Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
31-May-14 | Jul. 31, 2014 | Nov. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'AEHR TEST SYSTEMS | ' | ' |
Entity Central Index Key | '0001040470 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-May-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--05-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $23,598,088 |
Entity Common Stock, Shares Outstanding | ' | 11,465,718 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | 31-May-14 | 31-May-13 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $1,809 | $2,324 |
Accounts receivable, net | 3,390 | 2,632 |
Inventories | 6,148 | 5,369 |
Prepaid expenses and other | 326 | 276 |
Total current assets | 11,673 | 10,601 |
Property and equipment, net | 474 | 301 |
Other assets | 78 | 73 |
Total assets | 12,225 | 10,975 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ' | ' |
Line of credit | 777 | 1,101 |
Accounts payable | 1,892 | 1,188 |
Accrued expenses | 1,390 | 1,440 |
Customer deposits and deferred revenue, short-term | 1,058 | 1,972 |
Total current liabilities | 5,117 | 5,701 |
Income tax payable | 71 | 109 |
Deferred rent, net of current portion | 8 | 103 |
Deferred revenue, long-term | 0 | 68 |
Total liabilities | 5,196 | 5,981 |
Aehr Test Systems shareholders' equity: | ' | ' |
Preferred stock, $0.01 par value: Authorized: 10,000 shares; Issued and outstanding: none | 0 | 0 |
Common stock, $0.01 par value: Authorized: 75,000 shares; Issued and outstanding: 11,203 shares and 10,599 shares at May 31, 2014 and 2013, respectively | 112 | 106 |
Additional paid-in capital | 52,142 | 50,580 |
Accumulated other comprehensive income | 2,488 | 2,442 |
Accumulated deficit | -47,692 | -48,114 |
Total Aehr Test Systems shareholders' equity | 7,050 | 5,014 |
Noncontrolling interest | -21 | -20 |
Total Shareholders' equity | 7,029 | 4,994 |
Total liabilities and shareholders' equity | $12,225 | $10,975 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | 31-May-14 | 31-May-13 |
In Thousands, except Per Share data, unless otherwise specified | ||
Consolidated Balance Sheets Parenthetical | ' | ' |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 11,203 | 10,599 |
Common stock, shares outstanding | 11,203 | 10,599 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Consolidated Statements Of Operations | ' | ' | ' |
Net sales | $19,684 | $16,488 | $15,521 |
Cost of sales | 9,462 | 9,712 | 9,314 |
Gross profit | 10,222 | 6,776 | 6,207 |
Operating expenses: | ' | ' | ' |
Selling, general and administrative | 6,323 | 6,872 | 6,526 |
Research and development | 3,402 | 3,211 | 4,188 |
Total operating expenses | 9,725 | 10,083 | 10,714 |
Income (loss) from operations | 497 | -3,307 | -4,507 |
Interest expense | -26 | -49 | -4 |
Gain on sale of long-term investment | 0 | 0 | 990 |
Other (expense) income, net | -64 | -33 | 117 |
Income (loss) before income tax benefit (expense) | 407 | -3,389 | -3,404 |
Income tax benefit (expense) | 15 | -30 | 15 |
Net income (loss) | 422 | -3,419 | -3,389 |
Less: Net income attributable to the noncontrolling interest | 0 | 0 | 1 |
Net income (loss) attributable to Aehr Test Systems Common shareholders | $422 | ($3,419) | ($3,390) |
Net income (loss) per share - basic and diluted | $0.04 | ($0.36) | ($0.38) |
Shares used in per share calculation - basic | 10,877 | 9,549 | 9,016 |
Shares used in per share calculation - diluted | 11,889 | 9,549 | 9,016 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Consolidated Statements Of Comprehensive Income Loss | ' | ' | ' |
Net income (loss) | $422 | ($3,419) | ($3,389) |
Other comprehensive income (loss), net of tax: Foreign currency translation income (loss) | 45 | -14 | -135 |
Total comprehensive income (loss) | 467 | -3,433 | -3,524 |
Less: Comprehensive (loss) income attributable to noncontrolling interest | -1 | 2 | 1 |
Comprehensive income (loss), attributable to Aehr Test Systems | $468 | ($3,435) | ($3,525) |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Aehr Test Systems Shareholders' Equity | Noncontrolling Interest | Total |
In Thousands, except Share data | |||||||
Beginning Balance, Amount at May. 31, 2011 | $89 | $47,747 | $2,593 | ($41,305) | $9,124 | ($23) | $9,101 |
Beginning Balance, Shares at May. 31, 2011 | 8,932 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under employee plans, Shares | 203 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under employee plans, Amount | 2 | 166 | ' | ' | 168 | ' | 168 |
Stock-based compensation | ' | 709 | ' | ' | 709 | ' | 709 |
Net (loss) income | ' | ' | ' | -3,390 | -3,390 | 1 | -3,389 |
Foreign currency translation adjustment | ' | ' | -135 | ' | -135 | ' | -135 |
Ending Balance, Amount at May. 31, 2012 | 91 | 48,622 | 2,458 | -44,695 | 6,476 | -22 | 6,454 |
Ending Balance, Shares at May. 31, 2012 | 9,135 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under private placement, Shares | 1,158 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under private placement, Amount | 12 | 1,126 | ' | ' | 1,138 | ' | 1,138 |
Issuance of common stock under employee plans, Shares | 306 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under employee plans, Amount | 3 | 231 | ' | ' | 234 | ' | 234 |
Stock-based compensation | ' | 601 | ' | ' | 601 | ' | 601 |
Net (loss) income | ' | ' | ' | -3,419 | -3,419 | ' | -3,419 |
Foreign currency translation adjustment | ' | ' | -16 | ' | -16 | 2 | -14 |
Ending Balance, Amount at May. 31, 2013 | 106 | 50,580 | 2,442 | -48,114 | 5,014 | -20 | 4,994 |
Ending Balance, Shares at May. 31, 2013 | 10,599 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under employee plans, Shares | 604 | ' | ' | ' | ' | ' | ' |
Issuance of common stock under employee plans, Amount | 6 | 709 | ' | ' | 715 | ' | 715 |
Stock-based compensation | ' | 853 | ' | ' | 853 | ' | 853 |
Net (loss) income | ' | ' | ' | 422 | 422 | ' | 422 |
Foreign currency translation adjustment | ' | ' | 46 | ' | 46 | -1 | 45 |
Ending Balance, Amount at May. 31, 2014 | $112 | $52,142 | $2,488 | ($47,692) | $7,050 | ($21) | $7,029 |
Ending Balance, Shares at May. 31, 2014 | 11,203 | ' | ' | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Cash flows from operating activities: | ' | ' | ' |
Net income (loss) | $422 | ($3,419) | ($3,389) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ' | ' | ' |
Stock-based compensation expense | 829 | 601 | 709 |
Provision for doubtful accounts | 15 | 0 | 16 |
(Gain) loss on disposal of asset | -41 | 0 | 1 |
Gain on sale of long-term investment | 0 | 0 | -990 |
Depreciation and amortization | 141 | 322 | 491 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable | -720 | -206 | -1,285 |
Inventories | -740 | 702 | -1,114 |
Prepaid expenses and other | -51 | -7 | -42 |
Accounts payable | 707 | 243 | 570 |
Customer deposits and deferred revenue | -984 | 1,477 | 331 |
Accrued expenses | -25 | 58 | -36 |
Income tax payable | -65 | -5 | -78 |
Deferred rent | -95 | -76 | -59 |
Net cash used in operating activities | -607 | -310 | -4,875 |
Cash flows from investing activities: | ' | ' | ' |
Proceeds from sale of investments | 0 | 0 | 1,375 |
Proceeds from sales of property and equipment | 50 | 0 | 0 |
Purchases of property and equipment | -339 | -127 | -45 |
Net cash (used in) provided by investing activities | -289 | -127 | 1,330 |
Cash flows from financing activities: | ' | ' | ' |
Line of credit (repayments) borrowings, net | -324 | -307 | 1,408 |
Proceeds from issuance of common stock under private placement | 0 | 1,138 | 0 |
Proceeds from issuance of common stock under employee plans | 715 | 234 | 168 |
Net cash provided by financing activities | 391 | 1,065 | 1,576 |
Effect of exchange rates on cash and cash equivalents | -10 | -377 | 22 |
Net (decrease) increase in cash and cash equivalents | -515 | 251 | -1,947 |
Cash and cash equivalents, beginning of year | 2,324 | 2,073 | 4,020 |
Cash and cash equivalents, end of year | 1,809 | 2,324 | 2,073 |
Supplemental Cash Flow Information: | ' | ' | ' |
Cash paid during the year for Income taxes | 44 | 64 | 62 |
Cash paid during the year for Interest | 27 | 49 | 4 |
Non cash transactions: | ' | ' | ' |
Net change in capitalized stock-based compensation | $24 | $0 | $0 |
1_ORGANIZATION_AND_SUMMARY_OF_
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Organization And Summary Of Significant Accounting Policies | ' | ||||||||||||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||||||||||||||
BUSINESS: | |||||||||||||||||
Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full wafer contact parallel test and burn-in systems, the MAX burn-in system, WaferPak full wafer contactor, the DiePak carrier and test fixtures. | |||||||||||||||||
LIQUIDITY: | |||||||||||||||||
Since inception, the Company has incurred substantial cumulative losses and negative cash flows from operations. In recent years, the Company has recognized significantly lower sales levels compared to the net sales of the years immediately preceding fiscal 2009, as a result of a major customer filing bankruptcy and a slowdown in the semiconductor manufacturing industry. In response to the low levels of net sales, the Company took significant steps to minimize expense levels and to increase the likelihood that it will have sufficient cash to support operations during the slow business periods. Those steps included reductions in headcount, reduced compensation for officers and other salaried employees, Company-wide shutdowns and lower fees paid to the Board of Directors, among other spending cuts. The Company will continue to explore methods to reduce its costs as necessary. | |||||||||||||||||
In March 2013, the Company sold 1,158,000 shares of its common stock in a private placement transaction with certain Directors and Officers of the Company and other accredited investors. The purchase price per share of the common stock sold in the private placement was $1.00, resulting in gross proceeds to the Company of $1,158,000, before offering expenses. The net proceeds after offering expenses were $1,138,000. | |||||||||||||||||
In August 2011, the Company entered into a working capital credit facility agreement allowing the Company to borrow up to $1.5 million based upon qualified U.S. based and foreign customer receivables, and export-related inventory. In May 2012, the credit agreement was amended to increase the borrowing limit to $2.0 million. In September 2012, the credit agreement was amended to increase the borrowing limit to $2.5 million. Refer to Note 9, “LINE OF CREDIT”, for further discussion of the credit facility agreement. | |||||||||||||||||
During fiscal 2013, 2012 and fiscal 2011 we experienced operating losses and negative cash flow from operating activities. Due primarily to these operating losses, we experienced cash outflows and, at May 31, 2014, had $1.8 million in cash and cash equivalents, compared to $2.3 million at May 31, 2013. The Company anticipates that the existing cash balance together with cash flows from operations, as well as funds available through the working capital credit facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2015. After fiscal 2015, depending on its rate of growth and profitability, the Company may require additional equity or debt financing to meet its working capital requirements or capital equipment needs. There can be no assurance that additional financing will be available when required, or if available, that such financing can be obtained on terms satisfactory to the Company. | |||||||||||||||||
CONSOLIDATION AND EQUITY INVESTMENTS: | |||||||||||||||||
The consolidated financial statements include the accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions have been eliminated. Equity investments in which the Company holds an equity interest less than 20 percent and over which the Company does not have significant influence are accounted for using the cost method. Dividends received from investees accounted for using the cost method are included in other income on the Consolidated Statements of Operations. | |||||||||||||||||
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: | |||||||||||||||||
Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity. | |||||||||||||||||
Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented. | |||||||||||||||||
USE OF ESTIMATES: | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and warranty reserves. | |||||||||||||||||
CASH EQUIVALENTS AND INVESTMENTS: | |||||||||||||||||
Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value. | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS AND MEASUREMENT: | |||||||||||||||||
