0001078782-14-000640.txt : 20140414 0001078782-14-000640.hdr.sgml : 20140414 20140414164345 ACCESSION NUMBER: 0001078782-14-000640 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20140228 FILED AS OF DATE: 20140414 DATE AS OF CHANGE: 20140414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTECH INC CENTRAL INDEX KEY: 0000354260 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042453033 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10665 FILM NUMBER: 14762939 BUSINESS ADDRESS: STREET 1: 650 SUFFOLK STREET STREET 2: SUITE 415 CITY: LOWELL STATE: MA ZIP: 01851 BUSINESS PHONE: 978-513-2700 MAIL ADDRESS: STREET 1: 650 SUFFOLK STREET STREET 2: SUITE 415 CITY: LOWELL STATE: MA ZIP: 01851 10-Q 1 f10q022814_10q.htm FORM 10-Q QUARTERLY REPORT FEBRUARY 28, 2014 Form 10-Q Quarterly Report February 28, 2014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 10-Q


  X .QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2014


      .TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________


Commission File Number

0-10665


SOFTECH, INC.

(Exact name of the Registrant as specified in its charter)


Massachusetts

 

04-2453033

(State or other jurisdiction of incorporation or organization)

 

(I.R.S Employer Identification No.)


650 Suffolk Street, Suite 415, Lowell, MA 01854

(Address of principal executive offices and zip code)


Telephone (978) 513-2700

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X . No      .


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  X . No      .


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes      . No  X .


The number of shares outstanding of registrant’s common stock at April 8, 2014 was 875,135 shares.






SOFTECH, INC.


INDEX


PART I.

Financial Information

Page Number

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Consolidated Condensed Balance Sheets – February 28, 2014 (unaudited) and May 31, 2013

3

 

 

 


Consolidated Condensed Statements of Operations – Three Months Ended February 28, 2014 and 2013 (unaudited)

5

 

 

 

 

Consolidated Condensed Statements of Operations – Nine Months Ended February 28, 2014 and 2013 (unaudited)

6

 

 

 

 

Consolidated Condensed Statements of Comprehensive Income (Loss) – Three Months Ended February 28, 2014 and 2013 (unaudited)

7

 

 

 

 

Consolidated Condensed Statements of Comprehensive Income (Loss) – Nine Months Ended February 28, 2014 and 2013 (unaudited)

8

 

 

 

 

Consolidated Condensed Statements of Cash Flows – Nine Months Ended February 28, 2014 and 2013 (unaudited)

9

 

 

 

 

Notes to Consolidated Condensed Financial Statements (unaudited)

10

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

32

 

 

 

Item 4.

Controls and Procedures

32

 

 

 

PART II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

33

 

 

 

Item 1A.

Risk Factors

33

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

 

 

Item 3.

Defaults Upon Senior Securities

35

 

 

 

Item 4.

Mine Safety Disclosures

35

 

 

 

Item 5.

Other Information

35

 

 

 

Item 6.

Exhibits

35

 

 

 




2



PART I – FINANCIAL INFORMATION


Item 1. Financial Statements.


SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS


 

 

(in thousands)

 

 

(unaudited)

 

 

 

 

February 28,

2014

 

May 31,

2013

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

1,292

$

1,188

Restricted cash

 

35

 

100

Accounts receivable (less allowance for uncollectible accounts of

$29 as of February 28, 2014 and May 31, 2013)

 

1,202

 

895

Receivable from product line sale

 

320

 

-

Prepaid and other assets

 

55

 

299

Total current assets

 

2,904

 

2,482

 

 

 

 

 

Property and equipment, net

 

103

 

61

Goodwill

 

992

 

4,249

Capitalized software development costs, net

 

362

 

376

Capitalized patent costs, net

 

105

 

101

Debt issuance costs, net

 

210

 

250

Notes receivable and other assets

 

260

 

195

 

 

 

 

 

TOTAL ASSETS

$

4,936

$

7,714

 

 

 

 

 

LIABILITIES, REDEEMABLE COMMON STOCK

AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Accounts payable

$

690

$

137

Accrued expenses

 

425

 

602

Other current liabilities

 

114

 

89

Deferred maintenance revenue

 

1,405

 

2,147

Current portion of capital lease

 

19

 

13

Current portion of debt

 

964

 

-

 

 

 

 

 

Total current liabilities

 

3,617

 

2,988

 

 

 

 

 

Capital lease, net of current portion

 

52

 

39

Long-term debt, net of current portion

 

-

 

2,700

 

 

 

 

 

Total liabilities

 

3,669

 

5,727

 

 

 

 

 



3




Commitments

 

 

 

 

 

 

 

 

 

Redeemable common stock, $0.10 par value, 50,000 shares

issued and outstanding at February 28, 2014 and May 31, 2013

 

275

 

275

 

 

 

 

 

Shareholders’ equity :

 

 

 

 

Common stock, $0.10 par value 20,000,000 shares authorized,

875,135 and 1,045,135 issued and outstanding at February 28, 2014

and May 31, 2013, respectively

 

100

 

100

Capital in excess of par value

 

27,314

 

27,369

Accumulated deficit

 

(25,918)

 

(25,333)

Accumulated other comprehensive loss

 

(504)

 

(424)

Total shareholders’ equity

 

992

 

1,712

 

 

 

 

 

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY

$

4,936

$

7,714


See accompanying notes to unaudited consolidated financial statements.




4



SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)


 

 

(in thousands, except for share and per share data)

 

 

For the Three Months Ended

 

 

February 28,

 

February 28,

 

 

2014

 

2013

 

 

 

 

 

Revenue:

 

 

 

 

   Products

$

426

$

244

   Services

 

916

 

1,215

Total revenue

 

1,342

 

1,459

 

 

 

 

 

Cost of revenue:

 

 

 

 

   Products

 

241

 

38

   Services

 

325

 

293

Total cost of revenue

 

566

 

331

 

 

 

 

 

Gross margin

 

776

 

1,128

 

 

 

 

 

Research and development expenses

 

276

 

231

Selling, general and administrative expenses

 

835

 

848

Gain on sale of product line

 

(64)

 

-

 

 

 

 

 

Operating income (loss)

 

(271)

 

49

 

 

 

 

 

Interest expense

 

10

 

63

Other income

 

(6)

 

-

 

 

 

 

 

Net loss

$

(275)

$

(14)

 

 

 

 

 

Basic and diluted net loss per share:

$

(0.31)

$

(0.01)

 

 

 

 

 

Weighted average common shares outstanding-

basic and diluted

 

875,135

 

1,039,302


See accompanying notes to unaudited consolidated financial statements.



5



SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)


 

 

(in thousands, except for share and per share data)

 

 

For the Nine months Ended

 

 

 

 

 

February 28,

 

February 28,

 

 

2014

 

2013

 

 

 

 

 

Revenue:

 

 

 

 

   Products

$

1,042

$

936

   Services

 

3,089

 

3,574

   Royalties from sale of patents

 

-

 

290

Total revenue

 

4,131

 

4,800

 

 

 

 

 

Cost of revenue:

 

 

 

 

   Products

 

302

 

88

   Services

 

897

 

924

Total cost of revenue

 

1,199

 

1,012

 

 

 

 

 

Gross margin

 

2,932

 

3,788

 

 

 

 

 

Research and development expenses

 

915

 

799

Selling, general and administrative expenses

 

2,582

 

2,391

Gain on sale of product line

 

(155)

 

-

 

 

 

 

 

Operating income (loss)

 

(410)

 

598

 

 

 

 

 

Interest expense

 

203

 

198

Other income

 

(28)

 

(11)

 

 

 

 

 

Net income (loss)

$

(585)

$

411

 

 

 

 

 

Basic and diluted net income (loss) per share:

$

(0.66)

$

0.41

 

 

 

 

 

Weighted average common shares outstanding-basic

 

883,853

 

1,009,567

Weighted average common shares outstanding-diluted

 

883,853

 

1,010,842


See accompanying notes to unaudited consolidated financial statements.




6



SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


 

 

(in thousands, except for share

and per share data)

 

 

For the Three Months Ended

 

 

 

 

 

February 28,

 

February 28,

 

 

2014

 

2013

 

 

 

 

 

Net loss

$

(275)

$

(14)

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

   Foreign currency translation adjustment

 

(35)

 

3

 

 

 

 

 

Total other comprehensive income (loss)

 

(35)

 

3

  

 

 

 

 

Comprehensive loss

$

(310)

$

(11)


See accompanying notes to unaudited consolidated financial statements.



7



SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


 

 

(in thousands, except for share

and per share data)

 

 

For the Nine months Ended

 

 

 

 

 

February 28,

 

February 28,

 

 

2014

 

2013

 

 

 

 

 

Net income (loss)

$

(585)

$

411

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

   Foreign currency translation adjustment

 

(80)

 

9

 

 

 

 

 

Total other comprehensive income (loss)

 

(80)

 

9

  

 

 

 

 

Comprehensive income (loss)

$

(665)

$

420

 

 

 

 

 


See accompanying notes to unaudited consolidated financial statements.



8



SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


 

 

( in thousands)

 

 

For the Nine months Ended

 

 

 

 

 

February 28,

 

February 28,

 

 

2014

 

2013

Cash flows from operating activities:

 

 

 

 

   Net income (loss)

$

(585)

$

411

Adjustments to reconcile net income to net cash provided

by operating activities:

 

 

 

 

   Depreciation and amortization expense

 

170

 

161

   Gain on sale of product line

 

(155)

 

-

   Stock-based compensation

 

6

 

6

   Non-cash interest expense

 

15

 

-

   Change in fair value of warrant liability

 

(32)

 

-

Change in current assets and liabilities:

 

 

 

 

   Accounts receivable

 

(243)

 

(420)

   Prepaid expenses and other assets

 

179

 

(228)

   Restricted cash

 

65

 

217

   Accounts payable, accrued expenses and other liabilities

 

401

 

(187)

   Deferred maintenance revenue

 

(135)

 

-

Net cash used in operating activities

 

(314)

 

(40)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

   Proceeds from sale of product line, net of direct cash expenses

 

2,432

 

-

   Capital expenditures

 

(39)

 

(2)

   Capitalized software development costs

 

(57)

 

(207)

   Capitalized patent costs

 

(4)

 

(6)

Net cash provided by (used in) investing activities

 

2,332

 

(215)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

   Cost of treasury shares

 

(63)

 

-

   Capitalized debt issuance costs

 

(32)

 

-

   Repurchase of warrant liability

 

(19)

 

-

   Proceeds from issuance of redeemable common stock,

net of issuance costs

 

-

 

223

   Repayment under debt agreements

 

(1,700)

 

(855)

   Borrowing under debt agreements

 

-

 

300

   Repayments under capital lease

 

(11)

 

(7)

Net cash used in financing activities

 

(1,825)

 

(339)

 

 

 

 

 

Effect of exchange rates on cash

 

(89)

 

1

Increase (decrease) in cash and cash equivalents

 

104

 

(593)

Cash and cash equivalents, beginning of period

 

1,188

 

595

Cash and cash equivalents, end of period

$

1,292

$

2

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

    Interest paid

$

205

$

110

    Taxes paid

$

14

$

2

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

    Issuance of warrants

$

51

$

-

    Purchase of property and equipment under capital lease

$

30

$

53

    Accretion of redeemable common stock

$

-

$

112


See accompanying notes to unaudited consolidated financial statements




9



SOFTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


A.

Description of the Business and Basis of Presentation


SofTech, Inc. (the “Company”) was formed in Massachusetts on June 10, 1969. The Company is engaged in the development, marketing, distribution and support of computer software solutions that serve the Product Lifecycle Management (“PLM”) industry. The Company’s operations are organized geographically with offices in the U.S. and European sales and customer support offices in Germany and Italy. The Company also has resellers in Asia and Europe.


Since the Recapitalization Transaction described hereunder, the Company has also been actively engaged in acquiring and filing new U.S. patents, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance our value. It is expected that this kind of activity will become an increasing area of focus and investment over the coming years.


The consolidated financial statements of the Company include the accounts of SofTech, Inc. and its wholly-owned subsidiaries, Information Decisions, Inc., Workgroup Technology Corporation, SofTech, GmbH and SofTech, Srl. All significant intercompany accounts and transactions have been eliminated in consolidation.


The consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission without audit; however, in the opinion of management, the information presented reflects all adjustments which are of a normal recurring nature and elimination of intercompany transactions which are necessary to present fairly the Company’s financial position and results of operations. It is recommended that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2013.


CADRA Sale


On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”), to Mentor Graphics Corporation (“Mentor”), pursuant to an Asset Purchase Agreement dated August 30, 2013 (the “Asset Purchase Agreement”).  The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the “Earn-Out Agreement”).


The Company will continue to offer the CADRA technology as a reseller throughout Europe (except Germany) and for a one year period from the closing of the transaction to Sikorsky Aircraft, the largest CADRA user in the United States.  Due to the significant continued involvement in the sale and support of the CADRA product line, the transaction does not qualify for presentation as discontinued operations.


Recapitalization Transaction


In March 2011, the current management team (CEO and VP of Business Development) completed a transaction (the “Recapitalization Transaction”) in which a group of eight investors purchased 39% of the Company’s common stock, arranged for debt facilities of $3.2 million and negotiated for a $7.6 million debt reduction from Greenleaf Capital, Inc. (“Greenleaf”), at that time, the Company’s sole lender and largest shareholder. As part of that Recapitalization Transaction, Greenleaf accepted a payment of $2.7 million in cash and note for $250,000 in full satisfaction of the $10.6 million of indebtedness. The former CEO resigned after a short transition period, a new four person Board of Directors was appointed and the existing Board members resigned. In addition, Greenleaf gave the Company’s new Board of Directors voting control over its shares for a three year period immediately following the Recapitalization Transaction.



10



Refinancing of Debt


On December 5, 2013, the Company entered into an amended and restated loan agreement (the “Amended Loan Agreement No. 2”) between the Company, and Prides Crossing Capital Funding, L.P., (the “Lender”) whereby the parties agreed to amend and restate the Company’s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the “Term Note”) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.


The amended and restated Term Note matures on January 1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.


Stock Purchase Agreement with Greenleaf Capital and affiliates


In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note K to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2013. The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company’s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected by Greenleaf, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the purchase date.


B.

Significant Accounting Policies


USE OF ESTIMATES


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, and the valuation of long term assets including goodwill, intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates.


REVENUE RECOGNITION


The Company follows the provisions of the Accounting Standards Codification (“ASC”) 985, Software for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, and a fixed fee and collectability has been determined. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (“VSOE”) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985. Revenue from customer maintenance support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model.



11



The Company follows the provisions of ASC 605, Revenue Recognition for transactions that do not involve the licensing of software or software support services as in the case of the recent sale of our patents. Revenue from the sale of patents is recorded when persuasive evidence of an arrangement exists, delivery has taken place and a fixed fee and collectability has been determined. These conditions are no different from those when we license software. For multiple element arrangements, however, under ASC 605, total fees are allocated to each of the elements based upon the relative selling price method. Under that method the allocation of fees to the undelivered elements is based on VSOE, or if it doesn’t exist, then based on third party evidence of selling price. If neither exists, then the allocation is based on management’s best estimate of the selling price.


SOFTWARE DEVELOPMENT COSTS


The Company accounts for its software development costs in accordance with 985-20, Costs of Computer Software to Be Sold, Leased or Marketed.  Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.  Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.  Such costs are amortized using the straight-line method over the estimated economic life of the product, generally three years.  The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis.  Judgment is required in determining when technological feasibility of a product is established as well as its economic life.


During the nine months ended February 28, 2014, the Company capitalized approximately $57,000 of software development costs related to new products.  The Company did not capitalize software development costs during the three months ended February 28, 2014.  During the three and nine months ended February 28, 2013, the Company capitalized approximately $49,000 and $207,000, respectively. Amortization expense related to capitalized software development costs for the three and nine months ending February 28, 2014 was approximately $23,000 and $71,000, respectively, as compared to approximately $20,000 and $48,000 for the comparable periods in the prior fiscal year.  


DEBT ISSUANCE COSTS


The Company capitalizes the direct costs associated with entering into debt agreements and amortizes those costs over the life of the debt agreement.  The December 2013 refinancing was considered a modification per ASC 470-50, Debt Modifications and Extinguishment. The Company capitalized no additional costs in connection with the refinancing. The Company had approximately $238,000 in unamortized debt issuance costs remaining, relating to the old arrangement at the time of the transaction. The total debt issuance costs are being amortized over the term of the new arrangement in accordance with ASC 470-50. Unamortized debt issuance costs related to the Company’s previous debt agreement as of May 10, 2013 totaled approximately $108,000 and were expensed in Q4 of fiscal 2013. Amortization expense related to debt issuance costs for the three and nine months ending February 28, 2014 were approximately $22,000 and $81,000, respectively, as compared to approximately $29,000 and $88,000 for the comparable periods in the prior fiscal year.


ACCOUNTING FOR GOODWILL


The Company accounts for goodwill pursuant to the provisions of the ASC 350,  Intangibles – Goodwill and Other. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement’s criteria.


The Company operates in a single reporting unit.  Goodwill has been allocated to the CADRA product line based upon the estimated fair value of the CADRA product line based on the transaction with Mentor as compared to the estimated fair value of the Company as a whole. Goodwill allocated to the CADRA product line included in the derivation of the gain on sale was approximately $3.2 million.


As of May 31, 2013, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the nine months ended February 28, 2014 to warrant an interim impairment test.



12



CAPITALIZED PATENT COSTS


Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected.  Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs for the three and nine month periods ending February 28, 2014 were approximately $2,000 and $4,000, respectively, as compared to $ - and $6,000, respectively, for the three and nine month periods ending February 28, 2013.


LONG-LIVED ASSETS


The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of February 28, 2014, the Company does not have any long-lived assets it considers to be impaired.


STOCK BASED COMPENSATION


Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award. The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.


In May 2011, the 2011 Equity Incentive Plan (the “2011 Plan”) was approved by the Company’s shareholders, pursuant to which 150,000 shares of our common shares were reserved for issuance. Additionally, any future shares subject to any award under the 2011 Plan that expire, is terminated unexercised or is forfeited will be available for grant under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of February 28, 2014, 9,306 options were awarded and outstanding under the 2011 Plan.


The following table summarizes option activity under the 2011 Plan:


 

 

 

Weighted

 

Weighted-

 

 

 

 

 

Average

 

Average

 

 

 

Number of

 

Exercise Price

 

Remaining

 

Aggregate

 

Options

 

Per Share

 

Life (in years)

 

Intrinsic Value

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2012

10,000

$

2.40

 

9.02

$

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2013

10,000

 

2.40

 

8.02

 

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

694

 

2.40

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at February 28, 2014

9,306

$

2.40

 

4.00

$

-

 

 

 

 

 

 

 

 

Exercisable at February 28, 2014

8,750

$

2.40

 

3.77

$

-





13



The Company determined the volatility for options granted using the historical volatility of the Company’s common stock. The expected life of options has been determined utilizing the “simplified” method as prescribed in ASC 718 Compensation, Stock Compensation. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.


For each of the three and nine month periods ended February 28, 2014 and 2013, the Company expensed approximately $2,000 and $6,000, respectively, of stock-based compensation.  


REDEEMABLE COMMON STOCK


During the year ending May 31, 2013, the Company issued 50,000 shares of common stock, $.10 par value (the “Common Stock”) at a purchase price of $5.00 per share to accredited investors (collectively, the “Investors”) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the “Agreement”) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitles the Investors to a fee of $6,000 (the “Fee”) to be paid in six equal quarterly installments during the eighteen month period (the “Payment Period”) following the investment.  The Agreement also provides the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the “Put Option”) for $5.50 per share in cash for a 30 day period following the Payment Period.


The Company first assessed the redeemable Common Stock to determine if the instrument should be accounted for as a liability in accordance with ASC 480. In that the Put Option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed the Put Option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, Derivatives and Hedging, and concluded that the Put Option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the Common Stock issued pursuant to the Agreement in accordance with ASC 480-10-S99-3A, Classification and Measurement of Redeemable Securities, which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity. The 50,000 shares of Common Stock issued pursuant to the Agreement were recorded as redeemable common stock at an initial carrying value of $163,000. This amount is equal to the gross proceeds of $250,000, less $27,000 in issuance costs related to legal fees and the $60,000 Fee, which has been included in other liabilities. The Company elected to record the Common Stock at its redemption value of $275,000 immediately and accordingly recorded accretion of $112,000 to additional paid in capital during fiscal year 2013.


FOREIGN CURRENCY TRANSLATION


The functional currency of the Company’s foreign operations (Germany and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). Foreign currency gains and losses arising from transactions were included in the statements of operations. For the three and nine month periods ended February 28, 2014, the Company recorded a net gain from foreign currency related transactions of approximately $6,000, and $28,000, respectively, as compared to approximately $- and $11,000 for the comparable periods in the prior fiscal year, to Other (income) expense in the Consolidated Condensed Statements of Operations.


INCOME TAXES


The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.




14



NET INCOME (LOSS) PER COMMON SHARE


Basic and diluted net income (loss) per share are computed by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income (loss) by the weighted-average number of common and equivalent dilutive common shares outstanding.  For periods in which losses are reported potentially dilutive common stock equivalents are excluded from the calculation of diluted loss per share because the effect is antidilutive.


The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:


 

 

For the Three Months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net loss available to common shareholders

$

(275)

$

(14)

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

875,135

 

1,039,302

Incremental shares from the assumed exercise of

 

 

 

 

      dilutive stock options

 

-

 

-

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

875,135

 

1,039,302

 

 

 

 

 


 

 

For the Nine months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net income (loss) available to common shareholders

$

(585)

$

411

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

883,853

 

1,009,567

Incremental shares from the assumed exercise of dilutive stock options

 

-

 

1,275

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

883,853

 

1,010,842


For the three and nine month periods ended February 28, 2014, 9,306 options to purchase common shares were anti-dilutive and were excluded from the above calculation. For the three months ended February 28, 2013, 10,000 options to purchase common shares were anti-dilutive and were excluded from the above calculation and for the nine month periods ended February 28, 2013, all options were included in the above calculation.  




