10. CAPITAL STOCK

12 Months Ended

May 31, 2016

Capital Stock

CAPITAL STOCK

10. CAPITAL STOCK:

STOCK OPTIONS:

    In October 1996, the Company’s Board of Directors approved the 1996 Stock Option Plan (the “Stock Plan”), which provided for granting of incentive and non-qualified stock options to our employees and directors. The Stock Plan provides that qualified options be granted at an exercise price equal to the fair market value at the date of grant, as determined by the Board of Directors (85% of fair market value in the case of non-statutory options and purchase rights and 110% of fair market value in certain circumstances). Options generally expire within five years from date of grant. Most options become exercisable in increments over a four-year period from the date of grant.

    In October 2006, the Company’s 2006 Equity Incentive Plan and 2006 Employee Stock Purchase Plan (“2006 Plans”) were approved by the shareholders, which provide for granting of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and other stock or cash awards as the Company’s Board of Directors may determine. A total of 5,450,000 shares of common stock have been reserved for issuance under the Company’s 2006 Equity Incentive Plan. Options granted under the 2006 Equity Incentive Plan are generally for periods not to exceed ten years (five years if the option is granted to a 10% stockholder) and are granted at the fair market value of the stock at the date of grant as determined by the Board of Directors. The 2006 Plans respectively replace the Company’s Amended and Restated 1996 Stock Option Plan, which would otherwise have expired in 2006; and the Company’s 1997 Employee Stock Purchase Plan, which would have otherwise expired in 2007.

    As of May 31, 2016, out of the 5,083,000 shares authorized for grant under the 2006 Equity Incentive Plan, approximately 3,201,000 shares were outstanding.

    The following tables summarize the Company’s stock option and RSUs transactions during fiscal 2016, 2015 and 2014 (in thousands, except per share data):

	Available
	Shares
Balances, May 31, 2013		1,737
Options granted		(908	)
Options terminated		420
Plan shares expired		(104	)
Balances, May 31, 2014		1,145
Additional shares reserved		860
Options granted		(1,253	)
Options terminated		93
Balances, May 31, 2015		845
Additional shares reserved		800
Options granted		(92	)
RSUs granted		(35	)
Options terminated		329
Balances, May 31, 2016		1,847

	Outstanding Options
				Weighted
	Number			Average		Aggregate
	of			Exercise		Intrinsic
	Shares			Price		Value
Balances, May 31, 2013	2,956		$	1.79	$	964
Options granted	908		$	1.64
Options terminated	(420	)	$	5.51
Options exercised	(442	)	$	1.17
Balances, May 31, 2014	3,002		$	1.31	$	2,913
Options granted	1,253		$	2.38
Options terminated	(93	)	$	2.30
Options exercised	(476	)	$	1.33
Balances, May 31, 2015	3,686		$	1.66	$	2,946
Options granted	92		$	2.12
Options terminated	(329	)	$	1.93
Options exercised	(248	)	$	1.34
Balances, May 31, 2016	3,201		$	1.66	$	189
Options exercisable and expected to be exercisable at May 31, 2016	3,137		$	1.66	$	186

  The options outstanding and exercisable at May 31, 2016 were in the following exercise price ranges (in thousands, except per share data):

	Options Outstanding			Options Exercisable
	at May 31, 2016			at May 31, 2016
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	579	2.82	$0.68	578	2.82	$0.68
$1.09-$1.40	1,143	3.12	$1.28	987	2.96	$1.28
$1.73-$2.06	248	4.70	$1.88	221	4.75	$1.90
$2.10-$2.71	1,231	5.45	$2.43	604	5.33	$2.46
$0.59-$2.71	3,201	4.08	$1.66	2,390	3.69	$1.49	$189

    The total intrinsic values of options exercised were $185,000, $540,000 and $520,000 during fiscal 2016, 2015 and 2014, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2016 was 4.08 years.

    Options to purchase 2,390,000, 2,189,000 and 1,892,000 shares were exercisable at May 31, 2016, 2015 and 2014, respectively. These exercisable options had weighted average exercise prices of $3.69, $1.43 and $1.22 as of May 31, 2016, 2015 and 2014, respectively.

    During the fiscal year ended May 31, 2016, RSUs were granted to an employee for 35,000 shares. The market value on the date of the grant was $2.16 per share. The RSUs are performance based and immediately vest upon attainment of goals established and have a term of one year. The 35,000 RSUs were outstanding and fully vested at May 31, 2016. The intrinsic value of the outstanding RSUs at May 31, 2016 was $35,000. There were no RSUs granted during fiscal 2015 or 2014.