Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Feb. 29, 2020 | Mar. 31, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | AEHR TEST SYSTEMS | |
Entity Central Index Key | 0001040470 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 29, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | CA | |
Entity File Number | 000-22893 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,014,962 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 | [1] |
ASSETS | |||
Cash and cash equivalents | $ 5,058 | $ 5,428 | |
Accounts receivable, net | 3,511 | 4,859 | |
Inventories | 9,330 | 9,061 | |
Prepaid expenses and other current assets | 586 | 686 | |
Total current assets | 18,485 | 20,034 | |
Property and equipment, net | 783 | 1,045 | |
Operating lease right-of-use assets | 2,260 | 0 | |
Other assets | 160 | 228 | |
Total assets | 21,688 | 21,307 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Accounts payable | 925 | 1,933 | |
Accrued expenses | 1,373 | 2,034 | |
Operating lease liabilities, short-term | 644 | 0 | |
Customer deposits and deferred revenue, short-term | 385 | 1,545 | |
Total current liabilities | 3,327 | 5,512 | |
Operating lease liabilities, long-term | 1,772 | 0 | |
Deferred rent | 0 | 153 | |
Deferred revenue, long -term | 34 | 189 | |
Total liabilities | 5,133 | 5,854 | |
Aehr Test Systems shareholders' equity: | |||
Common stock, $0.01 par value: Authorized: 75,000 shares; Issued and outstanding: 23,015 shares and 22,669 shares at February 29, 2020 and May 31, 2019, respectively | 230 | 227 | |
Additional paid-in capital | 85,530 | 84,499 | |
Accumulated other comprehensive income | 2,216 | 2,230 | |
Accumulated deficit | (71,401) | (71,484) | |
Total Aehr Test Systems shareholders' equity | 16,575 | 15,472 | |
Noncontrolling interest | (20) | (19) | |
Total shareholders' equity | 16,555 | 15,453 | |
Total liabilities and shareholders' equity | $ 21,688 | $ 21,307 | |
[1] | The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Feb. 29, 2020 | May 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in thousands) | 75,000 | 75,000 |
Common stock, shares issued (in thousands) | 23,015 | 22,669 |
Common stock, shares outstanding (in thousands) | 23,015 | 22,669 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 6,111 | $ 3,163 | $ 18,518 | $ 13,814 |
Cost of sales | 3,120 | 2,891 | 10,054 | 9,591 |
Gross profit | 2,991 | 272 | 8,464 | 4,223 |
Operating expenses: | ||||
Selling, general and administrative | 1,891 | 1,850 | 5,856 | 5,706 |
Research and development | 845 | 931 | 2,532 | 3,033 |
Restructuring | 0 | 607 | 0 | 607 |
Total operating expenses | 2,736 | 3,388 | 8,388 | 9,346 |
Income (loss) from operations | 255 | (3,116) | 76 | (5,123) |
Interest income (expense), net | 13 | (76) | 27 | (228) |
Other (expense) income, net | (9) | (11) | 6 | 27 |
Income (loss) before tax (expense) benefit | 259 | (3,203) | 109 | (5,324) |
Income tax (expense) benefit | (14) | 2 | (26) | (21) |
Net income (loss) | 245 | (3,201) | 83 | (5,345) |
Less: Net income attributable to the noncontrolling interest | 0 | 0 | 0 | 0 |
Net income (loss) attributable to Aehr Test Systems common shareholders | $ 245 | $ (3,201) | $ 83 | $ (5,345) |
Net income (loss) per share basic | $ 0.01 | $ (0.14) | $ 0 | $ (0.24) |
Net income (loss) per share diluted | $ 0.01 | $ (0.14) | $ 0 | $ (0.24) |
Shares used in per share calculations: basic (in thousands) | 22,937 | 22,459 | 22,823 | 22,314 |
Shares used in per share calculations: diluted (in thousands) | 23,130 | 22,459 | 22,940 | 22,314 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 245 | $ (3,201) | $ 83 | $ (5,345) |
Other comprehensive income (loss), net of tax: | ||||
Net change in cumulative translation adjustments | 5 | 10 | (15) | (39) |
Total comprehensive income (loss) | 250 | (3,191) | 68 | (5,384) |
Less: Comprehensive (loss) income attributable to the noncontrolling interest | 0 | (1) | (1) | 1 |
Comprehensive income (loss), attributable to Aehr Test Systems common shareholders | $ 250 | $ (3,190) | $ 69 | $ (5,385) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Aehr Test Shareholders' Equity | Noncontrolling Interest | Total | |
Beginning balance, shares (in thousands) at May. 31, 2018 | 22,143 | |||||||
Beginning balance, amount at May. 31, 2018 | $ 221 | $ 83,041 | $ 2,292 | $ (66,249) | $ 19,305 | $ (20) | $ 19,285 | |
