11. CAPITAL STOCK

12 Months Ended

May 31, 2017

Capital Stock

CAPITAL STOCK

11. CAPITAL STOCK:

EQUITY INCENTIVE PLAN:

    In October 2006, the Company’s 2006 Equity Incentive Plan was approved by the shareholders, which provides 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.

    In October 2016, the Company’s 2016 Equity Incentive Plan was approved by the Company’s shareholders. The 2016 Equity Incentive Plan replaced our 2006 Equity Incentive Plan, which was scheduled to expire in October 2016, and will continue in effect until 2026. A total of 2,238,000 shares of common stock have been reserved for issuance under the Company’s 2016 Equity Incentive Plan, which includes 1,438,000 shares that remained available for issuance under the 2006 Equity Incentive Plan. See the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 for further information regarding the 2016 Equity Incentive Plan.

    As of May 31, 2017, out of the 5,275,000 shares authorized for grant under the 2006 Equity Incentive Plan and 2016 Equity Incentive Plan, 3,105,000 stock options and RSUs were outstanding.

    The following tables summarize the Company’s stock option and RSU transactions during fiscal 2017, 2016 and 2015 (in thousands):

	Available
	Shares
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
Additional shares reserved	2,238
Options granted	(368	)
RSUs granted	(157	)
Options terminated	55
Plan shares expired	(1,446	)
Balances, May 31, 2017	2,169

    The following table summarized the stock option transactions during fiscal 2017, 2016 and 2015 (in thousands, except per share data):

	Outstanding Options
			Weighted
	Number		Average		Aggregate
	of		Exercise		Intrinsic
	Shares		Price		Value
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 granted	368		$	1.83
Options terminated	(55	)	$	1.42
Options exercised	(440	)	$	1.35
Balances, May 31, 2017	3,074		$	1.73	$	8,763
Options exercisable and expected to be exercisable at May 31, 2017	3,030		$	1.72	$	8,654

    The options outstanding and exercisable at May 31, 2017 were in the following exercise price ranges (in thousands, except per share data):

			Options Outstanding					Options Exercisable
			at May 31, 2017					at May 31, 2017
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	514		1.77	$	0.66	514		1.77	$	0.66
	$	1.09-$1.40	784		2.41	$	1.28	773		2.40	$	1.28
	$	1.68-$2.06	542		5.12	$	1.77	287		4.26	$	1.85
	$	2.10-$2.81	1,234		4.53	$	2.44	848		4.46	$	2.46
	$	0.59-$2.81	3,074		3.63	$	1.73	2,422		3.21	$	1.63	$	7,148

    The total intrinsic values of options exercised were $810,000, $185,000 and $540,000 during fiscal 2017, 2016 and 2015, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2017 was 3.62 years.

    Options to purchase 2,422,000, 2,390,000 and 2,189,000 shares were exercisable at May 31, 2017, 2016 and 2015, respectively. These exercisable options had weighted average exercise prices of $3.21, $3.69 and $1.43 as of May 31, 2017, 2016 and 2015, respectively.

    During the fiscal year ended May 31, 2017, RSUs for 74,000 shares were granted to employees. The market value on the date of the grant of these RSUs was $1.68 per share. 42,000 RSUs became fully vested during the year ended May 31, 2017, and 32,000 RSUs were unvested at May 31, 2017. The intrinsic value of the unvested RSUs at May 31, 2017 was $145,000. 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 of these RSUs 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.

    During the fiscal year ended May 31, 2017, RSUs for 83,000 shares were granted to members of the Company’s Board of Directors. The weighted average market value on the date of the grant of these RSUs was $1.86 per share. All of these RSUs were fully vested at May 31, 2017. There were no RSUs granted to members of the Board of Directors during fiscal 2016 or 2015.