The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements. | |||||||||||||||||
The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: | |||||||||||||||||
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. | |||||||||||||||||
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments. | |||||||||||||||||
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value. | |||||||||||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 477 | $ | 477 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 527 | $ | 477 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2013 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-13 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 102 | $ | 102 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 152 | $ | 102 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
Financial instruments include cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities. The fair value of cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities are valued at their carrying value, which approximates fair value due to their short maturities. | |||||||||||||||||
The Company has at times invested in debt and equity of private companies, and may do so again in the future, as part of its business strategy. These investments are carried at cost and are included in “Other Assets” in the consolidated balance sheets. If the Company determines that an other-than-temporary decline exists in the fair value of an investment, the Company writes down the investment to its fair value and records the related write-down as an investment loss in “Other Income (Expense)” in its consolidated statements of operations. | |||||||||||||||||
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: | |||||||||||||||||
Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. No significant adjustments to the allowance for doubtful accounts were recorded during the years ended May 31, 2014, 2013 or 2012. | |||||||||||||||||
CONCENTRATION OF CREDIT RISK: | |||||||||||||||||
The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2014, approximately 36%, 35% and 29% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. As of May 31, 2013, approximately 52%, 37% and 12% of gross accounts receivable were from customers located in Asia, the United States and Europe, respectively. Four customers accounted for 35%, 24%, 18% and 17% of gross accounts receivable at May 31, 2014. Four customers accounted for 42%, 21%, 20% and 11% of gross accounts receivable at May 31, 2013. Three customers accounted for 40%, 30% and 12% of net sales in fiscal 2014. Two customers accounted for 32% and 26% of net sales in fiscal 2013. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers. | |||||||||||||||||
The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits. | |||||||||||||||||
CONCENTRATION OF SUPPLY RISK: | |||||||||||||||||
The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products. | |||||||||||||||||
STRATEGIC INVESTMENTS: | |||||||||||||||||
In June 2011, the Company sold all of its shares of ESA for approximately $1.4 million resulting in a gain of approximately $990,000 reported in the first quarter of fiscal 2012. | |||||||||||||||||
INVENTORIES: | |||||||||||||||||
Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or market. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or market value. If actual future demand or market conditions become less favorable than those projected by management, additional inventory write-downs may be required, and would be reflected in cost of product revenue in the period the revision is made. | |||||||||||||||||
PROPERTY AND EQUIPMENT: | |||||||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease. Furniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated useful lives. The ranges of estimated useful lives are generally as follows: | |||||||||||||||||
Furniture and fixtures | 2 to 6 years | ||||||||||||||||
Machinery and equipment | 3 to 6 years | ||||||||||||||||
Test equipment | 4 to 6 years | ||||||||||||||||
REVENUE RECOGNITION: | |||||||||||||||||
The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) services have been rendered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition. | |||||||||||||||||
Revenue related to the multiple elements are allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used. We have adopted this guidance effective with the first quarter of fiscal 2012. Prior to fiscal 2012, revenue for arrangements containing multiple deliverables was allocated based upon estimated fair values. The adoption of the new revenue recognition accounting standards did not have a material impact on our consolidated financial statements. | |||||||||||||||||
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer. | |||||||||||||||||
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped. | |||||||||||||||||
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee. | |||||||||||||||||
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration. | |||||||||||||||||
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: | |||||||||||||||||
Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2014, 2013 and 2012. | |||||||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS: | |||||||||||||||||
In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required. | |||||||||||||||||
ADVERTISING COSTS: | |||||||||||||||||
The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented. | |||||||||||||||||
SHIPPING AND HANDLING OF PRODUCTS: | |||||||||||||||||
Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales. | |||||||||||||||||
INCOME TAXES: | |||||||||||||||||
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized. | |||||||||||||||||
A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2014 and 2013. | |||||||||||||||||
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes. | |||||||||||||||||
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2013 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years. | |||||||||||||||||
STOCK-BASED COMPENSATION: | |||||||||||||||||
Stock-based compensation expense consists of expenses for stock options and employee stock purchase plan, or ESPP, shares. Stock-based compensation cost 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. All of the Company’s stock-based compensation is accounted for as an equity instrument. | |||||||||||||||||
The following table summarizes compensation costs related to the Company’s stock-based compensation for the years ended May 31, 2014, 2013 and 2012, respectively (in thousands, except per share data): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Stock-based compensation in the form of employee | |||||||||||||||||
stock options and ESPP shares, included in: | |||||||||||||||||
Cost of sales | $ | 43 | $ | 36 | $ | 87 | |||||||||||
Selling, general and administrative | 643 | 446 | 430 | ||||||||||||||
Research and development | 167 | 119 | 192 | ||||||||||||||
Net effect on net income (loss) | $ | 853 | $ | 601 | $ | 709 | |||||||||||
Effect on net income (loss) per share: | |||||||||||||||||
Basic. | $ | 0.08 | $ | 0.06 | $ | 0.08 | |||||||||||
Diluted | $ | 0.07 | $ | 0.06 | $ | 0.08 | |||||||||||
During fiscal 2014, 2013 and fiscal 2012, the Company recorded stock-based compensation related to stock options of $723,000, $551,000 and $613,000, respectively. | |||||||||||||||||
As of May 31, 2014, the total compensation cost related to unvested stock-based awards under the Company’s 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was $955,000 which is net of estimated forfeitures of $2,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.5 years. | |||||||||||||||||
During fiscal 2014, 2013 and fiscal 2012, the Company recorded stock-based compensation related to its ESPP of $130,000, $50,000 and $96,000, respectively. | |||||||||||||||||
As of May 31, 2014 there was $24,000 of stock-based compensation costs capitalized as part of inventory. There were no stock-based compensation costs capitalized as part of inventory as of May 31, 2013 or 2012. | |||||||||||||||||
As of May 31, 2014, the total compensation cost related to options to purchase the Company’s common shares under the ESPP but not yet recognized was $109,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 1.0 years. | |||||||||||||||||
Valuation Assumptions | |||||||||||||||||
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation method and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. | |||||||||||||||||
Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards. | |||||||||||||||||
Expected Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation cost recorded. | |||||||||||||||||
Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation method. | |||||||||||||||||
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation method on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP. | |||||||||||||||||
Estimated Forfeitures. When estimating forfeitures, the Company considers voluntary termination behavior as well as analysis of actual option forfeitures. | |||||||||||||||||
Fair Value. The fair values of the Company’s stock options granted to employees shares in fiscal 2014, 2013 and 2012 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Option Plan Shares | |||||||||||||||||
Expected Term (in years) | 4 | 5 | 5 | ||||||||||||||
Volatility | 0.95 | 0.91 | 0.84 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 1.39 | % | 0.72 | % | 1.12 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.09 | $ | 0.78 | $ | 0.6 | |||||||||||
The fair value of our ESPP purchase rights for the fiscal 2014, 2013 and 2012 was estimated using the following weighted-average assumptions: | |||||||||||||||||
Year End May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Employee Stock Purchase Plan Shares | |||||||||||||||||
Expected Term (in years) | 0.5 - 2.0 | 0.5 - 2.0 | 0.5 - 2.0 | ||||||||||||||
Volatility | 0.86 – 1.00 | 0.45 – 1.05 | 0.79 – 0.95 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 0.04%–0.44 | % | 0.11%–0.23 | % | 0.06%–1.05 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.34 | $ | 0.54 | $ | 0.4 | |||||||||||
EARNINGS PER SHARE (“EPS”): | |||||||||||||||||
Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed after giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of the incremental common shares issuable upon exercise of stock options for all periods. | |||||||||||||||||
A reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows (in thousands, except per share amounts): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Numerator: Net income (loss) | $ | 422 | $ | (3,419 | ) | $ | (3,390 | ) | |||||||||
Denominator for basic net income (loss) per share: | |||||||||||||||||
Weighted-average shares outstanding | 10,877 | 9,549 | 9,016 | ||||||||||||||
Shares used in basic net income (loss) per share calculation | 10,877 | 9,549 | 9,016 | ||||||||||||||
Effect of dilutive securities | 1,012 | -- | -- | ||||||||||||||
Denominator for diluted net income (loss) per share | 11,889 | 9,549 | 9,016 | ||||||||||||||
Basic net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
Diluted net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. Stock options to purchase 301,000 shares of common stock and ESPP rights to purchase 131,000 ESPP shares were outstanding on May 31, 2014, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. In the fiscal year’s ended May 31, 2013 and 2012, potential common shares have not been included in the calculation of diluted net loss per share as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for these periods are the same. Stock options to purchase 2,956,000 and 2,967,000 shares of common stock were outstanding on May 31, 2013 and 2012, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 178,000 and 253,000 ESPP shares were outstanding on May 31, 2013 and 2012, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. | |||||||||||||||||
COMPREHENSIVE INCOME (LOSS): | |||||||||||||||||
Comprehensive income (loss) generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive income (loss), which are excluded from net income (loss). Comprehensive income (loss) is included in the statement of shareholders’ equity and comprehensive loss. | |||||||||||||||||
RECLASSIFICATION | |||||||||||||||||
Certain reclassifications have been made to the consolidated financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net loss, total assets or shareholders’ equity. | |||||||||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS: | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from contracts with customers, a new standard on revenue recognition. The new standard will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers. The guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, and property and equipment. The new standard will become effective for us beginning with the first quarter of 2017 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. We are currently evaluating the impact of adopting this new guidance on our consolidated financial statements. |