Issuance of common stock under employee plans, shares (in thousands) | 419 | |||||||
Issuance of common stock under employee plans, amount | $ 5 | 430 | 435 | 435 | ||||
Stock-based compensation | 705 | 705 | 705 | |||||
Net income (loss) | (5,345) | (5,345) | (5,345) | |||||
Foreign currency translation adjustment | (40) | (40) | 1 | (39) | ||||
Ending balance, shares (in thousands) at Feb. 28, 2019 | 22,562 | |||||||
Ending balance, amount at Feb. 28, 2019 | $ 226 | 84,176 | 2,252 | (71,594) | 15,060 | (19) | 15,041 | |
Beginning balance, shares (in thousands) at Nov. 30, 2018 | 22,356 | |||||||
Beginning balance, amount at Nov. 30, 2018 | $ 224 | 83,830 | 2,241 | (68,393) | 17,902 | (18) | 17,884 | |
Issuance of common stock under employee plans, shares (in thousands) | 206 | |||||||
Issuance of common stock under employee plans, amount | $ 2 | 121 | 123 | 123 | ||||
Stock-based compensation | 225 | 225 | 225 | |||||
Net income (loss) | (3,201) | (3,201) | (3,201) | |||||
Foreign currency translation adjustment | 11 | 11 | (1) | (10) | ||||
Ending balance, shares (in thousands) at Feb. 28, 2019 | 22,562 | |||||||
Ending balance, amount at Feb. 28, 2019 | $ 226 | 84,176 | 2,252 | (71,594) | 15,060 | (19) | 15,041 | |
Beginning balance, shares (in thousands) at May. 31, 2019 | 22,669 | |||||||
Beginning balance, amount at May. 31, 2019 | $ 227 | 84,499 | 2,230 | (71,484) | 15,472 | (19) | 15,453 | [1] |
Issuance of common stock under employee plans, shares (in thousands) | 346 | |||||||
Issuance of common stock under employee plans, amount | $ 3 | 420 | 423 | 423 | ||||
Stock-based compensation | 611 | 611 | 611 | |||||
Net income (loss) | 83 | 83 | 83 | |||||
Foreign currency translation adjustment | (14) | (14) | (1) | (15) | ||||
Ending balance, shares (in thousands) at Feb. 29, 2020 | 23,015 | |||||||
Ending balance, amount at Feb. 29, 2020 | $ 230 | 85,530 | 2,216 | (71,401) | 16,575 | (20) | 16,555 | |
Beginning balance, shares (in thousands) at Nov. 30, 2019 | 22,914 | |||||||
Beginning balance, amount at Nov. 30, 2019 | $ 229 | 85,194 | 2,211 | (71,646) | 15,988 | (20) | 15,968 | |
Issuance of common stock under employee plans, shares (in thousands) | 101 | |||||||
Issuance of common stock under employee plans, amount | $ 1 | 129 | 130 | 130 | ||||
Stock-based compensation | 207 | 207 | 207 | |||||
Net income (loss) | 245 | 245 | 245 | |||||
Foreign currency translation adjustment | 5 | 5 | 5 | |||||
Ending balance, shares (in thousands) at Feb. 29, 2020 | 23,015 | |||||||
Ending balance, amount at Feb. 29, 2020 | $ 230 | $ 85,530 | $ 2,216 | $ (71,401) | $ 16,575 | $ (20) | $ 16,555 | |
[1] | The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 29, 2020 | Feb. 28, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 83 | $ (5,345) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Stock-based compensation expense | 611 | 705 |
Recovery of doubtful accounts | 0 | (3) |
Depreciation and amortization | 298 | 333 |
Gain on disposal of fixed asset | (2) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,360 | 871 |
Inventories | (157) | (121) |
Prepaid expenses and other assets | 170 | (47) |
Accounts payable | (1,033) | (1,132) |
Accrued expenses | (674) | 431 |
Customer deposits and deferred revenue | (1,315) | (582) |
Deferred rent | 0 | 88 |
Income taxes payable | 19 | 9 |
Net cash used in operating activities | (640) | (4,793) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (151) | (124) |
Proceeds from sales of property and equipment | 2 | 0 |
Net cash used in investing activities | (149) | (124) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards | 423 | 435 |
Net cash provided by financing activities | 423 | 435 |
Effect of exchange rates on cash and cash equivalents | (4) | (66) |
Net decrease in cash, cash equivalents and restricted cash | (370) | (4,548) |
Cash, cash equivalents and restricted cash, beginning of period | 5,508 | 16,848 |
Cash, cash equivalents and restricted cash, end of period | 5,138 | 12,300 |
Supplemental disclosure of non-cash flow information: | ||
Transfers of property and equipment to inventories | $ 112 | $ 20 |
1. BASIS OF PRESENTATION AND SU
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Feb. 29, 2020 | |
Accounting Policies [Abstract] | |
