2. STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Feb. 28, 2014

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 nine months ended February 28, 2014 and 2013 (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,				February 28,
	2014		2013		2014		2013
Stock-based compensation in the form of employee stock options and ESPP shares, included in:
Cost of sales	$	10	$	9	$	33	$	26
Selling, general and administrative		184		159		471		315
Research and development		41		33		121		86
Total stock-based compensation	$	235	$	201	$	625	$	427

Assumptions for Options Valuation Model

Fair Value.  The fair value of the Company’s stock options granted to employees for the three months ended February 28, 2013, and the nine months ended February 28, 2014 and 2013 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:

	Three Months Ended			Nine Months Ended
	February 28,			February 28,
	2013			2014			2013
Option plan shares
Expected term (in years)		5			4			5
Volatility		0.94			0.95			0.91
Expected dividend		$0.00			$0.00			$0.00
Risk-free interest rates		0.76	%		1.40	%		0.72	%
Estimated forfeiture rate		0.25	%		0.25	%		0.25	%
Weighted average grant date fair value		$0.62			$1.03			$0.78

Fair values of the ESPP shares

The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2014 were estimated using the following weighted-average assumptions:

	Nine Months Ended
	February 28,2014
Employee stock purchase plan purchase rights
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 nine months ended February 28, 2014 (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 granted		--				--
Options terminated		--				--
Options exercised		--				(85	)	$	0.93
Balances, February 28, 2014		1,221				3,065		$	1.26	$	3,370
Options fully vested and expected to vest at February 28, 2014						3,004		$	1.26	$	3,303
Options exercisable at February 28, 2014						1,852		$	1.21	$	2,051

Options Outstanding

		Options Outstanding						Options Exercisable
		at February 28, 2014						at February 28, 2014
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		1,000		3.76	$	0.75		804		3.50	$	0.79
$	1.09-$1.42		1,442		5.11	$	1.28		585		4.37	$	1.29
$	1.73-$1.95		461		3.05	$	1.88		361		2.47	$	1.91
$	2.15-$2.68		162		4.83	$	2.50		102		4.00	$	1.57
$	0.59-$2.68		3,065		4.35	$	1.26		1,852		3.60	$	1.21	$ 2,051