2_ACCOUNTS_RECEIVABLE
2. ACCOUNTS RECEIVABLE | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Accounts Receivable | ' | ||||||||||||||||
ACCOUNTS RECEIVABLE | ' | ||||||||||||||||
2. ACCOUNTS RECEIVABLE: | |||||||||||||||||
Accounts receivable comprise (in thousands): | |||||||||||||||||
May 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Accounts receivable | $ | 3,441 | $ | 2,671 | |||||||||||||
Less: Allowance for doubtful accounts | (51 | ) | (39 | ) | |||||||||||||
$ | 3,390 | $ | 2,632 | ||||||||||||||
Additions | |||||||||||||||||
Balance at | charged to | Balance | |||||||||||||||
beginning | costs and | at end | |||||||||||||||
of year | expenses | Deductions* | of year | ||||||||||||||
Allowance for doubtful | |||||||||||||||||
accounts receivable: | |||||||||||||||||
May 31, 2014 | $ | 39 | $ | 15 | $ | (3 | ) | $ | 51 | ||||||||
May 31, 2013 | $ | 39 | $ | -- | $ | -- | $ | 39 | |||||||||
* Deductions include write-offs of uncollectible accounts and collections of amounts previously reserved. |
3_INVENTORIES
3. INVENTORIES | 12 Months Ended | ||||||||
31-May-14 | |||||||||
InventoriesAbstract | ' | ||||||||
INVENTORIES | ' | ||||||||
3. INVENTORIES: | |||||||||
Inventories comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Raw materials and sub-assemblies | $ | 3,348 | $ | 3,180 | |||||
Work in process | 2,585 | 2,187 | |||||||
Finished goods | 215 | 2 | |||||||
$ | 6,148 | $ | 5,369 |
4_PROPERTY_AND_EQUIPMENT_NET
4. PROPERTY AND EQUIPMENT, NET | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT, NET | ' | ||||||||
4. PROPERTY AND EQUIPMENT, NET: | |||||||||
Property and equipment comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Leasehold improvements | $ | 1,093 | $ | 1,104 | |||||
Furniture and fixtures | 1,094 | 1,130 | |||||||
Machinery and equipment | 3,801 | 4,137 | |||||||
Test equipment | 3,041 | 3,040 | |||||||
9,029 | 9,411 | ||||||||
Less: Accumulated depreciation | |||||||||
and amortization | (8,555 | ) | (9,110 | ) | |||||
$ | 474 | $ | 301 | ||||||
Depreciation expense was $141,000, $322,000 and $491,000 for fiscal 2014, 2013, and 2012, respectively. |
5_PRODUCT_WARRANTIES
5. PRODUCT WARRANTIES | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Product Warranties | ' | ||||||||
Product Warranties | ' | ||||||||
5. PRODUCT WARRANTIES: | |||||||||
The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required. | |||||||||
Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2014 and May 31, 2013 (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Balance at the beginning of the year | $ | 222 | $ | 91 | |||||
Accruals for warranties issued during the year | 297 | 536 | |||||||
Settlement made during the year (in cash or in kind) | (296 | ) | (405 | ) | |||||
Balance at the end of the year | $ | 223 | $ | 222 | |||||
The accrued warranty balance is included in Accrued Expenses on the accompanying consolidated balance sheets. |
6_ACCRUED_EXPENSES
6. ACCRUED EXPENSES | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Accrued Expenses | ' | ||||||||
ACCRUED EXPENSES | ' | ||||||||
Accrued expenses comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Payroll related | $ | 596 | $ | 413 | |||||
Warranty | 223 | 222 | |||||||
Commissions and bonuses | 174 | 419 | |||||||
Professional services | 147 | 143 | |||||||
Deferred rent | 95 | 76 | |||||||
Taxes payable | 68 | 84 | |||||||
Accrued customer obligations | 35 | 35 | |||||||
Other | 52 | 48 | |||||||
$ | 1,390 | $ | 1,440 |
7_INCOME_TAXES
7. INCOME TAXES | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
Income Taxes | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
7. INCOME TAXES: | |||||||||||||
Domestic and foreign components of loss before income tax benefit (expense) 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 | ) | ||||||
The income tax benefit (expense) 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 | |||||||
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 | % | 34 | % | 34 | % | |||||||
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 | 0.1 | |||||||||
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 | % | |||||||
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 | $ | -- | $ | -- | |||||||||
The valuation allowance decreased by $206,000 during fiscal 2014, and increased by $1,080,000 during fiscal 2013, and $711,000 during fiscal 2012. As of May 31, 2014 and 2013, the Company concluded that it is more likely than not that the deferred tax assets will not be realized and therefore provided a full valuation allowance against the deferred tax assets. The Company will continue to evaluate the need for a valuation allowance against its deferred tax assets on a quarterly basis. | |||||||||||||
At May 31, 2014, the Company had federal and state net operating loss carryforwards of $32,672,000 and $28,185,000, respectively. These carryforwards will begin to expire in 2024 and 2014, respectively. At May 31, 2014, the Company also had federal and state research and development tax credit carryforwards of $1,959,000 and $4,452,000, respectively. The federal credit carryforward will begin to expire in 2016, and the California credit will carryforward indefinitely. These carryforwards may be subject to certain limitations on annual utilization in case of a change in ownership, as defined by tax law. The Company also has alternative minimum tax credit carryforwards of $91,000 for federal tax purposes and $34,000 for state purposes. The credits may be used to offset regular tax and do not expire. | |||||||||||||
The Company has made no provision for U.S. income taxes on undistributed earnings of certain foreign subsidiaries because it is the Company’s intention to permanently reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional U.S. income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. | |||||||||||||
Foreign net operating loss carryforwards of $959,000 are available to reduce future foreign taxable income. The foreign net operating losses will begin to expire in 2018. | |||||||||||||
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 | |||||||||||
If the ending balance of $973,000 of unrecognized tax benefits at May 31, 2014 were recognized, $71,000 would affect the effective income tax rate. In accordance with the Company’s accounting policy, it recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company had accrued interest and penalties of $11,000 at May 31, 2014. | |||||||||||||
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2013 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years. |
8_CUSTOMER_DEPOSITS_AND_DEFERR
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Customer Deposits And Deferred Revenue Short-Term | ' | ||||||||
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | ' | ||||||||
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM: | |||||||||
Customer deposits and deferred revenue, short-term (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Customer deposits | $ | 871 | $ | 1,728 | |||||
Deferred revenue, short-term | 187 | 244 | |||||||
$ | 1,058 | $ | 1,972 | ||||||
9_LINE_OF_CREDIT
9. LINE OF CREDIT | 12 Months Ended |
31-May-14 | |
Line Of Credit | ' |
Line of Credit | ' |
9. LINE OF CREDIT: | |
On August 25, 2011, the Company entered into a working capital credit facility agreement allowing the Company to borrow up to $1.5 million based upon qualified accounts receivable, and export-related inventory. On May 29, 2012, the credit agreement was amended to increase the borrowing limit to $2.0 million. On September 11, 2012, the Company entered into the second amendment to the Loan and Security Agreement to increase the borrowing limit under the credit facility from $2.0 million to $2.5 million. On August 21, 2013, the Company entered into the Third Amendment to Loan and Security Agreement to extend the term of the agreement to August 22, 2014. Under the terms of the amendment to the line of credit, the lender will also have a security interest in the Company’s intellectual property. On August 22, 2014, the Company entered into the Fourth Amendment to Loan and Security Agreement to extend the term of the agreement to August 21, 2015. The line of credit is collateralized by all of the Company’s assets. Each account receivable financed by the lender will bear an annual interest rate or finance charge equal to the greater of the lender's prime rate less 0.5%, or 3.50%, if the Company meets certain borrowing base requirements. If the Company does not meet the borrowing base requirements, each account receivable financed by the lender will bear an annual interest rate or finance charge equal to the greater of the lender's prime rate plus 0.75%, or 4.75%. The applicable interest is calculated based on the full amount of the account receivable and export-related inventory provided as collateral for the actual amounts borrowed. Depending on the composition of the collateral items, whether or not the Company meets certain borrowing base requirements and the relative cash position of the Company, the equivalent annual interest rate applied to the actual loan balances may vary from 3.89% to 8.94%, assuming that the bank’s prime rate is 4.00% or less. At May 31, 2014, the weighted average interest rate on the outstanding loan balance was 4.14%. The average loan balance in fiscal 2014 was $473,000. At May 31, 2014 and 2013, the Company had drawn $777,000 and $1,101,000 against the credit facility, respectively. The balance available to borrow under the line at May 31, 2014 was $1,566,000. The Company was in compliance with all covenants at May 31, 2014. | |
10_CAPITAL_STOCK
10. CAPITAL STOCK | 12 Months Ended | |||||||||||||||||||
31-May-14 | ||||||||||||||||||||
Capital Stock | ' | |||||||||||||||||||
CAPITAL STOCK | ' | |||||||||||||||||||
10. CAPITAL STOCK: | ||||||||||||||||||||
STOCK OPTIONS: | ||||||||||||||||||||
In October 1996, the Company’s Board of Directors approved the 1996 Stock Option Plan (the “Stock Plan”), which provided for granting of incentive and non-qualified stock options to our employees and directors. The Stock Plan provides that qualified options be granted at an exercise price equal to the fair market value at the date of grant, as determined by the Board of Directors (85% of fair market value in the case of non-statutory options and purchase rights and 110% of fair market value in certain circumstances). Options generally expire within five years from date of grant. Most options become exercisable in increments over a four-year period from the date of grant. | ||||||||||||||||||||
In October 2006, the Company’s 2006 Equity Incentive Plan and 2006 Employee Stock Purchase Plan (“2006 Plans”) were approved by the shareholders. A total of 3,900,000 shares of common stock have been reserved for issuance under the Company’s 2006 Equity Incentive Plan. Options granted under the 2006 Equity Incentive Plan are generally for periods not to exceed ten years (five years if the option is granted to a 10% stockholder) and are granted at the fair market value of the stock at the date of grant as determined by the Board of Directors. The 2006 Plans respectively replace the Company’s Amended and Restated 1996 Stock Option Plan, which would otherwise have expired in 2006; and the Company’s 1997 Employee Stock Purchase Plan, which would have otherwise expired in 2007. The Amended and Restated 1996 Stock Option Plan will continue to govern awards previously granted under that plan. | ||||||||||||||||||||
As of May 31, 2014, out of the 4,147,000 shares authorized for grant under the 1996 Stock Option Plan and 2006 Equity Incentive Plan, approximately 3,002,000 shares were outstanding. | ||||||||||||||||||||
The following table summarizes the Company’s stock option transactions during fiscal 2014, 2013 and 2012 (in thousands, except per share data): | ||||||||||||||||||||
Outstanding Options | ||||||||||||||||||||
Weighted | ||||||||||||||||||||
Number | Average | Aggregate | ||||||||||||||||||
Available | of | Exercise | Intrinsic | |||||||||||||||||
Shares | Shares | Price | Value | |||||||||||||||||
Balances, May 31, 2011 | 687 | 2,083 | $ | 3.4 | $ | 298 | ||||||||||||||
Additional shares reserved | 1,199 | -- | ||||||||||||||||||
Options granted | (1,141 | ) | 1,141 | $ | 0.92 | |||||||||||||||