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2019 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2019. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year. PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). All significant intercompany balances have been eliminated in consolidation. For the Company’s majority owned subsidiary, Aehr Test Systems Japan K.K., the noncontrolling interest of the portion the Company does not own was reflected on the Condensed Consolidated Balance Sheets in Shareholders’ Equity and in the Condensed Consolidated Statements of Operations. ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2019. There have been no significant changes in the Company’s significant accounting policies during the three and nine months ended February 29, 2020, except for the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Update No. 2016-02, Leases, as discussed in Note “2. RECENT ACCOUNTING PRONOUNCEMENTS.” |
2. RECENT ACCOUNTING PRONOUNCEM
2. RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Feb. 29, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
2. RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards Adopted Financial Instruments In January 2016, the FASB issued an accounting standard update related to the recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this standard clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company adopted this new standard in fiscal year 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements. Leases In February 2016, the FASB issued ASC Update No. 2016-02, Leases (FASB ASC Topic 842, Leases). The Company adopted the standard as of June 1, 2019, using the modified retrospective approach and the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leasing rules on the date of adoption and recognized the cumulative effect of initially applying the standard as an adjustment to its opening balance sheet, rather than at the earliest comparative period presented in the financial statements. Prior periods presented are in accordance with the previous lease guidance under FASB ASC Topic 840, Leases. In addition, the Company applied the package of practical expedients permitted under FASB ASC Topic 842 transition guidance to its entire lease portfolio at June 1, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases or (iii) the treatment of initial direct costs for any existing leases. Furthermore, the Company elected not to separate lease and non-lease components for the majority of its leases. Instead, for all applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. As a result of adopting FASB ASC Topic 842, Leases, on June 1, 2019, the Company recognized right-of-use assets of $2.7 million and corresponding liabilities of $2.8 million for its existing operating lease portfolio on its unaudited condensed consolidated balance sheet. Operating lease right-of-use assets are presented within Operating lease right-of-use assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease liabilities, long-term on the Company’s unaudited condensed consolidated balance sheet. There was no material impact to the Company’s unaudited condensed consolidated statements of operations or unaudited condensed consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note “11. LEASES” for information regarding the Company’s lease portfolio as of February 29, 2020 as accounted for under FASB ASC Topic 842, Leases. Accounting Standards Not Yet Adopted Financial Instruments In June 2016, the FASB issued an accounting standard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning in the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company does not expect a material impact of this accounting standard on its consolidated financial statements. |
3. REVENUE
3. REVENUE | 9 Months Ended |
Feb. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
3. REVENUE | 3. REVENUE Revenue recognition The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. Performance obligations include sales of systems, contactors, spare parts, and services, as well as installation and training services included in customer contracts. A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to, historical discounting trends for products and services and pricing practices in different geographies. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less. The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. Disaggregation of revenue The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar. The Company’s revenues by product category are as follows (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Type of good / service: Systems $ 2,138 $ 404 $ 8,099 $ 5,922 Contactors 3,094 1,445 7,790 3,541 Services 879 1,314 2,629 4,351 $ 6,111 $ 3,163 $ 18,518 $ 13,814 Product lines: Wafer-level $ 5,408 $ 2,046 $ 16,570 $ 8,240 Test During Burn-In 703 1,117 1,948 5,574 $ 6,111 $ 3,163 $ 18,518 $ 13,814 The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Geographic region: United States $ 5,014 $ 2,203 $ 12,698 $ 9,407 Asia 891 746 4,758 3,814 Europe 206 214 1,062 593 $ 6,111 $ 3,163 $ 18,518 $ 13,814 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Timing of revenue recognition: Products and services transferred at a point in time $ 5,485 $ 2,507 $ 16,666 $ 11,897 Services transferred over time 626 656 1,852 1,917 $ 6,111 $ 3,163 $ 18,518 $ 13,814 Contract balances A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of deferred revenue. Contract liabilities as of February 29, 2020 and May 31, 2019 were $419,000 and $1,734,000, respectively. During the three and nine months ended February 29, 2020, the Company recognized $135,000 and $1,316,000 respectively, of revenues that were included in contract liabilities as of May 31, 2019. Remaining performance obligations On February 29, 2020, the Company had $284,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 33% of its remaining performance obligations as revenue in fiscal 2020, and an additional 67% in fiscal 2021 and thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation. Costs to obtain or fulfill a contract The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expense as the amortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing process. |
4. EARNINGS PER SHARE
4. EARNINGS PER SHARE | 9 Months Ended |
Feb. 29, 2020 | |
Earnings Per Share [Abstract] | |
4. EARNINGS PER SHARE | 4. EARNINGS PER SHARE Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, RSUs and Amended and Restated 2006 Employee Stock Purchase Plan (“ESPP”) shares) outstanding during the period using the treasury stock method. The following table presents the computation of basic and diluted net income (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Numerator: Net income (loss) $ 245 $ (3,201 $ 83 $ (5,345 Denominator for basic net income (loss) per share: Weighted average shares outstanding 22,937 22,459 22,823 22,314 Shares used in basic net income (loss) per share calculation 22,937 22,459 22,823 22,314 Effect of dilutive securities 193 -- 117 -- Denominator for diluted net income (loss) per share 23,130 22,459 22,940 22,314 Basic net income (loss) per share $ 0.01 $ (0.14 $ 0.00 $ (0.24 Diluted net income (loss) per share $ 0.01 $ (0.14 $ 0.00 $ (0.24 For the purpose of computing diluted earnings per share, the weighted average number of potential common shares does not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the periods presented, as the effect would be anti-dilutive. Stock options to purchase 2,505,000 shares of common stock were outstanding as of February 29, 2020 but were not included in the computation of diluted net income per share for the periods, because the inclusion of such shares would be anti-dilutive. In the three and nine months ended February 28, 2019, 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 3,220,000 shares of common stock, and 34,000 RSUs under the Company’s 2016 Equity Incentive Plan (“2016 Plan”) and rights to purchase 327,000 ESPP shares were outstanding as of February 28, 2019 but were not included in the computation of diluted net loss per share for the periods, because the inclusion of such shares would be anti-dilutive. The 2,657,000 shares convertible under the convertible notes outstanding at February 28, 2019 were not included in the computation of diluted net income (loss) per share for the periods presented, because the inclusion of such shares would be anti-dilutive. |
5. FAIR VALUE OF FINANCIAL INST
5. FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Feb. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
5. FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements. The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value. The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of February 29, 2020 (in thousands): Balance as of February 29, 2020 Level 1 Level 2 Level 3 Money market funds $ 80 $ 80 $ -- $ -- Assets $ 80 $ 80 $ -- $ -- The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2019 (in thousands): Balance as of May 31, 2019 Level 1 Level 2 Level 3 Money market funds $ 3,017 $ 3,017 $ -- $ -- Assets $ 3,017 $ 3,017 $ -- $ -- Included in Money market funds as of February 29, 2020 and May 31, 2019 is $80,000 restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease. There were no financial liabilities measured at fair value as of February 29, 2020 and May 31, 2019. There were no transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended February 29, 2020. The carrying amounts of financial instruments including cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities. |
6. ACCOUNTS RECEIVABLE, NET
6. ACCOUNTS RECEIVABLE, NET | 9 Months Ended |
Feb. 29, 2020 | |
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | |
6. ACCOUNTS RECEIVABLE, NET | 6. ACCOUNTS RECEIVABLE, NET Accounts receivable represent customer trade receivables. As of February 29, 2020 and May 31, 2019, there were no allowances 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. The Company’s allowance for doubtful accounts is based upon historical experience and review of trade receivables by aging category to identify specific customers with known disputes or collection issues. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. |
7. INVENTORIES
7. INVENTORIES | 9 Months Ended |
Feb. 29, 2020 | |
Inventory Disclosure [Abstract] | |
7. INVENTORIES | 7. INVENTORIES Inventories are comprised of the following (in thousands): February 29, May 31, 2020 2019 Raw materials and sub-assemblies $ 6,449 $ 5,471 Work in process 2,875 3,580 Finished goods 6 10 $ 9,330 $ 9,061 |
8. PRODUCT WARRANTIES
8. PRODUCT WARRANTIES | 9 Months Ended |
Feb. 29, 2020 | |
Product Warranties Disclosures [Abstract] | |
8. PRODUCT WARRANTIES | 8. PRODUCT WARRANTIES The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required. The standard warranty period is one year for systems and ninety days for parts and service. The following is a summary of changes in the Company's liability for product warranties during the three and nine months ended February 29, 2020 and February 28, 2019 (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Balance at the beginning of the period $ 190 $ 163 $ 154 $ 135 Accruals for warranties issued during the period 26 30 167 176 Consumption of reserves (30 ) (30 ) (135 ) (148 ) Balance at the end of the period $ 186 $ 163 $ 186 $ 163 The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets. |
9. CUSTOMER DEPOSITS AND DEFERR
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | 9 Months Ended |
Feb. 29, 2020 | |
Customer Deposits And Deferred Revenue Short-term | |
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | 9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM Customer deposits and deferred revenue, short-term (in thousands): February 29, May 31, 2020 2019 Customer deposits $ 135 $ 1,003 Deferred revenue 250 542 $ 385 $ 1,545 |
10. INCOME TAXES
10. INCOME TAXES | 9 Months Ended |
Feb. 29, 2020 | |
Income Tax Disclosure [Abstract] | |
10. INCOME TAXES | 10. 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. Since fiscal 2009, a full valuation allowance was established against all deferred tax assets as management determined that it is more likely than not that certain deferred tax assets will not be realized. 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. On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company is currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available. |
11. LEASES
11. LEASES | 9 Months Ended |
Feb. 29, 2020 | |
Leases [Abstract] | |
11. LEASES | 11. LEASES The Company has only operating leases for real estate including corporate offices, warehouse space and certain equipment. A lease with an initial term of 12 months or less is generally not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or renew the arrangement that the Company is reasonably certain to exercise (short-term leases). The Company recognizes lease expense on a straight-line basis over the lease term for short-term leases that the Company does not record on its balance sheet. The Company’s operating leases have remaining lease terms of 1 to 3 years. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of the arrangement. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The weighted-average remaining lease term for the Company’s operating leases was 3.4 years at February 29, 2020 and the weighted-average discount rate was 5.5%. The Company’s operating lease cost was $183,000 and $548,000 for the three and nine months ended February 29, 2020, respectively. The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Three Months Ended Nine Months Ended Cash paid for amounts included in the measurement of operating lease liabilities Operating cash flows from operating leases $ 184 $ 550 The following table presents the maturities of the Company’s operating lease liabilities as of February 29, 2020 (in thousands): Fiscal year Operating Leases 2020 (excluding the first nine months of 2020) $ 187 2021 765 2022 779 2023 795 2024 132 Thereafter -- Total future minimum operating lease payments $ 2,658 Less: imputed interest 242 Present value of operating lease liabilities $ 2,416 |
12. BORROWING AND FINANCING ARR
12. BORROWING AND FINANCING ARRANGEMENTS | 9 Months Ended |
Feb. 29, 2020 | |
Debt Disclosure [Abstract] | |
12. BORROWING AND FINANCING ARRANGEMENTS | 12. BORROWING AND FINANCING ARRANGEMENTS On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”). Pursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $4.0 million or (ii) the amount available under the borrowing base minus (b) the outstanding principal balance of any advances, under a revolving line of credit. The borrowing base is 80% of eligible accounts, as determined by the Bank from the Company’s most recent borrowing base statement; provided, however, the Bank has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of certain events or conditions, which may adversely affect the collateral or its value. Subject to an event of default, the principal amount outstanding under the revolving line of credit will accrue interest at a floating per annum rate equal to the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%. Interest is payable monthly on the last calendar day of each month and the outstanding principal amount, the unpaid interest and all other obligations are due on the maturity date, which is 364 days from the effective date of January 13, 2020. At February 29, 2020, the Company had not drawn against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. There are no financial covenants in the agreement. |
13. STOCK-BASED COMPENSATION
13. STOCK-BASED COMPENSATION | 9 Months Ended |
Feb. 29, 2020 | |
Share-based Payment Arrangement [Abstract] | |
13. STOCK-BASED COMPENSATION | 13. STOCK-BASED COMPENSATION Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), and ESPP purchase rights. Stock-based compensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, stock-based compensation cost is based on the fair value of the Company’s common stock at the grant date. All of the Company’s stock-based compensation is accounted for as an equity instrument. See Note 10 in the Company’s Annual Report on Form 10-K for fiscal 2019 filed on August 28, 2019 for further information regarding the 2016 Plan and the ESPP. The following table summarizes the stock-based compensation expense for the three and nine months ended February 29, 2020 and February 28, 2019 (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 19 $ 24 $ 58 $ 83 Selling, general and administrative 137 137 401 421 Research and development 51 64 152 201 Total stock-based compensation $ 207 $ 225 $ 611 $ 705 As of February 29,2020 and February 28, 2019, there were no stock-based compensation expenses capitalized as part of inventory. During the three months ended February 29, 2020 and February 28, 2019, the Company recorded stock-based compensation expense related to stock options and RSUs under 2016 Plan of $166,000 and $166,000, respectively. During the nine months ended February 29, 2020 and February 28, 2019, the Company recorded stock-based compensation expense related to stock options and RSUs of $480,000 and $505,000, respectively. As of February 29, 2020, the total compensation expense related to unvested stock-based awards under the 2016 Plan, but not yet recognized, was approximately $1,244,000, which is net of estimated forfeitures of $3,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 2.7 years. During the three months ended February 29, 2020 and February 28, 2019, the Company recorded stock-based compensation expense related to the ESPP of $41,000 and $59,000, respectively. During the nine months ended February 29, 2020 and February 28, 2019, the Company recorded stock-based compensation expense related to the ESPP of $131,000 and $200,000, respectively. As of February 29, 2020, the total compensation expense related to purchase rights under the ESPP but not yet recognized was approximately $77,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 0.8 years. Valuation Assumptions Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards. 