Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May. 31, 2015 | Jul. 31, 2015 | Nov. 28, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | AEHR TEST SYSTEMS | ||
Entity Central Index Key | 1,040,470 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2015 | ||
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 | $ 26,544,438 | ||
Entity Common Stock, Shares Outstanding | 12,986,555 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 5,527 | $ 1,809 |
Accounts receivable, net | 1,383 | 3,390 |
Inventories | 7,123 | 6,148 |
Prepaid expenses and other | 262 | 326 |
Total current assets | 14,295 | 11,673 |
Property and equipment, net | 478 | 474 |
Other assets | 95 | 78 |
Total assets | 14,868 | 12,225 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Line of credit | 0 | 777 |
Accounts payable | 724 | 1,892 |
Accrued expenses | 1,045 | 1,390 |
Customer deposits and deferred revenue | 4,750 | 1,058 |
Total current liabilities | 6,519 | 5,117 |
Long-term debt, net of debt issuance costs | 3,791 | 0 |
Income taxes payable | 8 | 71 |
Deferred rent, net of current portion | 0 | 8 |
Total liabilities | 10,318 | 5,196 |
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: 12,857 shares and 11,203 shares at May 31, 2015 and 2014, respectively | 129 | 112 |
Additional paid-in capital | 56,547 | 52,142 |
Accumulated other comprehensive income | 2,231 | 2,488 |
Accumulated deficit | (54,339) | (47,692) |
Total Aehr Test Systems shareholders' equity | 4,568 | 7,050 |
Noncontrolling interest | (18) | (21) |
Total Shareholders' equity | 4,550 | 7,029 |
Total liabilities and shareholders' equity | $ 14,868 | $ 12,225 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | May. 31, 2015 | May. 31, 2014 |
Consolidated Balance Sheets Parenthetical | ||
Preferred stock, par value | $ .01 | $ .01 |
Preferred stock, authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ .01 | $ .01 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 12,857 | 11,203 |
Common stock, shares outstanding | 12,857 | 11,203 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Income Statement [Abstract] | |||
Net sales | $ 10,018 | $ 19,684 | $ 16,488 |
Cost of sales | 6,180 | 9,462 | 9,712 |
Gross profit | 3,838 | 10,222 | 6,776 |
Operating expenses: | |||
Selling, general and administrative | 6,470 | 6,323 | 6,872 |
Research and development | 4,062 | 3,402 | 3,211 |
Total operating expenses | 10,532 | 9,725 | 10,083 |
(Loss) income from operations | (6,694) | 497 | (3,307) |
Interest expense | (130) | (26) | (49) |
Other income (expense), net | 211 | (64) | (33) |
(Loss) income before income tax (expense) benefit | (6,613) | 407 | (3,389) |
Income tax (expense) benefit | (34) | 15 | (30) |
Net (loss) income | (6,647) | 422 | (3,419) |
Less: Net income attributable to the noncontrolling interest | 0 | 0 | 0 |
Net (loss) income attributable to Aehr Test Systems common shareholders | $ (6,647) | $ 422 | $ (3,419) |
Net (loss) income per share - basic and diluted | $ (0.55) | $ 0.04 | $ (0.36) |
Shares used in per share calculation - basic | 12,047,000 | 10,877,000 | 9,549,000 |
Shares used in per share calculation - diluted | 12,047,000 | 11,889,000 | 9,549,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net (loss) income | $ (6,647) | $ 422 | $ (3,419) |
Other comprehensive (loss) income, net of tax: Foreign currency translation (loss) income | (254) | 45 | (14) |
Total comprehensive (loss) income | (6,901) | 467 | (3,433) |
Less: Comprehensive income (loss) attributable to noncontrolling interest | 3 | (1) | 2 |
Comprehensive (loss) income, attributable to Aehr Test Systems | $ (6,904) | $ 468 | $ (3,435) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Aehr Test Systems Shareholders' Equity | Noncontrolling Interest | Total |
Beginning Balance, Shares at May. 31, 2012 | 9,135,000 | ||||||
Beginning Balance, Amount at May. 31, 2012 | $ 91 | $ 48,622 | $ 2,458 | $ (44,695) | $ 6,476 | $ (22) | $ 6,454 |
Issuance of common stock under private placement, Shares | 1,158,000 | ||||||
Issuance of common stock under private placement, Amount | $ 12 | 1,126 | 0 | 0 | 1,138 | 0 | 1,138 |
Issuance of common stock under employee plans, Shares | 306,000 | ||||||
Issuance of common stock under employee plans, Amount | $ 3 | 231 | 0 | 0 | 234 | 0 | 234 |
Stock-based compensation | 0 | 601 | 0 | 0 | 601 | 0 | 601 |
Net (loss) income | 0 | 0 | 0 | (3,419) | (3,419) | 0 | (3,419) |
Foreign currency translation adjustment | $ 0 | 0 | (16) | 0 | (16) | 2 | (14) |
Ending Balance, Shares at May. 31, 2013 | 10,599,000 | ||||||
Ending Balance, Amount at May. 31, 2013 | $ 106 | 50,580 | 2,442 | (48,114) | 5,014 | (20) | 4,994 |
Issuance of common stock under employee plans, Shares | 604,000 | ||||||
Issuance of common stock under employee plans, Amount | $ 6 | 709 | 0 | 0 | 715 | 0 | 715 |
Stock-based compensation | 0 | 853 | 0 | 0 | 853 | 0 | 853 |
Net (loss) income | 0 | 0 | 0 | 422 | 422 | 0 | 422 |
Foreign currency translation adjustment | $ 0 | 0 | 46 | 0 | 46 | (1) | 45 |
Ending Balance, Shares at May. 31, 2014 | 11,203,000 | ||||||
Ending Balance, Amount at May. 31, 2014 | $ 112 | 52,142 | 2,488 | (47,692) | 7,050 | (21) | 7,029 |
Issuance of common stock under private placement, Shares | 1,065,000 | ||||||
Issuance of common stock under private placement, Amount | $ 11 | 2,563 | 0 | 0 | 2,574 | 0 | 2,574 |
Issuance of common stock under employee plans, Shares | 589,000 | ||||||
Issuance of common stock under employee plans, Amount | $ 6 | 849 | 0 | 0 | 855 | 0 | 855 |
Stock-based compensation | 0 | 993 | 0 | 0 | 993 | 0 | 993 |
Net (loss) income | 0 | 0 | 0 | (6,647) | (6,647) | 0 | (6,647) |
Foreign currency translation adjustment | $ 0 | 0 | (257) | 0 | (257) | 3 | (254) |
Ending Balance, Shares at May. 31, 2015 | 12,857,000 | ||||||
Ending Balance, Amount at May. 31, 2015 | $ 129 | $ 56,547 | $ 2,231 | $ (54,339) | $ 4,568 | $ (18) | $ 4,550 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (6,647) | $ 422 | $ (3,419) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
Stock-based compensation expense | 997 | 829 | 601 |
(Recovery of) provision for doubtful accounts | (30) | 15 | 0 |
Gain on disposal of asset | 0 | (41) | 0 |
Amortization of debt issuance costs | 31 | 0 | 0 |
Depreciation and amortization | 135 | 141 | 322 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,774 | (720) | (206) |
Inventories | (1,008) | (740) | 702 |
Prepaid expenses and other | 34 | (51) | (7) |
Accounts payable | (850) | 707 | 243 |
Accrued expenses | (371) | (25) | 58 |
Customer deposits and deferred revenue | 3,702 | (984) | 1,477 |
Income taxes payable | (15) | (65) | (5) |
Deferred rent | (8) | (95) | (76) |
Net cash used in operating activities | (2,256) | (607) | (310) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (118) | (339) | (127) |
Proceeds from sales of property and equipment | 0 | 50 | 0 |
Net cash used in investing activities | (118) | (289) | (127) |
Cash flows from financing activities: | |||
Line of credit repayments, net | (777) | (324) | (307) |
Proceed from issuance of long-term debt, net | 3,760 | 0 | 0 |
Proceeds from issuance of common stock under private placement, net of issuance cost | 2,574 | 0 | 1,138 |
Proceeds from issuance of common stock under employee plans | 855 | 715 | 234 |
Net cash provided by financing activities | 6,412 | 391 | 1,065 |
Effect of exchange rates on cash and cash equivalents | (320) | (10) | (377) |
Net increase (decrease) in cash and cash equivalents | 3,718 | (515) | 251 |
Cash and cash equivalents, beginning of year | 1,809 | 2,324 | 2,073 |
Cash and cash equivalents, end of year | 5,527 | 1,809 | 2,324 |
Supplemental Cash Flow Information: | |||
Cash paid during the year for Income taxes | 26 | 44 | 64 |
Cash paid during the year for Interest | 130 | 27 | 49 |
Non-cash transactions: | |||
Net change in capitalized stock-based compensation | $ (4) | $ 24 | $ 0 |
1. ORGANIZATION AND SUMMARY OF
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May. 31, 2015 | |
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 Companys 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 November 2014, the Company sold 1,065,000 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 $2.431, resulting in gross proceeds to the Company of $2,589,000, before offering expenses. The net proceeds after offering expenses were $2,574,000. 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. On April 10, 2015, the Company terminated the working capital credit facility and entered into a Convertible Notes Purchase (the Convertible Notes) and Credit Facility (the Credit Facility) Agreement with QVT Fund LP and Quintessence Fund L.P. The Company received $3.8 million in net proceeds from the issuance of the convertible notes. Refer to Note 9, LINE OF CREDIT and Note 11, LONG-TERM DEBT, for further discussion of the Credit Facility and Convertible Notes agreement. During fiscal 2015, 2014 and 2013, the Company experienced negative cash flow from operating activities. The Company anticipates that the existing cash balance together with cash flows from operations, as well as funds available through the Credit Facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2016. After fiscal 2016, 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 Companys 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 14 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 Companys 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 Companys 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 entitys 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 Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 (in thousands): Balance as of May 31, 2015 Level 1 Level 2 Level 3 Money market funds $ 4,650 $ 4,650 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 4,700 $ 4,650 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): Balance as of May 31, 2014 Level 1 Level 2 Level 3 Money market funds $ 477 $ 477 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 527 $ 477 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- There were no transfers between Level 1 and Level 2 fair value measurements during the fiscal year ended May 31, 2015 and 2014. 