15



FAIR VALUE OF FINANCIAL INSTRUMENTS


The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable and notes payable. The estimated fair values have been determined through information obtained from market sources and management estimates.  The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity. 


C.

Segment Information


The Company operates in one reportable segment and is engaged in the development, marketing, distribution and support of computer aided design and product data management and collaboration computer solutions. The Company’s operations are organized geographically with offices in the U.S. and foreign offices in Germany and Italy. Components of revenue and long-lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):


 

 

Three Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

1,077

$

1,148

Europe

 

318

 

358

Asia

 

-

 

157

Eliminations

 

(53)

 

(204)

Consolidated Total

$

1,342

$

1,459

 

 


Nine Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

3,335

$

3,561

Europe

 

922

 

1,293

Asia

 

493

 

444

Eliminations

 

(619)

 

(498)

Consolidated Total

$

4,131

$

4,800


Long Lived Assets:

 

As of February 28,

2014

 

As of May 31,

2013

North America

$

1,989

$

5,119

Europe

 

43

 

113

Consolidated Total

$

2,032

$

5,232


D.

Note Receivable


Joseph Mullaney, the Company’s CEO, was extended a non-interest bearing note in the amount of $134,000 related to a stock transaction in May, 1998. The note is partially secured by the Company stock acquired in that transaction. The Company has accounted for the note as a fixed arrangement.


E.

Sale of Patents


In June 2012, the Company sold to an unrelated third party (the “Buyer”) its rights, title and interests in three of its U.S. patents (the “Patents”) all entitled Method and System for Design and Drafting in exchange for a non-refundable, initial royalty payment of $200,000 (the “Initial Payment”). These Patents were derived from the Company’s development work related to the Company’s CADRA product line and the inventions are a key, time saving feature within that technology offering. The Company received a limited, non-exclusive, royalty-free license under the Patents to make, use, offer to sell, or sell the Company’s products or services.


In September 2012, the Patent agreement was amended to include two other U.S. patents (“Additional Patents”) both entitled Product Development System and Method Using Integrated Process and Data Management. These Additional Patents were derived from the development work related to the Company’s ProductCenter product line and are a core and essential capability within that product offering. The Company received a limited, non-exclusive, royalty-free license under the Additional Patents to make, use, offer to sell or sell the Company’s products or services. As a result of the amendment, the Initial Payment was increased by $100,000.



16



The agreement gives the Buyer complete control over what, if any, actions shall be taken in the future to monetize the Patents through licensing, sale, enforcement or other means. In the event whereby monies are derived from the Patents, the Company is due 30% of the net proceeds (the “Net Proceeds”), as defined in the agreement. The Initial Payment shall be reimbursable from Net Proceeds to the extent any are due. There can be no assurance that the Company will derive any additional monies from the Patents, however.


The sale of the Patents is a multiple element arrangement as defined under ASC 605 and, as such, the Company allocated the Initial Payment between the sale of the Patents that were delivered during the fiscal quarter and support services that were undelivered. Support services include being available to the Buyer to assist them should they require such assistance in licensing or pursuing other means of monetizing the Patents to third parties. The allocation of the Initial Payment to the patent and support services elements was based on management’s best estimate of the selling price of each element. The Initial Payment was allocated as follows: Patents - $290,000; and Support Services - $10,000. Additional monies due the Company in the form of royalties from its 30% share of Net Proceeds will be recorded in the quarterly period in which the Buyer notifies the Company such payments are due. Such notification and payment, if any, are due thirty calendar days after the end of each calendar quarter. The revenue allocated to support services was recognized during the three months ended February 28, 2014 as all services had been performed. There can be no assurance that the Company will derive any other monies from the Additional Patents, however.


The Company retained its U.S. patent applications that it acquired or filed since the Recapitalization Transaction in March 2011. These patent applications were not included in the above described agreement. The Company expects to be actively engaged with the U.S. Patent and Trademark Office for the foreseeable future with regard to those filings.


F.

Debt


On May 10, 2013, the Company entered into the Loan Agreement with Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., (“Lenders”).  The Loan Agreement provided for a $2.7 million, three-year term Loan with interest only until October 1, 2014.


On July 9, 2013, the Loan Agreement was amended (the “Amended Loan Agreement No. 1”) to allow the Company to repurchase 170,000 of its shares from Greenleaf (as described in Note G) and to increase the maximum ratio of indebtedness to EBITDA from 2.25:1 to 2.60:1 for the quarters ended May 31, 2013, August 31, 2013 and November 30, 2013. In consideration for entering into the Amended Loan Agreement No. 1, the Company issued the Lenders warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share. The warrants were to vest monthly over three years, with accelerated vesting under certain circumstances including if the Loan was repaid prior to maturity, and terminate if not exercised on or before July 9, 2020.


Upon issuance, the warrants did not meet the requirements for equity classification, because such warrants provide a cash-out election allowing the holder to a one time right to require the Company to repurchase all or a portion of the warrants.  Therefore these warrants were required to be accounted for as a liability.  Changes in fair value are recognized as either a gain or loss in the consolidated statement of operations under the caption “Other income.”


The Company determined the fair value of the warrants using the Black-Scholes valuation model.  The grant date fair value of the warrant of approximately $51,000 was recorded a liability, with a corresponding discount recorded on the debt.  The debt discount is being accreted through the remaining term of the Loan Agreement using the effective interest rate method.  


On December 5, 2013, the Company entered into an amended and restated loan agreement (the “Amended Loan Agreement No. 2”) between the Company, as borrower and Prides Crossing Capital Funding, L.P., (the “Lender”) whereby the parties agreed to amend and restate the Company’s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the “Term Note”) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrant to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.



17



The amended and restated Term Note matures on January 1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.


The Company agreed to secure all of its obligations under the Term Note by granting the Lender a first priority security interest in all of the Company’s assets, including the Company’s intellectual property and pledges of (i) one hundred percent (100%) of the Company’s equity interests in its domestic subsidiaries and (ii) sixty-five percent (65%) of the Company’s equity interests in its foreign subsidiaries.  In connection with the grant of the security interest in favor of the Lender in the Company’s intellectual property, the Company has entered into an intellectual property security agreement with the Lender and entered into a source code escrow agreement with the Lender and an independent third party.  In addition, the Company’s Chief Executive Officer has provided the Lender with a personal guaranty of up to $500,000 secured by his equity interests in the Company.


The Amended Loan Agreement No. 2 contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes in its business.  In addition, the Amended Loan Agreement No. 2 contains financial covenants by the Company that establish (i) a month-end minimum consolidated cash balance of $1.0 million of which no less than $750,000 must be held in the Company’s main operating account that is subject to a deposit account control agreement; (ii) a minimum of $750,000 of consolidated cash at all times; (iii) a quick ratio covenant, which provides that on the last day of each fiscal quarter the ratio of the Company’s cash plus accounts receivable divided by accounts playable plus accrued expenses shall not be less than 2.7:1; and (iv) a covenant that provides that the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for Q3 and Q4 of fiscal 2014 shall not exceed a loss of $200,000 for each of those fiscal quarters and shall be greater than positive EBITDA of $100,000 for each subsequent fiscal quarter. The Amended Loan Agreement No. 2 also imposes limits on capital expenditures for each fiscal year during the term of the Amended Loan Agreement No. 2. As part of the Amended Loan Agreement No. 2 the Company, the Lender and First Republic Bank entered into a deposit account control agreement pursuant to which the Lender will perfect its security interest in the assets held in the Company’s main operating account at First Republic Bank.


The Amended Loan Agreement No. 2 provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy.  Upon an event of default relating to insolvency, bankruptcy or receivership, the amounts outstanding under the Amended Loan Agreement No. 2 will become immediately due and payable and the Lender commitment will be automatically terminated.  Upon the occurrence and continuation of any other event of default, the Lender may accelerate payment of all obligations and terminate the Lender’s commitments under the Amended Loan Agreement No. 2.


G.

Stock Purchase Agreement


In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note G to the consolidated financial statements as of May 31, 2013.  The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company’s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the transaction date.




18




H.

CADRA Sale


On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluded cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services, to Mentor, pursuant to an Asset Purchase Agreement dated August 30, 2013.  The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business (the “Earn-Out Payments”), subject to the terms of the Earn-Out Agreement dated August 30, 2013.  


The Company will continue to sell and support the CADRA technology throughout Europe (except Germany) and, for a one year period from the closing, will retain the rights to sell and support the technology to the largest U.S. CADRA user, Sikorsky Aircraft.


The transaction generated a gain during the second quarter of fiscal 2014 which was composed of the following (000’s):


Proceeds from the sale of the CADRA technology

$

3,200

Liabilities assumed by Mentor related to deferred maintenance obligations

 

607

Professional fees and other expenses related to the transaction

 

(448)

Goodwill allocated to the CADRA product line

 

(3,261)

Net book value of equipment transferred in the sale

 

(7)

Gain on sale of CADRA product line

$

91


Any additional Earn-Out Payments received by the Company will be recorded during the periods in which Mentor reports amounts due under the Earn-Out Agreement so long as collectability has been determined. During the quarter ended February 28, 2014, the Company recorded a gain of $64,000 under the Earn-Out Agreement bringing the total gain through February 28, 2014 to approximately $155,000.


I.

Subsequent Events


The Company has evaluated all events and transactions that occurred after the balance sheet and through the date that the financial statements were available to be issued.  



19



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


This report includes forward-looking statements. These forward-looking statements are often identified by words such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions. These statements are only predictions and involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed. You should not place any undue reliance on these forward-looking statements.


You should be aware that our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including our ability to:


·

generate sufficient cash flow from our operations or other sources to fund our working capital needs and growth initiatives;

·

maintain good relationships with our lender;

·

comply with the covenant requirements of our loan agreement;

·

successfully introduce and attain market acceptance of any new products and/or enhancements of existing products;

·

attract and retain qualified personnel;

·

prevent obsolescence of our technologies;

·

maintain agreements with our critical software vendors;

·

secure renewals of existing software maintenance contracts, as well as contracts with new maintenance customers; and

·

secure new business, both from existing and new customers.


The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. References in this prospectus to the “Company,” “we,” “our,” and “us” refer to the registrant, SofTech, Inc., and its wholly owned subsidiaries.


The following discussion and results of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included in the previously filed Form 10-K.  This discussion includes forward-looking statements that involve risk and uncertainties. 


Overview


We operate in one reportable segment and are engaged in the development, marketing, distribution and support of computer software solutions that enable companies to manage the entire lifecycle of their products from conception through design and manufacture, to service and disposal, all of which is known in the industry as Product Lifecycle Management (“PLM”). These solutions include software technology offerings for Computer Aided Design (“CAD”), Product Data Management (“PDM”) and Collaboration technologies, all of which fit under the broadly defined PLM industry. Pursuant to the terms of the sale of the CADRA product line on October 18, 2013, we will continue to sell and support that technology in certain limited markets. Our operations are organized geographically in the U.S. and Europe. We have sales and customer support offices in the U.S., Germany and Italy. We also operate through resellers in Europe and Asia. Components of revenue and long-lived assets by geographic location are outlined in Note E to the consolidated financial statements for the fiscal year ended May 31, 2013.


Since the Recapitalization Transaction described in Note A to the condensed Consolidated Financial Statements herein, the Company has also been actively engaged in acquiring and filing new patent applications, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance our value. It is expected that this kind of activity will become an increasing area of focus and investment over the coming years.


Revenue from our ProductCenter technology has been experiencing year over year revenue declines for six consecutive fiscal years due to several factors. In July 2007, Parametric Technology Corporation “PTC” informed us that it would not renew its partnership agreement with us when the agreement expired in January 2008.  We had been a member of the PTC partnership program for 12 years. The PTC partnership agreement, among other things, provided us with the right to distribute certain information that allowed for our technology to directly interface with PTC’s proprietary CAD tools. The non-renewal has essentially prevented us from marketing our ProductCenter solution to new customers that utilize PTC’s technology and has negatively impacted our product revenue from this technology offering.  In addition to the PTC partnership termination, ProductCenter revenue has been negatively affected by: (i) an increased number of competitive offerings in the marketplace, (ii) elongation of purchase decisions by customers of a technology that already has a long sales cycle, and (iii) uncertain economic conditions. Since PTC’s decision we have focused on offering ProductCenter to the mid-range CAD market and we are exploring other opportunities to broaden the addressable market for this product.



20



For more than a decade through fiscal 2010, we had also experienced revenue declines in our CADRA product line. CADRA, which we acquired in 1998, is a 2D technology that was first introduced in the early 1980’s. The revenue declines were due to the age of the product, the introduction of robust 3D solutions for less than $5,000 per unit and the dominance of AutoCAD in the 2D market, a product offered by Autodesk. However, in fiscal years 2011 and 2012 the CADRA revenue increased as compared to the immediately preceding fiscal year primarily driven by our existing non-maintenance CADRA customers that have had to repurchase licenses due to the upgrade of their operating system. Older versions of CADRA do not function properly on the Windows 7 operating system. Fiscal 2013 CADRA revenue declined by about 1% as compared to fiscal 2012.


Refinancing of Debt


In May 2013, the Company entered into a new three year, $2.7 million loan agreement (the “Loan Agreement”) that replaced the Company’s prior debt facilities that were to expire in February 2014. The Loan Agreement required quarterly principal payments of $135,000 beginning on October 1, 2014 and carried a 14% interest rate due in arrears each calendar quarter beginning July 1, 2013.


On July 9, 2013, the Loan Agreement was amended (the “Amended Loan Agreement No. 1”) to allow the Company to repurchase 170,000 of its shares from Greenleaf and to increase the maximum ratio of indebtedness to EBITDA from 2.25:1 to 2.60:1 for the quarters ended May 31, 2013, August 31, 2013 and February 28, 2014. In consideration for entering into Amended Loan Agreement No. 1, the Company issued the Lenders warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share. The warrants vest monthly over three years, with accelerated vesting under certain circumstances including if the loan was repaid prior to maturity, and terminate if not exercised on or before July 9, 2020.


Furthermore, on December 5, 2013, the Loan Agreement was again amended (the “Amended Loan Agreement No. 2”) in accordance with a prior agreement with the Lenders in connection with their consent to the sale of the CADRA product line. The terms of Amended Loan Agreement No. 2 are detailed in Note F and in the Liquidity and Capital Resources section below.


CADRA Sale


On October 18, 2013, SofTech sold its CADRA product line to Mentor Graphics Corporation (“Mentor”) for a purchase price of $3.2 million (subject to any indemnification claim), plus potential earn-out payments of up to an additional $750,000 based on 10% of CADRA revenue generated by Mentor in the three year period following the closing (the “CADRA Sale”).


The assets sold related to the CADRA product line include (i) rights to, and interest in, all computer software; (ii) specified physical assets; (iii) all customer information; and (iv) purchase orders in backlog and customer support agreements. The liabilities to be assumed by Mentor are limited to customer support obligations.  Specifically excluded from the sale and retained by SofTech are all remaining assets and liabilities not specifically identified and all billed accounts receivable of the CADRA product line through the closing date.


We are in the process of restructuring our business subsequent to the CADRA Sale to enable us to successfully operate as a significantly smaller company and to seek new sources of revenue and possible new strategic initiatives.  We currently contemplate pursuing the activities described below and other strategic initiatives that the board of directors may subsequently determine are in the best interests of the shareholders.


Activities following the CADRA Sale


PLM Business  


Subsequent to the completion of the CADRA Sale, we will continue to offer our ProductCenter and Connector technologies to design and manufacturing companies. Our ProductCenter technology manages the engineering data and electronic files of discrete parts designed in third party proprietary design technologies offered primarily by SolidWorks, PTC and Autodesk. The Connector platform is a technology that allows for a direct interface between Aras Innovator a PLM solution which features modern, web-based technology, and various well-established CAD technologies. The Aras technology is offered under a subscription revenue model as is our Connector technology. We entered into a partnership agreement with Aras in 2012, pursuant to which we provide distribution and consulting services, as further described below.  For a description of the risks related to our PLM business, see “Risk Factors – Risks Related to Our Business” in our Form 10-K for fiscal year 2013.



21



Recently, SofTech has developed for one of its largest customers an easy to use product offering combining a third party analysis solution with a 2D solution that allows a mechanical design engineer to simulate the movement of his or her design with limited training. Giving the mechanical design engineer the ability to detect design flaws and correct them with this easy to use technology represents an advancement, we believe, and one we hope to capitalize on in the coming years. We will seek to further develop this solution and introduce it to our customers over the coming fiscal year.


Distribution Activity


In connection with the CADRA Sale, we entered into a distribution agreement with Mentor to market and support the CADRA technology throughout Europe (except Germany), for a minimum of one year following the sale, through its wholly-owned subsidiary in Italy, SofTech, Srl.  In addition, pursuant to the terms of the distribution agreement, for a period of one year from the closing, we will be the account representative for Sikorsky Aircraft, the largest CADRA user in the United States. The margin to be earned by SofTech for this distribution activity will be consistent with the margin earned by distributors in the industry.  In addition, we will continue to market and distribute third party technologies from Aras and SpaceClaim as we have since 2012.


Consulting


SofTech has been engaged in the PLM market since 1993. Our consulting group is composed of deeply experienced, long tenured experts solving very complex problems relating to data migration, customization, data control, access, version control, connectivity between proprietary systems and a myriad of other problems encountered by our customers. Our revenue from consulting activities for fiscal year 2013 was about $875,000, representing an increase of 19% over the prior year period.  For the first nine months of fiscal 2014, our consulting revenue increased by about 11% as compared to the same period in fiscal 2013. This increase in consulting revenue was driven partly by our new partnership agreement with Aras, a rapidly growing PLM company that is disrupting the status quo. We intend to continue to grow and invest in our consulting business following the CADRA Sale.


Exploring Strategic Initiatives


A core tenet of the management team’s strategy following the recapitalization transaction in 2011 has been to actively consider ways to monetize some or all of SofTech’s assets and to pursue new strategic initiatives, such as potential business combinations, sale transactions or strategic partnerships.


Developing Remaining Patent Estate.  The Company has filed three provisional patents and purchased the rights to one provisional patent since March 2011. These patents remain in process at the United States Patent and Trademark Office, and the Company intends to continue to pursue the resolution to these filings.  These patents generally relate to methods of accumulating buyers’ information in a database in ways that allow the information to be shared with sellers so as to allow the sellers to make targeted, relevant offers to the buyers. While these patents, which could generally be considered eCommerce related, pertain to technologies that are not directly related to our historical revenue producing business activities, we believe they may have applications in those areas.   


Analyzing the potential of the technologies described in these patents and the business case for us to invest in efforts to commercialize any of them is part of an ongoing evaluation. It is possible that our efforts will be limited to securing the patent awards and monetizing the patents as we did in fiscal year 2013 for our five patents in the PLM space. While many of these businesses would be new to us, we believe that we possess underlying competencies from our existing businesses, such as strong engineering and software capabilities especially in database technologies, and other attributes, such as numerous long-term client relationships with technology companies that may be complementary to developing new businesses around these technologies.  However, any investment by us to attempt to commercialize the technologies described in these patents could be costly and prove to be unsuccessful.


Strategic Transactions.  We will continue to evaluate business combinations and other sale opportunities.  We believe that, in addition to our remaining businesses and prospects described above, our status as a publicly traded company and tax attributes could make us an attractive strategic partner.  As of May 31, 2013, SofTech had approximately $20 million in federal tax attributes and approximately $7 million in state tax attributes. We expect to generate taxable income in fiscal year 2014 from the CADRA Sale, which we believe will be significantly or completely offset from federal and state taxation by use of these tax assets. We will continue to seek strategic transactions for the benefit of our shareholders, but there can be no assurances in this regard.




22



Other


Deferred CADRA Purchase Price.  The sale of the CADRA assets includes a contingent earn-out payment equal to 10% of Mentor’s revenue derived from the CADRA technology up to a maximum of $750,000 over the three year period following completion of the transaction. Therefore, SofTech has a direct financial interest in the continued success of the CADRA technology subsequent to the sale. These contingent payments are due on or before April 1, 2014, 2015, 2016 and 2017 based on the revenue recorded during Mentor’s fiscal years ending January 31, 2014, 2015, 2016 and 2017.  The Company received the first earn out payment on March 27, 2014.


Contingent Rights with Respect to Transferred Patents.  In addition to our technology offerings, the Company retained its financial interest in the patents sold to Acacia Research Group (“Acacia”) in June 2012. In December 2012, Acacia filed infringement lawsuits in East Texas against Dassault Systemes SolidWorks (“Solidworks”), Autodesk and Siemens seeking treble damages for the unauthorized use of the technology described in those patents. SofTech received $300,000 as a non-recoverable advance payment against 30% of the net proceeds received by Acacia. A trial date has been set for November 2015. We believe there are other technology companies other than the three that have been sued that are also using the ideas protected by these patents. Acacia has complete control with regard to actions it may take or not take with regard to enforcing these patents. SofTech has a contractual obligation to support Acacia in its legal proceedings.  


In July 2013, Solidworks filed a third party claim against SofTech in connection with the above described suit by Acacia against them. Solidworks alleges that SofTech promised an arrangement that would protect Solidworks from claims of infringement of the patents in question. Among other things, Solidworks is seeking reimbursement from SofTech of any amounts it may have to pay for infringing the patents, including legal fees. SofTech believes that Solidworks’ claims are without merit and intends to vigorously defend itself against them. In October, 2013, Solidworks’s motion for change of venue from East Texas to Massachusetts was granted.


The foregoing are the currently anticipated activities of the Company following the CADRA Sale.  There can be no assurances that our pursuit of these activities will be successful.  Furthermore, we may pursue other opportunities that we subsequently determine to be in the best interests of the Company.


