2. STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Aug. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

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 months ended August 31, 2014 and 2013 (in thousands):

	Three Months Ended
	August 31,
	2014		2013
Stock-based compensation in the form of employee stock options and ESPP shares, included in:
Cost of sales	$	14	$	8
Selling, general and administrative		148		104
Research and development		35		31
Total stock-based compensation	$	197	$	143

Assumptions for Options Valuation Model

Fair Value.  The fair value of the Company’s stock options granted to employees for the three months ended August 31, 2014 and 2013 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:

	Three Months Ended
	August 31,
	2014			2013
Expected term (in years)		4			4
Volatility		0.91			0.95
Expected dividend	$	0.00		$	0.00
Risk-free interest rates		1.28	%		1.46	%
Estimated forfeiture rate		0.25	%		0.25	%
Weighted average grant date fair value	$	1.71		$	0.92

Stock option transactions

The following table summarizes the stock option transactions during the three months ended August 31, 2014 (in thousands, except per share data):

				Outstanding Options
							Weighted
				Number			Average		Aggregate
	Available			of			Exercise		Intrinsic
	Shares			Shares			Price		Value
Balances, May 31, 2014		1,145			3,002		$	1.31	$	2,913
Options granted		(625	)		625		$	2.65
Options terminated		9			(9	)	$	1.27
Options exercised		--			(295	)	$	1.07
Balances, August 31, 2014		529			3,323		$	1.59	$	3,277
Options fully vested and expected to vest at August 31, 2014					3,257		$	1.59	$	3,212
Options exercisable at August 31, 2014					1,768		$	1.26	$	2,074

Options Outstanding

The options outstanding and exercisable at August 31, 2014 were in the following exercise price ranges (in thousands, except per share data):

	Options Outstanding						Options Exercisable
	at August 31, 2014						at August 31, 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		680		4.59	$	0.70		536		4.66	$	0.73
$1.09-$1.42		1,351		4.67	$	1.28		675		4.15	$	1.28
$1.73-$1.95		428		2.68	$	1.88		365		2.11	$	1.90
$2.15-$2.71		864		6.07	$	2.63		192		4.73	$	1.47
$0.59-$2.71		3,323		4.76	$	1.59		1,768		3.94	$	1.26	$2,074