2. STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Nov. 30, 2013

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, 2013 and 2012, respectively (in thousands):

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2013		2012		2013		2012
Stock-based compensation in the form of employee stock options and ESPP shares, included in:
Cost of sales	$	15	$	7	$	23	$	17
Selling, general and administrative		183		66		287		156
Research and development		49		26		80		53
Total stock-based compensation	$	247	$	99	$	390	$	226

Assumptions for Options Valuation Model

Fair Value. The fair value of the Company’s stock options granted to employees for the three and six months ended November 30, 2013 and 2012 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,
	2013			2012			2013			2012
Option plan shares
Expected term (in years)		4			5			4			5
Volatility		0.94			0.93			0.95			0.91
Expected dividend	$	0.00		$	0.00		$	0.00		$	0.00
Risk-free interest rates		0.95	%		0.64	%		1.40	%		0.72	%
Estimated forfeiture rate		0.25	%		0.25	%		0.25	%		0.25	%
Weighted average grant date fair value	$	1.77		$	0.57		$	1.03		$	0.79

Fair values of the ESPP shares

The fair values of the ESPP shares granted for the three and six months ended November 30, 2013 were estimated using the following weighted-average assumptions:

	Three and Six
	Months Ended
	November 30, 2013
Employee stock purchase plan shares
Expected term (in years)		0.5-2.0
Volatility		0.86-1.00
Expected dividend	$	0.00
Risk-free interest rates		0.04%-0.33	%
Estimated forfeiture rate		0	%
Weighted average grant date fair value	$	1.34

Stock option transactions

The following table summarizes the stock option transactions during the three and six months ended November 30, 2013 (in thousands, except per share data):

				Outstanding Options
								Weighted
					Number			Average		Aggregate
	Available				of			Exercise		Intrinsic
	Shares				Shares			Price		Value
Balances, May 31, 2013		1,737				2,956		$	1.79	$	964
Options granted		(725	)			725		$	1.38
Options terminated		289				(289	)	$	6.99
Plan shares expired		(104	)			--
Options exercised		--				(69	)	$	0.86
Balances, August 31, 2013		1,197				3,323		$	1.27	$	1,301
Options granted		(107	)			107		$	2.68
Options terminated		131				(131	)	$	2.26
Options exercised		--				(149	)	$	1.71
Balances, November 30, 2013		1,221				3,150		$	1.25	$	4,968
Options fully vested and expected to vest at November 30, 2013						3,087		$	1.25	$	4,868
Options exercisable at November 30, 2013						1,734		$	1.19	$	2,837

Options Outstanding

The options outstanding and exercisable at November 30, 2013 were in the following exercise price ranges (in thousands, except per share data):

		Options Outstanding						Options Exercisable
		at November 30, 2013						at November 30, 2013
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		1,074		3.77	$	0.76		853		3.43	$	0.80
$	1.09-$1.42		1,449		5.34	$	1.28		506		4.43	$	1.29
$	1.73-$1.95		465		3.28	$	1.88		315		2.42	$	1.92
$	2.15-$2.68		162		5.08	$	2.50		60		2.71	$	2.26
$	0.59-$2.68		3,150		4.49	$	1.25		1,734		3.51	$	1.19	$ 2,837