Options terminated | 258 | (258 | ) | $ | 3.72 | |||||||||||||||
Plan shares expired | (164 | ) | -- | |||||||||||||||||
Options exercised | -- | (9 | ) | $ | 0.85 | |||||||||||||||
Balances, May 31, 2012 | 839 | 2,957 | $ | 2.4 | $ | 587 | ||||||||||||||
Additional shares reserved | 1,223 | -- | ||||||||||||||||||
Options granted | (670 | ) | 670 | $ | 1.13 | |||||||||||||||
Options terminated | 569 | (569 | ) | $ | 4.37 | |||||||||||||||
Plan shares expired | (224 | ) | -- | |||||||||||||||||
Options exercised | -- | (102 | ) | $ | 0.67 | |||||||||||||||
Balances, May 31, 2013 | 1,737 | 2,956 | $ | 1.79 | $ | 964 | ||||||||||||||
Options granted | (908 | ) | 908 | $ | 1.64 | |||||||||||||||
Options terminated | 420 | (420 | ) | $ | 5.51 | |||||||||||||||
Plan shares expired | (104 | ) | -- | |||||||||||||||||
Options exercised | -- | (442 | ) | $ | 1.17 | |||||||||||||||
Balances, May 31, 2014 | 1,145 | 3,002 | $ | 1.31 | $ | 2,913 | ||||||||||||||
Options exercisable and expected to be | ||||||||||||||||||||
exercisable at May 31, 2014 | 2,942 | $ | 1.31 | $ | 2,855 | |||||||||||||||
The options outstanding and exercisable at May 31, 2014 were in the following exercise price ranges (in thousands, except per share data): | ||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
at May 31, 2014 | at May 31, 2014 | |||||||||||||||||||
Range of Exercise | Number Outstanding Shares | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Prices | Shares | |||||||||||||||||||
$ | 0.59-$0.97 | 871 | 4.01 | $ | 0.73 | 702 | $ | 0.77 | 3.87 | |||||||||||
$ | 1.09-$1.42 | 1,432 | 4.87 | $ | 1.28 | 661 | $ | 1.28 | 4.26 | |||||||||||
$ | 1.73-$1.95 | 460 | 2.8 | $ | 1.88 | 384 | $ | 1.91 | 2.22 | |||||||||||
$ | 2.15-$2.68 | 239 | 5.32 | $ | 2.54 | 145 | $ | 1.33 | 4.44 | |||||||||||
$ | 0.59-$2.68 | 3,002 | 4.34 | $ | 1.31 | 1,892 | $ | 1.22 | 3.72 | $ | 1,835 | |||||||||
The total intrinsic values of options exercised were $520,000, $43,000 and $6,000 during fiscal 2014, 2013 and 2012, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2014 was 4.34 years. | ||||||||||||||||||||
Options to purchase 1,892,000, 1,948,000 and 1,850,000 shares were exercisable at May 31, 2014, 2013 and 2012, respectively. These exercisable options had weighted average exercise prices of $1.22, $2.12 and $3.13 as of May 31, 2014, 2013 and 2012, respectively. |
11_EMPLOYEE_BENEFIT_PLANS
11. EMPLOYEE BENEFIT PLANS | 12 Months Ended |
31-May-14 | |
Employee Benefit Plans | ' |
EMPLOYEE BENEFIT PLANS | ' |
11. EMPLOYEE BENEFIT PLANS: | |
EMPLOYEE STOCK OWNERSHIP PLAN: | |
The Company has a non-contributory, trusteed employee stock option plan for full-time employees who have completed three consecutive months of service and for part-time employees who have completed one year of service and have attained an age of 21. The Company can contribute either shares of the Company’s stock or cash to the plan. The contribution is determined annually by the Company and cannot exceed 15% of the annual aggregate salaries of those employees eligible for participation in the plan. On May 31, 2007, the Company converted the Aehr Test Systems Employee Stock Bonus Plan into the Aehr Test Systems Employee Stock Ownership Plan (the “Plan”). The stock bonus plan was converted to an employee stock ownership plan (“ESOP”) to enable the Plan to better comply with changes in the law regarding Company stock. Individuals’ account balances vest at a rate of 20% per year commencing upon completion of two years of service. Non-vested balances, which are forfeited following termination of employment, are allocated to the remaining employees in the Plan. Under the Plan provisions, each employee who reaches age fifty-five (55) and has been a participant in the Plan for ten years will be offered an election each year to direct the transfer of up to 25% of his/her ESOP account to the employee self-directed account in the Savings and Retirement Plan. For anyone who met the above prerequisites, the first election to diversify holdings was offered after May 31, 2008. In the sixth year, employees will be able to diversify up to 50% of their ESOP accounts. Contributions of $60,000 per year were authorized for the plan during fiscal 2014, 2013 and 2012. The contribution amounts are recorded as compensation expense, in the period authorized and included in accrued liabilities, in the period authorized. Contributions of 41,666 shares were made to the ESOP during fiscal 2014 for fiscal 2013. Contributions of 47,244 shares were made to the ESOP during fiscal 2013 for fiscal 2012. Contributions of 40,540 shares were made to the ESOP during fiscal 2012 for fiscal 2011. The contribution for fiscal 2014 will be made in fiscal 2015. Shares held in the ESOP are included in the EPS calculation. | |
401(K) PLAN: | |
The Company maintains a defined contribution savings plan (the “401(k) Plan”) to provide retirement income to all qualified employees of the Company. The 401(k) Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan is funded by voluntary pre-tax contributions from employees. Contributions are invested, as directed by the participant, in investment funds available under the 401(k) Plan. The Company is not required to make, and did not make, any contributions to the 401(k) Plan during fiscal 2014, 2013 and 2012. | |
EMPLOYEE STOCK PURCHASE PLAN: | |
In October 2006, the Company’s shareholders approved the 2006 Employee Stock Purchase Plan, or 2006 Purchase Plan. The 2006 Purchase Plan replaced the 1997 Employee Stock Purchase Plan which would have otherwise expired in 2007. A total of 1,150,000 shares of the Company’s common stock were reserved for issuance under the 2006 Purchase Plan. The 2006 Purchase Plan has consecutive, overlapping, twenty-four month offering periods. Each twenty-four month offering period includes four six month purchase periods. The offering periods generally begin on the first trading day on or after April 1 and October 1 each year. The first exercise date under the 2006 Purchase Plan was April 1, 2007. All employees who work a minimum of 20 hours per week and are customarily employed by the Company (or an affiliate thereof) for at least five months per calendar year are eligible to participate. Under the 2006 Purchase Plan, shares are purchased through employee payroll deductions at exercise prices equal to 85% of the lesser of the fair market value of the Company’s common stock at either the first day of an offering period or the last day of the purchase period. If a participant’s rights to purchase stock under all employee stock purchase plans of the Company accrue at a rate which exceeds $25,000 worth of stock for a calendar year, such participant may not be granted an option to purchase stock under the 2006 Purchase Plan. The maximum number of shares a participant may purchase during a single purchase period is 3,000 shares. For the years ended May 31, 2014, 2013 and 2012, approximately 120,000, 156,000 and 154,000 shares of common stock, respectively, were issued under the plans. To date, 795,000 shares have been issued under the 2006 Purchase Plan. | |
12_OTHER_EXPENSE_INCOME_NET
12. OTHER (EXPENSE) INCOME, NET | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
Other Expense Income Net | ' | ||||||||||||
OTHER (EXPENSE) INCOME, NET | ' | ||||||||||||
12. OTHER (EXPENSE) INCOME, NET: | |||||||||||||
Other (expense) income, net comprises the following (in thousands): | |||||||||||||
Year Ended May 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Foreign exchange (loss) gain | $ | (47 | ) | $ | (36 | ) | $ | 117 | |||||
Other, net | (17 | ) | 3 | -- | |||||||||
$ | (64 | ) | $ | (33 | ) | $ | 117 |
13_SEGMENT_INFORMATION
13. SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Segment Information | ' | ||||||||||||||||
13. SEGMENT INFORMATION: | |||||||||||||||||
As the Company’s business is completely focused on one industry segment, the designing, manufacturing and marketing of advanced test and burn-in products to the semiconductor manufacturing industry, management believes that the Company has only one reportable segment. The Company’s net sales and profits are generated through the sale and service of products for this one segment. | |||||||||||||||||
The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands). | |||||||||||||||||
United | |||||||||||||||||
States | Asia | Europe | Total | ||||||||||||||
2014:00:00 | |||||||||||||||||
Net sales | $ | 8,708 | $ | 7,453 | $ | 3,523 | $ | 19,684 | |||||||||
Property and equipment, net | 415 | 42 | 17 | 474 | |||||||||||||
2013:00:00 | |||||||||||||||||
Net sales | $ | 7,379 | $ | 8,184 | $ | 925 | $ | 16,488 | |||||||||
Property and equipment, net | 249 | 52 | -- | 301 | |||||||||||||
2012:00:00 | |||||||||||||||||
Net sales | $ | 9,560 | $ | 4,276 | $ | 1,685 | $ | 15,521 | |||||||||
Property and equipment, net | 441 | 66 | 3 | 510 | |||||||||||||
The Company’s foreign operations are primarily those of its Japanese and German subsidiaries. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese or European customers. Net sales exclude intercompany transactions. | |||||||||||||||||
14_RELATED_PARTY_TRANSACTIONS
14. RELATED PARTY TRANSACTIONS | 12 Months Ended |
31-May-14 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
14. RELATED PARTY TRANSACTIONS: | |
Mario M. Rosati, one of the Company’s directors, is also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which has served as the Company’s outside corporate counsel and has received compensation at normal commercial rates for these services. At May 31, 2014, the Company had $8,000 payable to Wilson Sonsini Goodrich & Rosati. | |
15_COMMITMENTS_AND_CONTINGENCI
15. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
31-May-14 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
15. COMMITMENTS AND CONTINGENCIES: | |||||
COMMITMENTS | |||||
The Company leases most of its manufacturing and office space under operating leases. The Company entered into non-cancelable operating lease agreements for its United States manufacturing and office facilities and maintains equipment under non-cancelable operating leases in Germany. The Company’s principal administrative and production facilities are located in Fremont, California, in a 51,289 square foot building. The term of the Company’s current lease commenced on April 1, 2008 and ends on June 30, 2015. The Company has an option to extend the lease for an additional period at rates to be determined. The Company’s facility in Japan was located in Tokyo in a 4,294 square foot building until this lease was cancelled on June 30, 2013. The Company moved its facility in Japan to a 418 square foot office in Tokyo under a cancellable lease which expires in June, 2016. The Company also maintains a 1,585 square foot warehouse in Yamanashi under a lease which expires in November, 2015. The Company leases a sales and support office in Utting, Germany. The lease, which began February 1, 1992 and expires on January 31, 2015, contains an automatic twelve months renewal, at rates to be determined, if no notice is given prior to six months from expiry. Under the lease agreements, the Company is responsible for payments of utilities, taxes and insurance. | |||||
Minimum annual rentals payments under non-cancellable operating leases in each of the next five fiscal years and thereafter are as follows (in thousands): | |||||
Years Ending May 31, | |||||
2015 | $ | 623 | |||
2016 | 62 | ||||
2017 | 11 | ||||
2018 | -- | ||||
2019 | -- | ||||
Thereafter | -- | ||||
Total | $ | 696 | |||
Rental expense for the years ended May 31, 2014, 2013 and 2012 was $562,000, $657,000 and $680,000, respectively. | |||||
At May 31, 2014 and 2013, the Company had a $50,000 certificate of deposit held by a financial institution representing a security deposit for its United States manufacturing and office space lease. This amount is included in “Other Assets” on the consolidated balance sheets. | |||||
PURCHASE OBLIGATIONS | |||||
The Company has purchase obligations to certain suppliers. In some cases the products the Company purchases are unique and have provisions against cancellation of the order. At May 31, 2014, the Company had $1,491,000 of purchase obligations which are due within the following 12 months. This amount does not include contractual obligations recorded on the consolidated balance sheets as liabilities. | |||||
CONTINGENCIES | |||||
The Company is, from time to time, involved in legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. | |||||
In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or from intellectual property infringement or other claims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents. | |||||
