2. STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Nov. 30, 2012

Stock-Based Compensation Tables

Compensation costs related to the Company’s stock-based compensation

The following table summarizes compensation costs related to the Company’s stock-based compensation for the three and six months ended November 30, 2012 and 2011, respectively (in thousands):

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2012		2011		2012		2011
Stock-based compensation in the form of employee stock options and ESPP shares, included in:
Cost of sales	$	7	$	27	$	17	$	46
Selling, general and administrative		66		95		156		188
Research and development		26		50		53		103
Total stock-based compensation	$	99	$	172	$	226	$	337

Assumptions for Options Valuation Model

The fair value of the Company’s stock options granted to employees for the three and six months ended November 30, 2012 and 2011 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model.

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2012			2011			2012			2011
Option Plan Shares
Expected Term (in years)		5			5			5			5
Volatility		0.93			0.81			0.91			0.81
Expected Dividend	$	0.00		$	0.00		$	0.00		$	0.00
Risk-free Interest Rates		0.64	%		1.01	%		0.72	%		1.51	%
Estimated Forfeiture Rate		0.25	%		0.25	%		0.25	%		0.25	%
Weighted Average Grant Date Fair Value	$	0.57		$	0.57		$	0.79		$	0.78

Fair values of the ESPP shares

The fair values of the ESPP shares granted for the three and six months ended November 30, 2011 were estimated using the following weighted-average assumptions:

	Three Months Ended			Six Months Ended
	November 30, 2011			November 30, 2011
Employee Stock Purchase Plan Shares
Expected Term (in years)		0.5-2.0			0.5-2.0
Volatility		0.79-0.98			0.79-0.98
Expected Dividend	$	0.00		$	0.00
Risk-free Interest Rates		0.1%-1.1	%		0.1%-1.1	%
Estimated Forfeiture Rate		0	%		0	%
Weighted Average Grant Date Fair Value	$	0.40		$	0.40

Stock option transactions

The following table summarizes the stock option transactions during the three and six months ended November 30, 2012 (in thousands, except per share data):

				Outstanding Options
							Weighted
				Number			Average		Aggregate
	Available			of			Exercise		Intrinsic
	Shares			Shares			Price		Value
Balances, May 31, 2012		839			2,957		$	2.40	$	587
Options granted		(439	)		439		$	1.28
Options terminated		402			(402	)	$	4.48
Plan shares expired		(180	)		--
Options exercised		--			(101	)	$	0.67
Balances, August 31, 2012		622			2,893		$	2.00	$	340
Additional shares reserved		1,185			--
Options granted		(180	)		180		$	0.81
Options terminated		91			(91	)	$	3.92
Balances, November 30, 2012		1,718			2,982		$	1.87	$	167
Options fully vested and expected to
vest at November 30, 2012					2,923		$	1.87	$	163
Options exercisable at November 30, 2012					1,603		$	2.50	$	51

Options Outstanding

The options outstanding and exercisable at November 30, 2012 were in the following exercise price ranges (in thousands, except per share data):

	Options Outstanding						Options Excercisable
	at November 30, 2012						at November 30, 2012
Range of Exercise Prices	Number Outstanding Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Aggregate Intrinsic Value
$0.59-$0.97		1,135		4.54	$	0.75		638		3.07	$	0.82
$1.10-$2.52		1,606		4.29	$	1.57		724		2.93	$	1.79
$6.00-$9.30		127		0.57	$	8.34		127		0.57	$	8.34
$9.94-$9.94		114		0.56	$	9.94		114		0.56	$	9.94
$0.59-$9.94		2,982		4.08	$	1.87		1,603		2.63	$	2.5	$	51