Critical Accounting Policies and Significant Judgments and Estimates


The Securities and Exchange Commission (“SEC”) issued disclosure guidance for “critical accounting policies.” The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.


Our significant accounting policies are described in Note B to the consolidated financial statements for the fiscal year ended May 31, 2013 included in our previously filed Form 10-K. There have been no material changes to the accounting policies for the nine months ended February 28, 2014.


Results of Operations




23



Three and Nine months Ended February 28, 2014, as Compared to Three and Nine months Ended February 28, 2013


The table below presents the comparative income statements for the three month periods ended February 28, 2014 and February 28, 2013 along with the dollar and percentage change amounts for each revenue and expense item (expressed in thousands, except percentages):


 

 

February 28,

2014

 

February 28, 2013

 

Change in

$

 

Change in

%

Revenue:

 

 

 

 

 

 

 


Products

$

426

$

244

$

182

 

74.6%

Services

 

916

 

1,215

 

(299)

 

(24.6)

Total revenue

 

1,342

 

1,459

 

(117)

 

(8.0)

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Products

 

241

 

38

 

203

 

534.2

Services

 

325

 

293

 

32

 

10.9

Total cost of revenue

 

566

 

331

 

235

 

71.0

 

 

 

 

 

 

 

 

 

Gross margin

 

776

 

1,128

 

(352)

 

(31.2)

 

 

 

 

 

 

 

 

 

Research and development expenses

 

276

 

231

 

45

 

19.5

Selling, general and administration expenses

 

835

 

848

 

(13)

 

(1.5)

Gain on sale of product line

 

(64)

 

-

 

(64)

 

-

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(271)

 

49

 

(320)

 

(653.1)

 

 

 

 

 

 

 

 

 

Interest expense

 

10

 

63

 

(53)

 

(84.0)

 

 

 

 

 

 

 

 

 

Other income

 

(6)

 

-

 

(6)

 

-

 

 

 

 

 

 

 

 

 

Net loss

$

(275)

$

(14)

$

(261)

 

(1864.3)%




24



The table below presents the comparative income statements for the nine month periods ended February 28, 2014 and February 28, 2013 along with the dollar and percentage change amounts for each revenue and expense item (expressed in thousands, except percentages):


 

 

February 28,

2014

 

February 28, 2013

 

Change in

$

 

Change in

%

Revenue:

 

 

 

 

 

 

 


Products

$

1,042

$

936

$

106

 

11.3%

Services

 

3,089

 

3,574

 

(485)

 

(13.6)

Royalties from sale of patents

 

-

 

290

 

(290)

 

(100.0)

Total revenue

 

4,131

 

4,800

 

(669)

 

(13.9)

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Products

 

302

 

88

 

214

 

243.2

Services

 

897

 

924

 

(27)

 

(2.9)

Total cost of revenue

 

1,199

 

1,012

 

187

 

18.5

 

 

 

 

 

 

 

 

 

Gross margin

 

2,932

 

3,788

 

(856)

 

(22.6)

 

 

 

 

 

 

 

 

 

Research and development expenses

 

915

 

799

 

116

 

14.5

Selling, general and administration expenses

 

2,582

 

2,391

 

191

 

8.0

Gain on sale of product line

 

(155)

 

-

 

(155)

 

-

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(410)

 

598

 

(1,008)

 

(168.6)

 

 

 

 

 

 

 

 

 

Interest expense

 

203

 

198

 

5

 

2.5

 

 

 

 

 

 

 

 

 

Other income

 

(28)

 

(11)

 

(17)

 

(154.5)

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(585)

$

411

$

(996)

 

(242.3)%





25



The table below presents the relationship, expressed as a percentage, between income and expense items and total revenue, for the three month periods ended February 28, 2014 and February 28, 2013:


 

Items as a percentage

of revenue

 

February 28,

 

February 28,

 

2014

 

2013

Revenue:

 

 

 

Products

31.7%

 

16.7%

Services

68.3

 

83.3

Total revenue

100.0

 

100.0

 

 

 

 

Cost of revenue:

 

 

 

Products

18.0

 

2.6

Services

24.2

 

20.1

Total cost of revenue

42.2

 

22.7

 

 

 

 

Gross margin

57.8

 

77.3

 

 

 

 

Research and development expenses

20.6

 

15.8

Selling, general and administrative expenses

62.2

 

58.1

Gain on sale of product line

(4.8)

 

-

 

 

 

 

Operating income (loss)

(20.2)

 

3.4

 

 

 

 

Interest expense

0.7

 

4.3

Other income

(0.4)

 

-

 

 

 

 

Net loss

(20.5)%

 

(1.0)%





26



The table below presents the relationship, expressed as a percentage, between income and expense items and total revenue, for the nine month periods ended February 28, 2014 and February 28, 2013:


 

Items as a percentage

of revenue

 

February 28,

 

February 28,

 

2014

 

2013

Revenue:

 

 

 

Products

25.2%

 

19.5%

Services

74.8

 

74.5

Royalties from sale of patents

-

 

6.0

Total revenue

100.0

 

100.0

 

 

 

 

Cost of revenue:

 

 

 

Products

7.3

 

1.8

Services

21.7

 

19.3

Total cost of revenue

29.0

 

21.1

 

 

 

 

Gross margin

71.0

 

78.9

 

 

 

 

Research and development expenses

22.2

 

16.6

Selling, general and administrative expenses

62.5

 

49.8

Gain on sale of product line

(3.8)

 

-

 

 

 

 

Operating income (loss)

(9.9)

 

12.5

 

 

 

 

Interest expense

4.9

 

4.1

 

 

 

 

Other income

(0.7)

 

(0.2)

 

 

 

 

Net income (loss)

(14.1)%

 

8.6%

Revenue


Total revenue for the three month periods ended February 28, 2014 and 2013 was approximately $1.3 million and $1.5 million, respectively. The following table summarizes total revenue by product line for the three month periods ended February 28, 2014 and February 28, 2013 (in thousands, except percentages):


 

February 28,

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

650

$

793

$

(143)

 

(18.0)%

CADRA

 

542

 

620

 

(78)

 

 (12.6)

Other

 

150

 

46

 

104

 

226.1

Total

$

1,342

$

1,459

$

(117)

 

(8.0)%


Total revenue for the nine month periods ended February 28, 2014 and 2013 was approximately $4.1 million and $4.8 million, respectively. The following table summarizes total revenue by product line for the nine month periods ended February 28, 2014 and February 28, 2013 (in thousands, except percentages):


 

February 28,

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

2,119

$

2,274

$

(155)

 

(6.8)%

CADRA

 

1,807

 

2,155

 

(348)

 

  (16.1)

Royalties from sale of patents

 

-

 

290

 

(290)

 

(100.0)

Other

 

205

 

81

 

124

 

  153.1

Total

$

4,131

$

4,800

$

(669)

 

(13.9)%




27



The product line revenue is further broken down by revenue type hereunder with explanations for changes in the current periods compared to the same periods in fiscal 2013.


Product Revenue


Product revenue for the three and nine month periods ended February 28, 2014 was approximately $426,000 and $1,042,000, respectively, as compared to approximately $244,000 and $936,000, respectively, for the same periods in the prior fiscal year.


The table below details product revenue by product line for the three month periods ended February 28, 2014 and 2013 (in thousands, except percentages):


 

February 28,

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

43

$

67

$

(24)

 

(35.8)%

CADRA

 

383

 

141

 

242

 

171.6

Other

 

-

 

36

 

(36)

 

(100.0)

Total

$

426

$

244

$

182

 

74.6%


The table below details product revenue by product line for the nine month periods ended February 28, 2014 and 2013 (in thousands, except percentages):


 

February 28,

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

153

$

128

$

25

 

19.5%

CADRA

 

881

 

755

 

126

 

    16.7

Other

 

8

 

53

 

(45)

 

    (84.9)

Total

$

1,042

$

936

$

106

 

 11.3%


Our product revenue for ProductCenter experienced an improvement for the first nine months of fiscal year 2014 as compared to the same period in fiscal 2013. The increase which occurred in the first quarter was significant as a percentage but only because the comparative fiscal year results were low, and does not signal a strengthening in demand for this technology. This product line’s challenges both from a macro-economic and from a competitive standpoint as detailed above make it difficult to reliably forecast receipt of purchase orders from customers.


Product revenue from our CADRA technology increased in the current quarter as compared to the same period in the prior fiscal year. Part of the CADRA Sale which occurred in the middle of the second quarter of fiscal 2014 included a carve-out for Sikorsky Aircraft which accounted for 90% of the CADRA product revenue during the three month period ending February 28, 2014.  We are restricted from reselling CADRA in other countries other than Italy and if it were not for Sikorsky Aircraft we would have experienced a decline in product revenue for that technology for both the three and the nine month periods ended February 28, 2014 as compared to the prior fiscal year.


Service Revenue


Our service revenue is composed of both annual software maintenance contracts for previously licensed technology for both of our product lines and consulting revenue generated primarily from our ProductCenter technology. The table below summarizes service revenue by product line for the three months ended February 28, 2014 and 2013, (in thousands, except percentages):


 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

608

$

726

$

(118)

 

(16.3)%

CADRA

 

158

 

479

 

(321)

 

  (67.0)

Other

 

150

 

10

 

140

 

1400.0

Total

$

916

$

1,215

$

(299)

 

(24.6)%





28



The table below summarizes service revenue by product line for the nine months ended February 28, 2014 and 2013, (in thousands, except percentages):


 

 

2014

 

2013

 

$ Change

 

% Change

Product Line

 

 

 

 

 

 

 

 

ProductCenter

$

1,967

$

2,146

$

(179)

 

(8.3)%

CADRA

 

923

 

1,401

 

(478)

 

(34.1)

Other

 

199

 

27

 

172

 

637.0

Total

$

3,089

$

3,574

$

(485)

 

(13.6)%


Maintenance revenue was approximately $670,000 and $2.4 million for the three and nine month periods ended February 28, 2014, as compared to $1.0 and $3.0 million for the same periods in the prior fiscal year. The CADRA Sale, which was completed at the mid-point of the second quarter of fiscal year 2014, was primarily responsible for the maintenance revenue declines for the current year as compared to fiscal year 2013. ProductCenter maintenance revenue was down approximately 10.9% and 8.1% for the three and nine month periods ended February 28, 2014, respectively, compared to the same periods in the prior fiscal year. The decline was due to non-renewal of maintenance contracts in fiscal 2013 at a slightly higher rate than we have experienced in the recent past. New licenses sold with one-year maintenance contracts were insufficient to offset the non-renewals.


Consulting revenue was approximately $246,000 and $689,000 for the three and nine month periods ended February 28, 2014, an increase of approximately 19.4% and 10.8%, respectively, from the same periods in the prior fiscal year. The current year increases follow an increase of almost 19% in fiscal 2013 as compared to fiscal year 2012. Over the last few years the Company has expanded its consulting opportunities by partnering with other technology companies such as Aras and Spaceclaim.


Royalties from sale of patents


During the three and nine months ended February 28, 2014, there were no royalties received from the sale of patents.  Royalties from sale of patents was approximately $100,000 and $290,000 for the three and nine months ended February 28, 2013, respectively.  


Since the Recapitalization Transaction described hereunder, the Company has been actively engaged in acquiring and filing U.S. patents applications, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance our value. It is expected that this kind of activity will become an increasing area of focus and investment over the coming years.


In June 2012 the Company sold its rights, title and interests in three of its U.S. patents (“Patents”) in exchange for a non-refundable, initial royalty payment of $200,000 (the “Initial Payment”) and in September 2012, the agreement was amended to include two other U.S. patents (“Additional Patents”) and the Initial Payment was increased by $100,000.  The agreement gives the Buyer complete control over what, if any, actions shall be taken in the future to monetize the Patents through licensing, sale, enforcement or other means. In the event whereby monies are derived from the Patents, the Company is due 30% of the net proceeds (the “Net Proceeds”), as defined in the agreement. The Initial Payment shall be reimbursable from Net Proceeds to the extent any are due. There can be no assurance that the Company will derive any additional monies from the Patents, however.


The sale of the Patents is a multiple element arrangement as defined under ASC 605 and, as such, the Company allocated the Initial Payment between the sale of the Patents that were delivered during the fiscal quarter and support services that were undelivered. Support services include being available to the Buyer to assist them should they require such assistance in licensing or pursuing other means on monetizing the "Patents" to third parties. The allocation of the Initial Payment to the patent and support services elements was based on management’s best estimate of the selling price of each element. The Initial Payment was allocated as follows: Patents - $290,000; and Support Services - $10,000. The revenue allocated to support services was recognized as revenue during the three month period ended February 28, 2014.


Gross Margin


Gross margin as a percentage of revenue was 57.8% and 71.0% for the three and nine month periods ended February 28, 2014, respectively, as compared to 77.3% and 78.9% in the same periods in the prior fiscal year. The decrease in gross margin was due to a an increase in cost associated with reselling the CADRA product line and an 8.0% and 13.9% reduction in total revenue in the three and nine month periods ending February 28, 2014 as compared to the same periods in the prior fiscal year.  



29



Research and Development Expenses


Research and development expenses were approximately $276,000 and $915,000 for the three and nine month periods ended February 28, 2014, respectively, as compared to approximately $231,000 and $799,000 in the comparable periods in fiscal 2013. The majority of the increase in R&D expenses for the nine month periods ended February 28, 2014 as compared to the prior fiscal year was the result of more development resources being allocated towards upgrading and maintaining our ProductCenter and CADRA product offerings in the current fiscal year, activities that are expensed as incurred, as compared to new product development in fiscal 2013, activities that are subject to potential capitalization. Specifically, capitalized software development expenditures were $49,000 and $208,000 for the three and nine month periods ended February 28, 2013, respectively, as compared to $-  and $57,000 for the three and nine month periods ended February 28, 2014, respectively. The CADRA Sale and the resulting reduction in R&D personnel in the current quarter offset the impact of the change in capitalized costs.


Selling, General and Administrative Expenses


Selling, general and administrative expenses were approximately $835,000 and $2.6 million for the three and nine month periods ended February 28, 2014, respectively, as compared to approximately $848,000 and $2.4 million for the comparable periods in fiscal year 2013. These increased expenses were due primarily to professional fees related to the SolidWorks legal proceedings (see PART II. OTHER INFORMATION), the debt amendments as described in Note F, and the negotiation of the lease for our office headquarters.


Gain on sale of product line


On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluded cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services.  The purchase price was $3.2 million of which the Company received $2.88 million at the close and will receive an additional $320,000 on October 18, 2014 subject to offset for any indemnification claims Mentor may have under the Asset Purchase Agreement. In addition, Mentor assumed contractual obligations related to maintenance contracts totaling approximately $607,000. Goodwill totaling $3.26 million was allocated to the CADRA product line and was included in the derivation of the gain on sale of the product line. Professional fees and other expenses related to the transaction totaled approximately $448,000. Finally, tangible assets with a net book value of approximately $7,000 were transferred to Mentor. Any contingent payments of up to $750,000 based on 10% of the revenue generated by Mentor from CADRA over the next three years will be recorded as earned. Through the nine months ended February 28, 2014, the Company recorded a gain of $155,000 on the sale of the CADRA product line of which $64,000 was recorded in the current quarter related to contingent payment described above.


The Company will continue to market and support the CADRA technology throughout Europe (except Germany) and for a specified customer in the U.S. for at least one year from the transaction date under a Distribution Agreement signed on October 18, 2013 between the Company and Mentor. The Distribution Agreement is subject to renewal thereafter by mutual agreement. Due to the Company’s significant continued involvement, the transaction did not qualify for discontinued operations treatment.


Interest Expense


Interest expense for the three and nine month periods ended February 28, 2014 was approximately $10,000 and $203,000, respectively, as compared to approximately $63,000 and $198,000 for the comparable periods in the prior fiscal year. The Company amended its debt agreement and paid down its outstanding debt balance (See Note F) on December 5, 2013 by $1.7 million and repurchased warrants previously issued to the Lender. The interest expense for the three month period ending February 28, 2014 was significantly reduced as compared to the same period in the prior year due to 1) the lower outstanding average debt balance from the $1.7 million paydown at the beginning of the quarter and 2) a $32,000 gain resulting from the repurchase of the warrants. The average debt outstanding for the three and nine month periods ended February 28, 2014 was $1.0 million and $2.1 million as compared to $1.8 million for the comparable periods in fiscal year 2013.


Net Income


Net income (loss) for the three and nine month periods ended February 28, 2014 was approximately ($275,000) and ($585,000) or ($0.31) and ($0.66) per share as compared to approximately ($14,000) and $411,000 or ($0.01) and $0.41 per share for the comparable periods in the prior fiscal year.



30



Liquidity and Capital Resources


During the nine month period ended February 28, 2014 operating activities used approximately $314,000 in cash. The net loss adjusted for non-cash expenses used cash of approximately $426,000. The increase in accounts receivable which used cash of $243,000 was due to a significant February order from one of our largest U.S. customers. The increase in accounts payable, accrued expenses and other liabilities of approximately $401,000 partially offset the aforementioned cash uses primarily as a result of the aforementioned significant February order taken as a reseller and certain accruals related to the CADRA Sale.


During the comparable period in fiscal year 2013, operating activities used $40,000. Net income adjusted for non-cash expenses provided $578,000 which was more than offset by an increase in accounts receivable that used $420,000.


Net cash provided by investing activities for the nine months ended February 28, 2014 was approximately $2.3 million primarily composed of the proceeds from the CADRA Sale net of transaction costs.


Net cash used in financing activities totaled approximately $1.8 million composed primarily of $1.7 debt repayment to our Lenders, and costs associated with the buyback of 170,000 Treasury shares during the first quarter of fiscal 2014 as described in Note G herein.


Our Credit Facility  


As of February 28, 2014, we had $1.0 million of outstanding indebtedness under our Loan Agreement with Prides Crossing Capital. The terms of that Loan Agreement are detailed in Note F to the financial statements herein. On December 5, 2013, the Loan Agreement was amended in accordance with an agreement with our Lenders in connection with their consent to the CADRA Sale. Under the terms of the Amended Loan Agreement No. 2 we agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the “Term Note”) using a portion of the proceeds from the CADRA Sale. In addition, we paid a pre-payment penalty of $81,000 and agreed to repurchase 25,000 warrants with an exercise price of $1.00 per share in exchange for $19,000.


The amended and restated Term Note matures on January 1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, we shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.


We agreed to secure all of its obligations under the Term Note by granting the Lender a first priority security interest in all of our assets, including our intellectual property and pledges of (i) one hundred percent (100%) of our equity interests in its domestic subsidiaries and (ii) sixty-five percent (65%) of our equity interests in its foreign subsidiaries.  In connection with the grant of the security interest in favor of the Lender in our intellectual property, we entered into an intellectual property security agreement with the Lender and will enter into a source code escrow agreement with the Lender and an independent third party on a post-closing basis.  In addition, our Chief Executive Officer has provided the Lender with a personal guaranty of up to $500,000 secured by his equity interests in the Company.


The Amended Loan Agreement No. 2 contains customary representations, warranties and covenants, including covenants by us limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes in our business.  In addition, the Amended Loan Agreement No. 2 contains financial covenants by us that establish (i) a month-end minimum consolidated cash balance of $1.0 million of which no less than $750,000 must be held in our main operating account that is subject to a deposit account control agreement; (ii) a minimum of $750,000 of consolidated cash at all times; (iii) a quick ratio covenant, which provides that on the last day of each fiscal quarter the ratio of our cash plus accounts receivable divided by accounts playable plus accrued expenses shall not be less than 2.7:1; and (iv) a covenant that provides that our earnings before interest, taxes, depreciation and amortization (“EBITDA”) for Q3 and Q4 of fiscal 2014 shall not exceed a loss of $200,000 for each of those fiscal quarters and shall be greater than positive EBITDA of $100,000 for each subsequent fiscal quarter. The Amended Loan Agreement No. 2 also imposes limits on capital expenditures for each fiscal year during the term of the Amended Loan Agreement No. 2. As part of the Amended Loan Agreement No. 2 we entered into a deposit account control agreement pursuant to which the Lender will perfect its security interest in the assets held in our main operating account at First Republic Bank.



31



The Amended Loan Agreement No. 2 provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy.  Upon an event of default relating to insolvency, bankruptcy or receivership, the amounts outstanding under the Amended Loan Agreement No. 2 will become immediately due and payable and the Lender commitment will be automatically terminated.  Upon the occurrence and continuation of any other event of default, the Lender may accelerate payment of all obligations and terminate the Lender’s commitments under the Amended Loan Agreement No. 2.


During fiscal year 2013, the Company issued 50,000 shares of common stock, $.10 par value (the “Common Stock”) at a purchase price of $5.00 per share to accredited investors (collectively, the “Investors”) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the “Agreement”) which the Company entered into with each of the respective Investors. The Agreement, among other things, provides the Investors with the right to require the Company to redeem the Common Stock held by the Investors (the “Put Option”) at $5.50 per share in cash during a 30 day period beginning June 1, 2014. The Amended Loan Agreement No. 2 requires that the Company provide written notice to Prides Crossing Capital at least ten business days prior to redeeming the Common Shares and receive their written consent which shall not be unreasonably withheld, conditioned or delayed if on the date of such purchase (1) no event of default under the debt facility exists, (2) such payment will not result in an event of default and (3) such payment will not have a material adverse effect, as defined in the debt facility. The Agreement provides that in the event whereby the Company fails to honor the Put Option, in whole or in part, the unpaid portion of the amount due will be evidenced by a secure promissory note issued by the Company to each applicable Investor bearing interest at an annual rate of 20%.


As stated above, we currently have approximately $1.3 million in cash and cash equivalents and would expect to have greater liquidity as we approach our fiscal year end on May 31, 2014.  Accordingly, we currently believe that we will have sufficient cash to honor the put obligation and that the conditions requiring Prides Crossing reasonable consent as described above will be satisfied at such time.  However, there can be no assurances in this regard.


