FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Feb. 29, 2024

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value of Measurements — The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 — Unobservable inputs that are supported by little or no market activities.

The following table represents the Company’s assets measured at fair value on a recurring basis as of February 29, 2024, and the basis for that measurement:

	Balance as of
(In thousands)	February 29, 2024		Level 1		Level 2		Level 3
Money market funds	$	44,189	$	44,189	$	-	$	-
Total	$	44,189	$	44,189	$	-	$	-

The following table represents the Company’s assets measured at fair value on a recurring basis as of May 31, 2023, and the basis for that measurement:

	Balance as of
(In thousands)	May 31, 2023		Level 1		Level 2		Level 3
Money market funds	$	27,022	$	27,022	$	-	$	-
U. S. treasury securities		17,853		17,853		-		-
Total	$	44,875	$	44,875	$	-	$	-

Included in money market funds as of February 29, 2024 and May 31, 2023 is $150,000 restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease. There were no financial liabilities measured at fair value as of February 29, 2024 and May 31, 2023. There were no transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended February 29, 2024. The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities.

The following table summarizes the Company’s cash, cash equivalents and investments by security type as of February 29, 2024 and May 31, 2023, respectively:

			Gross
Balances as of February 29, 2024			Unrealized		Estimated
(In thousands)	Cost		Loss		Fair Value
Cash	$	3,542	$	-	$	3,542
Cash equivalents:
Money market funds	$	44,039	$	-	$	44,039
Total cash and cash equivalents	$	47,581	$	-	$	47,581
Long-term investments:
Money market funds	$	150	$	-	$	150
Total cash, cash equivalents and investments	$	47,731	$	-	$	47,731

			Gross
Balances as of May 31, 2023			Unrealized			Estimated
(In thousands)	Cost		Loss			Fair Value
Cash	$	3,182	$	-		$	3,182
Cash equivalents:
Money market funds	$	26,872	$	-		$	26,872
Total cash and cash equivalents	$	30,054	$	-		$	30,054
Short term investments:
U. S. treasury securities	$	17,870	$	(17	)	$	17,853
Long-term investments:
Money market funds	$	150	$	-		$	150
Total cash, cash equivalents and investments	$	48,074	$	(17	)	$	48,057

Long-term investments are included in other assets on the accompanying Condensed Consolidated Balance Sheets. Unrealized gains and temporary losses on investments classified as available-for-sale debt securities are included within accumulated other comprehensive loss, net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to results of operations.