Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Shareholders' Equity

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Note 5 - Shareholders' Equity
 9 Months Ended
May 31, 2012
Stockholders' Equity Note Disclosure [Text Block]
NOTE 5 – SHAREHOLDERS’ EQUITY

The Company maintains the 2004 Incentive Plan (the “Equity Plan”), which was approved by shareholders in April 2004.  Executives, eligible employees, consultants and non-employee directors are eligible to receive options and stock grants pursuant to the Equity Plan. Pursuant to the Equity Plan, options to purchase shares of stock and restricted stock awards can be granted with exercise prices, vesting conditions and other performance criteria determined by the Compensation Committee of the Board.  The Company initially reserved 1.6 million shares of common stock for issuance under the Equity Plan. At May 31, 2012, the Company had 1,290,800 common shares that can be granted to eligible participants pursuant to the Equity Plan.

The following table summarizes the stock option activity for the Equity Plan for the nine months ended May 31, 2012:

   
Number of Options
   
Weighted-Average Exercise Price
   
Weighted-Average Remaining Contractual Term
   
Approximate Aggregate Instrinsic Value
 
Oustanding at beginning of period
    280,000     $ 6.10              
Granted
    12,500     $ 1.85              
Exercised
    –     $ –              
Forfeited or expired
    (29,500 )   $ 4.83              
Outstanding at May 31, 2012
    263,000     $ 6.04       5.3       *  
Options exercisable at May 31, 2012
    243,000     $ 6.18       4.9       *  

*       Intrinisic value less than $0

The following table summarizes the activity and value of non-vested options as of and for the nine months ended May 31, 2012:

   
Number of Options
   
Weighted-Average Grant Date Fair Value
 
Non-vested options oustanding at beginning of period
    49,500     $ 2.86  
Granted
    12,500     $ 1.23  
Vested
    (12,500 )   $ 3.11  
Forfeited
    (29,500 )   $ 4.14  
Options not vested at May 31, 2012
    20,000     $ 2.72  

All non-vested options are expected to vest.  The total fair value of options vested during the nine months ended May 31, 2012 and 2011 was $38,900 and $31,200, respectively.

Stock-based compensation expense for the three months ended May 31, 2012 and 2011, was $2,100 and $25,200, respectively. Stock-based compensation expense for the nine months ended May 31, 2012 and 2011, was $42,300 and $69,300, respectively.

At May 31, 2012, the Company has unrecognized expenses relating to non-vested options that are expected to vest totaling $25,500, which have a weighted average life of 1.3 years.  The Company has not recorded any excess tax benefits to additional paid in capital.