7. INCOME TAXES (Tables)

12 Months Ended

May 31, 2021

Income Tax Disclosure [Abstract]

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

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

	Year Ended May 31,
	2021		2020		2019
Domestic	$	(13,064)	$	(2,751)	$	(5,273)
Foreign		10,860		(15)		65
	$	(2,204)	$	(2,766)	$	(5,208)

Income tax benefit (expense)

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

	Year Ended May 31,
	2021		2020		2019
Federal income taxes:
Current	$	163	$	--	$	--
Deferred		--		--		--
State income taxes:
Current		13		(30)		(6)
Deferred		--		--		--
Foreign income taxes:
Current		1		(6)		(21)
Deferred		--		--		--
	$	177	$	(36)	$	(27)

Income tax reconciliation

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

	Year Ended May 31,
	2021			2020			2019
U.S. federal statutory tax rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal tax effect		0.6			1.4			(1.0)
Foreign rate differential		9.8			(21.5)			(0.7)
Stock-based compensation		(4.7)			(4.0)			(2.8)
Research and development credit		4.0			--			1.5
Change in valuation allowance		(32.1)			4.3			(15.6)
Federal rate change impact		--			--			--
Federal AMT refund		--			--			--
ASU 2016-09 adoption		--			--			--
Controlled Foreign Corporation Liquidation		9.8			--			--
Other		(0.4)			(2.5)			(2.9)
Effective tax rate		8.0	%		(1.3)	%		(0.5)	%

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,
	2021		2020
Deferred tax assets:
Net operating losses	$	15,584	$	13,634
Lease Liability		372		483
Credit carryforwards		5,298		5,089
Inventory reserves		1,006		1,005
Reserves and accruals		890		739
Other		450		319
		23,600		21,269
Deferred tax liabilities:
Operating lease right-of-use assets		(342)		(449)
Less: Valuation allowance		(23,258)		(20,820)
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, 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
Increases related to prior year tax positions		11
Increases related to current year tax positions		65
Balance at May 31, 2021	$	1,928