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have not had a material impact on the Company’s operating results, financial position or cash flows. |
16_SUBSEQUENT_EVENT
16. SUBSEQUENT EVENT | 12 Months Ended |
31-May-14 | |
Subsequent Event | ' |
SUBSEQUENT EVENT | ' |
16. SUBSEQUENT EVENT | |
On August 22, 2014 the Company entered into the Fourth Amendment to Loan and Security Agreement to extend the term of the agreement to August 21, 2015. |
17_SELECTED_QUARTERLY_CONSOLID
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Selected Quarterly Consolidated Financial Data | ' | ||||||||||||||||
SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | ' | ||||||||||||||||
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | |||||||||||||||||
The following tables (presented in thousands, except per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four quarters of the fiscal years ended May 31, 2014 and 2013. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein. | |||||||||||||||||
Three Months Ended | |||||||||||||||||
Aug. 31, | Nov. 30, | Feb. 28, | May 31, | ||||||||||||||
2013 | 2013 | 2014 | 2014 | ||||||||||||||
Net sales | $ | 3,752 | $ | 4,950 | $ | 5,612 | $ | 5,370 | |||||||||
Gross profit | $ | 1,944 | $ | 2,494 | $ | 2,870 | $ | 2,914 | |||||||||
Net (loss) income | $ | (166 | ) | $ | 137 | $ | 212 | $ | 239 | ||||||||
Net (loss) income per share basic and diluted | $ | (0.02 | ) | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||||
Three Months Ended | |||||||||||||||||
Aug. 31, | Nov. 30, | Feb. 28, | May 31, | ||||||||||||||
2012 | 2012 | 2013 | 2013 | ||||||||||||||
Net sales | $ | 4,832 | $ | 5,054 | $ | 3,340 | $ | 3,262 | |||||||||
Gross profit | $ | 2,456 | $ | 2,263 | $ | 765 | $ | 1,292 | |||||||||
Net loss | $ | (296 | ) | $ | (811 | ) | $ | (1,458 | ) | $ | (854 | ) | |||||
Net loss per share basic and diluted | $ | (0.03 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.08 | ) | |||||
1_ORGANIZATION_AND_SUMMARY_OF_1
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
LIQUIDITY: | ' | ||||||||||||||||
LIQUIDITY: | |||||||||||||||||
Since inception, the Company has incurred substantial cumulative losses and negative cash flows from operations. In recent years, the Company has recognized significantly lower sales levels compared to the net sales of the years immediately preceding fiscal 2009, as a result of a major customer filing bankruptcy and a slowdown in the semiconductor manufacturing industry. In response to the low levels of net sales, the Company took significant steps to minimize expense levels and to increase the likelihood that it will have sufficient cash to support operations during the slow business periods. Those steps included reductions in headcount, reduced compensation for officers and other salaried employees, Company-wide shutdowns and lower fees paid to the Board of Directors, among other spending cuts. The Company will continue to explore methods to reduce its costs as necessary. | |||||||||||||||||
In March 2013, the Company sold 1,158,000 shares of its common stock in a private placement transaction with certain Directors and Officers of the Company and other accredited investors. The purchase price per share of the common stock sold in the private placement was $1.00, resulting in gross proceeds to the Company of $1,158,000, before offering expenses. The net proceeds after offering expenses were $1,138,000. | |||||||||||||||||
In August 2011, the Company entered into a working capital credit facility agreement allowing the Company to borrow up to $1.5 million based upon qualified U.S. based and foreign customer receivables, and export-related inventory. In May 2012, the credit agreement was amended to increase the borrowing limit to $2.0 million. In September 2012, the credit agreement was amended to increase the borrowing limit to $2.5 million. Refer to Note 9, “LINE OF CREDIT”, for further discussion of the credit facility agreement. | |||||||||||||||||
During fiscal 2013, 2012 and fiscal 2011 we experienced operating losses and negative cash flow from operating activities. Due primarily to these operating losses, we experienced cash outflows and, at May 31, 2014, had $1.8 million in cash and cash equivalents, compared to $2.3 million at May 31, 2013. The Company anticipates that the existing cash balance together with cash flows from operations, as well as funds available through the working capital credit facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2015. After fiscal 2015, depending on its rate of growth and profitability, the Company may require additional equity or debt financing to meet its working capital requirements or capital equipment needs. There can be no assurance that additional financing will be available when required, or if available, that such financing can be obtained on terms satisfactory to the Company. | |||||||||||||||||
CONSOLIDATION AND EQUITY INVESTMENTS: | ' | ||||||||||||||||
CONSOLIDATION AND EQUITY INVESTMENTS: | |||||||||||||||||
The consolidated financial statements include the accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions have been eliminated. Equity investments in which the Company holds an equity interest less than 20 percent and over which the Company does not have significant influence are accounted for using the cost method. Dividends received from investees accounted for using the cost method are included in other income on the Consolidated Statements of Operations. | |||||||||||||||||
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: | ' | ||||||||||||||||
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: | |||||||||||||||||
Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity. | |||||||||||||||||
Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented. | |||||||||||||||||
USE OF ESTIMATES: | ' | ||||||||||||||||
USE OF ESTIMATES: | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and warranty reserves. | |||||||||||||||||
CASH EQUIVALENTS AND INVESTMENTS: | ' | ||||||||||||||||
CASH EQUIVALENTS AND INVESTMENTS: | |||||||||||||||||
Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value. | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS AND MEASUREMENT: | ' | ||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS AND MEASUREMENT: | |||||||||||||||||
The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements. | |||||||||||||||||
The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: | |||||||||||||||||
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. | |||||||||||||||||
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments. | |||||||||||||||||
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value. | |||||||||||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 477 | $ | 477 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 527 | $ | 477 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2013 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-13 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 102 | $ | 102 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 152 | $ | 102 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
Financial instruments include cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities. The fair value of cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities are valued at their carrying value, which approximates fair value due to their short maturities. | |||||||||||||||||
The Company has at times invested in debt and equity of private companies, and may do so again in the future, as part of its business strategy. These investments are carried at cost and are included in “Other Assets” in the consolidated balance sheets. If the Company determines that an other-than-temporary decline exists in the fair value of an investment, the Company writes down the investment to its fair value and records the related write-down as an investment loss in “Other Income (Expense)” in its consolidated statements of operations. | |||||||||||||||||
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: | ' | ||||||||||||||||
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: | |||||||||||||||||
Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. No significant adjustments to the allowance for doubtful accounts were recorded during the years ended May 31, 2014, 2013 or 2012. | |||||||||||||||||
CONCENTRATION OF CREDIT RISK: | ' | ||||||||||||||||
CONCENTRATION OF CREDIT RISK: | |||||||||||||||||
The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2014, approximately 36%, 35% and 29% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. As of May 31, 2013, approximately 52%, 37% and 12% of gross accounts receivable were from customers located in Asia, the United States and Europe, respectively. Four customers accounted for 35%, 24%, 18% and 17% of gross accounts receivable at May 31, 2014. Four customers accounted for 42%, 21%, 20% and 11% of gross accounts receivable at May 31, 2013. Three customers accounted for 40%, 30% and 12% of net sales in fiscal 2014. Two customers accounted for 32% and 26% of net sales in fiscal 2013. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers. | |||||||||||||||||
The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits. | |||||||||||||||||
CONCENTRATION OF SUPPLY RISK: | ' | ||||||||||||||||
CONCENTRATION OF SUPPLY RISK: | |||||||||||||||||
The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products. | |||||||||||||||||
STRATEGIC INVESTMENTS: | ' | ||||||||||||||||
STRATEGIC INVESTMENTS: | |||||||||||||||||
In June 2011, the Company sold all of its shares of ESA for approximately $1.4 million resulting in a gain of approximately $990,000 reported in the first quarter of fiscal 2012. | |||||||||||||||||
INVENTORIES: | ' | ||||||||||||||||
INVENTORIES: | |||||||||||||||||
Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or market. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or market value. If actual future demand or market conditions become less favorable than those projected by management, additional inventory write-downs may be required, and would be reflected in cost of product revenue in the period the revision is made. | |||||||||||||||||
PROPERTY AND EQUIPMENT: | ' | ||||||||||||||||
PROPERTY AND EQUIPMENT: | |||||||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease. Furniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated useful lives. The ranges of estimated useful lives are generally as follows: | |||||||||||||||||
Furniture and fixtures | 2 to 6 years | ||||||||||||||||
Machinery and equipment | 3 to 6 years | ||||||||||||||||
Test equipment | 4 to 6 years | ||||||||||||||||
REVENUE RECOGNITION: | ' | ||||||||||||||||
REVENUE RECOGNITION: | |||||||||||||||||
The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) services have been rendered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition. | |||||||||||||||||
Revenue related to the multiple elements are allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used. We have adopted this guidance effective with the first quarter of fiscal 2012. Prior to fiscal 2012, revenue for arrangements containing multiple deliverables was allocated based upon estimated fair values. The adoption of the new revenue recognition accounting standards did not have a material impact on our consolidated financial statements. | |||||||||||||||||
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer. | |||||||||||||||||
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped. | |||||||||||||||||
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee. | |||||||||||||||||
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration. | |||||||||||||||||
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: | ' | ||||||||||||||||
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: | |||||||||||||||||
Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2014, 2013 and 2012. | |||||||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS: | ' | ||||||||||||||||
IMPAIRMENT OF LONG-LIVED ASSETS: | |||||||||||||||||
In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required. | |||||||||||||||||
ADVERTISING COSTS: | ' | ||||||||||||||||
ADVERTISING COSTS: | |||||||||||||||||
The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented. | |||||||||||||||||
SHIPPING AND HANDLING OF PRODUCTS: | ' | ||||||||||||||||
SHIPPING AND HANDLING OF PRODUCTS: | |||||||||||||||||
Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales. | |||||||||||||||||
INCOME TAXES: | ' | ||||||||||||||||
INCOME TAXES: | |||||||||||||||||
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized. | |||||||||||||||||
