INCOME TAXES (Tables)

12 Months Ended

May 31, 2022

INCOME TAXES

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

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

	Year Ended May 31,
	2022		2021			2020
Domestic	$	9,416	$	(13,064	)	$	(2,751	)
Foreign		125		10,860			(15	)
	$	9,541	$	(2,204	)	$	(2,766	)

Income tax (expense) benefit

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

	Year Ended May 31,
	2022			2021		2020
Federal income taxes:
Current	$	(59	)	$	163	$	-
Deferred		-			-		-
State income taxes:
Current		(5	)		13		(30	)
Deferred		-			-		-
Foreign income taxes:
Current		(27	)		1		(6	)
Deferred		-			-		-
	$	(91	)	$	177	$	(36	)

Income tax reconciliation

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

	Year Ended May 31,
	2022			2021			2020
US federal statutory tax rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal tax effect		0.1			0.6			1.4
Foreign rate differential		0.3			9.8			(21.5	)
Stock-based compensation		(11.0	)		(4.7	)		(4.0	)
Research and development credit		(1.3	)		4.0			-
Change in valuation allowance		(4.7	)		(32.1	)		4.3
Controlled Foreign Corporation Liquidation		-			9.8			-
PPP Loan		(3.7	)		-			-
Other		0.4			(0.4	)		(2.5	)
Effective tax rate		1.1	%		8.0	%		(1.3	)%

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,
	2022			2021
Deferred tax assets:
Net operating losses	$	14,912		$	15,584
Lease Liability		218			372
Credit carryforwards		5,535			5,298
Inventory reserves		934			1,006
Reserves and accruals		1,360			890
Other		220			450
		23,179			23,600
Deferred tax liabilities:
Operating lease right-of-use assets		(199	)		(342	)
Less: Valuation allowance		(22,980	)		(23,258	)
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, 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
Increases related to prior year tax positions		12
Increases related to current year tax positions		78
Balance at May 31, 2022	$	2,018