STOCK-BASED COMPENSATION

3 Months Ended

Aug. 31, 2023

SHAREHOLDERS EQUITY

STOCK-BASED COMPENSATION

10. STOCK-BASED COMPENSATION

Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), performance RSUs, or PRSUs, restricted shares, performance restricted shares and employee stock purchase plan, or ESPP, purchase rights. Stock-based compensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, PRSUs, restricted shares and performance restricted shares, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as equity instruments. See Note 13 in the Company’s Annual Report on Form 10-K for fiscal 2023 filed on August 28, 2023 for further information regarding the 2016 Equity Incentive Plan (the “2016 Plan”) and the ESPP.

The following table summarizes the stock-based compensation expense for the three months ended August 31, 2023 and 2022:

	Three Months Ended August 31,
(In thousands)	2023		2022
Cost of sales	$	63	$	91
Research and development		153		154
Selling, general and administrative		306		465
	$	522	$	710

There were $149,000 and $120,000 in stock-based compensation expense capitalized as part of inventory as of August 31, 2023 and as of May 31, 2023, respectively.

There were no options granted during the three months ended August 31, 2023. There were no ESPP purchase rights granted during the three months ended August 31, 2023 and 2022.

Nonvested restricted stock units activity during the three months ended August 31, 2023, was as follows:

				Weighted
				Average Grant
				Date Fair
	Shares			Value
	(in thousands)			Per Share
Unvested May 31, 2023		345		$	6.40
Granted		-
Vested		(77	)		7.16
Forfeited		(52	)		5.79
Unvested August 31, 2023		216		$	6.27