A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2014 and 2013. | |||||||||||||||||
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes. | |||||||||||||||||
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2013 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years. | |||||||||||||||||
STOCK-BASED COMPENSATION: | ' | ||||||||||||||||
STOCK-BASED COMPENSATION: | |||||||||||||||||
Stock-based compensation expense consists of expenses for stock options and employee stock purchase plan, or ESPP, shares. Stock-based compensation cost 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. All of the Company’s stock-based compensation is accounted for as an equity instrument. | |||||||||||||||||
The following table summarizes compensation costs related to the Company’s stock-based compensation for the years ended May 31, 2014, 2013 and 2012, respectively (in thousands, except per share data): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Stock-based compensation in the form of employee | |||||||||||||||||
stock options and ESPP shares, included in: | |||||||||||||||||
Cost of sales | $ | 43 | $ | 36 | $ | 87 | |||||||||||
Selling, general and administrative | 643 | 446 | 430 | ||||||||||||||
Research and development | 167 | 119 | 192 | ||||||||||||||
Net effect on net income (loss) | $ | 853 | $ | 601 | $ | 709 | |||||||||||
Effect on net income (loss) per share: | |||||||||||||||||
Basic. | $ | 0.08 | $ | 0.06 | $ | 0.08 | |||||||||||
Diluted | $ | 0.07 | $ | 0.06 | $ | 0.08 | |||||||||||
During fiscal 2014, 2013 and fiscal 2012, the Company recorded stock-based compensation related to stock options of $723,000, $551,000 and $613,000, respectively. | |||||||||||||||||
As of May 31, 2014, the total compensation cost related to unvested stock-based awards under the Company’s 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was $955,000 which is net of estimated forfeitures of $2,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.5 years. | |||||||||||||||||
During fiscal 2014, 2013 and fiscal 2012, the Company recorded stock-based compensation related to its ESPP of $130,000, $50,000 and $96,000, respectively. | |||||||||||||||||
As of May 31, 2014 there was $24,000 of stock-based compensation costs capitalized as part of inventory. There were no stock-based compensation costs capitalized as part of inventory as of May 31, 2013 or 2012. | |||||||||||||||||
As of May 31, 2014, the total compensation cost related to options to purchase the Company’s common shares under the ESPP but not yet recognized was $109,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 1.0 years. | |||||||||||||||||
Valuation Assumptions | |||||||||||||||||
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation method and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. | |||||||||||||||||
Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards. | |||||||||||||||||
Expected Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation cost recorded. | |||||||||||||||||
Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation method. | |||||||||||||||||
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation method on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP. | |||||||||||||||||
Estimated Forfeitures. When estimating forfeitures, the Company considers voluntary termination behavior as well as analysis of actual option forfeitures. | |||||||||||||||||
Fair Value. The fair values of the Company’s stock options granted to employees shares in fiscal 2014, 2013 and 2012 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Option Plan Shares | |||||||||||||||||
Expected Term (in years) | 4 | 5 | 5 | ||||||||||||||
Volatility | 0.95 | 0.91 | 0.84 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 1.39 | % | 0.72 | % | 1.12 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.09 | $ | 0.78 | $ | 0.6 | |||||||||||
The fair value of our ESPP purchase rights for the fiscal 2014, 2013 and 2012 was estimated using the following weighted-average assumptions: | |||||||||||||||||
Year End May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Employee Stock Purchase Plan Shares | |||||||||||||||||
Expected Term (in years) | 0.5 - 2.0 | 0.5 - 2.0 | 0.5 - 2.0 | ||||||||||||||
Volatility | 0.86 – 1.00 | 0.45 – 1.05 | 0.79 – 0.95 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 0.04%–0.44 | % | 0.11%–0.23 | % | 0.06%–1.05 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.34 | $ | 0.54 | $ | 0.4 | |||||||||||
EARNINGS PER SHARE (bEPSb): | ' | ||||||||||||||||
EARNINGS PER SHARE (“EPS”): | |||||||||||||||||
Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed after giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of the incremental common shares issuable upon exercise of stock options for all periods. | |||||||||||||||||
A reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows (in thousands, except per share amounts): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Numerator: Net income (loss) | $ | 422 | $ | (3,419 | ) | $ | (3,390 | ) | |||||||||
Denominator for basic net income (loss) per share: | |||||||||||||||||
Weighted-average shares outstanding | 10,877 | 9,549 | 9,016 | ||||||||||||||
Shares used in basic net income (loss) per share calculation | 10,877 | 9,549 | 9,016 | ||||||||||||||
Effect of dilutive securities | 1,012 | -- | -- | ||||||||||||||
Denominator for diluted net income (loss) per share | 11,889 | 9,549 | 9,016 | ||||||||||||||
Basic net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
Diluted net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. Stock options to purchase 301,000 shares of common stock and ESPP rights to purchase 131,000 ESPP shares were outstanding on May 31, 2014, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. In the fiscal year’s ended May 31, 2013 and 2012, potential common shares have not been included in the calculation of diluted net loss per share as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for these periods are the same. Stock options to purchase 2,956,000 and 2,967,000 shares of common stock were outstanding on May 31, 2013 and 2012, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 178,000 and 253,000 ESPP shares were outstanding on May 31, 2013 and 2012, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. | |||||||||||||||||
COMPREHENSIVE INCOME (LOSS): | ' | ||||||||||||||||
COMPREHENSIVE INCOME (LOSS): | |||||||||||||||||
Comprehensive income (loss) generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive income (loss), which are excluded from net income (loss). Comprehensive income (loss) is included in the statement of shareholders’ equity and comprehensive loss. | |||||||||||||||||
RECLASSIFICATION: | ' | ||||||||||||||||
RECLASSIFICATION | |||||||||||||||||
Certain reclassifications have been made to the consolidated financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net loss, total assets or shareholders’ equity. | |||||||||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS: | ' | ||||||||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS: | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from contracts with customers, a new standard on revenue recognition. The new standard will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers. The guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, and property and equipment. The new standard will become effective for us beginning with the first quarter of 2017 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. We are currently evaluating the impact of adopting this new guidance on our consolidated financial statements. | |||||||||||||||||
1_ORGANIZATION_AND_SUMMARY_OF_2
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Organization And Summary Of Significant Accounting Policies Tables | ' | ||||||||||||||||
Financial assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 477 | $ | 477 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 527 | $ | 477 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2013 (in thousands): | |||||||||||||||||
Balance as of | |||||||||||||||||
31-May-13 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Money market funds | $ | 102 | $ | 102 | $ | -- | $ | -- | |||||||||
Certificate of Deposit | 50 | -- | 50 | -- | |||||||||||||
Assets | $ | 152 | $ | 102 | $ | 50 | $ | -- | |||||||||
Liabilities | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
Useful life for property and equipment | ' | ||||||||||||||||
The ranges of estimated useful lives are generally as follows: | |||||||||||||||||
Furniture and fixtures | 2 to 6 years | ||||||||||||||||
Machinery and equipment | 3 to 6 years | ||||||||||||||||
Test equipment | 4 to 6 years | ||||||||||||||||
Compensation costs related to the Company's stock-based compensation | ' | ||||||||||||||||
The following table summarizes compensation costs related to the Company’s stock-based compensation for the years ended May 31, 2014, 2013 and 2012, respectively (in thousands, except per share data): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Stock-based compensation in the form of employee | |||||||||||||||||
stock options and ESPP shares, included in: | |||||||||||||||||
Cost of sales | $ | 43 | $ | 36 | $ | 87 | |||||||||||
Selling, general and administrative | 643 | 446 | 430 | ||||||||||||||
Research and development | 167 | 119 | 192 | ||||||||||||||
Net effect on net income (loss) | $ | 853 | $ | 601 | $ | 709 | |||||||||||
Effect on net income (loss) per share: | |||||||||||||||||
Basic. | $ | 0.08 | $ | 0.06 | $ | 0.08 | |||||||||||
Diluted | $ | 0.07 | $ | 0.06 | $ | 0.08 | |||||||||||
Fair value assumptions for Option Valuation Model | ' | ||||||||||||||||
Fair Value. The fair values of the Company’s stock options granted to employees shares in fiscal 2014, 2013 and 2012 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Option Plan Shares | |||||||||||||||||
Expected Term (in years) | 4 | 5 | 5 | ||||||||||||||
Volatility | 0.95 | 0.91 | 0.84 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 1.39 | % | 0.72 | % | 1.12 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.09 | $ | 0.78 | $ | 0.6 | |||||||||||
Fair value assumption of the ESPP Purchase Rights | ' | ||||||||||||||||
The fair value of our ESPP purchase rights for the fiscal 2014, 2013 and 2012 was estimated using the following weighted-average assumptions: | |||||||||||||||||
Year End May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Employee Stock Purchase Plan Shares | |||||||||||||||||
Expected Term (in years) | 0.5 - 2.0 | 0.5 - 2.0 | 0.5 - 2.0 | ||||||||||||||
Volatility | 0.86 – 1.00 | 0.45 – 1.05 | 0.79 – 0.95 | ||||||||||||||
Expected Dividend | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Risk-free Interest Rates | 0.04%–0.44 | % | 0.11%–0.23 | % | 0.06%–1.05 | % | |||||||||||
Weighted Average Grant Date Fair Value | $ | 1.34 | $ | 0.54 | $ | 0.4 | |||||||||||
Basic and diluted EPS | ' | ||||||||||||||||
A reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows (in thousands, except per share amounts): | |||||||||||||||||
Year Ended May 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Numerator: Net income (loss) | $ | 422 | $ | (3,419 | ) | $ | (3,390 | ) | |||||||||
Denominator for basic net income (loss) per share: | |||||||||||||||||
Weighted-average shares outstanding | 10,877 | 9,549 | 9,016 | ||||||||||||||
Shares used in basic net income (loss) per share calculation | 10,877 | 9,549 | 9,016 | ||||||||||||||
Effect of dilutive securities | 1,012 | -- | -- | ||||||||||||||
Denominator for diluted net income (loss) per share | 11,889 | 9,549 | 9,016 | ||||||||||||||
Basic net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
Diluted net income (loss) per share | $ | 0.04 | $ | (0.36 | ) | $ | (0.38 | ) | |||||||||
2_ACCOUNTS_RECEIVABLE_Tables
2. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Receivables [Abstract] | ' | ||||||||||||||||
Accounts receivable | ' | ||||||||||||||||
Accounts receivable comprise (in thousands): | |||||||||||||||||
May 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Accounts receivable | $ | 3,441 | $ | 2,671 | |||||||||||||
Less: Allowance for doubtful accounts | (51 | ) | (39 | ) | |||||||||||||
$ | 3,390 | $ | 2,632 | ||||||||||||||
Additions | |||||||||||||||||
Balance at | charged to | Balance | |||||||||||||||
beginning | costs and | at end | |||||||||||||||
of year | expenses | Deductions* | of year | ||||||||||||||
Allowance for doubtful | |||||||||||||||||
accounts receivable: | |||||||||||||||||
May 31, 2014 | $ | 39 | $ | 15 | $ | (3 | ) | $ | 51 | ||||||||
May 31, 2013 | $ | 39 | $ | -- | $ | -- | $ | 39 | |||||||||