We believe that our cash together with our credit facility and cash provided by operations will be sufficient to meet our capital needs for at least the next twelve months.


Sources of Cash


As of February 28, 2014, we had cash on hand of approximately $1.3 million. This represents an increase of approximately $100,000 from May 31, 2013 resulting primarily from the CADRA Sale offset by the repayment of debt and cash used primarily in operating, investing and financing activities during the nine months ending February 28, 2014 the most significant of which are described above.  


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of the SEC’s Regulation S-K.


Item 3. Quantitative and Qualitative Disclosures about Market Risk


This Item is not applicable because we are a “smaller reporting company,” as defined by applicable SEC regulation.


Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating the cost-benefit relationship of possible changes or additions to our controls and procedures.



32



As of the end of the period covered by this report (February 28, 2014), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.


Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION


Item 1. Legal Proceedings


On July 19, 2013, Dassault Systemes SolidWorks Corporation (“SolidWorks”) filed a complaint (the “Complaint”) against the Company in the United States District Court for the Eastern District of Texas Tyler Division alleging fraud and false assurances. The Complaint is connected to a patent infringement suit brought by Auto-Dimensions LLC, a wholly-owned subsidiary of Acacia Research Group, against SolidWorks in December 2012. The Company owned those patents in question and sold them to Auto-Dimensions LLC in June 2012. SolidWorks is seeking reimbursement from the Company of attorneys’ fees and any judgments or settlement monies it may incur under the infringement suit, as well as punitive and multiple damages. In October, 2013, Solidworks’s motion for change of venue from East Texas to Massachusetts was granted. The Company believes the Complaint is without merit and is vigorously defending itself in this action.


Item 1A. Risk Factors


In addition to the other information set forth in this report and the risk factors below, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors" in our Annual Report on Form 10-K for the year ended May 31, 2013, which could materially affect our business, financial condition or future results. Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in the Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Any factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may differ materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.


General Risks


Failure to comply with financial covenants in our Amended Loan Agreement No. 2 could adversely affect us.


Our Amended Loan Agreement No. 2 includes enhanced financial covenants which require us to maintain compliance with certain financial ratios during the term of the agreement and other restrictions on our use of cash, such as maintaining a month-end minimum consolidated cash balance of $1.0 million, of which no less than $750,000 must be held in our main operating account that is subject to a deposit account control agreement with our Lender.  Failure to comply with the financial covenants or other restrictions is an event of default under the agreement. In an event of default, the Lender has the right to accelerate repayment of all sums due and take any and all action, at its sole option, to collect monies owed to it, including to enforce and foreclose on its security interest on all of our assets. If our Lender were to accelerate our debt payments, our assets may not be sufficient to fully repay the debt and we may not be able to obtain capital from other sources at favorable terms or at all.  


We may not have sufficient funds to repurchase common stock pursuant to the put right feature in our recent private placement if exercised when we are required to do so.


Investors in our private placement in Q2 and Q3 of fiscal year 2013 have certain contractual rights, such as the right to require us to repurchase the common stock for an aggregate purchase price of $275,000 for a 30-day period commencing in May 2014 and the right to receive quarterly fees. Funds required to repurchase the common stock, if the repurchase right is exercised by investors, must be generated from a combination of cash flow from operations and cash on hand while maintaining liquidity levels required under our Amended Loan Agreement No. 2. There can be no assurance that the Company will generate positive cash flow from operations to meet this cash requirement while also remaining in compliance with its debt agreement.



33



Risks Related to SofTech Following the Sale of the CADRA business


Following the sale of the CADRA business, we will need to restructure our business to enable us to successfully operate as a significantly smaller company and to seek new sources of revenue and possible new strategic initiatives. SofTech operating results subsequent to the sale of the CADRA business may not be profitable, and we may be unsuccessful in developing new business opportunities.


The CADRA business was responsible for about half of the consolidated revenue in fiscal 2013 and the majority of the profitability and cash flow.  The importance of the CADRA business to the consolidated results in fiscal 2013 was similar in at least the two immediately preceding fiscal years. The remaining product lines following the CADRA Sale, namely ProductCenter and the Connector technologies, are product lines that have historically been less profitable than the CADRA business, have fewer customers and have a more complex sales cycle. It is likely that the Company will need to reduce spending in order to achieve profitability, and ultimately will need to find new strategic directions and find new sources of business revenue in order to meaningfully increase the size of its business. The new product ideas that the management team has interest in pursuing as described in the patent filings over the last few years are speculative in that the products are still in development and the management team may not have the depth of experience required to be successful in those new markets.


A portion of the purchase price is contingent and we may not receive those payments.


A portion of the purchase price, an amount equal to $320,000, will be held back by the Mentor to secure any indemnification claims under the Asset Purchase Agreement. If indemnification claims are asserted, we may not receive all or any of the $320,000 payable to us.


In addition, up to $750,000 of the total purchase price is subject to an earn-out arrangement relating to the revenues generated by the CADRA business during the three-year period following the asset sale. The Asset Purchase Agreement also allows Mentor to withhold monies due under the earn-out arrangement if indemnification claims are asserted. Mentor has broad discretion to operate its post-closing business, and may choose to do so in a manner which may or may not result in the payment of all of the CADRA royalties pursuant to the Earn-Out Agreement.


We will continue to incur the expenses of complying with public company reporting requirements following the closing of the CADRA Sale.


After the CADRA Sale, we will continue to be required to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended, even though compliance with such reporting requirements is economically burdensome and will represent an even greater percentage of our expenses post-closing as we will be a significantly smaller company following the sale of the CADRA business.


Risks Related to the Asset Purchase Agreement


Buyer is not assuming any of the excluded liabilities under the Asset Purchase Agreement.


Under the Asset Purchase Agreement, Mentor is not assuming all of the liabilities associated with the CADRA business. Certain liabilities will remain with the Company post-closing. For example, Mentor is only assuming customer support obligations and obligations for performance under the certain assigned contracts that arise after the closing, and is not assuming liability for any obligation or breach by the Company occurring or arising prior to the closing. While the Company believes that it has adequately accrued for these liabilities or is adequately insured against certain of the risks associated with such excluded liabilities, there can be no assurances that additional expenditures will not be incurred in resolving these liabilities.


The Asset Purchase Agreement may expose us to contingent liabilities.


We have agreed to indemnify Mentor for certain breaches of representations, warranties or covenants made by us in the Asset Purchase Agreement up to $3.95 million. Significant indemnification claims by the Mentor could materially and adversely affect our business, financial condition and results of operations.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


None




34



Item 3. Defaults Upon Senior Securities


None


Item 4. Mine Safety Disclosures


Not Applicable


Item 5. Other Information


Not Applicable


Item 6. Exhibits


See Exhibit Index on page 37.




35



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

SOFTECH, INC.

 

 

Date: April 14, 2014

/s/ Amy E. McGuire

 

Amy E. McGuire

 

Chief Financial Officer

 

 

 

 

Date: April 14, 2014

/s/ Joseph P. Mullaney

 

Joseph P. Mullaney

 

President & Chief Executive Officer




36



Exhibit Index


Exhibit No.

 

Description of Document

2.1

 

Asset Purchase Agreement, dated as of August 30, 2013, between Mentor Graphics Corporation and the Company (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K, filed on September 6, 2013).

2.2

 

Earn-Out Agreement, dated August 30, 2013, between Mentor Graphics Corporation and the Company (incorporated by reference to Exhibit 2.2 to the Company’s Form 8-K, filed on September 6, 2013).

3.1

 

Articles of Organization, as amended through October 12, 1988 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2008, filed on April 14, 2008).

3.1.1

 

Articles of Amendment to Articles of Organization, dated April 15, 2011 (incorporated by reference to Exhibit 3.1.1 to the Company’s Registration Statement on Form S-1, filed on June 9, 2011).

3.1.2

 

Articles of Amendment to Articles of Organization, effective June 7, 2011 (incorporated by reference to Exhibit 3.1.2 to the Company’s Registration Statement on Form S-1, filed on June 9, 2011).

3.2

 

By-laws (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2008, filed on April 14, 2008).

10.1

 

Amended and Restated Loan, Pledge and Security Agreement, dated December 5, 2013, by and among Prides Crossing Capital Funding, L.P. and the Company (Incorporated by reference to Exhibit 10.2 to the Company’s quarterly report on Form 10-Q for the quarter ended November 30, 2013 filed on January 14, 2014).

31.1

 

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

 

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1

 

Certification of the Principal Financial Officer and Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**

 

XBRL Instance Document

101.SCH**

 

XBRL Taxonomy Extension Schema Document

101.CAL**

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE**

 

XBRL Taxonomy Extension Presentation Linkbase Document

**

 

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.




37


EX-31.1 2 f10q022814_ex31z1.htm EXHIBIT 31.1 SECTION 302 CERTIFICATION Exhibit 31.1 Section 302 Certification

EXHIBIT 31.1


CERTIFICATION PURSUANT TO RULE 13A-14(A) / 15D-14(A)


I, Amy E. McGuire, Chief Financial Officer of SofTech, Inc., certify that:


1.

I have reviewed this quarterly report on Form 10-Q of SofTech, Inc.;


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: April 14, 2014


/s/ Amy E. McGuire

Amy E. McGuire

Chief Financial Officer




EX-31.2 3 f10q022814_ex31z2.htm EXHIBIT 31.2 SECTION 302 CERTIFICATION Exhibit 31.2 Section 302 Certification

EXHIBIT 31.2


CERTIFICATION PURSUANT TO RULE 13A-14(A) / 15D-14(A)


I, Joseph P. Mullaney, President and Chief Executive Officer of SofTech, Inc., certify that:


1.

I have reviewed this quarterly report on Form 10-Q of SofTech, Inc.;


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: April 14, 2014


/s/ Joseph P. Mullaney

Joseph P. Mullaney

President and Chief Executive Officer



EX-32.1 4 f10q022814_ex32z1.htm EXHIBIT 32.1 SECTION 906 CERTIFICATION Exhibit 32.1 Section 906 Certification

EXHIBIT 32.1


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of SofTech, Inc. (the “Company”) on Form 10-Q for the quarter ended February 28, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Joseph P. Mullaney, Chief Executive Officer of the Company and Amy E. McGuire, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:  April 14, 2014