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 carrying value of the debt approximates the fair value. 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. 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, 2015, 2014 or 2013. CONCENTRATION OF CREDIT RISK: The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2015, approximately 70%, 3% and 27% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. 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. Two customers accounted for 41% and 32% of gross accounts receivable at May 31, 2015. Four customers accounted for 35%, 24%, 18% and 17% of gross accounts receivable at May 31, 2014. Two customers accounted for 45% and 11% of net sales in fiscal 2015. Three customers accounted for 40%, 30% and 12% of net sales in fiscal 2014. 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 Companys 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 Companys products or changes in its manufacturers financial or business condition could disrupt the Companys 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 Companys 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. 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 managements 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. The Company has 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 vendors 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 licensees report related to its usage of the licensed intellectual property or upon payment by the licensee. The Companys 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 Companys distributors do not generally carry inventories of the Companys products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Companys shipment terms to our distributors do not provide for credits or rights of return. Because the Companys 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 Companys 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 Companys 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 2015, 2014 and 2013. 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 assets 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, 2015 and 2014. 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 Companys only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 2014 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, purchase rights. 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 employees 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 Companys employee stock options have characteristics significantly different from those of publicly traded options. All of the Companys stock-based compensation is accounted for as an equity instrument. The following table summarizes compensation costs related to the Companys stock-based compensation for the years ended May 31, 2015, 2014 and 2013 (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Stock-based compensation in the form of employee stock options and ESPP purchase rights, included in: Cost of sales $ 70 $ 43 $ 36 Selling, general and administrative 726 643 446 Research and development 201 167 119 Net effect on net (loss) income $ 997 $ 853 $ 601 Effect on net (loss) income per share: Basic $ 0.08 $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.07 $ 0.06 During fiscal 2015, 2014 and fiscal 2013, the Company recorded stock-based compensation related to stock options of $857,000, $723,000 and $551,000, respectively. As of May 31, 2015, the total compensation cost related to unvested stock-based awards under the Companys 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was $1,873,000 which is net of estimated forfeitures of $5,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.9 years. During fiscal 2015, 2014 and fiscal 2013, the Company recorded stock-based compensation related to its ESPP of $140,000, $130,000 and $50,000, respectively. As of May 31, 2015 and 2014, stock-based compensation costs of $20,000 and $24,000, respectively, were capitalized as part of inventory. There were no stock-based compensation costs capitalized as part of inventory as of May 31, 2013. As of May 31, 2015, the total compensation cost related to purchase rights under the ESPP but not yet recognized was $135,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 1.3 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 Companys expected term represents the period that the Companys 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 ESPPs 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 Companys stock options granted to employees shares in fiscal 2015, 2014 and 2013 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: Year Ended May 31, 2015 2014 2013 Option plan shares Expected term (in years) 4 4 5 Volatility 0.90 0.95 0.91 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 1.20 % 1.39 % 0.72 % Weighted-average grant date fair value $ 1.52 $ 1.09 $ 0.78 The fair value of our ESPP purchase rights for the fiscal 2015, 2014 and 2013 was estimated using the following weighted-average assumptions: Year End May 31, 2015 2014 2013 Employee stock purchase plan shares Expected term (in years) 0.5 2.0 0.5 2.0 0.5 2.0 Volatility 0.55 0.83 0.86 1.00 0.45 1.05 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 0.04%0.55 % 0.04%0.44 % 0.11%0.23 % Weighted-average grant date fair value $ 1.43 $ 1.34 $ 0.52 During the fiscal years ended May 31, 2015, 2014 and 2013, ESPP purchase rights of 222,000, 172,000, and 27,000 shares, respectively, were granted. Total ESPP shares issued during the fiscal years ended May 31, 2015, 2014, and 2013 were 87,000, 120,000, and 156,000 shares, respectively. As of May 31, 2015 there were 268,000 ESPP shares available for issuance. EARNINGS PER SHARE (EPS): Basic EPS is determined using the weighted average number of common shares outstanding during the period. Diluted EPS is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, and employee stock purchase plan shares) outstanding during the period using the treasury stock method. The following table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Numerator: Net (loss) income $ (6,647 ) $ 422 $ (3,419 ) Denominator for basic net (loss) income per share: Weighted-average shares outstanding 12,047 10,877 9,549 Shares used in basic net (loss) income per share calculation 12,047 10,877 9,549 Effect of dilutive securities -- 1,012 -- Denominator for diluted net (loss) income per share 12,047 11,889 9,549 Basic net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) Diluted net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) 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 Companys common stock for the period, as the effect would be anti-dilutive. In the fiscal years ended May 31, 2015 and 2013, 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 3,686,000, 301,000 and 2,956,000 shares of common stock were outstanding on May 31, 2015, 2014 and 2013, respectively, but were not included in the computation of diluted net (loss) income per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 175,000, 131,000 and 178,000 ESPP shares were outstanding on May 31, 2015, 2014 and 2013, respectively, but were not included in the computation of diluted net (loss) income 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 Companys 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 fiscal 2019 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Going Concern. This standard requires management to evaluate the conditions or events that raise substantial doubt about the entitys ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard will apply to all entities and will be effective for us in the fiscal year 2017, with early adoption permitted. The adoption of this update is not expected to have a material effect on the Companys consolidated financial statements or disclosures. In April 2015, the FASB issued ASU No. 2015-03, Interest Imputation of Interest. This standard requires management to simplify the presentation of debt issuance costs by presenting the costs related to obtaining a debt liability as a direct deduction from that debt liability. The debt issuance costs, or discount, is amortized over the life of the debt liability. The new standard is effective for us in fiscal 2017, with early adoption permitted. The Company has adopted this update for the fiscal year ended May 31, 2015. Refer to Note 11 of Notes to Consolidated Financial Statements, LONG-TERM DEBT for further discussion of the new credit facility with QVT Fund LP and Quintessence Fund L.P. In July 2015, the FASB issued ASU No. 2015-11, Inventory. This standard requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This new standard will be effective for us in the fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. |
2. ACCOUNTS RECEIVABLE
2. ACCOUNTS RECEIVABLE | 12 Months Ended |
May. 31, 2015 | |
Accounts Receivable, Net, Current [Abstract] | |
ACCOUNTS RECEIVABLE | 2. ACCOUNTS RECEIVABLE: Accounts receivable comprise (in thousands): May 31, 2015 2014 Accounts receivable $ 1,404 $ 3,441 Less: Allowance for doubtful accounts (21 ) (51 ) $ 1,383 $ 3,390 Additions Balance at charged to Balance beginning costs and at end of year expenses Deductions* of year Allowance for doubtful accounts receivable: May 31, 2015 $ 51 $ -- $ (30 ) $ 21 May 31, 2014 $ 39 $ 15 $ (3 ) $ 51 * Deductions include write-offs of uncollectible accounts and collections of amounts previously reserved. |
