Stock Based Compensation

3 Months Ended

Oct. 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 nine months ended October 31, 2012, there were no options to purchase shares of common stock and no restricted stock granted by the Company.

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 three months ended October 31, 2012, there were no shares purchased by employees 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 an analysis of the Company’s historical daily closing prices. 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 $0 and $1,000 was recognized for the three months ended October 31, 2012 and 2011, respectively. As of October 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, 2012 is as follows:

	Shares Available for Grant		Options Outstanding		Weighted Average Exercise Price
Options at August 1, 2012		307,344		68,933	$	11.19
Granted		—		—		—
Exercised		—		—		—
Cancelled		—		—		—
Options at October 31, 2012		307,344		68,933	$	11.19

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

Range of Exercise Prices	Outstanding at October 31 2012		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Exercisable at October 31 2012		Weighted Average Exercise Price
$ 0.00 — $ 5.00		3,800		.4 years	$	4.24		3,800	$	4.24
$ 5.01 — $10.00		34,800		3.2 years		7.45		34,800		7.45
$15.01 — $25.00		30,333		1.3 years		16.35		30,333		16.35
		68,933		2.2 years	$	11.19		68,933	$	11.19

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