At November 30, 2012, the Company has two stock-based
employee compensation plans, both which have been approved by the shareholders.
The Company recognizes all share-based payments
to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair
values. That expense will be recognized over the period during which an employee is required to provide services in exchange for
the award, known as the requisite service period (usually the vesting period).
The value of each grant is estimated at the
grant date using the Black-Scholes model. There were no options granted or exercised during the three months ended November 30,
2012 and 2011.