3. INVENTORIES
3. INVENTORIES | 12 Months Ended |
May. 31, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES: Inventories comprise (in thousands): May 31, 2015 2014 Raw materials and sub-assemblies $ 4,018 $ 3,348 Work in process 2,584 2,585 Finished goods 521 215 $ 7,123 $ 6,148 |
4. PROPERTY AND EQUIPMENT, NET
4. PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
May. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 4. PROPERTY AND EQUIPMENT, NET: Property and equipment, net comprise (in thousands): May 31, 2015 2014 Leasehold improvements $ 1,093 $ 1,093 Furniture and fixtures 1,062 1,094 Machinery and equipment 3,802 3,801 Test equipment 2,967 3,041 8,924 9,029 Less: Accumulated depreciation and amortization (8,446 ) (8,555 ) $ 478 $ 474 Depreciation expense was $135,000, $141,000 and $322,000 for fiscal 2015, 2014, and 2013, respectively. |
5. PRODUCT WARRANTIES
5. PRODUCT WARRANTIES | 12 Months Ended |
May. 31, 2015 | |
Product Warranties Disclosures [Abstract] | |
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 Companys 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 Companys estimates, revisions to the estimated warranty liability would be required. The standard warranty period is one year for systems and ninety days for parts and service. Following is a summary of changes in the Companys liability for product warranties during the fiscal years ended May 31, 2015 and 2014 (in thousands): May 31, 2015 2014 Balance at the beginning of the year $ 223 $ 222 Accruals for warranties issued during the year 150 297 Settlement made during the year (in cash or in kind) (236 ) (296 ) Balance at the end of the year $ 137 $ 223 The accrued warranty balance is included in accrued expenses on the accompanying consolidated balance sheets. |
6. ACCRUED EXPENSES
6. ACCRUED EXPENSES | 12 Months Ended |
May. 31, 2015 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
ACCRUED EXPENSES | 6. ACCRUED EXPENSES: May 31, 2015 2014 Payroll related $ 503 $ 596 Professional services 142 147 Warranty 137 223 Taxes payable 101 68 Commissions and bonuses 94 174 Deferred rent 8 95 Accrued customer obligations -- 35 Other 60 52 $ 1,045 $ 1,390 |
7. INCOME TAXES
7. INCOME TAXES | 12 Months Ended |
May. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
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, 2015 2014 2013 Domestic $ (6,871 ) $ 438 $ (3,392 ) Foreign 258 (31 ) 3 $ (6,613 ) $ 407 $ (3,389 ) The income tax benefit (expense) consists of the following (in thousands): Year Ended May 31, 2015 2014 2013 Federal income taxes: Current $ -- $ -- $ -- Deferred -- -- -- State income taxes: Current (19 ) (30 ) (21 ) Deferred -- -- -- Foreign income taxes: Current (15 ) 45 (9 ) Deferred -- -- -- $ (34 ) $ 15 $ (30 ) The Companys effective tax rate differs from the U.S. federal statutory tax rate, as follows: Year Ended May 31, 2015 2014 2013 U.S. federal statutory tax rate 34.0 % 34.0 % 34.0 % State taxes, net of federal tax effect (0.2 ) 4.7 (0.4 ) Foreign rate differential 1.4 (11.9 ) 0.2 Stock-based compensation (2.2 ) 34.5 (4.4 ) Research and development credit 1.1 (20.5 ) 3.0 Change in valuation allowance (34.4 ) (45.8 ) (33.0 ) Other (0.2 ) 1.3 (0.3 ) Effective tax rate ( 0.5 )% (3.7 )% (0.9 )% The components of the net deferred tax assets are as follows (in thousands): Year Ended May 31, 2015 2014 Net operating losses $ 15,063 $ 12,368 Credit carryforwards 3,946 4,192 Inventory reserves 1,429 1,822 Reserves and accruals 2,809 2,899 Other 960 703 24,207 21,984 Less: Valuation allowance (24,207 ) (21,984 ) Net deferred tax assets $ -- $ -- The valuation allowance increased by $2,223,000 during fiscal 2015, decreased by $206,000 during fiscal 2014, and increased by $1,080,000 during fiscal 2013. As of May 31, 2015 and 2014, 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, 2015, the Company had federal and state net operating loss carryforwards of $40,100,000 and $33,529,000, respectively. The federal and state net operating loss carryforwards will begin to expire in 2024 and 2015, respectively. At May 31, 2015, the Company also had federal and state research and development tax credit carryforwards of $1,554,000 and $4,672,000, respectively. The federal credit carryforward will begin to expire in 2019, 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 Companys 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 $769,000 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, 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 Decreases related to prior year tax positions -- Decreases related to lapse of statute of limitations (54 ) Balance at May 31, 2015 $ 919 If the ending balance of $919,000 of unrecognized tax benefits at May 31, 2015 were recognized, $8,000 would affect the effective income tax rate. In accordance with the Companys 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 $2,000 at May 31, 2015. Although the Company files U.S. federal, various state, and foreign tax returns, the Companys only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 2014 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 | 12 Months Ended |
May. 31, 2015 | |
Customer Deposits And Deferred Revenue | |
CUSTOMER DEPOSITS AND DEFERRED REVENUE | 8. CUSTOMER DEPOSITS AND DEFERRED REVENUE: Customer deposits and deferred revenue (in thousands): May 31, 2015 2014 Customer deposits $ 3,685 $ 871 Deferred revenue 1,065 187 $ 4,750 $ 1,058 |
9. LINE OF CREDIT
9. LINE OF CREDIT | 12 Months Ended |
May. 31, 2015 | |
Line of Credit Facility [Abstract] | |
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 Companys 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 Companys 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 banks prime rate is 4.00% or less. The average loan balance in fiscal 2015 was $492,000. At May 31, 2014, the Company had drawn $777,000 against the credit facility. The working capital credit facility agreement was terminated on April 10, 2015 upon execution of the Convertible Notes Purchase (the Convertible Notes) and Credit Facility (the Credit Facility) Agreement with QVT Fund LP and Quintessence Fund L.P. (the Purchase Agreement). See Note 11, LONG-TERM DEBT, for a description of the Purchase Agreement. The Credit Facility entered into on April 10, 2015 allows the Company to borrow an aggregate principal amount of up to $2.0 million. Advances under the Credit Facility will bear interest at an annual rate of 5%. Each advance under the Credit Facility and any accrued and unpaid interest thereon must be repaid within 90 days from the date on which such advance is made. Unless paid in full at maturity, amounts owing under the credit facility may be converted by the holder into Convertible Notes. Advances under the Credit Facility may be prepaid without any prepayment premium or penalty. The Credit Facility is secured by substantially all of the assets of the Company. At May 31, 2015, the Company has not drawn any amount against the Credit Facility. |
10. SALES OF EQUITY SECURITIES
10. SALES OF EQUITY SECURITIES | 12 Months Ended |
May. 31, 2015 | |
Proceeds from Issuance or Sale of Equity [Abstract] | |
Sales of equity securities | 10. SALES OF EQUITY SECURITIES: During the second quarter of fiscal 2015, the Company sold 1,065,029 shares of its common stock in a private placement transaction with certain directors and officers of the Company and other accredited investors. The private placement resulted in net proceeds to the Company of $2,574,000 and closed on November 26, 2014. |
11. LONG-TERM DEBT
11. LONG-TERM DEBT | 12 Months Ended |
May. 31, 2015 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term debt | 11. LONG-TERM DEBT: On April 10, 2015, Aehr Test Systems (the Company) entered into a Convertible Notes Purchase and Credit Facility Agreement (the Purchase Agreement) with QVT Fund LP and Quintessence Fund L.P., (the Purchasers) providing for the Companys sale to the Purchasers of $4,110,000 in aggregate principal amount of 9.0% Convertible Secured Notes due April 2017 (the Convertible Notes). See Note 9, LINE OF CREDIT, for a description of the Purchase Agreement. Debt issuance costs of $350,000 were offset against the loan balance and are amortized over the life of the loan. During fiscal 2015, $31,000 of amortization costs was recognized as interest expense. Unamortized debt issuance costs of $319,000 were offset against the loan balance at May 31, 2015. Long-term debt, net of debt issuance costs (in thousands): May 31, 2015 2014 Principal $ 4,110 $ -- Unamortized debt issuance costs (319 ) -- $ 3,791 $ -- The Convertible Notes bear interest at an annual rate of 9.0% and will mature on April 10, 2017 unless repurchased or converted prior to that date. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. The $350,000 in debt issuance costs, amortized over the life of the loan, represent an effective interest rate of 4.3%. The Company may not redeem the Convertible Notes prior to maturity. The initial conversion price for the Convertible Notes is $2.65 per share of the Companys common stock and is subject to adjustment upon the occurrence of certain specified events (as adjusted, the Conversion Price). Holders may convert all or any part of the principal amount of their Convertible Notes in integral multiples of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Companys obligations under the Convertible Notes are secured by substantially all of the assets of the Company. |
