2. STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Nov. 30, 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 and six months ended November 30, 2014 and 2013 (in thousands):

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2014		2013		2014		2013
Stock-based compensation in the form of  employee stock options and ESPP shares, included in:
Cost of sales	$	16	$	15	$	30	$	23
Selling, general and administrative		212		183		360		287
Research and development		49		49		84		80
Total stock-based compensation	$	277	$	247	$	474	$	390

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, 2014 and 2013 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,
	2014			2013			2014			2013
Expected term (in years)		4			4			4			4
Volatility		0.90			0.94			0.91			0.95
Expected dividend	$	0.00		$	0.00		$	0.00		$	0.00
Risk-free interest rates		1.11	%		0.95	%		1.25	%		1.40	%
Estimated forfeiture rate		0.25	%		0.25	%		0.25	%		0.25	%
Weighted average grant date fair value	$	1.32		$	1.77		$	1.64		$	1.03

Fair values of the ESPP shares

The fair values of the ESPP shares granted for the three and six months ended November 30, 2014 and 2013 were estimated using the following weighted-average assumptions:

	Three and Six Months Ended			Three and Six Months Ended
	November 30, 2014			November 30, 2013
Expected Term (in years)		0.5-2.0			0.5-2.0
Volatility		0.55-0.83			0.86-1.00
Expected Dividend	$	0.00		$	0.00
Risk-free Interest Rates		0.04%-0.53	%		0.04%-0.33	%
Estimated Forfeiture Rate		0	%		0	%
Weighted Average Grant Date Fair Value	$	1.47		$	1.34

Stock option transactions

The following table summarizes the stock option transactions during the three and six months ended November 30, 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
Additional shares reserved		860			--
Options granted		(140	)		140		$	2.06
Options terminated		10			(10	)	$	1.74
Options exercised		--			(35	)	$	1.62
Balances, November 30, 2014		1,259			3,418		$	1.61	$	3,657
Options fully vested and expected to vest at November 30, 2014					3,350		$	1.61	$	3,584
Options exercisable at November 30, 2014					1,928		$	1.29	$	2,435

Options Outstanding

 The options outstanding and exercisable at November 30, 2014 were in the following exercise price ranges (in thousands, except per share data): 

	Options Outstanding						Options Exercisable
	at November 30, 2014						at November 30, 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		4.34	$	0.70		561		4.39	$	0.72
$1.09-$1.40		1,327		4.47	$	1.28		737		4.06	$	1.28
$1.73-$2.06		547		3.58	$	1.92		372		2.21	$	1.91
$2.15-$2.71		864		6.18	$	2.63		258		4.99	$	1.68
$0.59-$2.71		3,418		4.74	$	1.61		1,928		3.92	$	1.29	$	2,435