/s/ Amy E. McGuire

Amy E. McGuire

Chief Financial Officer


/s/ Joseph P. Mullaney

Joseph P. Mullaney

President and Chief Executive Officer



EX-101.INS 5 soft-20140228.xml XBRL INSTANCE DOCUMENT 1292 1188 35 100 1202 895 320 0 55 299 2904 2482 103 61 992 4249 362 376 105 101 210 250 260 195 4936 7714 690 137 425 602 114 89 1405 2147 19 13 964 0 2717 2988 52 39 0 2700 3669 5727 275 275 100 100 27314 27369 -25918 -25333 -504 -424 992 1712 4936 7714 29 29 0.10 0.10 50000 50000 50000 50000 0.10 0.10 20000000 20000000 875135 1045315 875135 1045315 426 244 1042 936 916 1215 3089 3574 0 0 290 1342 1459 4131 4800 241 38 302 88 325 293 897 924 566 331 1199 1012 776 1128 2932 3788 276 231 915 799 835 848 2582 2391 -64 -155 -271 49 -410 598 10 63 203 198 -6 0 -28 -11 -0.31 -0.01 -0.66 0.41 875135 1039302 883853 1009567 883853 1010842 -275 -14 -585 411 -35 3 -80 9 -35 3 -80 9 -310 -11 -665 420 -585 411 170 161 -155 0 6 6 15 0 -32 0 -243 -420 179 -228 65 217 401 -187 -135 0 -314 -40 2432 0 -39 -2 -57 -207 -4 -6 2332 -215 -63 0 -32 0 0 223 -1700 -855 0 300 -11 -7 -1825 -339 -89 1 104 -593 1188 595 1292 2 205 110 14 2 51 0 30 53 0 112 <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>A.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Description of the Business and Basis of Presentation </b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>SofTech, Inc. (the &#147;Company&#148;) was formed in Massachusetts on June 10, 1969. The Company is engaged in the development, marketing, distribution and support of computer software solutions that serve the Product Lifecycle Management (&#147;PLM&#148;) industry. The Company&#146;s operations are organized geographically with offices in the U.S. and European sales and customer support offices in Germany and Italy. The Company also has resellers in Asia and Europe.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Since the Recapitalization Transaction described hereunder, the Company has also been actively engaged in acquiring and filing new U.S. patents, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance our value. It is expected that this kind of activity will become an increasing area of focus and investment over the coming years.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The consolidated financial statements of the Company include the accounts of SofTech, Inc. and its wholly-owned subsidiaries, Information Decisions, Inc., Workgroup Technology Corporation, SofTech, GmbH and SofTech, Srl. All significant intercompany accounts and transactions have been eliminated in consolidation.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission without audit; however, in the opinion of management, the information presented reflects all adjustments which are of a normal recurring nature and elimination of intercompany transactions which are necessary to present fairly the Company&#146;s financial position and results of operations. It is recommended that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company&#146;s Annual Report on Form 10-K for the fiscal year ended May 31, 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><i>CADRA Sale</i></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the &#147;CADRA Sale&#148;), to Mentor Graphics Corporation (&#147;Mentor&#148;), pursuant to an Asset Purchase Agreement dated August 30, 2013 (the &#147;Asset Purchase Agreement&#148;). &nbsp;The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the &#147;Earn-Out Agreement&#148;). </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company will continue to offer the CADRA technology as a reseller throughout Europe (except Germany) and for a one year period from the closing of the transaction to Sikorsky Aircraft, the largest CADRA user in the United States. &nbsp;Due to the significant continued involvement in the sale and support of the CADRA product line, the transaction does not qualify for presentation as discontinued operations.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><i>Recapitalization Transaction</i></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In March 2011, the current management team (CEO and VP of Business Development) completed a transaction (the &#147;Recapitalization Transaction&#148;) in which a group of eight investors purchased 39% of the Company&#146;s common stock, arranged for debt facilities of $3.2 million and negotiated for a $7.6 million debt reduction from Greenleaf Capital, Inc. (&#147;Greenleaf&#148;), at that time, the Company&#146;s sole lender and largest shareholder. As part of that Recapitalization Transaction, Greenleaf accepted a payment of $2.7 million in cash and note for $250,000 in full satisfaction of the $10.6 million of indebtedness. The former CEO resigned after a short transition period, a new four person Board of Directors was appointed and the existing Board members resigned. In addition, Greenleaf gave the Company&#146;s new Board of Directors voting control over its shares for a three year period immediately following the Recapitalization Transaction.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><i>Refinancing of Debt </i></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On December 5, 2013, the Company entered into an amended and restated loan agreement (the &#147;Amended Loan Agreement No. 2&#148;) between the Company, and Prides Crossing Capital Funding, L.P., (the &#147;Lender&#148;) whereby the parties agreed to amend and restate the Company&#146;s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the &#147;Term Note&#148;) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The amended and restated Term Note matures on January&nbsp;1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><i>Stock Purchase Agreement with Greenleaf Capital and affiliates</i></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note K to the Company&#146;s Annual Report on Form 10-K for the fiscal year ended May 31, 2013. The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company&#146;s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected by Greenleaf, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the purchase date.</p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>B.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Significant Accounting Policies</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>USE OF ESTIMATES</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, and the valuation of long term assets including goodwill, intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>REVENUE RECOGNITION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company follows the provisions of the Accounting Standards Codification (&#147;ASC&#148;) 985, <i>Software </i>for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, and a fixed fee and collectability has been determined. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (&#147;VSOE&#148;) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985. Revenue from customer maintenance support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company follows the provisions of ASC 605, <i>Revenue Recognition</i> for transactions that do not involve the licensing of software or software support services as in the case of the recent sale of our patents. Revenue from the sale of patents is recorded when persuasive evidence of an arrangement exists, delivery has taken place and a fixed fee and collectability has been determined. These conditions are no different from those when we license software. For multiple element arrangements, however, under ASC 605, total fees are allocated to each of the elements based upon the relative selling price method. Under that method the allocation of fees to the undelivered elements is based on VSOE, or if it doesn&#146;t exist, then based on third party evidence of selling price. If neither exists, then the allocation is based on management&#146;s best estimate of the selling price.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>SOFTWARE DEVELOPMENT COSTS </u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company accounts for its software development costs in accordance with 985-20, <i>Costs of Computer Software to Be Sold, Leased or Marketed. &nbsp;</i>Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.&nbsp; Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.&nbsp; Such costs are amortized using the straight-line method over the estimated economic life of the product, generally three years.&nbsp; The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis. &nbsp;Judgment is required in determining when technological feasibility of a product is established as well as its economic life.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>During the nine months ended February 28, 2014, the Company capitalized approximately $57,000 of software development costs related to new products. &nbsp;The Company did not capitalize software development costs during the three months ended February 28, 2014. &nbsp;During the three and nine months ended February 28, 2013, the Company capitalized approximately $49,000 and $207,000, respectively. Amortization expense related to capitalized software development costs for the three and nine months ending February 28, 2014 was approximately $23,000 and $71,000, respectively, as compared to approximately $20,000 and $48,000 for the comparable periods in the prior fiscal year. &nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>DEBT ISSUANCE COSTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company capitalizes the direct costs associated with entering into debt agreements and amortizes those costs over the life of the debt agreement. &nbsp;The December 2013 refinancing was considered a modification per ASC 470-50, <i>Debt Modifications and Extinguishment</i>. The Company capitalized no additional costs in connection with the refinancing. The Company had approximately $238,000 in unamortized debt issuance costs remaining, relating to the old arrangement at the time of the transaction. The total debt issuance costs are being amortized over the term of the new arrangement in accordance with ASC 470-50. Unamortized debt issuance costs related to the Company&#146;s previous debt agreement as of May 10, 2013 totaled approximately $108,000 and were expensed in Q4 of fiscal 2013. Amortization expense related to debt issuance costs for the three and nine months ending February 28, 2014 were approximately $22,000 and $81,000, respectively, as compared to approximately $29,000 and $88,000 for the comparable periods in the prior fiscal year. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>ACCOUNTING FOR GOODWILL</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company accounts for goodwill pursuant to the provisions of the ASC 350, &nbsp;<i>Intangibles &#150; Goodwill and Other</i>. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement&#146;s criteria.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company operates in a single reporting unit. &nbsp;Goodwill has been allocated to the CADRA product line based upon the estimated fair value of the CADRA product line based on the transaction with Mentor as compared to the estimated fair value of the Company as a whole. Goodwill allocated to the CADRA product line included in the derivation of the gain on sale was approximately $3.2 million.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>As of May 31, 2013, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the nine months ended February 28, 2014 to warrant an interim impairment test. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>CAPITALIZED PATENT COSTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected.&nbsp; Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs for the three and nine month periods ending February 28, 2014 were approximately $2,000 and $4,000, respectively, as compared to $ - and $6,000, respectively, for the three and nine month periods ending February 28, 2013. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>LONG-LIVED ASSETS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of February 28, 2014, the Company does not have any long-lived assets it considers to be impaired. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>STOCK BASED COMPENSATION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award.&nbsp;The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In May 2011, the 2011 Equity Incentive Plan (the &#147;2011 Plan&#148;) was approved by the Company&#146;s shareholders, pursuant to which 150,000 shares of our common shares were reserved for issuance. Additionally, any future shares subject to any award under the 2011 Plan that expire, is terminated unexercised or is forfeited will be available for grant under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of February 28, 2014, 9,306 options were awarded and outstanding under the 2011 Plan.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes option activity under the 2011 Plan:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted-</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Number of</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Exercise Price</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Remaining</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Aggregate</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Options</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Per Share</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Life (in years)</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Intrinsic Value</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2012</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9.02</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2013</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8.02 </p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired </p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>694</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9,306</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4.00</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercisable at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8,750</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3.77</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0.1in'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company determined the volatility for options granted using the historical volatility of the Company&#146;s common stock. The expected life of options has been determined utilizing the &#147;simplified&#148; method as prescribed in ASC 718 <i>Compensation, Stock Compensation</i>. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>For each of the three and nine month periods ended February 28, 2014 and 2013, the Company expensed approximately $2,000 and $6,000, respectively, of stock-based compensation. &nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>REDEEMABLE COMMON STOCK</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>During the year ending May 31, 2013, the Company issued 50,000 shares of common stock, $.10 par value (the &#147;Common Stock&#148;) at a purchase price of $5.00 per share to accredited investors (collectively, the &#147;Investors&#148;) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the &#147;Agreement&#148;) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitles the Investors to a fee of $6,000 (the &#147;Fee&#148;) to be paid in six equal quarterly installments during the eighteen month period (the &#147;Payment Period&#148;) following the investment. &nbsp;The Agreement also provides the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the &#147;Put Option&#148;) for $5.50 per share in cash for a 30 day period following the Payment Period. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company first assessed the redeemable Common Stock to determine if the instrument should be accounted for as a liability in accordance with ASC 480. In that the Put Option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed the Put Option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, <i>Derivatives and Hedging, </i>and concluded that the Put Option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the Common Stock issued pursuant to the Agreement in accordance with ASC 480-10-S99-3A, <i>Classification and Measurement of Redeemable Securities</i>,&nbsp;which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity. The 50,000 shares of Common Stock issued pursuant to the Agreement were recorded as redeemable common stock at an initial carrying value of $163,000. This amount is equal to the gross proceeds of $250,000, less $27,000 in issuance costs related to legal fees and the $60,000 Fee, which has been included in other liabilities. The Company elected to record the Common Stock at its redemption value of $275,000 immediately and accordingly recorded accretion of $112,000 to additional paid in capital during fiscal year 2013.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>FOREIGN CURRENCY TRANSLATION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The functional currency of the Company&#146;s foreign operations (Germany and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). Foreign currency gains and losses arising from transactions were included in the statements of operations. For the three and nine month periods ended February 28, 2014, the Company recorded a net gain from foreign currency related transactions of approximately $6,000, and $28,000, respectively, as compared to approximately $- and $11,000 for the comparable periods in the prior fiscal year, to Other (income) expense in the Consolidated Condensed Statements of Operations.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>INCOME TAXES</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company&#146;s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>NET INCOME (LOSS) PER COMMON SHARE</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Basic and diluted net income (loss) per share are computed by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income (loss) by the weighted-average number of common and equivalent dilutive common shares outstanding. &nbsp;For periods in which losses are reported potentially dilutive common stock equivalents are excluded from the calculation of diluted loss per share because the effect is antidilutive. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Three Months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net loss available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(275)</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(14)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Nine months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net income (loss) available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(585)</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>411</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,009,567</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,275</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,010,842</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>For the three and nine month periods ended February 28, 2014, 9,306 options to purchase common shares were anti-dilutive and were excluded from the above calculation. For the three months ended February 28, 2013, 10,000 options to purchase common shares were anti-dilutive and were excluded from the above calculation and for the nine month periods ended February 28, 2013, all options were included in the above calculation. &nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'><u>FAIR VALUE OF FINANCIAL INSTRUMENTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company&#146;s financial instruments consist of cash equivalents, accounts receivable, accounts payable and notes payable. The estimated fair values have been determined through information obtained from market sources and management estimates.&nbsp; The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity.&nbsp; </p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>C.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Segment Information</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company operates in one reportable segment and is engaged in the development, marketing, distribution and support of computer aided design and product data management and collaboration computer solutions. The Company&#146;s operations are organized geographically with offices in the U.S. and foreign offices in Germany and Italy. Components of revenue and long-lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="291" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:218.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Three Month Periods Ended</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Revenue:</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2013</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,077</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,148</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>318</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>358</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Asia</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>157</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Eliminations</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(53)</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(204)</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,342</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,459</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="291" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:218.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Nine Month Periods Ended</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Revenue:</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2013</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,335</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,561</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>922</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,293</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Asia</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>493</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>444</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Eliminations</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(619)</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(498)</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4,131</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4,800</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="124" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="147" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Long Lived Assets:</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="124" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>As of February 28, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="147" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>As of May 31, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="124" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,989</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="147" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,119</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="124" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>43</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="147" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>113</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="124" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2,032</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="147" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,232</p></td></tr></table></div> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>D.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Note Receivable</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Joseph Mullaney, the Company&#146;s CEO, was extended a non-interest bearing note in the amount of $134,000 related to a stock transaction in May, 1998. The note is partially secured by the Company stock acquired in that transaction. The Company has accounted for the note as a fixed arrangement.</p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>E.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Sale of Patents</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In June 2012, the Company sold to an unrelated third party (the &#147;Buyer&#148;) its rights, title and interests in three of its U.S. patents (the &#147;Patents&#148;) all entitled Method and System for Design and Drafting in exchange for a non-refundable, initial royalty payment of $200,000 (the &#147;Initial Payment&#148;). These Patents were derived from the Company&#146;s development work related to the Company&#146;s CADRA product line and the inventions are a key, time saving feature within that technology offering. The Company received a limited, non-exclusive, royalty-free license under the Patents to make, use, offer to sell, or sell the Company&#146;s products or services. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In September 2012, the Patent agreement was amended to include two other U.S. patents (&#147;Additional Patents&#148;) both entitled Product Development System and Method Using Integrated Process and Data Management. These Additional Patents were derived from the development work related to the Company&#146;s ProductCenter product line and are a core and essential capability within that product offering. The Company received a limited, non-exclusive, royalty-free license under the Additional Patents to make, use, offer to sell or sell the Company&#146;s products or services. As a result of the amendment, the Initial Payment was increased by $100,000. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The agreement gives the Buyer complete control over what, if any, actions shall be taken in the future to monetize the Patents through licensing, sale, enforcement or other means. In the event whereby monies are derived from the Patents, the Company is due 30% of the net proceeds (the &#147;Net Proceeds&#148;), as defined in the agreement. The Initial Payment shall be reimbursable from Net Proceeds to the extent any are due. There can be no assurance that the Company will derive any additional monies from the Patents, however.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The sale of the Patents is a multiple element arrangement as defined under ASC 605 and, as such, the Company allocated the Initial Payment between the sale of the Patents that were delivered during the fiscal quarter and support services that were undelivered. Support services include being available to the Buyer to assist them should they require such assistance in licensing or pursuing other means of monetizing the Patents to third parties. The allocation of the Initial Payment to the patent and support services elements was based on management&#146;s best estimate of the selling price of each element. The Initial Payment was allocated as follows: Patents - $290,000; and Support Services - $10,000. Additional monies due the Company in the form of royalties from its 30% share of Net Proceeds will be recorded in the quarterly period in which the Buyer notifies the Company such payments are due. Such notification and payment, if any, are due thirty calendar days after the end of each calendar quarter. The revenue allocated to support services was recognized during the three months ended February 28, 2014 as all services had been performed. There can be no assurance that the Company will derive any other monies from the Additional Patents, however.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company retained its U.S. patent applications that it acquired or filed since the Recapitalization Transaction in March 2011. These patent applications were not included in the above described agreement. The Company expects to be actively engaged with the U.S. Patent and Trademark Office for the foreseeable future with regard to those filings.</p> <!--egx--><p style='margin:0in 0in 0pt'><b>F. Debt</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On May&nbsp;10, 2013, the Company entered into the Loan Agreement with Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., (&#147;Lenders&#148;).&nbsp; The Loan Agreement provided for a $2.7 million, three-year term Loan with interest only until October 1, 2014.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On July 9, 2013, the Loan Agreement was amended (the &#147;Amended Loan Agreement No. 1&#148;) to allow the Company to repurchase 170,000 of its shares from Greenleaf (as described in Note G) and to increase the maximum ratio of indebtedness to EBITDA from 2.25:1 to 2.60:1 for the quarters ended May 31, 2013, August 31, 2013 and November 30, 2013. In consideration for entering into the Amended Loan Agreement No. 1, the Company issued the Lenders warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share. The warrants were to vest monthly over three years, with accelerated vesting under certain circumstances including if the Loan was repaid prior to maturity, and terminate if not exercised on or before July 9, 2020.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Upon issuance, the warrants did not meet the requirements for equity classification, because such warrants provide a cash-out election allowing the holder to a one time right to require the Company to repurchase all or a portion of the warrants.&nbsp; Therefore these warrants were required to be accounted for as a liability.&nbsp; Changes in fair value are recognized as either a gain or loss in the consolidated statement of operations under the caption &#147;Other income.&#148;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company determined the fair value of the warrants using the Black-Scholes valuation model. &nbsp;The grant date fair value of the warrant of approximately $51,000 was recorded a liability, with a corresponding discount recorded on the debt. &nbsp;The debt discount is being accreted through the remaining term of the Loan Agreement using the effective interest rate method. &nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On December 5, 2013, the Company entered into an amended and restated loan agreement (the &#147;Amended Loan Agreement No. 2&#148;) between the Company, as borrower and Prides Crossing Capital Funding, L.P., (the &#147;Lender&#148;) whereby the parties agreed to amend and restate the Company&#146;s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the &#147;Term Note&#148;) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrant to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The amended and restated Term Note matures on January&nbsp;1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company agreed to secure all of its obligations under the Term Note by granting the Lender a first priority security interest in all of the Company&#146;s assets, including the Company&#146;s intellectual property and pledges of (i) one hundred percent (100%) of the Company&#146;s equity interests in its domestic subsidiaries and (ii) sixty-five percent (65%) of the Company&#146;s equity interests in its foreign subsidiaries. &nbsp;In connection with the grant of the security interest in favor of the Lender in the Company&#146;s intellectual property, the Company has entered into an intellectual property security agreement with the Lender and entered into a source code escrow agreement with the Lender and an independent third party. &nbsp;In addition, the Company&#146;s Chief Executive Officer has provided the Lender with a personal guaranty of up to $500,000 secured by his equity interests in the Company.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Amended Loan Agreement No. 2 contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes in its business.&nbsp; In addition, the Amended Loan Agreement No. 2 contains financial covenants by the Company that establish (i)&nbsp;a month-end minimum consolidated cash balance of $1.0 million of which no less than $750,000 must be held in the Company&#146;s main operating account that is subject to a deposit account control agreement; (ii)&nbsp;a minimum of $750,000 of consolidated cash at all times; (iii) a quick ratio covenant, which provides that on the last day of each fiscal quarter the ratio of the Company&#146;s cash plus accounts receivable divided by accounts playable plus accrued expenses shall not be less than 2.7:1; and (iv) a covenant that provides that the Company&#146;s earnings before interest, taxes, depreciation and amortization (&#147;EBITDA&#148;) for Q3 and Q4 of fiscal 2014 shall not exceed&nbsp;a loss of $200,000 for each of those fiscal quarters and shall be greater than positive EBITDA of $100,000 for each subsequent fiscal quarter. The Amended Loan Agreement No. 2 also imposes limits on capital expenditures for each fiscal year during the term of the Amended Loan Agreement No. 2. As part of the Amended Loan Agreement No. 2 the Company, the Lender and First Republic Bank entered into a deposit account control agreement pursuant to which the Lender will perfect its security interest in the assets held in the Company&#146;s main operating account at First Republic Bank.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Amended Loan Agreement No. 2 provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy.&nbsp; Upon an event of default relating to insolvency, bankruptcy or receivership, the amounts outstanding under the Amended Loan Agreement No. 2 will become immediately due and payable and the Lender commitment will be automatically terminated.&nbsp; Upon the occurrence and continuation of any other event of&nbsp;default, the Lender may accelerate payment of all obligations and terminate the Lender&#146;s commitments under the Amended Loan Agreement No. 2.</p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>G.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Stock Purchase Agreement</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note G to the consolidated financial statements as of May 31, 2013. &nbsp;The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company&#146;s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the transaction date.</p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>H.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>CADRA Sale</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluded cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services, to Mentor, pursuant to an Asset Purchase Agreement dated August 30, 2013. &nbsp;The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business (the &#147;Earn-Out Payments&#148;), subject to the terms of the Earn-Out Agreement dated August 30, 2013. &nbsp;</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company will continue to sell and support the CADRA technology throughout Europe (except Germany) and, for a one year period from the closing, will retain the rights to sell and support the technology to the largest U.S. CADRA user, Sikorsky Aircraft. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The transaction generated a gain during the second quarter of fiscal 2014 which was composed of the following (000&#146;s):</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Proceeds from the sale of the CADRA technology</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,200</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Liabilities assumed by Mentor related to deferred maintenance obligations</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>607</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Professional fees and other expenses related to the transaction</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(448)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Goodwill allocated to the CADRA product line</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(3,261)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net book value of equipment transferred in the sale</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(7)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Gain on sale of CADRA product line</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="72" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>91</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Any additional Earn-Out Payments received by the Company will be recorded during the periods in which Mentor reports amounts due under the Earn-Out Agreement so long as collectability has been determined. During the quarter ended February 28, 2014, the Company recorded a gain of $64,000 under the Earn-Out Agreement bringing the total gain through February 28, 2014 to approximately $155,000.</p> <!--egx--><p style='text-indent:0.25in;margin:0in 0in 0pt'><b>I.</b></p> <p style='text-indent:-1.5pt;margin:0in 0in 0pt'><b>Subsequent Events</b></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company has evaluated all events and transactions that occurred after the balance sheet and through the date that the financial statements were available to be issued. &nbsp;</p> <!--egx--><p style='margin:0in 0in 0pt'><u>USE OF ESTIMATES</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, and the valuation of long term assets including goodwill, intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates.</p> <!--egx--><p style='margin:0in 0in 0pt'><u>REVENUE RECOGNITION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company follows the provisions of the Accounting Standards Codification (&#147;ASC&#148;) 985, <i>Software </i>for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, and a fixed fee and collectability has been determined. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (&#147;VSOE&#148;) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985. Revenue from customer maintenance support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company follows the provisions of ASC 605, <i>Revenue Recognition</i> for transactions that do not involve the licensing of software or software support services as in the case of the recent sale of our patents. Revenue from the sale of patents is recorded when persuasive evidence of an arrangement exists, delivery has taken place and a fixed fee and collectability has been determined. These conditions are no different from those when we license software. For multiple element arrangements, however, under ASC 605, total fees are allocated to each of the elements based upon the relative selling price method. Under that method the allocation of fees to the undelivered elements is based on VSOE, or if it doesn&#146;t exist, then based on third party evidence of selling price. If neither exists, then the allocation is based on management&#146;s best estimate of the selling price.</p> <!--egx--><p style='margin:0in 0in 0pt'><u>SOFTWARE DEVELOPMENT COSTS </u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company accounts for its software development costs in accordance with 985-20, <i>Costs of Computer Software to Be Sold, Leased or Marketed. &nbsp;</i>Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.&nbsp; Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.&nbsp; Such costs are amortized using the straight-line method over the estimated economic life of the product, generally three years.&nbsp; The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis. &nbsp;Judgment is required in determining when technological feasibility of a product is established as well as its economic life.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>During the nine months ended February 28, 2014, the Company capitalized approximately $57,000 of software development costs related to new products. &nbsp;The Company did not capitalize software development costs during the three months ended February 28, 2014. &nbsp;During the three and nine months ended February 28, 2013, the Company capitalized approximately $49,000 and $207,000, respectively. Amortization expense related to capitalized software development costs for the three and nine months ending February 28, 2014 was approximately $23,000 and $71,000, respectively, as compared to approximately $20,000 and $48,000 for the comparable periods in the prior fiscal year. &nbsp;</p> <!--egx--><p style='margin:0in 0in 0pt'><u>DEBT ISSUANCE COSTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company capitalizes the direct costs associated with entering into debt agreements and amortizes those costs over the life of the debt agreement. &nbsp;The December 2013 refinancing was considered a modification per ASC 470-50, <i>Debt Modifications and Extinguishment</i>. The Company capitalized no additional costs in connection with the refinancing. The Company had approximately $238,000 in unamortized debt issuance costs remaining, relating to the old arrangement at the time of the transaction. The total debt issuance costs are being amortized over the term of the new arrangement in accordance with ASC 470-50. Unamortized debt issuance costs related to the Company&#146;s previous debt agreement as of May 10, 2013 totaled approximately $108,000 and were expensed in Q4 of fiscal 2013. Amortization expense related to debt issuance costs for the three and nine months ending February 28, 2014 were approximately $22,000 and $81,000, respectively, as compared to approximately $29,000 and $88,000 for the comparable periods in the prior fiscal year. </p> <!--egx--><p style='margin:0in 0in 0pt'><u>ACCOUNTING FOR GOODWILL</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company accounts for goodwill pursuant to the provisions of the ASC 350, &nbsp;<i>Intangibles &#150; Goodwill and Other</i>. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement&#146;s criteria.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company operates in a single reporting unit. &nbsp;Goodwill has been allocated to the CADRA product line based upon the estimated fair value of the CADRA product line based on the transaction with Mentor as compared to the estimated fair value of the Company as a whole. Goodwill allocated to the CADRA product line included in the derivation of the gain on sale was approximately $3.2 million.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>As of May 31, 2013, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the nine months ended February 28, 2014 to warrant an interim impairment test. </p> <!--egx--><p style='margin:0in 0in 0pt'><u>CAPITALIZED PATENT COSTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected.&nbsp; Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs for the three and nine month periods ending February 28, 2014 were approximately $2,000 and $4,000, respectively, as compared to $ - and $6,000, respectively, for the three and nine month periods ending February 28, 2013. </p> <!--egx--><p style='margin:0in 0in 0pt'><u>LONG-LIVED ASSETS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of February 28, 2014, the Company does not have any long-lived assets it considers to be impaired. </p> <!--egx--><p style='margin:0in 0in 0pt'><u>STOCK BASED COMPENSATION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award.&nbsp;The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>In May 2011, the 2011 Equity Incentive Plan (the &#147;2011 Plan&#148;) was approved by the Company&#146;s shareholders, pursuant to which 150,000 shares of our common shares were reserved for issuance. Additionally, any future shares subject to any award under the 2011 Plan that expire, is terminated unexercised or is forfeited will be available for grant under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of February 28, 2014, 9,306 options were awarded and outstanding under the 2011 Plan.</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table summarizes option activity under the 2011 Plan:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted-</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Number of</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Exercise Price</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Remaining</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Aggregate</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Options</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Per Share</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Life (in years)</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Intrinsic Value</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2012</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9.02</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2013</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8.02 </p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired </p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>694</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9,306</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4.00</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercisable at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8,750</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3.77</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0.1in'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company determined the volatility for options granted using the historical volatility of the Company&#146;s common stock. The expected life of options has been determined utilizing the &#147;simplified&#148; method as prescribed in ASC 718 <i>Compensation, Stock Compensation</i>. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <!--egx--><p style='margin:0in 0in 0pt'><u>REDEEMABLE COMMON STOCK</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>During the year ending May 31, 2013, the Company issued 50,000 shares of common stock, $.10 par value (the &#147;Common Stock&#148;) at a purchase price of $5.00 per share to accredited investors (collectively, the &#147;Investors&#148;) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the &#147;Agreement&#148;) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitles the Investors to a fee of $6,000 (the &#147;Fee&#148;) to be paid in six equal quarterly installments during the eighteen month period (the &#147;Payment Period&#148;) following the investment. &nbsp;The Agreement also provides the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the &#147;Put Option&#148;) for $5.50 per share in cash for a 30 day period following the Payment Period. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company first assessed the redeemable Common Stock to determine if the instrument should be accounted for as a liability in accordance with ASC 480. In that the Put Option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed the Put Option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, <i>Derivatives and Hedging, </i>and concluded that the Put Option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the Common Stock issued pursuant to the Agreement in accordance with ASC 480-10-S99-3A, <i>Classification and Measurement of Redeemable Securities</i>,&nbsp;which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity. The 50,000 shares of Common Stock issued pursuant to the Agreement were recorded as redeemable common stock at an initial carrying value of $163,000. This amount is equal to the gross proceeds of $250,000, less $27,000 in issuance costs related to legal fees and the $60,000 Fee, which has been included in other liabilities. The Company elected to record the Common Stock at its redemption value of $275,000 immediately and accordingly recorded accretion of $112,000 to additional paid in capital during fiscal year 2013.</p> <!--egx--><p style='margin:0in 0in 0pt'><u>FOREIGN CURRENCY TRANSLATION</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The functional currency of the Company&#146;s foreign operations (Germany and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). Foreign currency gains and losses arising from transactions were included in the statements of operations. For the three and nine month periods ended February 28, 2014, the Company recorded a net gain from foreign currency related transactions of approximately $6,000, and $28,000, respectively, as compared to approximately $- and $11,000 for the comparable periods in the prior fiscal year, to Other (income) expense in the Consolidated Condensed Statements of Operations.</p> <!--egx--><p style='margin:0in 0in 0pt'><u>INCOME TAXES</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company&#146;s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.</p> <!--egx--><p style='margin:0in 0in 0pt'><u>NET INCOME (LOSS) PER COMMON SHARE</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>Basic and diluted net income (loss) per share are computed by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income (loss) by the weighted-average number of common and equivalent dilutive common shares outstanding. &nbsp;For periods in which losses are reported potentially dilutive common stock equivalents are excluded from the calculation of diluted loss per share because the effect is antidilutive. </p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Three Months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net loss available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(275)</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(14)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Nine months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net income (loss) available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(585)</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>411</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,009,567</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,275</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,010,842</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>For the three and nine month periods ended February 28, 2014, 9,306 options to purchase common shares were anti-dilutive and were excluded from the above calculation. For the three months ended February 28, 2013, 10,000 options to purchase common shares were anti-dilutive and were excluded from the above calculation and for the nine month periods ended February 28, 2013, all options were included in the above calculation. &nbsp;</p> <!--egx--><p style='margin:0in 0in 0pt'><u>FAIR VALUE OF FINANCIAL INSTRUMENTS</u></p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <p style='margin:0in 0in 0pt'>The Company&#146;s financial instruments consist of cash equivalents, accounts receivable, accounts payable and notes payable. The estimated fair values have been determined through information obtained from market sources and management estimates.&nbsp; The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity.&nbsp; </p> <!--egx--><p style='margin:0in 0in 0pt'>The following table summarizes option activity under the 2011 Plan:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Weighted-</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Average</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Number of</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Exercise Price</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Remaining</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Aggregate</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Options</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Per Share</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Life (in years)</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Intrinsic Value</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2012</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9.02</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired</p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at May 31, 2013</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>10,000</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8.02 </p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Granted</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercised</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Forfeited or expired </p></td> <td valign="bottom" width="75" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>694</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Outstanding options at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>9,306</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4.00</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="75" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="91" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="99" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="bottom" width="240" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:2.5in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Exercisable at February 28, 2014</p></td> <td valign="bottom" width="75" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:56.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>8,750</p></td> <td valign="bottom" width="17" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:12.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="91" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:68.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2.40</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="98" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:73.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3.77</p></td> <td valign="bottom" width="15" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:11.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="99" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:74.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr></table></div> <!--egx--><p style='margin:0in 0in 0pt'>The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Three Months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net loss available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(275)</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(14)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>875,135</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,039,302</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="106" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:79.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="27" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:20.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>For the Nine months Ended</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28,</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="230" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:172.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>(amounts in thousands)</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="top" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net income (loss) available to common shareholders </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(585)</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>411</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares outstanding used in calculation of basic earnings per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,009,567</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Incremental shares from the assumed exercise of dilutive stock options</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,275</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Weighted average number of common shares </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;outstanding used in calculating diluted earnings </p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td></tr> <tr> <td valign="top" width="300" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:225pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;&nbsp;&nbsp;&nbsp;per share</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="104" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:78pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>883,853</p></td> <td valign="bottom" width="29" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:21.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="96" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:1in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,010,842</p></td></tr></table></div> <!--egx--><p style='margin:0in 0in 0pt'>Components of revenue and long-lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="291" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:218.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Three Month Periods Ended</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Revenue:</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2013</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,077</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,148</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>318</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>358</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Asia</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>-</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>157</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Eliminations</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(53)</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(204)</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,342</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,459</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="291" colspan="3" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:218.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>&nbsp;</p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>Nine Month Periods Ended</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Revenue:</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>February 28, 2013</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,335</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,561</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>922</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,293</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Asia</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>493</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>444</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Eliminations</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="126" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(619)</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="143" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(498)</p></td></tr> <tr> <td valign="bottom" width="146" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:109.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="126" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:94.5pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4,131</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="143" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:107.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>4,800</p></td></tr></table></div> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="124" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="147" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Long Lived Assets:</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="124" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>As of February 28, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2014</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="147" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="center" style='text-align:center;margin:0in 0in 0pt'>As of May 31, </p> <p align="center" style='text-align:center;margin:0in 0in 0pt'>2013</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>North America</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="124" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>1,989</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="147" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,119</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Europe</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="124" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>43</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="147" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>113</p></td></tr> <tr> <td valign="bottom" width="148" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:111pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Consolidated Total</p></td> <td valign="bottom" width="24" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.25in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="124" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:93pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>2,032</p></td> <td valign="bottom" width="21" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:15.75pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="147" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:110.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>5,232</p></td></tr></table></div> <!--egx--><p style='margin:0in 0in 0pt'>The transaction generated a gain during the second quarter of fiscal 2014 which was composed of the following (000&#146;s):</p> <p style='margin:0in 0in 0pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0"> <tr> <td width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td> <td width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Proceeds from the sale of the CADRA technology</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>3,200</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Liabilities assumed by Mentor related to deferred maintenance obligations</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>607</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Professional fees and other expenses related to the transaction</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(448)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Goodwill allocated to the CADRA product line</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(3,261)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Net book value of equipment transferred in the sale</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>&nbsp;</p></td> <td valign="bottom" width="72" style='border-bottom:black 1pt solid;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>(7)</p></td></tr> <tr> <td valign="top" width="439" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:329.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p style='margin:0in 0in 0pt'>Gain on sale of CADRA product line</p></td> <td valign="bottom" width="31" style='border-bottom:#ece9d8;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:23.25pt;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>$</p></td> <td valign="bottom" width="72" style='border-bottom:black 2.25pt double;border-left:#ece9d8;padding-bottom:0in;background-color:transparent;padding-left:0in;width:0.75in;padding-right:0in;border-top:#ece9d8;border-right:#ece9d8;padding-top:0in'> <p align="right" style='text-align:right;margin:0in 0in 0pt'>91</p></td></tr></table></div> 3200 607 -448 -3261 -7 91 170000 62900 0.37 101411 0.37 200000 290000 10000 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Direct costs incurred in establishing debt agreement LONG-LIVED ASSETS DEBT ISSUANCE COSTS POLICY Sale of Patents {1} Sale of Patents Sale of Patents Increase (decrease) in cash and cash equivalents Adjustments to reconcile net income to net cash provided by operating activities: Net income(loss) Cost of revenue: Common Stock, par value Long-term debt, net of current portion Capital lease, net of current portion Goodwill allocated to the CADRA product line Goodwill allocated to the CADRA product line Professional fees and other expenses related to the transaction Professional fees and other expenses related to the transaction Accretion during recorded as interest expense Accretion during recorded as interest expense Company issued common stock shares Company issued common stock shares Exercised DEBT ISSUANCE COSTS DURING THE PERIOD: Interest paid Other comprehensive income: Gross margin Redeemable common stock, $0.10 par value, 50,000 shares issued and outstanding at February 28, 2014 and May 31, 2013 Redeemable common stock, $0.10 par value, 50,000 shares issued and outstanding at February 28, 2014 and May 31, 2013 Total liabilities ASSETS: Loan Agreement with Prides Crossing Capital L.P. and Prides Crossing Capital -A, L.P. Loan Agreement with Prides Crossing Capital L.P. and Prides Crossing Capital -A, L.P. Asia Revenue Revenues for reportable segments Summarizes option activity under the 2011 Plan Segment Reporting Information {1} Segment Reporting Information USE OF ESTIMATES Supplemental disclosures of cash flow information: Cash and cash equivalents, beginning of period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Capitalized patent costs {1} Capitalized patent costs CapitalizedPatentCosts2 Cash flows operating activities: Services Common Stock, shares issued Redeemable common Stock, shares issued Total number of redeemable common shares of an entity that have been sold or granted to shareholders TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY Accumulated other comprehensive loss Deferred maintenance revenue Goodwill Entity Public Float Europe Assets Asstes of Europe segment. 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Statement Options were awarded and outstanding under the 2011 Plan. Options were awarded and outstanding under the 2011 Plan Transaction Generated a Gain During Current Quarter Calculation of basic and diluted net income for each period (Tables): Summarizes option activity {1} Summarizes option activity Summarizes option activity FAIR VALUE OF FINANCIAL INSTRUMENTS REEDEMABLE COMMON STOCK CAPITALIZED PATENT COSTS POLICY Entire policy disclosure related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected REVENUE RECOGNITION Subsequent Events CADRA Sale: Note Receivable {1} Note Receivable Gain on sale of product line {1} Gain on sale of product line Products {1} Products Revenue: Common stock, $0.10 par value 20,000,000 shares authorized, 875,135 and 1,045,135 issued and outstanding at February 28, 2014 and May 31, 2013, respectively Other current liabilities Cash and cash equivalents Document Fiscal Year Focus Document Type Equity Component [Domain] Increase in the limit of initial payment Increase in the limit of initial payment patents acquisition Par value of the share Par value of the share Transaction Generated a Gain During Current Quarter {1} Transaction Generated a Gain During Current Quarter The transaction generated a gain during the current quarter which was composed. Non-cash interest expense Amount of the cost of borrowed funds accounted for as interest expense. Services {1} Services Total shareholders' equity Accrued expenses Capitalized software development costs, net Receivable from product line sale Purchase price (total) Purchase price (total) Common Stock recorded at its redemption value Common Stock recorded at its redemption value Amount equal to gross proceeds Amount equal to gross proceeds Accounts receivable Change in fair value of warrant liability ChangeInFairValueOfWarrantLiability Redeemable common Stock, shares outstanding Total number of shares of redeemable common stock held by shareholders. Debt issuance costs, net For an unclassified balance sheet, the carrying amount (net of accumulated amortization) as of the balance sheet date of capitalized costs associated with the issuance of debt instruments (for example, legal, accounting, underwriting, printing, and registration costs) that will be charged against earnings over the life of the debt instruments to which such costs pertain. Document Fiscal Period Focus Entity Registrant Name Weighted Average Exercise Price Per Share Stock Purchase Agreement Depreciation and amortization expense Total other comprehensive loss Other income Interest expense Current portion of capital lease Net book value of equipment transferred in the sale Net book value of equipment transferred in the sale PRIDES CROSSING CAPITAL Investors fee Investors fee Reedemable common stock ACCOUNTING POLICIES DEBT Borrowing under debt agreements Repayment under debt agreements Weighted average common shares outstanding-diluted Basic and diluted net income(loss) per share: Net income (loss) Royalties on sale of patents RoyaltiesFromSaleOfPatents1 Redeemable common stock, par value Face amount or stated value of redeemable common stock per share; generally not indicative of the fair market value per share. Gain on sale of CADRA product line Gain on sale of CADRA product line Non-refundable initial royalty payment made Non-refundable initial royalty payment made for acquiring patents. Notes Receivables details Calculation of basic and diluted net income: Aggregate Intrinsic Value STOCK-BASED COMPENSATION POLICY Stock Purchase Agreement Text Block Entire disclosure for stock purchase agreement provides an option for the Company to either make an offer to purchase the remaining shares as set forth in the Registration Rights Agreement. 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Granted Statement {1} Statement Segment Reporting Information INCOME TAXES Policy Segment Information {1} Segment Information Significant Accounting Policies {1} Significant Accounting Policies Accretion of redeemable common stock AccretionOfRedeemableCommonStock Issuance of warrants Capitalized software development costs Weighted average common shares outstanding-basic Products Common Stock, shares outstanding Allowance for uncollectible accounts Liabilities assumed by Mentor related to deferred maintenance obligations Liabilities assumed by Mentor related to deferred maintenance obligations Shares of common stock at an exercise price Shares of common stock at an exercise price Patents purchased Patents purchased by the entity. Revenues: Issuance cost related legal fee Issuance cost related legal fee Outstanding options Outstanding options Outstanding options Outstanding options SOFTWARE DEVELOPMENT COSTS DURING: FOREIGN CURRENCY TRANSLATION ACCOUNTING FOR GOODWILL SOFTWARE DEVELOPMENT COSTS Note Receivable Significant Accounting Policies Taxes paid Effect of exchange rates on cash Comprehensive income (loss) COMPREHENSIVE INCOME (LOSS): Revenue Commitments Current portion of debt LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY Amendment Flag Document and Entity Information Proceeds from the sale of the CADRA technology Stock Purchase Agreement: Other income recorded during the period Other income recorded during the period Security offered in company's equity interests in its foreign subsidiaries Security offered in company's equity interests in its foreign subsidiaries Loan matures on May1, 2016 and bears an interest rate of Loan matures on May1, 2016 and bears an interest rate of Support services payment Support services payment in patents acquisition Net gain from foreign currency related transactions Purchase price of the share Purchase price of the share As per equity incentive plan company reserved common shares for issuance As per equity incentive plan company reserved common shares for issuance Amortization expense related to capitalized software development costs Amortization expense related to capitalized software development Subsequent Events {1} Subsequent Events Selling, general and administrative expenses Research and development expenses Property and equipment, net Accounts receivable (less allowance for uncollectible accounts of $29 as of February 28, 2014 and May 31, 2013) Transaction generated a gain during as Follows: Quarterly principal payments Quarterly principal payments North America Assets Asstes of North America segment. 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DEBT link:presentationLink link:definitionLink link:calculationLink 000150 - Disclosure - Subsequent Events link:presentationLink link:definitionLink link:calculationLink 000350 - Statement - SEGMENT INFORMATION (Details) link:presentationLink link:definitionLink link:calculationLink 000260 - Statement - Stock based compensation Issuance (details) link:presentationLink link:definitionLink link:calculationLink EXCEL 11 Financial_Report.xlsx IDEA: XBRL DOCUMENT begin 644 Financial_Report.xlsx M4$L#!!0`!@`(````(0`:,QE5V@$``#$6```3``@"6T-O;G1E;G1?5'EP97-= M+GAM;""B!`(HH``"```````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M``````````````````````````````````````#,F%UKPC`4AN\'^P\EM\/& MI)MSP^K%/BXW8>X'9,W1%MLD)-'IOU]:/QC2.63"SHU%FYSW,90'^@Y&JZJ, MEF!=H55*6-PE$:A,RT+-4O(^>>[T2>2\4%*46D%*UN#(:'AY,9BL#;@H[%8N M);GWYIY2E^50"1=K`RK[?9HII4'Y3N^GD&&@T>8 MBD7IHZ=5^'E#8J%T)'K8+*RS4B*,*8M,^$!*ETH>I'2V"7'8V:QQ>6'<5<`@ MM#6AOO-SP';?:S@:6TB(QL+Z%U$%#+HJZ:>V\P^MY_'Q(2V4>CHM,I`Z6U3A M!&)G+`CI<@!?E7%SC2M1J!WWD?QFL:/-A9T9I/Y_S>`3.3@2C@0)QS42CALD M'#TD'+=(./I(..Z0<+`N%A`L1F58E,JP.)5AD2K#8E6&1:L,BU<9%K$R+&;E M6,S*L9B58S$KQV)6CL6L'(M9.1:S*TG?'A$%@?0'[%K.M#=PGAGKT],"#.A+J`E:";,FF3>$[ M_`(``/__`P!02P,$%``&``@````A`+55,"/U````3`(```L`"`)?]=J>*V?5@^@8B)G:13'&HX<85?=WFQ?>*24FV+7^ZBRBXL:NI3\ M(V(T'4\4"_'L)MI< M3_3_MCAQ(DN)T$C@\SS?BG-`Z^N!+I]HJ?B]SCSBIX3A363X8<'%#U1?```` M__\#`%!+`P04``8`"````"$`_GO?E-(!```<%0``&@`(`7AL+U]R96QS+W=O M_%[)K?BL"EJL2UI0]@)88@((EL]X>W MKX40%*F=7J*]1+*C.*/)>KYX9XNOPS[[<#YLFSI7U.NKS-5%4V[K3:[>5L\/ M$Y6%:.O2[IO:Y>KH@EK,[^]F+VYO8WHH5-LV9&F5.N2JBK%]U#H4E3O8T&M: M5Z<[Z\8?;$Q#O]&M+79VXS3W^R/M?ZZAYC=K9LLR5WY9DE'9ZMBF5_^_>+-> M;POWU!3O!U?'7]ZA/QN_"Y5S,2UJ_<;%7%VF@C[=(=-+FI7^0T[R0U;.!,GA MD;`<'D$Y)"V'D!PS$)9C!DC.6%C-&(DA%E9##.5(FT/0'1X*N\-#Y(Z1#D$# M0U"Z='#E2$<@X0A,!!4%!/=1Y?!46LX4R9'F`\2#=.'`NB%Q:Z`W+(U.AN@T MTI%C8.:83FD5*NM=^1I]^ND.:;N>?TQOIM&FDF851!5)JR$HAZ7)R9B"'XJD MK2'H#4O#DB$LN5-87MHUUYRY3)T[.`R/=D8ZA/EWA MUI:F$H92TB_9\+L`6]_T-.??````__\#`%!+`P04``8`"````"$`HL#*\1D$ M``#A"@``#P```'AL+W=OPE6:>DLN?P[G7/Q^X_/:\ M*P=/O-)"R2MG_&GD#+C,52'DYLJYS69_?74&VC!9L%))?N6\<.U\N_[SC\N# MJAX?E'H<@(#45\[6F/W%<*CS+=\Q_4GMN80S:U7MF(&RV@SUON*LT%O.S:X< MNJ/1V7#'A'1:A8OJ5S34>BUR'JB\WG%I6I&*E\R`?;T5>^U<7ZY%R>_:C@9L MOX_8#GP_E\Z@9-J00AA>7#F?H50'?G*@JO"'_3[3;8@B=C9U!=2'@3Q468VL]9`7F/UQ,)]_3P6W=(9D M&C!P2P'7>27V%E:JUM1L.;VIM9!<:U@X9,;2<73SI>LF%1LI8!\P::B7YZJ& M]98;NE*ER`7',MC-UYX,W]A-A#@YL?`%63COWALIPVG"V$-Y\DP(C*/U M\:A[8\I*;GM?,0//UMCL.;ZQQV9`;C)T]11VT_MC>@RF1N6/=%57^99I3KU- MQ6'?2H,53K9"'S\O2#QJ[>)[,/CC'FQI_:#Y/[4=*GGJM#?%L(][A'F^']]& M61C-Z0JVH!^2]&U!\9"F&/9Q#["TWNU8)?[EFJH6,Y8;\633(&,/N!$,V+A' MF,_*O&Y3U2[6`],B;Z*E$&5],D1,V/A#Q!*^5U4#Z7LH28K]8-K&/=RRBDEM M6X&-,^>25T!/01F=P_N#!E@'TP>)VPFX-)YE]UY":$#NR")>V42!H$LA5@*. 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Stock Purchase Agreement (DETAILS) (USD $)
Feb. 28, 2014
Stock Purchase Agreement:  
Company purchased common stock from Greenleaf Capital Inc, 170,000
Purchase price (total) $ 62,900
Purchase price per share $ 0.37
Option to purchase remainig shares as per stock purchase agreement 101,411
Price per share within one year of the date of agreement $ 0.37
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Summarizes option activity under the 2011 Plan (Details)
Number of Options
Weighted Average Exercise Price Per Share
Weighted-Average Remaining Life (in years)
Aggregate Intrinsic Value
Outstanding options at May. 31, 2012 10,000 2.40 9.02 0
Granted 0 0.00 0.00 0
Exercised 0 0.00 0.00 0
Forfeited or expired 0 0.00 0.00 0
Outstanding options at May. 31, 2013 10,000 2.40 8.02 0
Granted 0 0.00 0.00 0
Exercised 0 0.00 0.00 0
Forfeited or expired 0 0.00 0.00 0
Exercisable at Feb. 28, 2014 8,750 2.40 3.77 0
Outstanding options at Feb. 28, 2014 9,306 2.40 4.00 0
XML 15 R9.htm IDEA: XBRL DOCUMENT v2.4.0.8
Segment Information
9 Months Ended
Feb. 28, 2014
Segment Information  
Segment Information