12. CAPITAL STOCK
12. CAPITAL STOCK | 12 Months Ended |
May. 31, 2015 | |
Capital Stock | |
CAPITAL STOCK | 12. CAPITAL STOCK: STOCK OPTIONS: In October 1996, the Companys 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 Companys 2006 Equity Incentive Plan and 2006 Employee Stock Purchase Plan (2006 Plans) were approved by the shareholders. A total of 4,650,000 shares of common stock have been reserved for issuance under the Companys 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 Companys Amended and Restated 1996 Stock Option Plan, which would otherwise have expired in 2006; and the Companys 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, 2015, out of the 4,531,000 shares authorized for grant under the 1996 Stock Option Plan and 2006 Equity Incentive Plan, approximately 3,686,000 shares were outstanding. The following table summarizes the Companys stock option transactions during fiscal 2015, 2014 and 2013 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate Available of Exercise Intrinsic Shares Shares Price Value Balances, May 31, 2012 839 2,957 $ 2.40 $ 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 Additional shares reserved 860 -- Options granted (1,253 ) 1,253 $ 2.38 Options terminated 93 (93 ) $ 2.30 Options exercised -- (476 ) $ 1.33 Balances, May 31, 2015 845 3,686 $ 1.66 $ 2,946 Options exercisable and expected to be exercisable at May 31, 2015 3,612 $ 1.66 $ 2,887 The options outstanding and exercisable at May 31, 2015 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at May 31, 2015 at May 31, 2015 Range of Exercise Prices Number Outstanding Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value $0.59-$0.97 680 3.85 $ 0.70 612 3.87 $ 0.71 $1.09-$1.40 1,293 3.97 $ 1.28 874 3.64 $ 1.28 $1.73-$2.06 411 3.71 $ 1.90 345 3.37 $ 1.92 $2.15-$2.71 1,302 6.10 $ 2.45 358 5.01 $ 2.54 $0.59-$2.71 3,686 4.67 $ 1.66 2,189 3.89 $ 1.43 $ 2,198 The total intrinsic values of options exercised were $540,000, $520,000 and $43,000 during fiscal 2015, 2014 and 2013, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2015 was 4.67 years. Options to purchase 2,189,000, 1,892,000 and 1,948,000 shares were exercisable at May 31, 2015, 2014 and 2013, respectively. These exercisable options had weighted average exercise prices of $1.43, $1.22 and $2.12 as of May 31, 2015, 2014 and 2013, respectively. |
13. EMPLOYEE BENEFIT PLANS
13. EMPLOYEE BENEFIT PLANS | 12 Months Ended |
May. 31, 2015 | |
Employee Benefit Plans | |
EMPLOYEE BENEFIT PLANS | 13. 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 Companys 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 2015, 2014 and 2013. The contribution amounts are recorded as compensation expense, in the period authorized and included in accrued liabilities, in the period authorized. Contributions of 26,548 shares were made to the ESOP during fiscal 2015 for fiscal 2014. 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. The contribution for fiscal 2015 will be made in fiscal 2016. 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 2015, 2014 and 2013. EMPLOYEE STOCK PURCHASE PLAN: In October 2006, the Companys 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 Companys 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 Companys common stock at either the first day of an offering period or the last day of the purchase period. If a participants 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, 2015, 2014 and 2013, approximately 87,000, 120,000 and 156,000 shares of common stock, respectively, were issued under the plans. To date, 882,000 shares have been issued under the 2006 Purchase Plan. |
14. OTHER INCOME (EXPENSE), NET
14. OTHER INCOME (EXPENSE), NET | 12 Months Ended |
May. 31, 2015 | |
Other Income Expense Net | |
OTHER INCOME (EXPENSE), NET | 14. OTHER INCOME (EXPENSE), NET: Other income (expense), net comprises the following (in thousands): Year Ended May 31, 2015 2014 2013 Foreign exchange gain (loss) $ 194 $ (47 ) $ (36 ) Other, net 17 (17 ) 3 $ 211 $ (64 ) $ (33 ) |
15. SEGMENT INFORMATION
15. SEGMENT INFORMATION | 12 Months Ended |
May. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 15. SEGMENT INFORMATION: The Company operates in one reportable segment: the design, manufacture and marketing of advanced test and burn-in products to the semiconductor manufacturing industry. The following presents information about the Companys operations in different geographic areas. Net sales are based upon ship-to location (in thousands). United States Asia Europe Total 2015: Net sales $ 3,648 $ 4,943 $ 1,427 $ 10,018 Property and equipment, net 432 34 12 478 2014: Net sales $ 8,708 $ 7,453 $ 3,523 $ 19,684 Property and equipment, net 415 42 17 474 2013: Net sales $ 7,379 $ 8,184 $ 925 $ 16,488 Property and equipment, net 249 52 -- 301 The Companys Japanese and German subsidiaries primarily comprise the foreign operations. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese or European customers. Net sales from outside the United States include those of Aehr Test Systems Japan K.K. and Aehr Test Systems GmbH. |
16. RELATED PARTY TRANSACTIONS
16. RELATED PARTY TRANSACTIONS | 12 Months Ended |
May. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS: Mario M. Rosati, one of the Companys directors, is also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which has served as the Companys outside corporate counsel and has received compensation at normal commercial rates for these services. At May 31, 2015, the Company had $141,000 payable to Wilson Sonsini Goodrich & Rosati. |
17. COMMITMENTS AND CONTINGENCI
17. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
May. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 17. 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 Companys principal administrative and production facilities are located in Fremont, California, in a 51,289 square foot building. The Companys lease was renewed in November, 2014 and expires in June 2018. The Company has an option to extend the lease for an additional three year period at rates to be determined. The Companys facility in Japan is located in 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, 2016, 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, 2016 $ 486 2017 465 2018 469 2019 39 2020 -- Thereafter -- Total $ 1,459 Rental expense for the years ended May 31, 2015, 2014 and 2013 was $554,000, $562,000 and $657,000, respectively. At May 31, 2015 and 2014, 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, 2015, the Company had $2,879,000 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 Companys 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 Companys bylaws contain similar indemnification obligations to the Companys 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 Companys operating results, financial position or cash flows. |
18. SELECTED QUARTERLY CONSOLID
18. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
May. 31, 2015 | |
Selected Quarterly Consolidated Financial Data | |
SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 18. 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, 2015 and 2014. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Companys 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 Companys and the notes thereto included elsewhere herein. Three Months Ended Aug. 31, Nov. 30, Feb. 28, May 31, 2014 2014 2015 2015 Net sales $ 3,558 $ 2,615 $ 2,027 $ 1,818 Gross profit $ 1,610 $ 694 $ 852 $ 682 Net loss $ (907 ) $ (2,114 ) $ (1,726 ) $ (1,900 ) Net loss per share basic and diluted $ (0.08 ) $ (0.18 ) $ (0.14 ) $ (0.15 ) 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 |
1. ORGANIZATION AND SUMMARY O26
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May. 31, 2015 | |
Accounting Policies [Abstract] | |
BUSINESS: | 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 Companys 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: | 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 November 2014, the Company sold 1,065,000 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 $2.431, resulting in gross proceeds to the Company of $2,589,000, before offering expenses. The net proceeds after offering expenses were $2,574,000. 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. On April 10, 2015, the Company terminated the working capital credit facility and entered into a Convertible Notes Purchase (the Convertible Notes) and Credit Facility (the Credit Facility) Agreement with QVT Fund LP and Quintessence Fund L.P. The Company received $3.8 million in net proceeds from the issuance of the convertible notes. Refer to Note 9, LINE OF CREDIT and Note 11, LONG-TERM DEBT, for further discussion of the Credit Facility and Convertible Notes agreement. During fiscal 2015, 2014 and 2013, the Company experienced negative cash flow from operating activities. The Company anticipates that the existing cash balance together with cash flows from operations, as well as funds available through the Credit Facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2016. After fiscal 2016, 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 Companys 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 14 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 Companys 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 Companys 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 entitys 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 Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 (in thousands): Balance as of May 31, 2015 Level 1 Level 2 Level 3 Money market funds $ 4,650 $ 4,650 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 4,700 $ 4,650 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): Balance as of May 31, 2014 Level 1 Level 2 Level 3 Money market funds $ 477 $ 477 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 527 $ 477 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- There were no transfers between Level 1 and Level 2 fair value measurements during the fiscal year ended May 31, 2015 and 2014. 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 carrying value of the debt approximates the fair value. 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. |