* Deductions include write-offs of uncollectible accounts and collections of amounts previously reserved. | |||||||||||||||||
3_INVENTORIES_Tables
3. INVENTORIES (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Inventories Tables | ' | ||||||||
Inventories | ' | ||||||||
Inventories comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Raw materials and sub-assemblies | $ | 3,348 | $ | 3,180 | |||||
Work in process | 2,585 | 2,187 | |||||||
Finished goods | 215 | 2 | |||||||
$ | 6,148 | $ | 5,369 |
4_PROPERTY_AND_EQUIPMENT_NET_T
4. PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment | ' | ||||||||
Property and equipment comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Leasehold improvements | $ | 1,093 | $ | 1,104 | |||||
Furniture and fixtures | 1,094 | 1,130 | |||||||
Machinery and equipment | 3,801 | 4,137 | |||||||
Test equipment | 3,041 | 3,040 | |||||||
9,029 | 9,411 | ||||||||
Less: Accumulated depreciation | |||||||||
and amortization | (8,555 | ) | (9,110 | ) | |||||
$ | 474 | $ | 301 |
5_PRODUCT_WARRANTIES_Tables
5. PRODUCT WARRANTIES (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Product Warranties Tables | ' | ||||||||
Liability for product warranties | ' | ||||||||
Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2014 and May 31, 2013 (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Balance at the beginning of the year | $ | 222 | $ | 91 | |||||
Accruals for warranties issued during the year | 297 | 536 | |||||||
Settlement made during the year (in cash or in kind) | (296 | ) | (405 | ) | |||||
Balance at the end of the year | $ | 223 | $ | 222 | |||||
6_ACCRUED_EXPENSES_Tables
6. ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses | ' | ||||||||
Accrued expenses comprise (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Payroll related | $ | 596 | $ | 413 | |||||
Warranty | 223 | 222 | |||||||
Commissions and bonuses | 174 | 419 | |||||||
Professional services | 147 | 143 | |||||||
Deferred rent | 95 | 76 | |||||||
Taxes payable | 68 | 84 | |||||||
Accrued customer obligations | 35 | 35 | |||||||
Other | 52 | 48 | |||||||
$ | 1,390 | $ | 1,440 |
7_INCOME_TAXES_Tables
7. INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
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 | % | 34 | % | 34 | % | |||||||
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 | 0.1 | |||||||||
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 |
8_CUSTOMER_DEPOSITS_AND_DEFERR1
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Customer Deposits And Deferred Revenue Short-Term Tables | ' | ||||||||
Customer deposits and deferred revenue | ' | ||||||||
Customer deposits and deferred revenue, short-term (in thousands): | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Customer deposits | $ | 871 | $ | 1,728 | |||||
Deferred revenue, short-term | 187 | 244 | |||||||
$ | 1,058 | $ | 1,972 | ||||||
10_CAPITAL_STOCK_Tables
10. CAPITAL STOCK (Tables) | 12 Months Ended | |||||||||||||||||||
31-May-14 | ||||||||||||||||||||
Capital Stock Tables | ' | |||||||||||||||||||
Stock option transactions | ' | |||||||||||||||||||
The following table summarizes the Company’s stock option transactions during fiscal 2014, 2013 and 2012 (in thousands, except per share data): | ||||||||||||||||||||
Outstanding Options | ||||||||||||||||||||
Weighted | ||||||||||||||||||||
Number | Average | Aggregate | ||||||||||||||||||
Available | of | Exercise | Intrinsic | |||||||||||||||||
Shares | Shares | Price | Value | |||||||||||||||||
Balances, May 31, 2011 | 687 | 2,083 | $ | 3.4 | $ | 298 | ||||||||||||||
Additional shares reserved | 1,199 | -- | ||||||||||||||||||
Options granted | (1,141 | ) | 1,141 | $ | 0.92 | |||||||||||||||
Options terminated | 258 | (258 | ) | $ | 3.72 | |||||||||||||||
Plan shares expired | (164 | ) | -- | |||||||||||||||||
Options exercised | -- | (9 | ) | $ | 0.85 | |||||||||||||||
Balances, May 31, 2012 | 839 | 2,957 | $ | 2.4 | $ | 587 | ||||||||||||||
Additional shares reserved | 1,223 | -- | ||||||||||||||||||
Options granted | (670 | ) | 670 | $ | 1.13 | |||||||||||||||
Options terminated | 569 | (569 | ) | $ | 4.37 | |||||||||||||||
Plan shares expired | (224 | ) | -- | |||||||||||||||||
Options exercised | -- | (102 | ) | $ | 0.67 | |||||||||||||||
Balances, May 31, 2013 | 1,737 | 2,956 | $ | 1.79 | $ | 964 | ||||||||||||||
Options granted | (908 | ) | 908 | $ | 1.64 | |||||||||||||||
Options terminated | 420 | (420 | ) | $ | 5.51 | |||||||||||||||
Plan shares expired | (104 | ) | -- | |||||||||||||||||
Options exercised | -- | (442 | ) | $ | 1.17 | |||||||||||||||
Balances, May 31, 2014 | 1,145 | 3,002 | $ | 1.31 | $ | 2,913 | ||||||||||||||
Options exercisable and expected to be | ||||||||||||||||||||
exercisable at May 31, 2014 | 2,942 | $ | 1.31 | $ | 2,855 | |||||||||||||||
Options Outstanding | ' | |||||||||||||||||||
The options outstanding and exercisable at May 31, 2014 were in the following exercise price ranges (in thousands, except per share data): | ||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
at May 31, 2014 | at May 31, 2014 | |||||||||||||||||||
Range of Exercise | Number Outstanding Shares | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||
Prices | Shares | |||||||||||||||||||
$ | 0.59-$0.97 | 871 | 4.01 | $ | 0.73 | 702 | $ | 0.77 | 3.87 | |||||||||||
$ | 1.09-$1.42 | 1,432 | 4.87 | $ | 1.28 | 661 | $ | 1.28 | 4.26 | |||||||||||
$ | 1.73-$1.95 | 460 | 2.8 | $ | 1.88 | 384 | $ | 1.91 | 2.22 | |||||||||||
$ | 2.15-$2.68 | 239 | 5.32 | $ | 2.54 | 145 | $ | 1.33 | 4.44 | |||||||||||
$ | 0.59-$2.68 | 3,002 | 4.34 | $ | 1.31 | 1,892 | $ | 1.22 | 3.72 | $ | 1,835 | |||||||||
12_OTHER_EXPENSE_INCOME_NET_Ta
12. OTHER (EXPENSE) INCOME, NET (Tables) | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
Other Income and Expenses [Abstract] | ' | ||||||||||||
Other (expense) income | ' | ||||||||||||
Other (expense) income, net comprises the following (in thousands): | |||||||||||||
Year Ended May 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Foreign exchange (loss) gain | $ | (47 | ) | $ | (36 | ) | $ | 117 | |||||
Other, net | (17 | ) | 3 | -- | |||||||||
$ | (64 | ) | $ | (33 | ) | $ | 117 |
13_SEGMENT_INFORMATION_Tables
13. SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Segment Information Tables | ' | ||||||||||||||||
Company's operations in different geographic areas | ' | ||||||||||||||||
The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands). | |||||||||||||||||
United | |||||||||||||||||
States | Asia | Europe | Total | ||||||||||||||
2014:00:00 | |||||||||||||||||
Net sales | $ | 8,708 | $ | 7,453 | $ | 3,523 | $ | 19,684 | |||||||||
Property and equipment, net | 415 | 42 | 17 | 474 | |||||||||||||
2013:00:00 | |||||||||||||||||
Net sales | $ | 7,379 | $ | 8,184 | $ | 925 | $ | 16,488 | |||||||||
Property and equipment, net | 249 | 52 | -- | 301 | |||||||||||||
2012:00:00 | |||||||||||||||||
Net sales | $ | 9,560 | $ | 4,276 | $ | 1,685 | $ | 15,521 | |||||||||
Property and equipment, net | 441 | 66 | 3 | 510 | |||||||||||||
15_COMMITMENTS_AND_CONTINGENCI1
15. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
31-May-14 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Minimum annual rentals payments under non-cancellable operating leases | ' | ||||
Minimum annual rentals payments under non-cancellable operating leases in each of the next five fiscal years and thereafter are as follows (in thousands): | |||||
Years Ending May 31, | |||||
2015 | $ | 623 | |||
2016 | 62 | ||||
2017 | 11 | ||||
2018 | -- | ||||
2019 | -- | ||||
Thereafter | -- | ||||
Total | $ | 696 | |||
17_SELECTED_QUARTERLY_CONSOLID1
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Tables) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Selected Quarterly Consolidated Financial Data (unaudited) | ' | ||||||||||||||||
The following tables (presented in thousands, except per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four quarters of the fiscal years ended May 31, 2014 and 2013. | |||||||||||||||||
Three Months Ended | |||||||||||||||||
Aug. 31, | Nov. 30, | Feb. 28, | May 31, | ||||||||||||||
2013 | 2013 | 2014 | 2014 | ||||||||||||||
Net sales | $ | 3,752 | $ | 4,950 | $ | 5,612 | $ | 5,370 | |||||||||
Gross profit | $ | 1,944 | $ | 2,494 | $ | 2,870 | $ | 2,914 | |||||||||
Net (loss) income | $ | (166 | ) | $ | 137 | $ | 212 | $ | 239 | ||||||||
Net (loss) income per share basic and diluted | $ | (0.02 | ) | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||||
Three Months Ended | |||||||||||||||||
Aug. 31, | Nov. 30, | Feb. 28, | May 31, | ||||||||||||||
2012 | 2012 | 2013 | 2013 | ||||||||||||||
Net sales | $ | 4,832 | $ | 5,054 | $ | 3,340 | $ | 3,262 | |||||||||
Gross profit | $ | 2,456 | $ | 2,263 | $ | 765 | $ | 1,292 | |||||||||
Net loss | $ | (296 | ) | $ | (811 | ) | $ | (1,458 | ) | $ | (854 | ) | |||||
Net loss per share basic and diluted | $ | (0.03 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.08 | ) | |||||
1_ORGANIZATION_AND_SUMMARY_OF_3
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 31-May-14 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Assets | $527 | $152 |
Liabilities | 0 | 0 |
Money market funds | ' | ' |
Assets | 477 | 102 |
Certificate of Deposit | ' | ' |
Assets | 50 | 50 |
Level 1 | ' | ' |
Assets | 477 | 102 |
Liabilities | 0 | 0 |
Level 1 | Money market funds | ' | ' |
Assets | 477 | 102 |
Level 1 | Certificate of Deposit | ' | ' |
Assets | 0 | 0 |
Level 2 | ' | ' |
Assets | 50 | 50 |
Liabilities | 0 | 0 |
Level 2 | Money market funds | ' | ' |
Assets | 0 | 0 |
Level 2 | Certificate of Deposit | ' | ' |
Assets | 50 | 50 |
Level 3 | ' | ' |
Assets | 0 | 0 |
Liabilities | 0 | 0 |
Level 3 | Money market funds | ' | ' |
Assets | 0 | 0 |
Level 3 | Certificate of Deposit | ' | ' |
Assets | $0 | $0 |
1_ORGANIZATION_AND_SUMMARY_OF_4
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PROPERTY AND EQUIPMENT (Details) | 12 Months Ended |
31-May-14 | |
Furniture and fixtures | Minimum | ' |
Useful life | '2 years |
Furniture and fixtures | Maximum | ' |
Useful life | '6 years |
Machinery and equipment | Minimum | ' |
Useful life | '3 years |
Machinery and equipment | Maximum | ' |
Useful life | '6 years |
Test equipment | Minimum | ' |
Useful life | '4 years |
Test equipment | Maximum | ' |
Useful life | '6 years |
1_ORGANIZATION_AND_SUMMARY_OF_5
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Stock-based compensation in the form of employee stock options and ESPP shares included in: | ' | ' | ' |
Total stock-based compensation | $853 | $601 | $709 |
Effect on net income (loss) per share, Basic | $0.08 | $0.06 | $0.08 |
Effect on net income (loss) per share, Diluted | $0.07 | $0.06 | $0.08 |
Cost Of Sales | ' | ' | ' |
Stock-based compensation in the form of employee stock options and ESPP shares included in: | ' | ' | ' |
Total stock-based compensation | 43 | 36 | 87 |
Selling, General and Administrative | ' | ' | ' |
Stock-based compensation in the form of employee stock options and ESPP shares included in: | ' | ' | ' |
Total stock-based compensation | 643 | 446 | 430 |
Research And Development | ' | ' | ' |
Stock-based compensation in the form of employee stock options and ESPP shares included in: | ' | ' | ' |
Total stock-based compensation | $167 | $119 | $192 |
1_ORGANIZATION_AND_SUMMARY_OF_6
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (Stock Option, USD $) | 12 Months Ended | ||
31-May-14 | 31-May-13 | 31-May-12 | |
Stock Option | ' | ' | ' |
Fair Value Assumptions for Stock Options Granted | ' | ' | ' |
Expected term (in years) | '4 years | '5 years | '5 years |
Volatility | 95.00% | 91.00% | 84.00% |
Expected dividend | $0 | $0 | $0 |
Risk-free Interest Rates | 1.39% | 0.72% | 1.12% |
Weighted Average Grant Date Fair Value | $1.09 | $0.78 | $0.60 |
1_ORGANIZATION_AND_SUMMARY_OF_7
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (Employee Stock Purchase Plan, USD $) | 12 Months Ended | ||
31-May-14 | 31-May-13 | 31-May-12 | |
Minimum | ' | ' | ' |
Fair Value Assumptions for ESPP purchase rights granted | ' | ' | ' |
Expected term (in years) | '6 months | '6 months | '6 months |
Volatility | 86.00% | 45.00% | 79.00% |
Expected dividend | $0 | $0 | $0 |
Risk-free Interest Rates | 0.04% | 0.11% | 0.06% |
Weighted Average Grant Date Fair Value | $1.34 | $0.54 | $0.40 |
Maximum | ' | ' | ' |
Fair Value Assumptions for ESPP purchase rights granted | ' | ' | ' |
Expected term (in years) | '2 years | '2 years | '2 years |
Volatility | 100.00% | 105.00% | 95.00% |
Expected dividend | $0 | $0 | $0 |
Risk-free Interest Rates | 0.44% | 0.23% | 1.05% |
Weighted Average Grant Date Fair Value | $1.34 | $0.54 | $0.40 |
1_ORGANIZATION_AND_SUMMARY_OF_8
