Commitments and Contingencies

6 Months Ended

Nov. 30, 2013

Commitments and Contingencies

Note 11: Commitments and Contingencies

We are subject to legal proceedings and business disputes involving ordinary routine legal proceedings and claims incidental to our business. The ultimate legal and financial liability with respect to such matters generally cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements or awards against us. Estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, we may be required to record either more or less litigation expense. We are not involved in any pending or threatened legal proceedings that we believe could reasonably be expected to have a material adverse effect on our financial condition, results of operations or cash flows.

In fiscal 2010, we became a reseller for Agilent Technologies Inc. (“Agilent”), the largest T&M equipment manufacturer in North America, which provides us with the exclusive right to sell Agilent’s more complex T&M equipment to small and medium size customers (who previously purchased directly from Agilent) in the United States and Canada through January 31, 2014. Sales of new T&M equipment represent approximately 65.2% and 68.9% of our sales of equipment and other revenues for the six months ended November 30, 2013 and 2012, respectively. We are in negotiations with Agilent to extend the reseller agreement another two years, however as of January 3, 2014 the negotiations have not been finalized. We have renewed the Agilent reseller agreement twice since we entered into the reseller agreement with Agilent in 2009. If we are unable to renew our reseller agreement with Agilent on acceptable terms or at all, our T&M equipment sales business and stock price may be materially and adversely affected.