the fair market value of the common stock at the beginning of an offering period or on a purchase date, whichever is less. Offering periods generally last one year with purchase dates six and twelve months from the beginning of an offering period. During the six months ended January 31, 2012, employees purchased 6,000 shares under the plan.

Determining Fair Value

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatilities are based on historical daily closing prices adjusted for expected future volatility. The Company believes that implied volatility is more reflective of market conditions and a better indicator of expected volatility than historical volatility. The Company uses historical information to calculate the expected life of option grants. The Company believes that historical information is currently reflective of the economic life of outstanding option grants. The dividend yield is determined by dividing the expected per share dividend during the coming year by the average fair market value of the stock during the quarter. The Company has not historically declared any cash dividends on its common stock, and currently intends to retain any retained earnings to finance the operation and expansion of the business and therefore does not expect to pay cash dividends on the common stock in the foreseeable future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The estimated fair value of the employee stock options are amortized to expense using the straight-line method over the vesting period.

Stock-based compensation of $3,000 and $36,000 was recognized for the six months ended January 31, 2012 and 2011, respectively. As of January 31, 2012, the Company has no unrecognized compensation costs related to unvested stock options under the Plans.

General Stock Option Information

Activity in the Company's stock option plans since July 31, 2011 is as follows:

						Weighted
	Shares					Average
	Available		Options			Exercise
	for Grant		Outstanding			Price
Options at August 1, 2011		302,756		73,521		$	10.80
Granted		—		—			—
Exercised		—		—			—
Cancelled		1,588		(1,588	)		2.76
Options at January 31, 2012		304,344		71,933		$	10.98

Information regarding the stock options outstanding under the Company's stock option plans at January 31, 2012 is summarized as follows:

			Weighted
			Average		Weighted				Weighted
	Outstanding		Remaining		Average		Exercisable		Average
	at January 31		Contractual		Exercise		at January 31		Exercise
Range of Exercise Prices	2012		Term		Price		2012		Price
$ 0.00 —  $ 5.00		5,800		.9 years	$	3.95		5,800	$	3.95
$ 5.01 — $10.00		34,800		4.0 years		7.45		34,800		7.45
$10.01 — $15.00		1,000		.0 years		11.90		1,000		11.90
$15.01 — $25.00		30,333		2.1 years		16.35		30,333		16.35
		71,933		2.9 years	$	10.98		71,933	$	10.98

The aggregate intrinsic value of both options outstanding and options exercisable as of January 31, 2012 was $0. All options outstanding were fully vested as of January 31, 2012. During the six months ended January 31, 2012, no options to purchase common stock were exercised.