INCOME TAXES (Tables)

12 Months Ended

May 31, 2023

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,
	2023		2022		2021
Domestic	$	14,541	$	9,416	$	(13,064	)
Foreign		76		125		10,860
	$	14,617	$	9,541	$	(2,204	)

Income tax (expense) benefit

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

	Year Ended May 31,
	2023			2022			2021
Federal income taxes:
Current	$	(28	)	$	(59	)	$	163
Deferred		-			-			-
State income taxes:
Current		-			(5	)		13
Deferred		-			-			-
Foreign income taxes:
Current		(32	)		(27	)		1
Deferred		-			-			-
	$	(60	)	$	(91	)	$	177

Income tax reconciliation

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

	Year Ended May 31,
	2023			2022			2021
U.S. federal statutory tax rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal tax effect		-			0.1			0.6
Foreign rate differential		0.7			0.3			9.8
Stock-based compensation		(9.1	)		(11.0	)		(4.7	)
Research and development credit		(2.3	)		(1.3	)		4.0
Change in valuation allowance		(9.3	)		(4.7	)		(32.1	)
Controlled Foreign Corporation Liquidation. .		-			-			9.8
PPP Loan		-			(3.7	)		-
Other		(0.6	)		0.4			(0.4	)
Effective tax rate		0.4	%		1.1	%		8.0	%

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,
	2023			2022
Deferred tax assets:
Net operating losses	$	11,964		$	14,912
Lease liability		1,335			218
Credit carryforwards		6,235			5,535
Inventory reserves		938			934
Reserves and accruals		1,200			1,360
Capitalized research and development		1,187			-
Other		297			220
Less: valuation allowance		(21,859	)		(22,980	)
		1,297			199
Deferred tax liabilities:
Operating lease right-of-use assets		(1,297	)		(199	)
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, 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
Increases related to prior year tax positions		90
Increases related to current year tax positions		168
Balance at May 31, 2023	$	2,276