C.

Segment Information

 

The Company operates in one reportable segment and is engaged in the development, marketing, distribution and support of computer aided design and product data management and collaboration computer solutions. The Company’s operations are organized geographically with offices in the U.S. and foreign offices in Germany and Italy. Components of revenue and long-lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):

 

 

 

Three Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

1,077

$

1,148

Europe

 

318

 

358

Asia

 

-

 

157

Eliminations

 

(53)

 

(204)

Consolidated Total

$

1,342

$

1,459

 

 

 

Nine Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

3,335

$

3,561

Europe

 

922

 

1,293

Asia

 

493

 

444

Eliminations

 

(619)

 

(498)

Consolidated Total

$

4,131

$

4,800

 

Long Lived Assets:

 

As of February 28,

2014

 

As of May 31,

2013

North America

$

1,989

$

5,119

Europe

 

43

 

113

Consolidated Total

$

2,032

$

5,232

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SEGMENT INFORMATION (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
May 31, 2013
SEGMENT INFORMATION AS FOLLOWS:          
North America Revenue $ 1,077 $ 1,148 $ 3,335 $ 3,561  
Europe Revenue 318 358 922 1,293  
Asia Revenue   157 493 444  
Eliminations Revenue (53) (204) (619) (498)  
Consolidated Revenue Total 1,342 1,459 4,131 4,800  
Long-Lived Assets:          
North America Assets 1,989   1,989   5,119
Europe Assets 43   43   113
Consolidated Assets Total $ 2,032   $ 2,032   $ 5,232
XML 18 R28.htm IDEA: XBRL DOCUMENT v2.4.0.8
NET INCOME PER COMMON SHARE (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
Calculation of basic and diluted net income:        
Net income (loss) available to common shareholders $ (275) $ (14) $ (585) $ 411
Weighted average number of common shares outstanding used in calculating basic earnings per share 875,135 1,039,302 883,853 1,009,567
Incremental shares from the assumed exercise of dilutive stock options       $ 1,275
Weighted average number of common shares outstanding used in calculating diluted earnings per share 875,135 1,039,302 883,853 1,010,842
XML 19 R30.htm IDEA: XBRL DOCUMENT v2.4.0.8
Notes Receivables (details) (USD $)
May 31, 1998
Notes Receivables details  
Non interest bearing note extended by CEO related to a stock transaction $ 134,000
XML 20 R31.htm IDEA: XBRL DOCUMENT v2.4.0.8
Patents Sales Transactions (DETAILS) (USD $)
Feb. 28, 2014
Sep. 30, 2012
Patents Sales Transactions    
Non-refundable initial royalty payment made $ 200,000  
Patents purchased 290,000  
Support services payment 10,000  
Share of royalties payable 30.00%  
Increase in the limit of initial payment   $ 100,000
XML 21 R8.htm IDEA: XBRL DOCUMENT v2.4.0.8
Significant Accounting Policies
9 Months Ended
Feb. 28, 2014
Significant Accounting Policies  
Significant Accounting Policies

B.

Significant Accounting Policies

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, and the valuation of long term assets including goodwill, intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates.

 

REVENUE RECOGNITION

 

The Company follows the provisions of the Accounting Standards Codification (“ASC”) 985, Software for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, and a fixed fee and collectability has been determined. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (“VSOE”) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985. Revenue from customer maintenance support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model.

 

The Company follows the provisions of ASC 605, Revenue Recognition for transactions that do not involve the licensing of software or software support services as in the case of the recent sale of our patents. Revenue from the sale of patents is recorded when persuasive evidence of an arrangement exists, delivery has taken place and a fixed fee and collectability has been determined. These conditions are no different from those when we license software. For multiple element arrangements, however, under ASC 605, total fees are allocated to each of the elements based upon the relative selling price method. Under that method the allocation of fees to the undelivered elements is based on VSOE, or if it doesn’t exist, then based on third party evidence of selling price. If neither exists, then the allocation is based on management’s best estimate of the selling price.

 

SOFTWARE DEVELOPMENT COSTS

 

The Company accounts for its software development costs in accordance with 985-20, Costs of Computer Software to Be Sold, Leased or Marketed.  Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.  Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.  Such costs are amortized using the straight-line method over the estimated economic life of the product, generally three years.  The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis.  Judgment is required in determining when technological feasibility of a product is established as well as its economic life.

 

During the nine months ended February 28, 2014, the Company capitalized approximately $57,000 of software development costs related to new products.  The Company did not capitalize software development costs during the three months ended February 28, 2014.  During the three and nine months ended February 28, 2013, the Company capitalized approximately $49,000 and $207,000, respectively. Amortization expense related to capitalized software development costs for the three and nine months ending February 28, 2014 was approximately $23,000 and $71,000, respectively, as compared to approximately $20,000 and $48,000 for the comparable periods in the prior fiscal year.  

 

DEBT ISSUANCE COSTS

 

The Company capitalizes the direct costs associated with entering into debt agreements and amortizes those costs over the life of the debt agreement.  The December 2013 refinancing was considered a modification per ASC 470-50, Debt Modifications and Extinguishment. The Company capitalized no additional costs in connection with the refinancing. The Company had approximately $238,000 in unamortized debt issuance costs remaining, relating to the old arrangement at the time of the transaction. The total debt issuance costs are being amortized over the term of the new arrangement in accordance with ASC 470-50. Unamortized debt issuance costs related to the Company’s previous debt agreement as of May 10, 2013 totaled approximately $108,000 and were expensed in Q4 of fiscal 2013. Amortization expense related to debt issuance costs for the three and nine months ending February 28, 2014 were approximately $22,000 and $81,000, respectively, as compared to approximately $29,000 and $88,000 for the comparable periods in the prior fiscal year.