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, 2015, 2014 or 2013. |
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, 2015, approximately 70%, 3% and 27% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. 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. Two customers accounted for 41% and 32% of gross accounts receivable at May 31, 2015. Four customers accounted for 35%, 24%, 18% and 17% of gross accounts receivable at May 31, 2014. Two customers accounted for 45% and 11% of net sales in fiscal 2015. Three customers accounted for 40%, 30% and 12% of net sales in fiscal 2014. 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 Companys 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 Companys products or changes in its manufacturers financial or business condition could disrupt the Companys 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 Companys 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. |
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 managements 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. The Company has 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 vendors 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 licensees report related to its usage of the licensed intellectual property or upon payment by the licensee. The Companys 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 Companys distributors do not generally carry inventories of the Companys products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Companys shipment terms to our distributors do not provide for credits or rights of return. Because the Companys 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 Companys 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 Companys 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 2015, 2014 and 2013. |
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 assets 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, 2015 and 2014. 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 Companys only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 2014 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, purchase rights. 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 employees 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 Companys employee stock options have characteristics significantly different from those of publicly traded options. All of the Companys stock-based compensation is accounted for as an equity instrument. The following table summarizes compensation costs related to the Companys stock-based compensation for the years ended May 31, 2015, 2014 and 2013 (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Stock-based compensation in the form of employee stock options and ESPP purchase rights, included in: Cost of sales $ 70 $ 43 $ 36 Selling, general and administrative 726 643 446 Research and development 201 167 119 Net effect on net (loss) income $ 997 $ 853 $ 601 Effect on net (loss) income per share: Basic $ 0.08 $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.07 $ 0.06 During fiscal 2015, 2014 and fiscal 2013, the Company recorded stock-based compensation related to stock options of $857,000, $723,000 and $551,000, respectively. As of May 31, 2015, the total compensation cost related to unvested stock-based awards under the Companys 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was $1,873,000 which is net of estimated forfeitures of $5,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.9 years. During fiscal 2015, 2014 and fiscal 2013, the Company recorded stock-based compensation related to its ESPP of $140,000, $130,000 and $50,000, respectively. As of May 31, 2015 and 2014, stock-based compensation costs of $20,000 and $24,000, respectively, were capitalized as part of inventory. There were no stock-based compensation costs capitalized as part of inventory as of May 31, 2013. As of May 31, 2015, the total compensation cost related to purchase rights under the ESPP but not yet recognized was $135,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 1.3 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 Companys expected term represents the period that the Companys 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 ESPPs 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 Companys stock options granted to employees shares in fiscal 2015, 2014 and 2013 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: Year Ended May 31, 2015 2014 2013 Option plan shares Expected term (in years) 4 4 5 Volatility 0.90 0.95 0.91 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 1.20 % 1.39 % 0.72 % Weighted-average grant date fair value $ 1.52 $ 1.09 $ 0.78 The fair value of our ESPP purchase rights for the fiscal 2015, 2014 and 2013 was estimated using the following weighted-average assumptions: Year End May 31, 2015 2014 2013 Employee stock purchase plan shares Expected term (in years) 0.5 2.0 0.5 2.0 0.5 2.0 Volatility 0.55 0.83 0.86 1.00 0.45 1.05 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 0.04%0.55 % 0.04%0.44 % 0.11%0.23 % Weighted-average grant date fair value $ 1.43 $ 1.34 $ 0.52 During the fiscal years ended May 31, 2015, 2014 and 2013, ESPP purchase rights of 222,000, 172,000, and 27,000 shares, respectively, were granted. Total ESPP shares issued during the fiscal years ended May 31, 2015, 2014, and 2013 were 87,000, 120,000, and 156,000 shares, respectively. As of May 31, 2015 there were 268,000 ESPP shares available for issuance. |
EARNINGS PER SHARE (“EPS”): | EARNINGS PER SHARE (EPS): Basic EPS is determined using the weighted average number of common shares outstanding during the period. Diluted EPS is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, and employee stock purchase plan shares) outstanding during the period using the treasury stock method. The following table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Numerator: Net (loss) income $ (6,647 ) $ 422 $ (3,419 ) Denominator for basic net (loss) income per share: Weighted-average shares outstanding 12,047 10,877 9,549 Shares used in basic net (loss) income per share calculation 12,047 10,877 9,549 Effect of dilutive securities -- 1,012 -- Denominator for diluted net (loss) income per share 12,047 11,889 9,549 Basic net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) Diluted net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) 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 Companys common stock for the period, as the effect would be anti-dilutive. In the fiscal years ended May 31, 2015 and 2013, 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 3,686,000, 301,000 and 2,956,000 shares of common stock were outstanding on May 31, 2015, 2014 and 2013, respectively, but were not included in the computation of diluted net (loss) income per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 175,000, 131,000 and 178,000 ESPP shares were outstanding on May 31, 2015, 2014 and 2013, respectively, but were not included in the computation of diluted net (loss) income 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 Companys 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 fiscal 2019 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Going Concern. This standard requires management to evaluate the conditions or events that raise substantial doubt about the entitys ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard will apply to all entities and will be effective for us in the fiscal year 2017, with early adoption permitted. The adoption of this update is not expected to have a material effect on the Companys consolidated financial statements or disclosures. In April 2015, the FASB issued ASU No. 2015-03, Interest Imputation of Interest. This standard requires management to simplify the presentation of debt issuance costs by presenting the costs related to obtaining a debt liability as a direct deduction from that debt liability. The debt issuance costs, or discount, is amortized over the life of the debt liability. The new standard is effective for us in fiscal 2017, with early adoption permitted. The Company has adopted this update for the fiscal year ended May 31, 2015. Refer to Note 11 of Notes to Consolidated Financial Statements, LONG-TERM DEBT for further discussion of the new credit facility with QVT Fund LP and Quintessence Fund L.P. In July 2015, the FASB issued ASU No. 2015-11, Inventory. This standard requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This new standard will be effective for us in the fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. |
1. ORGANIZATION AND SUMMARY O27
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
May. 31, 2015 | |
