2. STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Feb. 28, 2015

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 nine months ended February 28, 2015 and 2014 (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,				February 28,
	2015		2014		2015		2014
Stock-based compensation in the form of employee stock options and ESPP shares, included in:
Cost of sales	$	17	$	10	$	47	$	33
Selling, general and administrative		148		184		508		471
Research and development		54		41		138		121
Total stock-based compensation	$	219	$	235	$	693	$	625

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, 2015, and the nine months ended February 28, 2015 and 2014 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,
	2015			2015			2014
Option plan shares
Expected term (in years)		4			4			4
Volatility		0.90			0.91			0.95
Expected dividend	$	0.00		$	0.00		$	0.00
Risk-free interest rates		1.16	%		1.25	%		1.40	%
Estimated forfeiture rate		0.25	%		0.25	%		0.25	%
Weighted average grant date fair value	$	1.62		$	1.64		$	1.03

There were no options granted during the three months ended February 28, 2014.

Fair values of the ESPP shares

The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2015 and 2014 were estimated using the following weighted-average assumptions:

	Nine Months Ended
	February 28,
Employee stock purchase plan purchase rights	2015			2014
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

 There were no ESPP purchase rights granted during the three months ended February 28, 2015 and 2014.

Stock option transactions

 The following table summarizes the stock option transactions during the three and nine months ended February 28, 2015 (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 granted		(35	)			35		$	2.54
Options terminated		24				(24	)	$	2.06
Options exercised		--				(27	)	$	1.56
Balances, February 28, 2015		1,248				3,402		$	1.61	$	3,534
Options fully vested and expected to vest at February 28, 2015						3,334		$	1.61	$	3,463
Options exercisable at February 28, 2015						2,098		$	1.43	$	2,551

Options Outstanding

 The options outstanding and exercisable at February 28, 2015 were in the following exercise price ranges (in thousands, except per share data):

	Options Outstanding						Options Exercisable
	at February 28, 2015						at February 28, 2015
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		4.10	$	0.70		586		4.14	$	0.72
$1.09-$1.40		1,311		4.23	$	1.28		807		3.86	$	1.28
$1.73-$2.06		512		3.25	$	1.91		409		2.55	$	1.92
$2.15-$2.71		899		5.96	$	2.62		296		4.96	$	2.56
$0.59-$2.71		3,402		4.51	$	1.61		2,098		3.84	$	1.43	$	$2,551