 

ACCOUNTING FOR GOODWILL

 

The Company accounts for goodwill pursuant to the provisions of the ASC 350,  Intangibles – Goodwill and Other. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement’s criteria.

 

The Company operates in a single reporting unit.  Goodwill has been allocated to the CADRA product line based upon the estimated fair value of the CADRA product line based on the transaction with Mentor as compared to the estimated fair value of the Company as a whole. Goodwill allocated to the CADRA product line included in the derivation of the gain on sale was approximately $3.2 million.

 

As of May 31, 2013, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the nine months ended February 28, 2014 to warrant an interim impairment test.

 

CAPITALIZED PATENT COSTS

 

Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected.  Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs for the three and nine month periods ending February 28, 2014 were approximately $2,000 and $4,000, respectively, as compared to $ - and $6,000, respectively, for the three and nine month periods ending February 28, 2013.

 

LONG-LIVED ASSETS

 

The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of February 28, 2014, the Company does not have any long-lived assets it considers to be impaired.

 

STOCK BASED COMPENSATION

 

Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award. The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.

 

In May 2011, the 2011 Equity Incentive Plan (the “2011 Plan”) was approved by the Company’s shareholders, pursuant to which 150,000 shares of our common shares were reserved for issuance. Additionally, any future shares subject to any award under the 2011 Plan that expire, is terminated unexercised or is forfeited will be available for grant under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of February 28, 2014, 9,306 options were awarded and outstanding under the 2011 Plan.

 

The following table summarizes option activity under the 2011 Plan:

 

 

 

 

Weighted

 

Weighted-

 

 

 

 

 

Average

 

Average

 

 

 

Number of

 

Exercise Price

 

Remaining

 

Aggregate

 

Options

 

Per Share

 

Life (in years)

 

Intrinsic Value

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2012

10,000

$

2.40

 

9.02

$

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2013

10,000

 

2.40

 

8.02

 

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

694

 

2.40

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at February 28, 2014

9,306

$

2.40

 

4.00

$

-

 

 

 

 

 

 

 

 

Exercisable at February 28, 2014

8,750

$

2.40

 

3.77

$

-

 

 

The Company determined the volatility for options granted using the historical volatility of the Company’s common stock. The expected life of options has been determined utilizing the “simplified” method as prescribed in ASC 718 Compensation, Stock Compensation. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

 

For each of the three and nine month periods ended February 28, 2014 and 2013, the Company expensed approximately $2,000 and $6,000, respectively, of stock-based compensation.  

 

REDEEMABLE COMMON STOCK

 

During the year ending May 31, 2013, the Company issued 50,000 shares of common stock, $.10 par value (the “Common Stock”) at a purchase price of $5.00 per share to accredited investors (collectively, the “Investors”) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the “Agreement”) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitles the Investors to a fee of $6,000 (the “Fee”) to be paid in six equal quarterly installments during the eighteen month period (the “Payment Period”) following the investment.  The Agreement also provides the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the “Put Option”) for $5.50 per share in cash for a 30 day period following the Payment Period.

 

The Company first assessed the redeemable Common Stock to determine if the instrument should be accounted for as a liability in accordance with ASC 480. In that the Put Option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed the Put Option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, Derivatives and Hedging, and concluded that the Put Option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the Common Stock issued pursuant to the Agreement in accordance with ASC 480-10-S99-3A, Classification and Measurement of Redeemable Securities, which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity. The 50,000 shares of Common Stock issued pursuant to the Agreement were recorded as redeemable common stock at an initial carrying value of $163,000. This amount is equal to the gross proceeds of $250,000, less $27,000 in issuance costs related to legal fees and the $60,000 Fee, which has been included in other liabilities. The Company elected to record the Common Stock at its redemption value of $275,000 immediately and accordingly recorded accretion of $112,000 to additional paid in capital during fiscal year 2013.

 

FOREIGN CURRENCY TRANSLATION

 

The functional currency of the Company’s foreign operations (Germany and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). Foreign currency gains and losses arising from transactions were included in the statements of operations. For the three and nine month periods ended February 28, 2014, the Company recorded a net gain from foreign currency related transactions of approximately $6,000, and $28,000, respectively, as compared to approximately $- and $11,000 for the comparable periods in the prior fiscal year, to Other (income) expense in the Consolidated Condensed Statements of Operations.

 

INCOME TAXES

 

The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.

 

NET INCOME (LOSS) PER COMMON SHARE

 

Basic and diluted net income (loss) per share are computed by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income (loss) by the weighted-average number of common and equivalent dilutive common shares outstanding.  For periods in which losses are reported potentially dilutive common stock equivalents are excluded from the calculation of diluted loss per share because the effect is antidilutive.

 

The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:

 

 

 

For the Three Months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net loss available to common shareholders

$

(275)

$

(14)

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

875,135

 

1,039,302

Incremental shares from the assumed exercise of

 

 

 

 

      dilutive stock options

 

-

 

-

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

875,135

 

1,039,302

 

 

 

 

 

 

 

 

For the Nine months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net income (loss) available to common shareholders

$

(585)

$

411

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

883,853

 

1,009,567

Incremental shares from the assumed exercise of dilutive stock options

 

-

 

1,275

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

883,853

 

1,010,842

 

For the three and nine month periods ended February 28, 2014, 9,306 options to purchase common shares were anti-dilutive and were excluded from the above calculation. For the three months ended February 28, 2013, 10,000 options to purchase common shares were anti-dilutive and were excluded from the above calculation and for the nine month periods ended February 28, 2013, all options were included in the above calculation.  

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable and notes payable. The estimated fair values have been determined through information obtained from market sources and management estimates.  The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity. 

XML 22 R32.htm IDEA: XBRL DOCUMENT v2.4.0.8
PRIDES CROSSING CAPITAL (DETAILS) (USD $)
Feb. 28, 2014
Dec. 31, 2013
PRIDES CROSSING CAPITAL    
Loan Agreement with Prides Crossing Capital L.P. and Prides Crossing Capital -A, L.P. $ 2,700,000  
Loan matures on May1, 2016 and bears an interest rate of 14.00%  
Quarterly principal payments 135,000  
Security offered in company's equity interests in its domestic subsidiaries 100.00%  
Security offered in company's equity interests in its foreign subsidiaries 65.00%  
Personal guarantee offered by CEO upto 500,000  
Repurchase of shares as per the amended agreement 170,000  
Warrants issued to the lender 25,000  
Exercise price per share $ 1.00  
Warrants vesting period 3  
Grant date fair value of the warrant of approximately 51,000  
Accretion during recorded as interest expense 4,000  
Warrant was adjusted to its fair value 45,000  
Other income recorded during the period 6,000  
Paid a pre-payment penalty   $ 81,000
Agreed to repurchase the outstanding warrant to purchase shares of common stock   25,000
Shares of common stock at an exercise price   $ 1.00
XML 23 R2.htm IDEA: XBRL DOCUMENT v2.4.0.8
CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) (USD $)
Feb. 28, 2014
May 31, 2013
CURRENT ASSETS    
Cash and cash equivalents $ 1,292 $ 1,188
Restricted cash 35 100
Accounts receivable (less allowance for uncollectible accounts of $29 as of February 28, 2014 and May 31, 2013) 1,202 895
Receivable from product line sale 320 0
Prepaid and other assets 55 299
Total current assets 2,904 2,482
Property and equipment, net 103 61
Goodwill 992 4,249
Capitalized software development costs, net 362 376
Capitalized patent costs 105 101
Debt issuance costs, net 210 250
Notes receivable and other assets 260 195
TOTAL ASSETS 4,936 7,714
LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY    
Accounts payable 690 137
Accrued expenses 425 602
Other current liabilities 114 89
Deferred maintenance revenue 1,405 2,147
Current portion of capital lease 19 13
Current portion of debt 964 0
Total current liabilities 2,717 2,988
Capital lease, net of current portion 52 39
Long-term debt, net of current portion 0 2,700
Total liabilities 3,669 5,727
Commitments      
Redeemable common stock, $0.10 par value, 50,000 shares issued and outstanding at February 28, 2014 and May 31, 2013 275 275
Shareholders' equity :    
Common stock, $0.10 par value 20,000,000 shares authorized, 875,135 and 1,045,135 issued and outstanding at February 28, 2014 and May 31, 2013, respectively 100 100
Capital in excess of par value 27,314 27,369
Accumulated deficit (25,918) (25,333)
Accumulated other comprehensive loss (504) (424)
Total shareholders' equity 992 1,712
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY $ 4,936 $ 7,714
XML 24 R6.htm IDEA: XBRL DOCUMENT v2.4.0.8
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) (USD $)
9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Cash flows from operating activities:    
Net income(loss) $ (585) $ 411
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 170 161
Gain on sale of product line (155) 0
Stock-based compensation 6 6
Non-cash interest expense 15 0
Change in fair value of warrant liability (32) 0
Change in current assets and liabilities:    
Accounts receivable (243) (420)
Prepaid expenses and other assets 179 (228)
Restricted cash 65 217
Accounts payable, accrued expenses and other liabilities 401 (187)
Deferred maintenance revenue (135) 0
Net cash used in operating activities (314) (40)
Cash flows from investing activities:    
Proceeds from sale of product line, net of direct cash expenses 2,432 0
Capital expenditures (39) (2)
Capitalized software development costs (57) (207)
Capitalized patent costs (4) (6)
Net cash provided by (used in) investing activities 2,332 (215)
Cash flows from financing activities:    
Cost of treasury shares (63) 0
Capitalized debt issuance costs (32) 0
Proceeds from issuance of redeemable common stock, net of issuance costs 0 223
Repayment under debt agreements (1,700) (855)
Borrowing under debt agreements 0 300
Repayments under capital lease (11) (7)
Net cash used in financing activities (1,825) (339)
Effect of exchange rates on cash (89) 1
Increase (decrease) in cash and cash equivalents 104 (593)
Cash and cash equivalents, beginning of period 1,188 595
Cash and cash equivalents, end of period 1,292 2
Supplemental disclosures of cash flow information:    
Interest paid 205 110
Taxes paid 14 2
Noncash investing and financing activities:    
Issuance of warrants 51 0
Purchase of property and equipment under capital lease 30 53
Accretion of redeemable common stock $ 0 $ 112
XML 25 R22.htm IDEA: XBRL DOCUMENT v2.4.0.8
DEBT ISSUANCE COSTS (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2014
May 10, 2013
DEBT ISSUANCE COSTS DURING THE PERIOD:      
Direct costs incurred in establishing debt agreement     $ 238,000
Unamortized debt issuance costs     108,000
Amortization expense related to debt issuance costs $ 22,000 $ 81,000  
XML 26 R24.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stock based compensation Issuance (details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
May 31, 2011
Stock based compensation Issuance          
As per equity incentive plan company reserved common shares for issuance         150,000
Options were awarded and outstanding under the 2011 Plan. 9,306   9,306    
Expensed approximately of stock-based compensation $ 2,000 $ 2,000 $ 6,000 $ 6,000  
XML 27 Show.js IDEA: XBRL DOCUMENT /** * Rivet Software Inc. * * @copyright Copyright (c) 2006-2011 Rivet Software, Inc. All rights reserved. * Version 2.4.0.3 * */ var Show = {}; Show.LastAR = null, Show.hideAR = function(){ Show.LastAR.style.display = 'none'; }; Show.showAR = function ( link, id, win ){ if( Show.LastAR ){ Show.hideAR(); } var ref = link; do { ref = ref.nextSibling; } while (ref && ref.nodeName != 'TABLE'); if (!ref || ref.nodeName != 'TABLE') { var tmp = win ? win.document.getElementById(id) : document.getElementById(id); if( tmp ){ ref = tmp.cloneNode(true); ref.id = ''; link.parentNode.appendChild(ref); } } if( ref ){ ref.style.display = 'block'; Show.LastAR = ref; } }; Show.toggleNext = function( link ){ var ref = link; do{ ref = ref.nextSibling; }while( ref.nodeName != 'DIV' ); if( ref.style && ref.style.display && ref.style.display == 'none' ){ ref.style.display = 'block'; if( link.textContent ){ link.textContent = link.textContent.replace( '+', '-' ); }else{ link.innerText = link.innerText.replace( '+', '-' ); } }else{ ref.style.display = 'none'; if( link.textContent ){ link.textContent = link.textContent.replace( '-', '+' ); }else{ link.innerText = link.innerText.replace( '-', '+' ); } } }; XML 28 R7.htm IDEA: XBRL DOCUMENT v2.4.0.8
Description of the Business and Basis of Presentation
9 Months Ended
Feb. 28, 2014
Description of the Business and Basis of Presentation  
Description of the Business and Basis of Presentation

A.

Description of the Business and Basis of Presentation

 

SofTech, Inc. (the “Company”) was formed in Massachusetts on June 10, 1969. The Company is engaged in the development, marketing, distribution and support of computer software solutions that serve the Product Lifecycle Management (“PLM”) industry. The Company’s operations are organized geographically with offices in the U.S. and European sales and customer support offices in Germany and Italy. The Company also has resellers in Asia and Europe.

 

Since the Recapitalization Transaction described hereunder, the Company has also been actively engaged in acquiring and filing new U.S. patents, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance our value. It is expected that this kind of activity will become an increasing area of focus and investment over the coming years.

 

The consolidated financial statements of the Company include the accounts of SofTech, Inc. and its wholly-owned subsidiaries, Information Decisions, Inc., Workgroup Technology Corporation, SofTech, GmbH and SofTech, Srl. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission without audit; however, in the opinion of management, the information presented reflects all adjustments which are of a normal recurring nature and elimination of intercompany transactions which are necessary to present fairly the Company’s financial position and results of operations. It is recommended that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2013.

 

CADRA Sale

 

On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”), to Mentor Graphics Corporation (“Mentor”), pursuant to an Asset Purchase Agreement dated August 30, 2013 (the “Asset Purchase Agreement”).  The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the “Earn-Out Agreement”).

 

The Company will continue to offer the CADRA technology as a reseller throughout Europe (except Germany) and for a one year period from the closing of the transaction to Sikorsky Aircraft, the largest CADRA user in the United States.  Due to the significant continued involvement in the sale and support of the CADRA product line, the transaction does not qualify for presentation as discontinued operations.

 

Recapitalization Transaction

 

In March 2011, the current management team (CEO and VP of Business Development) completed a transaction (the “Recapitalization Transaction”) in which a group of eight investors purchased 39% of the Company’s common stock, arranged for debt facilities of $3.2 million and negotiated for a $7.6 million debt reduction from Greenleaf Capital, Inc. (“Greenleaf”), at that time, the Company’s sole lender and largest shareholder. As part of that Recapitalization Transaction, Greenleaf accepted a payment of $2.7 million in cash and note for $250,000 in full satisfaction of the $10.6 million of indebtedness. The former CEO resigned after a short transition period, a new four person Board of Directors was appointed and the existing Board members resigned. In addition, Greenleaf gave the Company’s new Board of Directors voting control over its shares for a three year period immediately following the Recapitalization Transaction.

 

Refinancing of Debt

 

On December 5, 2013, the Company entered into an amended and restated loan agreement (the “Amended Loan Agreement No. 2”) between the Company, and Prides Crossing Capital Funding, L.P., (the “Lender”) whereby the parties agreed to amend and restate the Company’s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the “Term Note”) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.

 

The amended and restated Term Note matures on January 1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.

 

Stock Purchase Agreement with Greenleaf Capital and affiliates

 

In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note K to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2013. The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company’s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected by Greenleaf, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the purchase date.

XML 29 R3.htm IDEA: XBRL DOCUMENT v2.4.0.8
CONSOLIDATED CONDENSED BALANCE SHEETS PARENTHETICALS (USD $)
Feb. 28, 2014
May 31, 2013
Parentheticals    
Allowance for uncollectible accounts $ 29 $ 29
Redeemable common stock, par value $ 0.10 $ 0.10
Redeemable common Stock, shares issued 50,000 50,000
Redeemable common Stock, shares outstanding 50,000 50,000
Common Stock, par value $ 0.10 $ 0.10
Common Stock, shares authorized 20,000,000 20,000,000
Common Stock, shares issued 875,135 1,045,315
Common Stock, shares outstanding 875,135 1,045,315
XML 30 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Summarizes option activity (Tables)
9 Months Ended
Feb. 28, 2014
Summarizes option activity  
Summarizes option activity

The following table summarizes option activity under the 2011 Plan:

 

 

 

 

Weighted

 

Weighted-

 

 

 

 

 

Average

 

Average

 

 

 

Number of

 

Exercise Price

 

Remaining

 

Aggregate

 

Options

 

Per Share

 

Life (in years)

 

Intrinsic Value

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2012

10,000

$

2.40

 

9.02

$

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2013

10,000

 

2.40

 

8.02

 

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

694

 

2.40

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at February 28, 2014

9,306

$

2.40

 

4.00

$

-

 

 

 

 

 

 

 

 

Exercisable at February 28, 2014

8,750

$

2.40

 

3.77

$

-

XML 31 R1.htm IDEA: XBRL DOCUMENT v2.4.0.8
Document and Entity Information
9 Months Ended
Feb. 28, 2014
Apr. 08, 2014
Document and Entity Information    
Entity Registrant Name SOFTECH INC  
Document Type 10-Q  
Document Period End Date Feb. 28, 2014  
Amendment Flag false  
Entity Central Index Key 0000354260  
Current Fiscal Year End Date --05-31  
Entity Common Stock, Shares Outstanding   875,135
Entity Filer Category Smaller Reporting Company  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well-known Seasoned Issuer No  
Document Fiscal Year Focus 2014  
Document Fiscal Period Focus Q3  
XML 32 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
Calculation of basic and diluted net income for each period (Tables)
9 Months Ended
Feb. 28, 2014
Calculation of basic and diluted net income for each period (Tables):  
Calculation of basic and diluted net income for each period

The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:

 

 

 

For the Three Months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net loss available to common shareholders

$

(275)

$

(14)

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

875,135

 

1,039,302

Incremental shares from the assumed exercise of

 

 

 

 

      dilutive stock options

 

-

 

-

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

875,135

 

1,039,302

 

 

 

 

 

 

 

 

For the Nine months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net income (loss) available to common shareholders

$

(585)

$

411

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

883,853

 

1,009,567

Incremental shares from the assumed exercise of dilutive stock options

 

-

 

1,275

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

883,853

 

1,010,842

XML 33 R4.htm IDEA: XBRL DOCUMENT v2.4.0.8
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for share and per share data) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
Revenue:        
Products $ 426 $ 244 $ 1,042 $ 936
Services 916 1,215 3,089 3,574
Royalties on sale of patents 0 0   290
Total revenue 1,342 1,459 4,131 4,800
Cost of revenue:        
Products 241 38 302 88
Services 325 293 897 924
Total cost of revenue 566 331 1,199 1,012
Gross margin 776 1,128 2,932 3,788
Research and development expenses 276 231 915 799
Selling, general and administrative expenses 835 848 2,582 2,391
Gain on sale of product line (64)   (155)  
Operating income(loss) (271) 49 (410) 598
Interest expense 10 63 203 198
Other income (6) 0 (28) (11)
Net income (loss) $ (275) $ (14) $ (585) $ 411
Basic and diluted net income(loss) per share: $ (0.31) $ (0.01) $ (0.66) $ 0.41
Weighted average common shares outstanding-basic and diluted 875,135 1,039,302    
Weighted average common shares outstanding-basic     883,853 1,009,567
Weighted average common shares outstanding-diluted     883,853 1,010,842
XML 34 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
DEBT
9 Months Ended
Feb. 28, 2014
DEBT  
DEBT

F. Debt

 

On May 10, 2013, the Company entered into the Loan Agreement with Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., (“Lenders”).  The Loan Agreement provided for a $2.7 million, three-year term Loan with interest only until October 1, 2014.

 

On July 9, 2013, the Loan Agreement was amended (the “Amended Loan Agreement No. 1”) to allow the Company to repurchase 170,000 of its shares from Greenleaf (as described in Note G) and to increase the maximum ratio of indebtedness to EBITDA from 2.25:1 to 2.60:1 for the quarters ended May 31, 2013, August 31, 2013 and November 30, 2013. In consideration for entering into the Amended Loan Agreement No. 1, the Company issued the Lenders warrants to purchase 25,000 shares of common stock at an exercise price of $1.00 per share. The warrants were to vest monthly over three years, with accelerated vesting under certain circumstances including if the Loan was repaid prior to maturity, and terminate if not exercised on or before July 9, 2020.

 

Upon issuance, the warrants did not meet the requirements for equity classification, because such warrants provide a cash-out election allowing the holder to a one time right to require the Company to repurchase all or a portion of the warrants.  Therefore these warrants were required to be accounted for as a liability.  Changes in fair value are recognized as either a gain or loss in the consolidated statement of operations under the caption “Other income.”

 

The Company determined the fair value of the warrants using the Black-Scholes valuation model.  The grant date fair value of the warrant of approximately $51,000 was recorded a liability, with a corresponding discount recorded on the debt.  The debt discount is being accreted through the remaining term of the Loan Agreement using the effective interest rate method.  

