v3.26.1
Income Taxes
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of consolidated income before taxes from continuing operations were as follows:
May 31, 2026May 31, 2025
United States$(49,300)$(72,730)
Foreign— — 
Consolidated income before taxes$(49,300)$(72,730)

Income tax expense from continuing operations for the fiscal years ended May 31, 2026 and 2025 was $0.
Beginning in the fiscal year ended May 31, 2026, the Company adopted ASU 2023-09 prospectively. A reconciliation of the statutory income tax rate from continuing operations to the Company's effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended May 31, 2026 is as follows:
May 31, 2026
U.S. federal statutory income tax rate$(10,353)21%
Non-taxable or non-deductible items
Transaction costs453 (1)
Other365 (1)
Internal Reorganization7,722 (16)
Changes in valuation allowances1,813 (4)
Total$— — %

The following table reconciles the statutory rate to the Company's effective tax rate for the fiscal year ended May 31, 2025:
May 31, 2025
Expected income tax at U.S. Statutory Rate21 %
State tax, net of federal benefit4 
Stock-based compensation— 
Change in valuation allowance (25)
Other, net— 
Effective tax rate— %
Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the years ended May 31, 2026 and 2025 was immaterial.
Deferred income taxes reflect the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts utilized for tax purposes. The primary components of the temporary differences that gave rise to the Company's deferred tax assets and liabilities for the fiscal years ended May 31, 2026 and 2025 are as follows:
May 31, 2026May 31, 2025
Deferred tax assets:
Net operating losses$60,081 $43,712 
Stock-based compensation553 — 
Capitalized research and development1,297 — 
R&D credits2,117 — 
Interest expense116 6,800 
Lease liability13,756 18,903 
Other deferred tax assets622 (305)
Deferred tax assets, gross78,542 69,110 
Less: Valuation allowance(54,521)(41,228)
Total deferred tax assets, net$24,021 $27,882 
Deferred tax liabilities:
Property and equipment(5,766)(4,702)
Intangible assets(1,327)— 
Right of use assets(16,928)(23,180)
Total deferred tax liabilities, net(24,021)(27,882)
Net deferred tax assets (liabilities)$— $— 
As of May 31, 2026, the deferred tax assets, deferred tax liabilities, and valuation allowance depicted in the table above, include $63,142 of deferred tax assets, $1,528 of deferred tax liabilities, and $61,614 of related valuation allowances associated with discontinued operations on the consolidated balance sheet.
The Company had $386,571 and $172,000 of federal and state tax net operating losses as of May 31, 2026 and 2025, respectively. As of May 31, 2026, $386,571 is available indefinitely to offset future income of the Company.
A valuation allowance is provided when it is more likely than not that some portion or the entire net deferred tax asset will not be realized. The Company has recorded an increase in the valuation allowance of $13,293 as of May 31, 2026. The Company has provided a valuation allowance for the portion of the deferred tax assets that it has determined are not more likely than not to be recognized.
The valuation allowance is primarily attributable to deferred tax assets for net operating losses that management believes are more likely than not to expire prior to being realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income of the appropriate character (i.e., capital or ordinary) during the period in which the temporary differences become deductible. Management considers, among other things, the scheduled reversals of deferred tax liabilities and the history of positive taxable income in evaluating the realizability of the deferred tax assets. Management believes that it is not likely that the results of future operations will generate sufficient taxable income to realize its deferred tax assets. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards that could be used annually to offset future taxable income.
The Company recognized $1,754 of unrecognized tax benefits for the year ended May 31, 2026. The Company did not have any unrecognized tax benefits for the year ended May 31, 2025. The Company recognizes interest expense related to unrecognized tax benefits in income tax expense. The Company did not have any interest expense or expense for penalties related to unrecognized tax benefits for the reported periods. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended May 31, 2025 and 2026, were as follows:
Balance as of May 31, 2025 $— 
Additions based on tax positions in the current year— 
Additions based on tax positions related to prior years1,754 
Reductions for tax positions of prior years— 
Settlements with taxing authorities— 
Expiration of statue of limitations— 
Balance as of May 31, 2026 $1,754 

The Company is subject to U.S. federal and state income tax examinations. Tax years ended May 31, 2023 through May 31, 2026 are open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in these years may still be adjusted upon examination by the Internal Revenue Service ("IRS") or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other taxing jurisdictions for any tax years.