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 four or five years based on weighted average of the expected term of option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation expense recorded. Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation model 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. Fair Value. The fair value of the Company’s stock options granted to employees for the three and nine months ended February 29, 2020 and February 28, 2019, were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Expected term (in years) 5 5 5 5 Volatility 0.72 0.69 0.71 0.72 Risk-free interest rate 1.57 % 2.77 % 1.85 % 2.83 % Weighted average grant date fair value $ 1.37 $ 1.01 $ 0.98 $ 1.34 The fair values of the ESPP purchase rights granted for the nine months ended February 29, 2020 were estimated using the following weighted-average assumptions: Nine Months Ended February 29, 2020 Expected term (in years) 0.5-2.0 Volatility 0.62-0.71 Expected dividend $ 0.00 Risk-free interest rates 1.56%-1.81 % Estimated forfeiture rate 0 % Weighted average grant date fair value $ 0.80 There were no ESPP purchase rights granted to employees for the three months ended February 29, 2020 and February 28, 2019. During the nine months ended February 29, 2020 and February 28, 2019, ESPP purchase rights of 38,000 and 327,000 were granted, respectively. Total ESPP shares issued during the nine months ended February 29, 2020 and February 28, 2019 were 71,000 and 64,000 shares, respectively. As of February 29, 2020, there were 299,000 ESPP shares available for issuance. The following tables summarize the Company’s stock option and RSU transactions during the three and nine months ended February 29, 2020 (in thousands): Available Shares Balance, May 31, 2019 1,147 Options granted (527 ) Options cancelled 151 Options expired (119 ) Balance, August 31, 2019 652 Options reserved 1,196 Options granted (58 ) Options cancelled 280 Options expired (256 ) Balance, November 30, 2019 1,814 Options granted (6 ) Options cancelled 11 Options expired (8 ) Balance, February 29, 2020 1,811 The following table summarizes the stock option transactions during the three and nine months ended February 29, 2020 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2019 3,107 $ 2.20 $ 282 Options granted 527 $ 1.64 Options cancelled (151 ) $ 1.50 Options exercised (49 ) $ 1.27 Balances, August 31, 2019 3,434 $ 2.16 $ 41 Options granted 58 $ 1.77 Options cancelled (280 ) $ 2.19 Options exercised (85 ) $ 1.06 Balances, November 30, 2019 3,127 $ 2.18 $ 358 Options granted 6 $ 2.30 Options cancelled (11 ) $ 2.42 Options exercised (98 ) $ 1.34 Balances, February 29, 2020 3,024 $ 2.21 $ 544 Options fully vested and expected to vest at February 29, 2020 2,989 $ 2.21 $ 536 The options outstanding and exercisable at February 29, 2020 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at February 29, 2020 at February 29, 2020 Range of 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 $ 1.09-$1.28 177 0.32 $ 1.28 177 0.32 $ 1.28 $ 1.64-$2.06 1,183 5.30 $ 1.76 520 4.28 $ 1.80 $ 2.10-$2.81 1,436 2.90 $ 2.43 1,166 2.31 $ 2.43 $ 3.46-$3.93 228 4.41 $ 3.85 162 4.44 $ 3.81 $ 1.09-$3.93 3,024 3.80 $ 2.21 2,025 2.81 $ 2.28 $ 301 The total intrinsic value of options exercised during the three and nine months ended February 29, 2020 was $92,000 and $159,000, respectively. The total intrinsic value of options exercised during the three and nine months ended February 28, 2019 was $160,000 and $322,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at February 29, 2020 was 3.78 years. There were no RSUs granted to employees during the three and nine months ended February 29, 2020 and February 28, 2019. During the three and nine months ended February 29, 2020, 3,000 and 10,000 RSUs became fully vested, respectively. During the three and nine months ended February 28, 2019, 4,000 and 13,000 RSUs became fully vested, respectively. As of February 29, 2020, 13,000 RSUs remain unvested which had an intrinsic value of $27,000. As of February 28, 2019, 34,000 RSUs remain unvested which had an intrinsic value of $50,000. |