 

On December 5, 2013, the Company entered into an amended and restated loan agreement (the “Amended Loan Agreement No. 2”) between the Company, as borrower and Prides Crossing Capital Funding, L.P., (the “Lender”) whereby the parties agreed to amend and restate the Company’s existing $2.7 million Loan Agreement following the CADRA Sale. The Lender was the successor to Prides Crossing Capital, L.P. and Prides Crossing Capital-A, L.P., the Lenders under the Loan Agreement. Under the terms of the Amended Loan Agreement No. 2, the Company agreed to pay down the principal of the Loan Agreement from $2.7 million to $1.0 million (the “Term Note”) using a portion of the proceeds from the CADRA Sale. In addition, the Company paid a pre-payment penalty of $81,000 and agreed to repurchase the outstanding warrant to purchase 25,000 shares of common stock at an exercise price of $1.00 per share in exchange for $19,000.

 

The amended and restated Term Note matures on January 1, 2015 and bears an interest rate of 14% payable in arrears on a monthly basis throughout the life of the loan commencing on January 1, 2014. The Term Note may be repaid in full at any time but partial voluntary pre-payments are not allowed. If a pre-payment is made on or prior to September 30, 2014, the Company shall pay a yield maintenance fee equal to the interest that would have accrued under the Term Note from the date of pre-payment through September 30, 2014. No yield maintenance fee is due for a pre-payment made subsequent to September 30, 2014.

 

The Company agreed to secure all of its obligations under the Term Note by granting the Lender a first priority security interest in all of the Company’s assets, including the Company’s intellectual property and pledges of (i) one hundred percent (100%) of the Company’s equity interests in its domestic subsidiaries and (ii) sixty-five percent (65%) of the Company’s equity interests in its foreign subsidiaries.  In connection with the grant of the security interest in favor of the Lender in the Company’s intellectual property, the Company has entered into an intellectual property security agreement with the Lender and entered into a source code escrow agreement with the Lender and an independent third party.  In addition, the Company’s Chief Executive Officer has provided the Lender with a personal guaranty of up to $500,000 secured by his equity interests in the Company.

 

The Amended Loan Agreement No. 2 contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes in its business.  In addition, the Amended Loan Agreement No. 2 contains financial covenants by the Company that establish (i) a month-end minimum consolidated cash balance of $1.0 million of which no less than $750,000 must be held in the Company’s main operating account that is subject to a deposit account control agreement; (ii) a minimum of $750,000 of consolidated cash at all times; (iii) a quick ratio covenant, which provides that on the last day of each fiscal quarter the ratio of the Company’s cash plus accounts receivable divided by accounts playable plus accrued expenses shall not be less than 2.7:1; and (iv) a covenant that provides that the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for Q3 and Q4 of fiscal 2014 shall not exceed a loss of $200,000 for each of those fiscal quarters and shall be greater than positive EBITDA of $100,000 for each subsequent fiscal quarter. The Amended Loan Agreement No. 2 also imposes limits on capital expenditures for each fiscal year during the term of the Amended Loan Agreement No. 2. As part of the Amended Loan Agreement No. 2 the Company, the Lender and First Republic Bank entered into a deposit account control agreement pursuant to which the Lender will perfect its security interest in the assets held in the Company’s main operating account at First Republic Bank.

 

The Amended Loan Agreement No. 2 provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy.  Upon an event of default relating to insolvency, bankruptcy or receivership, the amounts outstanding under the Amended Loan Agreement No. 2 will become immediately due and payable and the Lender commitment will be automatically terminated.  Upon the occurrence and continuation of any other event of default, the Lender may accelerate payment of all obligations and terminate the Lender’s commitments under the Amended Loan Agreement No. 2.

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Sale of Patents
9 Months Ended
Feb. 28, 2014
Sale of Patents  
Sale of Patents

E.

Sale of Patents

 

In June 2012, the Company sold to an unrelated third party (the “Buyer”) its rights, title and interests in three of its U.S. patents (the “Patents”) all entitled Method and System for Design and Drafting in exchange for a non-refundable, initial royalty payment of $200,000 (the “Initial Payment”). These Patents were derived from the Company’s development work related to the Company’s CADRA product line and the inventions are a key, time saving feature within that technology offering. The Company received a limited, non-exclusive, royalty-free license under the Patents to make, use, offer to sell, or sell the Company’s products or services.

 

In September 2012, the Patent agreement was amended to include two other U.S. patents (“Additional Patents”) both entitled Product Development System and Method Using Integrated Process and Data Management. These Additional Patents were derived from the development work related to the Company’s ProductCenter product line and are a core and essential capability within that product offering. The Company received a limited, non-exclusive, royalty-free license under the Additional Patents to make, use, offer to sell or sell the Company’s products or services. As a result of the amendment, the Initial Payment was increased by $100,000.

 

The agreement gives the Buyer complete control over what, if any, actions shall be taken in the future to monetize the Patents through licensing, sale, enforcement or other means. In the event whereby monies are derived from the Patents, the Company is due 30% of the net proceeds (the “Net Proceeds”), as defined in the agreement. The Initial Payment shall be reimbursable from Net Proceeds to the extent any are due. There can be no assurance that the Company will derive any additional monies from the Patents, however.

 

The sale of the Patents is a multiple element arrangement as defined under ASC 605 and, as such, the Company allocated the Initial Payment between the sale of the Patents that were delivered during the fiscal quarter and support services that were undelivered. Support services include being available to the Buyer to assist them should they require such assistance in licensing or pursuing other means of monetizing the Patents to third parties. The allocation of the Initial Payment to the patent and support services elements was based on management’s best estimate of the selling price of each element. The Initial Payment was allocated as follows: Patents - $290,000; and Support Services - $10,000. Additional monies due the Company in the form of royalties from its 30% share of Net Proceeds will be recorded in the quarterly period in which the Buyer notifies the Company such payments are due. Such notification and payment, if any, are due thirty calendar days after the end of each calendar quarter. The revenue allocated to support services was recognized during the three months ended February 28, 2014 as all services had been performed. There can be no assurance that the Company will derive any other monies from the Additional Patents, however.

 

The Company retained its U.S. patent applications that it acquired or filed since the Recapitalization Transaction in March 2011. These patent applications were not included in the above described agreement. The Company expects to be actively engaged with the U.S. Patent and Trademark Office for the foreseeable future with regard to those filings.

XML 37 R23.htm IDEA: XBRL DOCUMENT v2.4.0.8
CAPITALIZED PATENT COSTS AS FOLLOWS (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
CAPITALIZED PATENT COSTS AS FOLLOWS:        
Capitalized patent costs totaled $ 2,000 $ 0 $ 4,000 $ 6,000
XML 38 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
Segment Reporting Information (Tables)
9 Months Ended
Feb. 28, 2014
Segment Reporting Information  
Segment Reporting Information

Components of revenue and long-lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):

 

 

 

Three Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

1,077

$

1,148

Europe

 

318

 

358

Asia

 

-

 

157

Eliminations

 

(53)

 

(204)

Consolidated Total

$

1,342

$

1,459

 

 

 

Nine Month Periods Ended

Revenue:

 

February 28, 2014

 

February 28, 2013

North America

$

3,335

$

3,561

Europe

 

922

 

1,293

Asia

 

493

 

444

Eliminations

 

(619)

 

(498)

Consolidated Total

$

4,131

$

4,800

 

Long Lived Assets:

 

As of February 28,

2014

 

As of May 31,

2013

North America

$

1,989

$

5,119

Europe

 

43

 

113

Consolidated Total

$

2,032

$

5,232

XML 39 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Subsequent Events
9 Months Ended
Feb. 28, 2014
Subsequent Events  
Subsequent Events

I.

Subsequent Events

 

The Company has evaluated all events and transactions that occurred after the balance sheet and through the date that the financial statements were available to be issued.  

XML 40 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stock Purchase Agreement
9 Months Ended
Feb. 28, 2014
Stock Purchase Agreement  
Stock Purchase Agreement Text Block

G.

Stock Purchase Agreement

 

In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E. Stryker and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note G to the consolidated financial statements as of May 31, 2013.  The agreement provides an option for the Company to either make an offer to purchase the remaining 101,411 shares held by Greenleaf at $0.37 per share or to provide Greenleaf with registration rights with respect to the remaining shares as set forth in the Registration Rights Agreement dated March 8, 2011. Greenleaf is under no obligation to accept the Company’s offer to purchase the remaining shares on the terms set forth above, however, if the offer is made by the Company and rejected, the Company will no longer be obligated to provide Greenleaf with registration rights with respect to the remaining shares. As part of the agreement, Greenleaf agreed not to sell or transfer the shares for a one year period from the transaction date.

XML 41 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
CADRA Sale
9 Months Ended
Feb. 28, 2014
CADRA Sale:  
CADRA Sale

H.

CADRA Sale

 

On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluded cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services, to Mentor, pursuant to an Asset Purchase Agreement dated August 30, 2013.  The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business (the “Earn-Out Payments”), subject to the terms of the Earn-Out Agreement dated August 30, 2013.  

 

The Company will continue to sell and support the CADRA technology throughout Europe (except Germany) and, for a one year period from the closing, will retain the rights to sell and support the technology to the largest U.S. CADRA user, Sikorsky Aircraft.

 

The transaction generated a gain during the second quarter of fiscal 2014 which was composed of the following (000’s):

 

Proceeds from the sale of the CADRA technology

$

3,200

Liabilities assumed by Mentor related to deferred maintenance obligations

 

607

Professional fees and other expenses related to the transaction

 

(448)

Goodwill allocated to the CADRA product line

 

(3,261)

Net book value of equipment transferred in the sale

 

(7)

Gain on sale of CADRA product line

$

91

 

Any additional Earn-Out Payments received by the Company will be recorded during the periods in which Mentor reports amounts due under the Earn-Out Agreement so long as collectability has been determined. During the quarter ended February 28, 2014, the Company recorded a gain of $64,000 under the Earn-Out Agreement bringing the total gain through February 28, 2014 to approximately $155,000.

XML 42 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
ACCOUNTING POLICIES (Policies)
9 Months Ended
Feb. 28, 2014
ACCOUNTING POLICIES  
USE OF ESTIMATES

USE OF ESTIMATES

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, and the valuation of long term assets including goodwill, intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates.

REVENUE RECOGNITION

REVENUE RECOGNITION

 

The Company follows the provisions of the Accounting Standards Codification (“ASC”) 985, Software for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, and a fixed fee and collectability has been determined. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (“VSOE”) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985. Revenue from customer maintenance support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model.

 

The Company follows the provisions of ASC 605, Revenue Recognition for transactions that do not involve the licensing of software or software support services as in the case of the recent sale of our patents. Revenue from the sale of patents is recorded when persuasive evidence of an arrangement exists, delivery has taken place and a fixed fee and collectability has been determined. These conditions are no different from those when we license software. For multiple element arrangements, however, under ASC 605, total fees are allocated to each of the elements based upon the relative selling price method. Under that method the allocation of fees to the undelivered elements is based on VSOE, or if it doesn’t exist, then based on third party evidence of selling price. If neither exists, then the allocation is based on management’s best estimate of the selling price.

SOFTWARE DEVELOPMENT COSTS

SOFTWARE DEVELOPMENT COSTS

 

The Company accounts for its software development costs in accordance with 985-20, Costs of Computer Software to Be Sold, Leased or Marketed.  Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.  Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.  Such costs are amortized using the straight-line method over the estimated economic life of the product, generally three years.  The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis.  Judgment is required in determining when technological feasibility of a product is established as well as its economic life.

 

During the nine months ended February 28, 2014, the Company capitalized approximately $57,000 of software development costs related to new products.  The Company did not capitalize software development costs during the three months ended February 28, 2014.  During the three and nine months ended February 28, 2013, the Company capitalized approximately $49,000 and $207,000, respectively. Amortization expense related to capitalized software development costs for the three and nine months ending February 28, 2014 was approximately $23,000 and $71,000, respectively, as compared to approximately $20,000 and $48,000 for the comparable periods in the prior fiscal year.  

DEBT ISSUANCE COSTS POLICY

DEBT ISSUANCE COSTS

 

The Company capitalizes the direct costs associated with entering into debt agreements and amortizes those costs over the life of the debt agreement.  The December 2013 refinancing was considered a modification per ASC 470-50, Debt Modifications and Extinguishment. The Company capitalized no additional costs in connection with the refinancing. The Company had approximately $238,000 in unamortized debt issuance costs remaining, relating to the old arrangement at the time of the transaction. The total debt issuance costs are being amortized over the term of the new arrangement in accordance with ASC 470-50. Unamortized debt issuance costs related to the Company’s previous debt agreement as of May 10, 2013 totaled approximately $108,000 and were expensed in Q4 of fiscal 2013. Amortization expense related to debt issuance costs for the three and nine months ending February 28, 2014 were approximately $22,000 and $81,000, respectively, as compared to approximately $29,000 and $88,000 for the comparable periods in the prior fiscal year.

ACCOUNTING FOR GOODWILL

ACCOUNTING FOR GOODWILL

 

The Company accounts for goodwill pursuant to the provisions of the ASC 350,  Intangibles – Goodwill and Other. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement’s criteria.

 

The Company operates in a single reporting unit.  Goodwill has been allocated to the CADRA product line based upon the estimated fair value of the CADRA product line based on the transaction with Mentor as compared to the estimated fair value of the Company as a whole. Goodwill allocated to the CADRA product line included in the derivation of the gain on sale was approximately $3.2 million.

 

As of May 31, 2013, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the nine months ended February 28, 2014 to warrant an interim impairment test.

CAPITALIZED PATENT COSTS POLICY

CAPITALIZED PATENT COSTS

 

Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected.  Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs for the three and nine month periods ending February 28, 2014 were approximately $2,000 and $4,000, respectively, as compared to $ - and $6,000, respectively, for the three and nine month periods ending February 28, 2013.

LONG-LIVED ASSETS

LONG-LIVED ASSETS

 

The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of February 28, 2014, the Company does not have any long-lived assets it considers to be impaired.

STOCK-BASED COMPENSATION POLICY

STOCK BASED COMPENSATION

 

Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award. The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.

 

In May 2011, the 2011 Equity Incentive Plan (the “2011 Plan”) was approved by the Company’s shareholders, pursuant to which 150,000 shares of our common shares were reserved for issuance. Additionally, any future shares subject to any award under the 2011 Plan that expire, is terminated unexercised or is forfeited will be available for grant under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of February 28, 2014, 9,306 options were awarded and outstanding under the 2011 Plan.

 

The following table summarizes option activity under the 2011 Plan:

 

 

 

 

Weighted

 

Weighted-

 

 

 

 

 

Average

 

Average

 

 

 

Number of

 

Exercise Price

 

Remaining

 

Aggregate

 

Options

 

Per Share

 

Life (in years)

 

Intrinsic Value

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2012

10,000

$

2.40

 

9.02

$

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at May 31, 2013

10,000

 

2.40

 

8.02

 

-

Granted

-

 

-

 

-

 

-

Exercised

-

 

-

 

-

 

-

Forfeited or expired

694

 

2.40

 

-

 

-

 

 

 

 

 

 

 

 

Outstanding options at February 28, 2014

9,306

$

2.40

 

4.00

$

-

 

 

 

 

 

 

 

 

Exercisable at February 28, 2014

8,750

$

2.40

 

3.77

$

-

 

 

The Company determined the volatility for options granted using the historical volatility of the Company’s common stock. The expected life of options has been determined utilizing the “simplified” method as prescribed in ASC 718 Compensation, Stock Compensation. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

 

REEDEMABLE COMMON STOCK

REDEEMABLE COMMON STOCK

 

During the year ending May 31, 2013, the Company issued 50,000 shares of common stock, $.10 par value (the “Common Stock”) at a purchase price of $5.00 per share to accredited investors (collectively, the “Investors”) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the “Agreement”) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitles the Investors to a fee of $6,000 (the “Fee”) to be paid in six equal quarterly installments during the eighteen month period (the “Payment Period”) following the investment.  The Agreement also provides the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the “Put Option”) for $5.50 per share in cash for a 30 day period following the Payment Period.

 

The Company first assessed the redeemable Common Stock to determine if the instrument should be accounted for as a liability in accordance with ASC 480. In that the Put Option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed the Put Option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, Derivatives and Hedging, and concluded that the Put Option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the Common Stock issued pursuant to the Agreement in accordance with ASC 480-10-S99-3A, Classification and Measurement of Redeemable Securities, which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity. The 50,000 shares of Common Stock issued pursuant to the Agreement were recorded as redeemable common stock at an initial carrying value of $163,000. This amount is equal to the gross proceeds of $250,000, less $27,000 in issuance costs related to legal fees and the $60,000 Fee, which has been included in other liabilities. The Company elected to record the Common Stock at its redemption value of $275,000 immediately and accordingly recorded accretion of $112,000 to additional paid in capital during fiscal year 2013.

FOREIGN CURRENCY TRANSLATION

FOREIGN CURRENCY TRANSLATION

 

The functional currency of the Company’s foreign operations (Germany and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). Foreign currency gains and losses arising from transactions were included in the statements of operations. For the three and nine month periods ended February 28, 2014, the Company recorded a net gain from foreign currency related transactions of approximately $6,000, and $28,000, respectively, as compared to approximately $- and $11,000 for the comparable periods in the prior fiscal year, to Other (income) expense in the Consolidated Condensed Statements of Operations.

INCOME TAXES Policy

INCOME TAXES

 

The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.

NET INCOME (LOSS) PER COMMON SHARE POLICY

NET INCOME (LOSS) PER COMMON SHARE

 

Basic and diluted net income (loss) per share are computed by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income (loss) by the weighted-average number of common and equivalent dilutive common shares outstanding.  For periods in which losses are reported potentially dilutive common stock equivalents are excluded from the calculation of diluted loss per share because the effect is antidilutive.

 

The following table details the derivation of weighted average shares outstanding used in the calculation of basic and diluted net income (loss) for each period:

 

 

 

For the Three Months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net loss available to common shareholders

$

(275)

$

(14)

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

875,135

 

1,039,302

Incremental shares from the assumed exercise of

 

 

 

 

      dilutive stock options

 

-

 

-

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

875,135

 

1,039,302

 

 

 

 

 

 

 

 

For the Nine months Ended

 

 

February 28,

2014

 

February 28,

2013

 

 

(amounts in thousands)

 

 

 

 

 

Net income (loss) available to common shareholders

$

(585)

$

411

 

 

 

 

 

Weighted average number of common shares outstanding used in calculation of basic earnings per share

 

883,853

 

1,009,567

Incremental shares from the assumed exercise of dilutive stock options

 

-

 

1,275

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

    outstanding used in calculating diluted earnings

 

 

 

 

    per share

 

883,853

 

1,010,842

 

For the three and nine month periods ended February 28, 2014, 9,306 options to purchase common shares were anti-dilutive and were excluded from the above calculation. For the three months ended February 28, 2013, 10,000 options to purchase common shares were anti-dilutive and were excluded from the above calculation and for the nine month periods ended February 28, 2013, all options were included in the above calculation.  

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financial instruments consist of cash equivalents, accounts receivable, accounts payable and notes payable. The estimated fair values have been determined through information obtained from market sources and management estimates.  The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity. 

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Transaction generated a gain during as Follows (DETAILS) (USD $)
3 Months Ended
Feb. 28, 2014
Transaction generated a gain during as Follows:  
Proceeds from the sale of the CADRA technology $ 3,200
Liabilities assumed by Mentor related to deferred maintenance obligations 607
Professional fees and other expenses related to the transaction (448)
Goodwill allocated to the CADRA product line (3,261)
Net book value of equipment transferred in the sale (7)
Gain on sale of CADRA product line $ 91
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SOFTWARE DEVELOPMENT COSTS (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
SOFTWARE DEVELOPMENT COSTS DURING:        
Capitalized approximately $ 0 $ 49,000 $ 57,000 $ 207,000
Amortization expense related to capitalized software development costs $ 23,000 $ 20,000 $ 71,000 $ 48,000
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REEDEMABLE COMMON STOCK (Details) (USD $)
Feb. 28, 2014
Reedemable common stock  
Company issued common stock shares 50,000
Par value of the share $ 0.10
Purchase price of the share $ 5.00
Private placement transactions for total proceeds $ 250,000
company investment 25,000
Investors fee 6,000
Redemption price of the Common Stock per share (Put option) $ 5.50
Redeemable common Stock initial carrying value 163,000
Amount equal to gross proceeds 250,000
Issuance cost related legal fee 27,000
Fee included in other liabilities 60,000
Common Stock recorded at its redemption value 275,000
Recorded accretion to additional paid in capital $ 112,000
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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (UNAUDITED) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
COMPREHENSIVE INCOME (LOSS):        
Net income (loss) $ (275) $ (14) $ (585) $ 411
Foreign currency translation adjustment (35) 3 (80) 9
Total other comprehensive loss (35) 3 (80) 9
Comprehensive income (loss) $ (310) $ (11) $ (665) $ 420
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Note Receivable
9 Months Ended
Feb. 28, 2014
Note Receivable  
Note Receivable

D.

Note Receivable

 

Joseph Mullaney, the Company’s CEO, was extended a non-interest bearing note in the amount of $134,000 related to a stock transaction in May, 1998. The note is partially secured by the Company stock acquired in that transaction. The Company has accounted for the note as a fixed arrangement.

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FOREIGN CURRENCY TRANSLATION TRANSACTIONS (Details) (USD $)
3 Months Ended 9 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Feb. 28, 2013
FOREIGN CURRENCY TRANSLATION TRANSACTIONS:        
Net gain from foreign currency related transactions $ 6,000 $ 0 $ 28,000 $ 11,000
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Transaction Generated a Gain During Current Quarter (Tables)
9 Months Ended
Feb. 28, 2014
Transaction Generated a Gain During Current Quarter  
Transaction Generated a Gain During Current Quarter

The transaction generated a gain during the second quarter of fiscal 2014 which was composed of the following (000’s):

 

Proceeds from the sale of the CADRA technology

$

3,200

Liabilities assumed by Mentor related to deferred maintenance obligations

 

607

Professional fees and other expenses related to the transaction

 

(448)

Goodwill allocated to the CADRA product line

 

(3,261)

Net book value of equipment transferred in the sale

 

(7)

Gain on sale of CADRA product line

$

91