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 Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 (in thousands): Balance as of May 31, 2015 Level 1 Level 2 Level 3 Money market funds $ 4,650 $ 4,650 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 4,700 $ 4,650 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2014 (in thousands): Balance as of May 31, 2014 Level 1 Level 2 Level 3 Money market funds $ 477 $ 477 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 527 $ 477 $ 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 Companys stock-based compensation for the years ended May 31, 2015, 2014 and 2013 (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Stock-based compensation in the form of employee stock options and ESPP purchase rights, included in: Cost of sales $ 70 $ 43 $ 36 Selling, general and administrative 726 643 446 Research and development 201 167 119 Net effect on net (loss) income $ 997 $ 853 $ 601 Effect on net (loss) income per share: Basic $ 0.08 $ 0.08 $ 0.06 Diluted $ 0.08 $ 0.07 $ 0.06 |
Fair value assumptions for Option Valuation Model | Fair Value. The fair values of the Companys stock options granted to employees shares in fiscal 2015, 2014 and 2013 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: Year Ended May 31, 2015 2014 2013 Option plan shares Expected term (in years) 4 4 5 Volatility 0.90 0.95 0.91 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 1.20 % 1.39 % 0.72 % Weighted-average grant date fair value $ 1.52 $ 1.09 $ 0.78 |
Fair value assumption of the ESPP Purchase Rights | The fair value of our ESPP purchase rights for the fiscal 2015, 2014 and 2013 was estimated using the following weighted-average assumptions: Year End May 31, 2015 2014 2013 Employee stock purchase plan shares Expected term (in years) 0.5 2.0 0.5 2.0 0.5 2.0 Volatility 0.55 0.83 0.86 1.00 0.45 1.05 Expected dividend $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 0.04%0.55 % 0.04%0.44 % 0.11%0.23 % Weighted-average grant date fair value $ 1.43 $ 1.34 $ 0.52 |
Basic and diluted EPS | The following table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Year Ended May 31, 2015 2014 2013 Numerator: Net (loss) income $ (6,647 ) $ 422 $ (3,419 ) Denominator for basic net (loss) income per share: Weighted-average shares outstanding 12,047 10,877 9,549 Shares used in basic net (loss) income per share calculation 12,047 10,877 9,549 Effect of dilutive securities -- 1,012 -- Denominator for diluted net (loss) income per share 12,047 11,889 9,549 Basic net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) Diluted net (loss) income per share $ (0.55 ) $ 0.04 $ (0.36 ) |
2. ACCOUNTS RECEIVABLE (Tables)
2. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
May. 31, 2015 | |
Receivables [Abstract] | |
Accounts receivable | Accounts receivable comprise (in thousands): May 31, 2015 2014 Accounts receivable $ 1,404 $ 3,441 Less: Allowance for doubtful accounts (21 ) (51 ) $ 1,383 $ 3,390 Additions Balance at charged to Balance beginning costs and at end of year expenses Deductions* of year Allowance for doubtful accounts receivable: May 31, 2015 $ 51 $ -- $ (30 ) $ 21 May 31, 2014 $ 39 $ 15 $ (3 ) $ 51 * Deductions include write-offs of uncollectible accounts and collections of amounts previously reserved. |
3. INVENTORIES (Tables)
3. INVENTORIES (Tables) | 12 Months Ended |
May. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories comprise (in thousands): May 31, 2015 2014 Raw materials and sub-assemblies $ 4,018 $ 3,348 Work in process 2,584 2,585 Finished goods 521 215 $ 7,123 $ 6,148 |
4. PROPERTY AND EQUIPMENT, NET
4. PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
May. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment, net comprise (in thousands): May 31, 2015 2014 Leasehold improvements $ 1,093 $ 1,093 Furniture and fixtures 1,062 1,094 Machinery and equipment 3,802 3,801 Test equipment 2,967 3,041 8,924 9,029 Less: Accumulated depreciation and amortization (8,446 ) (8,555 ) $ 478 $ 474 |
5. PRODUCT WARRANTIES (Tables)
5. PRODUCT WARRANTIES (Tables) | 12 Months Ended |
May. 31, 2015 | |
Product Warranties Disclosures [Abstract] | |
Liability for product warranties | Following is a summary of changes in the Companys liability for product warranties during the fiscal years ended May 31, 2015 and 2014 (in thousands): May 31, 2015 2014 Balance at the beginning of the year $ 223 $ 222 Accruals for warranties issued during the year 150 297 Settlement made during the year (in cash or in kind) (236 ) (296 ) Balance at the end of the year $ 137 $ 223 |
6. ACCRUED EXPENSES (Tables)
6. ACCRUED EXPENSES (Tables) | 12 Months Ended |
May. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued expenses | May 31, 2015 2014 Payroll related $ 503 $ 596 Professional services 142 147 Warranty 137 223 Taxes payable 101 68 Commissions and bonuses 94 174 Deferred rent 8 95 Accrued customer obligations -- 35 Other 60 52 $ 1,045 $ 1,390 |
7. INCOME TAXES (Tables)
7. INCOME TAXES (Tables) | 12 Months Ended |
May. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Domestic and foreign components of loss before income tax benefit (expenses) | Domestic and foreign components of loss before income tax benefit (expense) are as follows (in thousands): Year Ended May 31, 2015 2014 2013 Domestic $ (6,871 ) $ 438 $ (3,392 ) Foreign 258 (31 ) 3 $ (6,613 ) $ 407 $ (3,389 ) |
Income tax benefit (expense) | The income tax benefit (expense) consists of the following (in thousands): Year Ended May 31, 2015 2014 2013 Federal income taxes: Current $ -- $ -- $ -- Deferred -- -- -- State income taxes: Current (19 ) (30 ) (21 ) Deferred -- -- -- Foreign income taxes: Current (15 ) 45 (9 ) Deferred -- -- -- $ (34 ) $ 15 $ (30 ) |
Income tax reconciliation | The Companys effective tax rate differs from the U.S. federal statutory tax rate, as follows: Year Ended May 31, 2015 2014 2013 U.S. federal statutory tax rate 34.0 % 34.0 % 34.0 % State taxes, net of federal tax effect (0.2 ) 4.7 (0.4 ) Foreign rate differential 1.4 (11.9 ) 0.2 Stock-based compensation (2.2 ) 34.5 (4.4 ) Research and development credit 1.1 (20.5 ) 3.0 Change in valuation allowance (34.4 ) (45.8 ) (33.0 ) Other (0.2 ) 1.3 (0.3 ) Effective tax rate ( 0.5 )% (3.7 )% (0.9 )% |
Net deferred tax assets | The components of the net deferred tax assets are as follows (in thousands): Year Ended May 31, 2015 2014 Net operating losses $ 15,063 $ 12,368 Credit carryforwards 3,946 4,192 Inventory reserves 1,429 1,822 Reserves and accruals 2,809 2,899 Other 960 703 24,207 21,984 Less: Valuation allowance (24,207 ) (21,984 ) Net deferred tax assets $ -- $ -- |
Unrecognized tax benefits | The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands): Beginning balance as of 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 Decreases related to prior year tax positions -- Decreases related to lapse of statute of limitations (54 ) Balance at May 31, 2015 $ 919 |
8. CUSTOMER DEPOSITS AND DEFE34
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE (Tables) | 12 Months Ended |
May. 31, 2015 | |
Customer Deposits And Deferred Revenue Tables | |
Customer deposits and deferred revenue | Customer deposits and deferred revenue (in thousands): May 31, 2015 2014 Customer deposits $ 3,685 $ 871 Deferred revenue 1,065 187 $ 4,750 $ 1,058 |
11. LONG-TERM DEBT (Tables)
11. LONG-TERM DEBT (Tables) | 12 Months Ended |
May. 31, 2015 | |
Long-term Debt Tables | |
Long-term debt, net of debt issuance costs | Long-term debt, net of debt issuance costs (in thousands): May 31, 2015 2014 Principal $ 4,110 $ -- Unamortized debt issuance costs (319 ) -- $ 3,791 $ -- |
12. CAPITAL STOCK (Tables)
12. CAPITAL STOCK (Tables) | 12 Months Ended |
May. 31, 2015 | |
Capital Stock Tables | |
Stock option transactions | The following table summarizes the Companys stock option transactions during fiscal 2015, 2014 and 2013 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate Available of Exercise Intrinsic Shares Shares Price Value Balances, May 31, 2012 839 2,957 $ 2.40 $ 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 Additional shares reserved 860 -- Options granted (1,253 ) 1,253 $ 2.38 Options terminated 93 (93 ) $ 2.30 Options exercised -- (476 ) $ 1.33 Balances, May 31, 2015 845 3,686 $ 1.66 $ 2,946 Options exercisable and expected to be exercisable at May 31, 2015 3,612 $ 1.66 $ 2,887 |
Options Outstanding | The options outstanding and exercisable at May 31, 2015 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at May 31, 2015 at May 31, 2015 Range of Exercise Prices Number Outstanding Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value $0.59-$0.97 680 3.85 $ 0.70 612 3.87 $ 0.71 $1.09-$1.40 1,293 3.97 $ 1.28 874 3.64 $ 1.28 $1.73-$2.06 411 3.71 $ 1.90 345 3.37 $ 1.92 $2.15-$2.71 1,302 6.10 $ 2.45 358 5.01 $ 2.54 $0.59-$2.71 3,686 4.67 $ 1.66 2,189 3.89 $ 1.43 $ 2,198 |
14. OTHER INCOME (EXPENSE), N37
14. OTHER INCOME (EXPENSE), NET (Tables) | 12 Months Ended |
May. 31, 2015 | |
Other Income and Expenses [Abstract] | |
Other income (expense) | Other income (expense), net comprises the following (in thousands): Year Ended May 31, 2015 2014 2013 Foreign exchange gain (loss) $ 194 $ (47 ) $ (36 ) Other, net 17 (17 ) 3 $ 211 $ (64 ) $ (33 ) |
15. SEGMENT INFORMATION (Tables
15. SEGMENT INFORMATION (Tables) | 12 Months Ended |
May. 31, 2015 | |
Segment Reporting [Abstract] | |
Company's operations in different geographic areas | The following presents information about the Companys operations in different geographic areas. Net sales are based upon ship-to location (in thousands). United States Asia Europe Total 2015: Net sales $ 3,648 $ 4,943 $ 1,427 $ 10,018 Property and equipment, net 432 34 12 478 2014: Net sales $ 8,708 $ 7,453 $ 3,523 $ 19,684 Property and equipment, net 415 42 17 474 2013: Net sales $ 7,379 $ 8,184 $ 925 $ 16,488 Property and equipment, net 249 52 -- 301 |
17. COMMITMENTS AND CONTINGEN39
17. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
May. 31, 2015 | |
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, 2016 $ 486 2017 465 2018 469 2019 39 2020 -- Thereafter -- Total $ 1,459 |
18. SELECTED QUARTERLY CONSOL40
18. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Tables) | 12 Months Ended |
May. 31, 2015 | |
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, 2015 and 2014. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Companys 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 Companys and the notes thereto included elsewhere herein. Three Months Ended Aug. 31, Nov. 30, Feb. 28, May 31, 2014 2014 2015 2015 Net sales $ 3,558 $ 2,615 $ 2,027 $ 1,818 Gross profit $ 1,610 $ 694 $ 852 $ 682 Net loss $ (907 ) $ (2,114 ) $ (1,726 ) $ (1,900 ) Net loss per share basic and diluted $ (0.08 ) $ (0.18 ) $ (0.14 ) $ (0.15 ) 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 |
1. ORGANIZATION AND SUMMARY O41
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Money market funds | $ 4,650 | $ 477 |
Certificate of deposit | 50 | 50 |
Assets | 4,700 | 527 |
Liabilities | 0 | 0 |
Level 1 | ||
Money market funds | 4,650 | 477 |
Certificate of deposit | 0 | 0 |
Assets | 4,650 | 477 |
Liabilities | 0 | 0 |
Level 2 | ||
Money market funds | 0 | 0 |
Certificate of deposit | 50 | 50 |
Assets | 50 | 50 |
Liabilities | 0 | 0 |
Level 3 | ||
Money market funds | 0 | 0 |
Certificate of deposit | 0 | 0 |
Assets | 0 | 0 |
Liabilities | $ 0 | $ 0 |
1. ORGANIZATION AND SUMMARY O42
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PROPERTY AND EQUIPMENT (Details) | 12 Months Ended |
May. 31, 2015 | |
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 O43
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Stock-based compensation in the form of employee stock options and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 997 | $ 853 | $ 601 |
Effect on net (loss) income per share, Basic | $ .08 | $ .08 | $ .06 |
Effect on net (loss) income per share, Diluted | $ .08 | $ .07 | $ .06 |
Cost Of Sales | |||
Stock-based compensation in the form of employee stock options and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 70 | $ 43 | $ 36 |
Selling, General and Administrative | |||
Stock-based compensation in the form of employee stock options and ESPP purchase rights included in: | |||
Total stock-based compensation | 726 | 643 | 446 |
Research And Development | |||
Stock-based compensation in the form of employee stock options and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 201 | $ 167 | $ 119 |
1. ORGANIZATION AND SUMMARY O44
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Stock Option - USD ($) | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Fair Value Assumptions for Stock Options Granted | |||
Expected term (in years) | 4 years | 4 years | 5 years |
Volatility | 90.00% | 95.00% | 91.00% |
Expected dividend | $ 0 | $ 0 | $ 0 |
Risk-free Interest Rates | 1.20% | 1.39% | 0.72% |
Weighted Average Grant Date Fair Value | $ 1.52 | $ 1.09 | $ 0.78 |
1. ORGANIZATION AND SUMMARY O45
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - Employee Stock Purchase Plan - USD ($) | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Minimum | |||
Fair Value Assumptions for ESPP purchase rights granted | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Volatility | 55.00% | 86.00% | 45.00% |
Expected dividend | $ 0 | $ 0 | $ 0 |
Risk-free Interest Rates | 0.04% | 0.04% | 0.11% |
Maximum | |||
Fair Value Assumptions for ESPP purchase rights granted | |||
Expected term (in years) | 2 years | 2 years | 2 years |
Volatility | 83.00% | 100.00% | 105.00% |
Expected dividend | $ 0 | $ 0 | $ 0 |
Risk-free Interest Rates | 0.55% | 0.44% | 0.23% |
Weighted Average Grant Date Fair Value | $ 1.43 | $ 1.34 | $ .52 |
1. ORGANIZATION AND SUMMARY O46
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May. 31, 2015 | Feb. 28, 2015 | Nov. 30, 2014 | Aug. 31, 2014 | May. 31, 2014 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Organization And Summary Of Significant Accounting Policies Details 4 | |||||||||||
Numerator: Net (loss) income | $ (1,900) | $ (1,726) | $ (2,114) | $ (907) | $ 239 | $ 212 | $ 137 | $ (166) | $ (6,647) | $ 422 | $ (3,419) |
Denominator for basic net (loss) income per share: Weighted average shares outstanding | 12,047,000 | 10,877,000 | 9,549,000 | ||||||||
Shares used in basic net (loss) income per share calculation | 12,047,000 | 10,877,000 | 9,549,000 | ||||||||
Effect of dilutive securities | 0 | 1,012,000 | 0 | ||||||||
Denominator for diluted net (loss) income per share | 12,047,000 | 11,889,000 | 9,549,000 | ||||||||
Basic net (loss) income per share | $ (.55) | $ .04 | $ (.36) | ||||||||
Diluted net (loss) income per share | $ (.55) | $ .04 | $ (.36) |
1. ORGANIZATION AND SUMMARY O47
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
STOCK BASED COMPENSATION: | |||
Stock-based compensation costs capitalized as part of inventory | $ 20 | $ 24 | $ 0 |
Stock-based compensation expense related to stock options | 857 | 723 | 551 |
Stock-based compensation related to the ESPP | 140 | $ 130 | $ 50 |
Compensation cost related to purchase rights under the ESPP but not yet recognized | $ 135 | ||
Weighted average period for recognition of costs | 1 year 3 months 18 days | ||
ESPP shares issued | 87,000 | 120,000 | 156,000 |
EARNINGS PER SHARE: | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 3,686,000 | 301,000 | 2,956,000 |
ESPP | |||
STOCK BASED COMPENSATION: | |||
ESPP purchase rights granted | 222,000 | 172,000 | 27,000 |
ESPP shares issued | 87,000 | 120,000 | 156,000 |
ESPP shares available for issuance | 268,000 | ||
EARNINGS PER SHARE: | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 175,000 | 131,000 | 178,000 |
1996 Stock Option Plan and 2006 Equity Incentive Plan | |||
STOCK BASED COMPENSATION: | |||
Unrecognized stock-based compensation | $ 1,873 | ||
Estimated forfeitures of unvested stock based awards, amount | $ 5 | ||
Weighted average period for recognition of costs | 2 years 10 months 24 days |
2. ACCOUNTS RECEIVABLE (Details
2. ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Accounts Receivable Details | ||
Accounts receivable, Gross | $ 1,404 | $ 3,441 |
Allowance for doubtful accounts, Beginning | (51) | (39) |
Allowance for doubtful accounts, Additions charged to costs and expenses | 0 | (15) |
Allowance for doubtful accounts, Deductions | 30 | 3 |
Allowance for doubtful accounts, Ending | (21) | (51) |
Accounts receivable, Net | $ 1,383 | $ 3,390 |
3. INVENTORIES (Details)
3. INVENTORIES (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Inventory, Net [Abstract] | ||
Raw materials and sub-assemblies | $ 4,018 | $ 3,348 |
Work-in-process | 2,584 | 2,585 |
Finished goods | 521 | 215 |
Inventory | $ 7,123 | $ 6,148 |
4. PROPERTY AND EQUIPMENT, NE50
4. PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 |
Property And Equipment Net Details | |||
Leasehold improvements | $ 1,093 | $ 1,093 | |
Furniture and fixtures | 1,062 | 1,094 | |
Machinery and equipment | 3,802 | 3,801 | |
Test equipment | 2,967 | 3,041 | |
Property and equipment, gross | 8,924 | 9,029 | |
Less: Accumulated depreciation and amortization | (8,446) | (8,555) | |
Property and equipment, net | $ 478 | $ 474 | $ 301 |
4. PROPERTY AND EQUIPMENT NET (
4. PROPERTY AND EQUIPMENT NET (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Property And Equipment Net Details Narrative | |||
Depreciation expense | $ 135 | $ 141 | $ 322 |
5. PRODUCT WARRANTIES (Details)
5. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the year | $ 223 | $ 222 |
Accruals for warranties issued during the year | 150 | 297 |
Settlement made during the year (in cash or in kind) | (236) | (296) |
Balance at the end of the year | $ 137 | $ 223 |
6. ACCRUED EXPENSES (Details)
6. ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 |
Accrued Expenses Details | |||
Payroll related | $ 503 | $ 596 | |
Professional services | 142 | 147 | |
Warranty | 137 | 223 | $ 222 |
Taxes payable | 101 | 68 | |
Commissions and bonuses | 94 | 174 | |
Deferred rent | 8 | 95 | |
Accrued customer obligations | 0 | 35 | |
Other | 60 | 52 | |
Accrued expenses | $ 1,045 | $ 1,390 |
7. INCOME TAXES (Details)
7. INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Components of Loss Before Income Tax Benefit (Expense) | |||
Domestic | $ (6,871) | $ 438 | $ (3,392) |
Foreign | 258 | (31) | 3 |
(Loss) income before income tax (expense) benefit | $ (6,613) | $ 407 | $ (3,389) |
7. INCOME TAXES (Details 1)
7. INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Federal income taxes: | |||
Current | $ 0 | $ 0 | $ 0 |
Deferred | 0 | 0 | 0 |
State income taxes: | |||
Current | (19) | (30) | (21) |
Deferred | 0 | 0 | 0 |
Foreign income taxes: | |||
Current | (15) | 45 | (9) |
Deferred | 0 | 0 | 0 |
Income tax benefit (expense) | $ (34) | $ 15 | $ (30) |
7. INCOME TAXES (Details 2)
7. INCOME TAXES (Details 2) | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
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 | (0.20%) | 4.70% | (0.40%) |
Foreign rate differential | 1.40% | (11.90%) | 0.20% |
Stock-based compensation | (2.20%) | 34.50% | (4.40%) |
Research and development credit | 1.10% | (20.50%) | 3.00% |
Change in valuation allowance | (34.40%) | (45.80%) | (33.00%) |
Other | (0.20%) | 1.30% | (0.30%) |
Effective tax rate | (0.50%) | (3.70%) | (0.90%) |
7. INCOME TAXES (Details 3)
7. INCOME TAXES (Details 3) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Components of Deferred Tax Assets | ||
Net operating losses | $ 15,063 | $ 12,368 |
Credit carryforwards | 3,946 | 4,192 |
Inventory reserves | 1,429 | 1,822 |
Reserves and accruals | 2,809 | 2,899 |
Other | 960 | 703 |
Gross deferred tax assets | 24,207 | 21,984 |
Less: Valuation allowance | (24,207) | (21,984) |
Net deferred tax assets | $ 0 | $ 0 |
7. INCOME TAXES (Details 4)
