7. INCOME TAXES (Tables)

12 Months Ended

May 31, 2014

Income Tax Disclosure [Abstract]

Domestic and foreign components of income (loss) before income tax benefit (expenses)

    Domestic and foreign components of loss before income tax (expense) benefit are as follows (in thousands):

	Year Ended May 31,
	2014			2013			2012
Domestic	$	438		$	(3,392	)	$	(3,590	)
Foreign		(31	)		3			186
	$	407		$	(3,389	)	$	(3,404	)

Income tax benefit (expense)

The income tax (expense) benefit consists of the following (in thousands):

	Year Ended May 31,
	2014			2013			2012
Federal income taxes:
Current	$	--		$	--		$	--
Deferred		--			--			--
State income taxes:
Current		(30	)		(21	)		(12	)
Deferred		--			--			--
Foreign income taxes:
Current		45			(9	)		27
Deferred		--			--			--
	$	15		$	(30	)	$	15

Income tax reconciliation

The Company’s effective tax rate differs from the U.S. federal statutory tax rate, as follows:

	Year Ended May 31,
	2014			2013			2012
U.S. federal statutory tax rate		34.0	%		34.0	%		34.0	%
State taxes, net of federal tax effect		4.7			(0.4	)		(0.2	)
Foreign rate differential		(11.9	)		0.2			2.9
Stock-based compensation		34.5			(4.4	)		(6.0	)
Research and development credit		(20.5	)		3.0			0.1
Change in valuation allowance		(45.8	)		(33.0	)		(30.2	)
Other		1.3			(0.3	)		(0.2	)
Effective tax rate		(3.7	)%		(0.9	)%		0.4	%

Net deferred tax assets

The components of the net deferred tax assets are as follows (in thousands):

	Year Ended May 31,
	2014			2013
Net operating losses	$	12,368		$	11,903
Credit carryforwards		4,192			4,028
Inventory reserves		1,822			2,667
Reserves and accruals		2,899			2,913
Other		703			679
		21,984			22,190
Less: Valuation allowance		(21,984	)		(22,190	)
Net deferred tax assets	$	--		$	--

Unrecognized tax benefits

The Company maintains liabilities for uncertain tax positions.  These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available.  The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):

Beginning balance as of May 31, 2011	$	1,093
Decreases related to prior year tax positions		--
Decreases related to lapse of statute of limitations		(71	)
Balance at May 31, 2012	$	1,022
Decreases related to prior year tax positions		--
Decreases related to lapse of statute of limitations		(15	)
Balance at May 31, 2013	$	1,007
Decreases related to prior year tax positions		--
Decreases related to lapse of statute of limitations		(34	)
Balance at May 31, 2014	$	973