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | 31-May-14 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | 31-May-13 | Feb. 28, 2013 | Nov. 30, 2012 | Aug. 31, 2012 | 31-May-14 | 31-May-13 | 31-May-12 |
Organization And Summary Of Significant Accounting Policies Details 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | $239 | $212 | $137 | ($166) | ($854) | ($1,458) | ($811) | ($296) | $422 | ($3,419) | ($3,390) |
Denominator for basic net income (loss) per share: Weighted average shares outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 10,877 | 9,549 | 9,016 |
Shares used in basic net income (loss) per share calculation | ' | ' | ' | ' | ' | ' | ' | ' | 10,877 | 9,549 | 9,016 |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | 1,012 | 0 | 0 |
Denominator for diluted net income (loss) per share | ' | ' | ' | ' | ' | ' | ' | ' | 11,889 | 9,549 | 9,016 |
Basic net income (loss) per share | ' | ' | ' | ' | ' | ' | ' | ' | $0.04 | ($0.36) | ($0.38) |
Diluted net income (loss) per share | ' | ' | ' | ' | ' | ' | ' | ' | $0.04 | ($0.36) | ($0.38) |
2_ACCOUNTS_RECEIVABLE_Details
2. ACCOUNTS RECEIVABLE (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 |
Accounts Receivable Details | ' | ' |
Accounts receivable, Gross | $3,441 | $2,671 |
Allowance for doubtful accounts, Beginning | -39 | -39 |
Allowance for doubtful accounts, Additions charged to costs and expenses | -15 | 0 |
Allowance for doubtful accounts, Deductions | 3 | 0 |
Allowance for doubtful accounts, Ending | -51 | -39 |
Accounts receivable, Net | $3,390 | $2,632 |
3_INVENTORIES_Details
3. INVENTORIES (Details) (USD $) | 31-May-14 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Inventories Details | ' | ' |
Raw materials and sub-assemblies | $3,348 | $3,180 |
Work-in-process | 2,585 | 2,187 |
Finished goods | 215 | 2 |
Inventory | $6,148 | $5,369 |
4_PROPERTY_AND_EQUIPMENT_NET_D
4. PROPERTY AND EQUIPMENT, NET (Details) (USD $) | 31-May-14 | 31-May-13 | 31-May-12 |
In Thousands, unless otherwise specified | |||
Property And Equipment Net Details | ' | ' | ' |
Leasehold improvements | $1,093 | $1,104 | ' |
Furniture and fixtures | 1,094 | 1,130 | ' |
Machinery and equipment | 3,801 | 4,137 | ' |
Test equipment | 3,041 | 3,040 | ' |
Property and equipment, gross | 9,029 | 9,411 | ' |
Less: Accumulated depreciation and amortization | -8,555 | -9,110 | ' |
Property and equipment, net | $474 | $301 | $510 |
4_PROPERTY_AND_EQUIPMENT_NET_D1
4. PROPERTY AND EQUIPMENT NET (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Property And Equipment Net Details Narrative | ' | ' | ' |
Depreciation expense | $141 | $322 | $491 |
5_PRODUCT_WARRANTIES_Details
5. PRODUCT WARRANTIES (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 |
Product Warranties Details | ' | ' |
Balance at the beginning of the year | $222 | $91 |
Accruals for warranties issued during the year | 297 | 536 |
Settlement made during the year (in cash or in kind) | -296 | -405 |
Balance at the end of the year | $223 | $222 |
6_ACCRUED_EXPENSES_Details
6. ACCRUED EXPENSES (Details) (USD $) | 31-May-14 | 31-May-13 | 31-May-12 |
In Thousands, unless otherwise specified | |||
Accrued Expenses Details | ' | ' | ' |
Payroll related | $596 | $413 | ' |
Warranty | 223 | 222 | 91 |
Commissions and bonuses | 174 | 419 | ' |
Professional services | 147 | 143 | ' |
Deferred rent | 95 | 76 | ' |
Taxes payable | 68 | 84 | ' |
Accrued customer obligations | 35 | 35 | ' |
Other | 52 | 48 | ' |
Accrued expenses | $1,390 | $1,440 | ' |
7_INCOME_TAXES_Details
7. INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Components of Income (Loss) Before Income Tax Benefit (Expense) | ' | ' | ' |
Domestic | $438 | ($3,392) | ($3,590) |
Foreign | -31 | 3 | 186 |
Income (loss) before income tax benefit (expense) | $407 | ($3,389) | ($3,404) |
7_INCOME_TAXES_Details_1
7. INCOME TAXES (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Components of Income Tax Benefit (Expense): | ' | ' | ' |
Current | $0 | $0 | $0 |
Deferred | 0 | 0 | 0 |
State income taxes: | ' | ' | ' |
Current | -30 | -21 | -12 |
Deferred | 0 | 0 | 0 |
Foreign income taxes: | ' | ' | ' |
Current | 45 | -9 | 27 |
Deferred | 0 | 0 | 0 |
Income tax benefit (expense) | $15 | ($30) | $15 |
7_INCOME_TAXES_Details_2
7. INCOME TAXES (Details 2) | 12 Months Ended | ||
31-May-14 | 31-May-13 | 31-May-12 | |
Reconciliation of Federal Statutory Rate to Effective Rate | ' | ' | ' |
U.S. federal statutory tax rate | 34.00% | 34.00% | 34.00% |
State taxes, net of federal tax effect | 4.70% | -0.40% | -0.20% |
Foreign rate differential | -11.90% | 0.20% | 2.90% |
Stock-based compensation | 34.50% | -4.40% | -6.00% |
Research and development credit | -20.50% | 3.00% | 0.10% |
Change in valuation allowance | -45.80% | -33.00% | -30.20% |
Other | 1.30% | -0.30% | -0.20% |
Effective tax rate | -3.70% | -0.90% | 0.40% |
7_INCOME_TAXES_Details_3
7. INCOME TAXES (Details 3) (USD $) | 31-May-14 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Components of Deferred Tax Assets | ' | ' |
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 |
Gross deferred tax assets | 21,984 | 22,190 |
Less: Valuation allowance | -21,984 | -22,190 |
Net deferred tax assets | $0 | $0 |
7_INCOME_TAXES_Details_4
7. INCOME TAXES (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Components of Unrecognized Tax Benefits | ' | ' | ' |
Unrecognized tax benefit, Beginning | $1,007 | $1,022 | $1,093 |
Decreases related to prior year tax positions | 0 | 0 | 0 |
Decreases related to lapse of statute of limitations | -34 | -15 | -71 |
Unrecognized tax benefit, Ending | $973 | $1,007 | $1,022 |
7_INCOME_TAXES_Details_Narrati
7. INCOME TAXES (Details Narrative) (USD $) | 31-May-14 |
In Thousands, unless otherwise specified | |
Income Taxes Details Narrative | ' |
Impact on effective income tax rate | $71 |
Accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes | $11 |
8_CUSTOMER_DEPOSITS_AND_DEFERR2
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) (USD $) | 31-May-14 | 31-May-13 |
In Thousands, unless otherwise specified | ||
Customer Deposits And Deferred Revenue Short-Term Details | ' | ' |
Customer deposits | $871 | $1,728 |
Deferred revenue, short-term | 187 | 244 |
Customer deposits and deferred revenue, short-term | $1,058 | $1,972 |
9_LINE_OF_CREDIT_Details_Narra
9. LINE OF CREDIT (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 |
Line Of Credit Details Narrative | ' | ' |
Line of credit, maximum borrowing capacity | $2,500 | $2,500 |
Line of credit facility, amount borrowed | 777 | 1,101 |
Balance available to borrow under the line of credit | 1,566 | ' |
Weighted Average Interest Rate | 4.14% | ' |
Average loan balance | $473 | ' |
10_CAPITAL_STOCK_Details
10. CAPITAL STOCK (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Available Shares Stock Option Tranactions | ' | ' | ' |
Available Shares, Beginning | 1,737 | 839 | 687 |
Additional shares reserved | ' | 1,223 | 1,199 |
Options granted | -908 | -670 | -1,141 |
Options terminated | 420 | 569 | 258 |
Plan shares expired | -104 | -224 | -164 |
Available Shares, Ending | 1,145 | 1,737 | 839 |
Outstanding Options Stock Option Tranactions | ' | ' | ' |
Options Outstanding, Beginning | 2,956 | 2,957 | 2,083 |
Options Granted | 908 | 670 | 1,141 |
Options terminated | -420 | -569 | -258 |
Plan options exercised | -442 | -102 | -9 |
Number of Options Outstanding, Ending | 3,002 | 2,956 | 2,957 |
Options exercisable and expected to be exercisable | 2,942 | ' | ' |
Weighted Average Exercise Price Outstanding, Beginning | $1.79 | $2.40 | $3.40 |
Weighted Average Exercise Price Granted | $1.64 | $1.13 | $0.92 |
Weighted Average Exercise Price Terminated | $5.51 | $4.37 | $3.72 |
Weighted Average Exercise Price Exercised | $1.17 | $0.67 | $0.85 |
Weighted Average Exercise Price Outstanding, Ending | $1.31 | $1.79 | $2.40 |
Weighted Average Exercise Price Exercisable and expected to be exercisable | $1.31 | ' | ' |
Aggregate Intrinsic Value, beginning balance | $964 | $587 | $298 |
Aggregate Intrinsic Value, ending balance | 2,913 | 964 | 587 |
Aggregate Intrinsic Value for Options exercisable and expected to be exercisable | $2,855 | ' | ' |
10_CAPITAL_STOCK_Details_2
10. CAPITAL STOCK (Details 2) (USD $) | 31-May-14 | 31-May-13 | 31-May-12 | 31-May-11 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 |
In Thousands, except Share data, unless otherwise specified | $0.59-$0.97 | $1.09-$1.42 | $1.73-$1.95 | $2.15-$2.68 | $0.59-$2.68 | ||||
Number of Options Outstanding, Ending | 3,002 | 2,956 | 2,957 | 2,083 | 871 | 1,432 | 460 | 239 | 3,002 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | ' | ' | ' | ' | '4 years 4 days | '4 years 10 months 13 days | '2 years 9 months 18 days | '5 years 3 months 25 days | '4 years 3 months 25 days |
Weighted Average Exercise Price Outstanding, Ending | $1.31 | $1.79 | $2.40 | $3.40 | $0.73 | $1.28 | $1.88 | $2.54 | $1.31 |
Options exercisable and expected to be exercisable | ' | ' | ' | ' | 702 | 661 | 384 | 145 | 1,892 |
Weighted Average Exercise Price Exercisable | ' | ' | ' | ' | $0.77 | $1.28 | $1.91 | $1.33 | $1.22 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | ' | ' | ' | ' | '3 years 10 months 13 days | '4 years 3 months 4 days | '2 years 2 months 19 days | '4 years 5 months 8 days | '3 years 8 months 19 days |
Aggregate Intrinsic Value | ' | ' | ' | ' | ' | ' | ' | ' | $1,835 |
11_EMPLOYEE_BENEFIT_PLANS_Deta
11. EMPLOYEE BENEFIT PLANS (Details Narrative) (USD $) | 12 Months Ended | ||
31-May-14 | 31-May-13 | 31-May-12 | |
Employee Benefit Plans Details Narrative | ' | ' | ' |
Contributions to ESOP | $60,000 | $60,000 | $60,000 |
Shares contributed to the ESOP for fiscal year | 41,666 | 47,244 | 40,540 |
Common stock issued under ESPP plan | 120,000 | 156,000 | 154,000 |
12_OTHER_EXPENSE_INCOME_NET_De
12. OTHER (EXPENSE) INCOME, NET (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Other Expense Income Net Details | ' | ' | ' |
Foreign exchange (loss) gain | ($47) | ($36) | $117 |
Other, net | -17 | 3 | 0 |
Other (expense) income, net | ($64) | ($33) | $117 |
13_SEGMENT_INFORMATION_Details
13. SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | 31-May-14 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | 31-May-13 | Feb. 28, 2013 | Nov. 30, 2012 | Aug. 31, 2012 | 31-May-14 | 31-May-13 | 31-May-12 |
Net Sales | $5,370 | $5,612 | $4,950 | $3,752 | $3,262 | $3,340 | $5,054 | $4,832 | $19,684 | $16,488 | $15,521 |
Property and equipment, net | 474 | ' | ' | ' | 301 | ' | ' | ' | 474 | 301 | 510 |
US | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Sales | ' | ' | ' | ' | ' | ' | ' | ' | 8,708 | 7,379 | 9,560 |
Property and equipment, net | 415 | ' | ' | ' | 249 | ' | ' | ' | 415 | 249 | 441 |
Asia | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Sales | ' | ' | ' | ' | ' | ' | ' | ' | 7,453 | 8,184 | 4,276 |
Property and equipment, net | 42 | ' | ' | ' | 52 | ' | ' | ' | 42 | 52 | 66 |
Europe | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Sales | ' | ' | ' | ' | ' | ' | ' | ' | 3,523 | 925 | 1,685 |
Property and equipment, net | $17 | ' | ' | ' | $0 | ' | ' | ' | $17 | $0 | $3 |
14_RELATED_PARTY_TRANSACTIONS_
14. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 31-May-14 |
In Thousands, unless otherwise specified | |
Related Party Transactions Details Narrative | ' |
Payable to Wilson Sonsini Goodrich & Rosati | $8 |
15_COMMITMENTS_AND_CONTINGENCI2
15. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 31-May-14 |
In Thousands, unless otherwise specified | |
Commitments And Contingencies Details | ' |
2015 | $623 |
2016 | 62 |
2017 | 11 |
2018 | 0 |
2019 | 0 |
Thereafter | 0 |
Total | $696 |
15_COMMITMENTS_AND_CONTINGENCI3
15. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Commitments And Contingencies Details Narrative | ' | ' | ' |
Rental expense | $562 | $657 | $680 |
17_SELECTED_QUARTERLY_CONSOLID2
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | 31-May-14 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | 31-May-13 | Feb. 28, 2013 | Nov. 30, 2012 | Aug. 31, 2012 | 31-May-14 | 31-May-13 | 31-May-12 |
Selected Quarterly Consolidated Financial Data Details | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $5,370 | $5,612 | $4,950 | $3,752 | $3,262 | $3,340 | $5,054 | $4,832 | $19,684 | $16,488 | $15,521 |
Gross profit | 2,914 | 2,870 | 2,494 | 1,944 | 1,292 | 765 | 2,263 | 2,456 | 10,222 | 6,776 | 6,207 |
Net (loss) income | $239 | $212 | $137 | ($166) | ($854) | ($1,458) | ($811) | ($296) | $422 | ($3,419) | ($3,390) |
Net (loss) income per share basic and diluted | $0.02 | $0.02 | $0.01 | ($0.02) | ($0.08) | ($0.16) | ($0.09) | ($0.03) | $0.04 | ($0.36) | ($0.38) |