7. INCOME TAXES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Components of Unrecognized Tax Benefits | |||
Unrecognized tax benefit, Beginning | $ 973 | $ 1,007 | $ 1,022 |
Decreases related to prior year tax positions | 0 | 0 | 0 |
Decreases related to lapse of statute of limitations | (54) | (34) | (15) |
Unrecognized tax benefit, Ending | $ 919 | $ 973 | $ 1,007 |
7. INCOME TAXES (Details Narrat
7. INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Valuation Allowance | $ 2,223 | $ (206) | $ 1,080 |
Impact on effective income tax rate if $919 of unrecognized tax benefit were recognized | 8 | ||
Accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes | 2 | ||
Foreign net operating loss carryforwards | 769 | ||
Federal | |||
Net operating loss carryforward | 40,100 | ||
Research and development tax credit carryforwards | 1,554 | ||
Alternative minimum tax credit carryforwards | 91 | ||
State | |||
Net operating loss carryforward | 33,529 | ||
Research and development tax credit carryforwards | 4,672 | ||
Alternative minimum tax credit carryforwards | $ 34 |
8. CUSTOMER DEPOSITS AND DEFE60
8. CUSTOMER DEPOSITS AND DEFERRED REVENUE (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Customer Deposits And Deferred Revenue Details | ||
Customer deposits | $ 3,685 | $ 871 |
Deferred revenue | 1,065 | 187 |
Customer deposits and deferred revenue | $ 4,750 | $ 1,058 |
9. LINE OF CREDIT (Details Narr
9. LINE OF CREDIT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Line of Credit Facility [Abstract] | ||
Line of credit, maximum borrowing capacity | $ 2,000 | $ 2,500 |
Line of credit facility, amount borrowed | 0 | $ 777 |
Balance available to borrow under the line of credit | 2,000 | |
Average loan balance | $ 492 |
10. SALES OF EQUITY SECURITIES
10. SALES OF EQUITY SECURITIES (Details Narrative) - 3 months ended Nov. 26, 2014 - USD ($) $ in Thousands | Total |
Proceeds from Issuance or Sale of Equity [Abstract] | |
Proceeds from issuance of common stock under private placement, net of issuance costs | $ 2,574 |
Number of shares sold in private placement | 1,065,029 |
11. LONG-TERM DEBT (Details)
11. LONG-TERM DEBT (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Long-term Debt Details | ||
Principal | $ 4,110 | $ 0 |
Unamortized debt issuance costs | (319) | 0 |
Long-term debt | $ 3,791 | $ 0 |
12. CAPITAL STOCK (Details)
12. CAPITAL STOCK (Details) - Stock Option - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Available Shares Stock Option Tranactions | |||
Available Shares, Beginning | 1,145,000 | 1,737,000 | 839,000 |
Additional shares reserved | 860,000 | 0 | 1,223,000 |
Options granted | (1,253,000) | (908,000) | (670,000) |
Options terminated | 93,000 | 420,000 | 569,000 |
Plan shares expired | 0 | (104,000) | (224,000) |
Available Shares, Ending | 845,000 | 1,145,000 | 1,737,000 |
Outstanding Options Stock Option Transactions | |||
Options Outstanding, Beginning | 3,002,000 | 2,956,000 | 2,957,000 |
Options Granted | 1,253,000 | 908,000 | 670,000 |
Options terminated | (93,000) | (420,000) | (569,000) |
Options exercised | (476,000) | (442,000) | (102,000) |
Number of Options Outstanding, Ending | 3,686,000 | 3,002,000 | 2,956,000 |
Options exercisable and expected to be exercisable | 3,612,000 | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 1.31 | $ 1.79 | $ 2.40 |
Weighted Average Exercise Price Granted | 2.38 | 1.64 | 1.13 |
Weighted Average Exercise Price Terminated | 2.30 | 5.51 | 4.37 |
Weighted Average Exercise Price Exercised | 1.33 | 1.17 | 0.67 |
Weighted Average Exercise Price Outstanding, Ending | 1.66 | $ 1.31 | $ 1.79 |
Weighted Average Exercise Price Exercisable and expected to be exercisable | $ 1.66 | ||
Aggregate Intrinsic Value, beginning balance | $ 2,913 | $ 964 | $ 587 |
Aggregate Intrinsic Value, ending balance | 2,946 | $ 2,913 | $ 964 |
Aggregate Intrinsic Value for Options exercisable and expected to be exercisable | $ 2,887 |
12. CAPITAL STOCK (Details 2)
12. CAPITAL STOCK (Details 2) - 12 months ended May. 31, 2015 - USD ($) $ / shares in Units, $ in Thousands | Total |
Options exercisable and expected to be exercisable | 2,189,000 |
Weighted Average Exercise Price Exercisable | $ 1.43 |
Aggregate Intrinsic Value | $ 2,198 |
$0.59-$0.97 | |
Number of Options Outstanding, Ending | 680,000 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 3 years 10 months 6 days |
Weighted Average Exercise Price Outstanding, Ending | $ .7 |
Options exercisable and expected to be exercisable | 612,000 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 10 months 13 days |
Weighted Average Exercise Price Exercisable | $ .71 |
$1.09-$1.40 | |
Number of Options Outstanding, Ending | 1,293,000 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 3 years 11 months 19 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.28 |
Options exercisable and expected to be exercisable | 874,000 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 7 months 20 days |
Weighted Average Exercise Price Exercisable | $ 1.28 |
$1.73-$2.06 | |
Number of Options Outstanding, Ending | 411,000 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 3 years 8 months 16 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.9 |
Options exercisable and expected to be exercisable | 345,000 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 4 months 13 days |
Weighted Average Exercise Price Exercisable | $ 1.92 |
$2.15-$2.71 | |
Number of Options Outstanding, Ending | 1,302,000 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 6 years 1 month 6 days |
Weighted Average Exercise Price Outstanding, Ending | $ 2.45 |
Options exercisable and expected to be exercisable | 358,000 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 5 years 4 days |
Weighted Average Exercise Price Exercisable | $ 2.54 |
$0.59-$2.71 | |
Number of Options Outstanding, Ending | 3,686,000 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 4 years 8 months 8 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.66 |
Options exercisable and expected to be exercisable | 2,189,000 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 10 months 20 days |
Weighted Average Exercise Price Exercisable | $ 1.43 |
12. CAPITAL STOCK (Details Narr
12. CAPITAL STOCK (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Total intrinsic values of options exercised | $ 540 | $ 520 | $ 43 |
Weighted average contractual life of the options exercisable and expected to be exercisable | 4 years 8 months 8 days | ||
Exercisable options to purchase | 2,189,000 | 1,892,000 | 1,948,000 |
Weighted average exercise prices | $ 1.43 | $ 1.22 | $ 2.12 |
1996 Stock Option Plan and 2006 Equity Incentive Plan | |||
Authorized Shares | 4,531,000 | ||
Outstanding Shares | 3,686,000 |
13. EMPLOYEE BENEFIT PLANS (Det
13. EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Employee Benefit Plans Details Narrative | |||
Contributions to ESOP | $ 60,000 | $ 60,000 | $ 60,000 |
Shares contributed to the ESOP for fiscal year | 26,548 | 41,666 | 47,244 |
Common stock issued under ESPP plan | 87,000 | 120,000 | 156,000 |
14. OTHER INCOME (EXPENSE), N68
14. OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Other Income Expense Net Details | |||
Foreign exchange gain (loss) | $ 194 | $ (47) | $ (36) |
Other, net | 17 | (17) | 3 |
Other income (expense), net | $ 211 | $ (64) | $ (33) |
15. SEGMENT INFORMATION (Detail
15. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May. 31, 2015 | Feb. 28, 2015 | Nov. 30, 2014 | Aug. 31, 2014 | May. 31, 2014 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Net Sales | $ 1,818 | $ 2,027 | $ 2,615 | $ 3,558 | $ 5,370 | $ 5,612 | $ 4,950 | $ 3,752 | $ 10,018 | $ 19,684 | $ 16,488 |
Property and equipment, net | 478 | 474 | 478 | 474 | 301 | ||||||
US | |||||||||||
Net Sales | 3,648 | 8,708 | 7,379 | ||||||||
Property and equipment, net | 432 | 415 | 432 | 415 | 249 | ||||||
Asia | |||||||||||
Net Sales | 4,943 | 7,453 | 8,184 | ||||||||
Property and equipment, net | 34 | 42 | 34 | 42 | 52 | ||||||
Europe | |||||||||||
Net Sales | 1,427 | 3,523 | 925 | ||||||||
Property and equipment, net | $ 12 | $ 17 | $ 12 | $ 17 | $ 0 |
16. RELATED PARTY TRANSACTIONS
16. RELATED PARTY TRANSACTIONS (Details Narrative) $ in Thousands | May. 31, 2015USD ($) |
Related Party Transactions Details Narrative | |
Payable to Wilson Sonsini Goodrich & Rosati | $ 141 |
17. COMMITMENTS AND CONTINGEN71
17. COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | May. 31, 2015USD ($) |
Commitments And Contingencies Details | |
2,016 | $ 486 |
2,017 | 465 |
2,018 | 469 |
2,019 | 39 |
2,020 | 0 |
Thereafter | 0 |
Total | $ 1,459 |
17. COMMITMENTS AND CONTINGEN72
17. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Commitments And Contingencies Details Narrative | |||
Rental expense | $ 554 | $ 562 | $ 657 |
Certificate of deposit | $ 50 | $ 50 |
18. SELECTED QUARTERLY CONSOL73
18. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May. 31, 2015 | Feb. 28, 2015 | Nov. 30, 2014 | Aug. 31, 2014 | May. 31, 2014 | Feb. 28, 2014 | Nov. 30, 2013 | Aug. 31, 2013 | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Selected Quarterly Consolidated Financial Data Details | |||||||||||
Net sales | $ 1,818 | $ 2,027 | $ 2,615 | $ 3,558 | $ 5,370 | $ 5,612 | $ 4,950 | $ 3,752 | $ 10,018 | $ 19,684 | $ 16,488 |
Gross profit | 682 | 852 | 694 | 1,610 | 2,914 | 2,870 | 2,494 | 1,944 | 3,838 | 10,222 | 6,776 |
Net (loss) income | $ (1,900) | $ (1,726) | $ (2,114) | $ (907) | $ 239 | $ 212 | $ 137 | $ (166) | $ (6,647) | $ 422 | $ (3,419) |
Net (loss) income per share basic and diluted | $ (0.15) | $ (0.14) | $ (0.18) | $ (0.08) | $ 0.02 | $ 0.02 | $ 0.01 | $ (0.02) | $ (0.55) | $ 0.04 | $ (0.36) |