The estimated financial results contained in this announcement for the Company’s first fiscal quarter ended August 31, 2014 are preliminary, and are subject to the closing of its financial books and the completion of the customary quarter-end review procedures.

FINANCIAL STATEMENTS

The Statements of Operations for the three and twelve month periods ended May 31, 2014 compared to the same periods in the prior fiscal year are presented below. A reconciliation of Net income(loss) to EBITDA, a non-GAAP financial measure, is also provided.

Statements of Operations
(in thousands, except % and per share data)
										For the three months ended
										May 31,					May 31,					Change
											2014					2013					$			%
Product revenue											95				$	347					(252	)		-72.6	%
Service revenue											783					1,211					(428	)		-35.3	%
Total revenue											878					1,558					(680	)		-43.6	%
Cost of sales											369					363					6			1.7	%
Gross margin											509					1,195					(686	)		-57.4	%
Gross margin %											58.0	%				76.7	%
R&D											256					288					(32	)		-11.1	%
SG&A											882					795					87			10.9	%
Gain on sale of CADRA product line											(494	)				-					(494	)		-
Operating income											(135	)				112					(247	)		-220.5	%
Interest expense											48					144					(96	)		-66.7	%
Other (income) expense											(22	)				4					(26	)		-650.0	%
Income(loss) from operations before income taxes											(161	)				(36	)				(125	)		347.2	%
Provision for income taxes											2					15					(13	)		-86.7	%
Net income(loss)											(163	)				(51	)				(112	)		219.6	%
Weighted average shares outstanding											875					1,045					(170	)		-16.3	%
Basic and diluted net income per share:										$	(0.19	)			$	(0.05	)			$	(0.14	)		281.7	%
Reconciliation of Net income to EBITDA:
Net income(loss)										$	(163	)			$	(51	)			$	(112	)		219.6	%
Plus interest expense											48					144					(96	)		-66.7	%
Plus tax expense											2					15					(13	)		-86.7	%
Plus non-cash expenses											128					176					(48	)		-27.3	%
Plus non-cash goodwill expense related to CADRA product line											44					-					44			-
EBITDA										$	59				$	284				$	(225	)		-79.2	%

Statements of Operations
(in thousands, except % and per share data)
									For the fiscal years ended
									May 31,					May 31,					Change
										2014					2013					$			%
Product revenue									$	1,138				$	1,284				$	(146	)		-11.4	%
Service revenue										3,861					4,784					(923	)		-19.3	%
Royalties on sale of patents										10					290					(280	)		-
Total revenue										5,009					6,358					(1,349	)		-21.2	%
Cost of sales										1,567					1,375					192			14.0	%
Gross margin										3,442					4,983					(1,541	)		-0.8	%
Gross margin %										68.7	%				78.4	%
R&D										1,171					1,087					84			7.7	%
SG&A										3,465					3,186					279			8.8	%
Gain on sale of CADRA product line										(649	)				-					(649	)		-
Operating income										(545	)				710					(1,255	)		-176.8	%
Interest expense										251					342					(91	)		-26.6	%
Other (income) expense										(50	)				(7	)				(43	)		614.3	%
Income from operations before income taxes										(746	)				375					(1,121	)		-298.9	%
Provision for income taxes										2					15					(13	)		-86.7	%
Net income										(748	)				360					(1,108	)		-307.8	%
Weighted average shares outstanding										877					1,019					(142	)		-13.9	%
Basic and diluted net income per share:									$	(0.85	)			$	0.35				$	(1.21	)		-341.4	%
Reconciliation of Net income to EBITDA
Net income									$	(748	)			$	360					(1,108	)		-307.8	%
Plus interest expense										251					342					(91	)		-26.6	%
Plus tax expense										2					15					(13	)		-86.7	%
Plus non-cash expenses, net										284					341					(57	)		-16.7	%
Plus non-cash goodwill expense related to CADRA product line										3,305					-					3,305			-
EBITDA									$	3,094				$	1,058				$	2,036			192.4	%

Balance Sheets
(in thousands)
								As of
								May 31,				May 31,
								2014				2013
Cash								$	1,209			$	1,188
Restricted cash									-				100
Accounts receivable									666				895
Receivable due from sale of CADRA product line									547
Other current assets									343				299
Total current assets									2,765				2,482
Property and equipment, net									95				61
Goodwill									948				4,249
Other non-current assets									916				922
Total assets								$	4,724			$	7,714
Accounts payable								$	483			$	137
Accrued expenses									503				602
Deferred maintenance revenue									1,462				2,088
Current portion of long term debt									973				-
Other current liabilities									123				102
Total current liabilities									3,544				2,929
Other non-current liabilities									47				98
Long term debt									-				2,700
Total liabilities									3,591				5,727
Redeemable common stock									275				275
Stockholders' equity									858				1,712
Total liabilities, redeemable common stock
and stockholders' equity								$	4,724			$	7,714

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