v2.4.0.8

7. INCOME TAXES (Tables)

12 Months Ended

May 31, 2014

Income Tax Disclosure [Abstract]

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

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

		Year Ended May 31,
		2014				2013				2012
Domestic		$	438			$	(3,392	)		$	(3,590	)
Foreign			(31	)			3				186
		$	407			$	(3,389	)		$	(3,404	)

Income tax benefit (expense)

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

		Year Ended May 31,
		2014				2013				2012
Federal income taxes:
Current		$	--			$	--			$	--
Deferred			--				--				--
State income taxes:
Current			(30	)			(21	)			(12	)
Deferred			--				--				--
Foreign income taxes:
Current			45				(9	)			27
Deferred			--				--				--
		$	15			$	(30	)		$	15

Income tax reconciliation

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

		Year Ended May 31,
		2014				2013				2012
U.S. federal statutory tax rate			34.0	%			34.0	%			34.0	%
State taxes, net of federal tax effect			4.7				(0.4	)			(0.2	)
Foreign rate differential			(11.9	)			0.2				2.9
Stock-based compensation			34.5				(4.4	)			(6.0	)
Research and development credit			(20.5	)			3.0				0.1
Change in valuation allowance			(45.8	)			(33.0	)			(30.2	)
Other			1.3				(0.3	)			(0.2	)
Effective tax rate			(3.7	)%			(0.9	)%			0.4	%

Net deferred tax assets

The components of the net deferred tax assets are as follows (in thousands):

		Year Ended May 31,
		2014				2013
Net operating losses		$	12,368			$	11,903
Credit carryforwards			4,192				4,028
Inventory reserves			1,822				2,667
Reserves and accruals			2,899				2,913
Other			703				679
			21,984				22,190
Less: Valuation allowance			(21,984	)			(22,190	)
Net deferred tax assets		$	--			$	--

Unrecognized tax benefits

The Company maintains liabilities for uncertain tax positions.  These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available.  The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):

Beginning balance as of May 31, 2011		$	1,093
Decreases related to prior year tax positions			--
Decreases related to lapse of statute of limitations			(71	)
Balance at May 31, 2012		$	1,022
Decreases related to prior year tax positions			--
Decreases related to lapse of statute of limitations			(15	)
Balance at May 31, 2013		$	1,007
Decreases related to prior year tax positions			--
Decreases related to lapse of statute of limitations			(34	)
Balance at May 31, 2014		$	973

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

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-Section 50

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of the change in unrecognized tax benefits.

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