7. INCOME TAXES (Tables)

12 Months Ended

May 31, 2020

Income Tax Disclosure [Abstract]

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

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

	Year Ended May 31,
	2020			2019			2018
Domestic	$	(2,751	)	$	(5,273	)	$	433
Foreign		(15	)		65			22
	$	(2,766	)	$	(5,208	)	$	455

Income tax (expense) benefit

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

	Year Ended May 31,
	2020			2019			2018
Federal income taxes:
Current	$	--		$	--		$	99
Deferred		--			--			--
State income taxes:
Current		(30	)		(6	)		(22	)
Deferred		--			--			--
Foreign income taxes:
Current		(6	)		(21	)		(4	)
Deferred		--			--			--
	$	(36	)	$	(27	)	$	73

Income tax reconciliation

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

	Year Ended May 31,
	2020			2019			2018
U.S. federal statutory tax rate		21.0	%		21.0	%		28.6	%
State taxes, net of federal tax effect		1.4			(1.0	)		(16.7	)
Foreign rate differential.		(21.5	)		(0.7	)		39.4
Stock-based compensation		(4.0	)		(2.8	)		39.9
Research and development credit		--			1.5			5.9
Change in valuation allowance		4.3			(15.6	)		(1,349.2	)
Federal rate change impact		--			--			1,419.7
Federal AMT refund		--			--			(20.0	)
ASU 2016-09 adoption		--			--			(169.1	)
Other		(2.5	)		(2.9	)		5.4
Effective tax rate		(1.3	)%		(0.5	)%		(16.1	)%

Net deferred tax assets and liabilities

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

	Year Ended May 31,
	2020			2019
Deferred tax assets:
Net operating losses	$	13,634		$	13,475
Lease Liability		483			--
Credit carryforwards		5,089			4,995
Inventory reserves		1,005			790
Reserves and accruals		739			1,379
Other		319			298
		21,269			20,937
Deferred tax liabilities:
Operating lease right-of-use assets		(449	)		--
Less: Valuation allowance		(20,820	)		(20,937	)
Net deferred tax assets (liabilities)	$	--		$	--

Unrecognized tax benefits

    The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):

Beginning balance as of May 31, 2017	$	789
Increases related to prior year tax positions		889
Increases related to current year tax positions		107
Balance at May 31, 2018	$	1,785
Decreases related to prior year tax positions		(41	)
Increases related to current year tax positions		65
Balance at May 31, 2019	$	1,809
Decreases related to prior year tax positions		(11	)
Increases related to current year tax positions		54
Balance at May 31, 2020	$	1,852