14. SEGMENT INFORMATION
14. SEGMENT INFORMATION | 9 Months Ended |
Feb. 29, 2020 | |
Segment Reporting [Abstract] | |
14. SEGMENT INFORMATION | 14. SEGMENT INFORMATION The Company has only one reportable segment. The information for revenue category by type, product line, geography and timing of revenue recognition, is summarized in Note “3. REVENUE.” Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in thousands): February 29, May 31, 2020 2019 United States $ 744 $ 1,005 Asia 39 40 Europe -- -- $ 783 $ 1,045 As of February 29, 2020, the operating lease right-of-use assets of $2,260,000 were allocated in the United States. There were no revenues through distributors for the three and nine months ended February 29, 2020 and February 28, 2019. The Company’s Japanese and German subsidiaries primarily comprise the foreign operations. Substantially all of the sales by the Company’s 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. Sales to the Company’s five largest customers accounted for approximately 94% and 89% of its net sales in the three and nine months ended February 29, 2020, respectively. One customer accounted for approximately 71% of the Company’s net sales in the three months ended February 29, 2020. Two customers accounted for approximately 51% and 18% of the Company’s net sales in the nine months ended February 29, 2020. Sales to the Company’s five largest customers accounted for approximately 90% and 81% of its net sales in the three and nine months ended February 28, 2019, respectively. Four customers accounted for approximately 27%, 25%, 22% and 13%, respectively, of the Company’s net sales in the three months ended February 28, 2019. Four customers accounted for approximately 31%, 18%, 16% and 12%, respectively, of the Company’s net sales in the nine months ended February 28, 2019. No other customers represented more than 10% of the Company’s net sales in the three and nine months ended February 29, 2020 and February 28, 2019. |
15. SUBSEQUENT EVENT
15. SUBSEQUENT EVENT | 9 Months Ended |
Feb. 29, 2020 | |
Subsequent Events [Abstract] | |
15. SUBSEQUENT EVENT | 15. SUBSEQUENT EVENT On March 19, 2020, the Company approved to dissolve Aehr Test Systems Japan K.K (“ATS-Japan”), a majority owned subsidiary. In connection with the dissolving plan, the Company expects to incur charges of approximately $150,000 related to severance payments for individuals impacted in this reduction and legal fees associated with the dissolving process in the fourth quarter of fiscal 2020. The Company expects the dissolution of ATS-Japan will result in a cost saving of approximately $90,000 each quarter beginning in fiscal 2021. |
1. BASIS OF PRESENTATION AND _2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Feb. 29, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2019 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2019. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year. |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). All significant intercompany balances have been eliminated in consolidation. For the Company’s majority owned subsidiary, Aehr Test Systems Japan K.K., the noncontrolling interest of the portion the Company does not own was reflected on the Condensed Consolidated Balance Sheets in Shareholders’ Equity and in the Condensed Consolidated Statements of Operations. |
ACCOUNTING ESTIMATES | ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2019. There have been no significant changes in the Company’s significant accounting policies during the three and nine months ended February 29, 2020, except for the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Update No. 2016-02, Leases, as discussed in Note “2. RECENT ACCOUNTING PRONOUNCEMENTS.” |
2. RECENT ACCOUNTING PRONOUNC_2
2. RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Feb. 29, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards Adopted Financial Instruments In January 2016, the FASB issued an accounting standard update related to the recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this standard clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company adopted this new standard in fiscal year 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements. Leases In February 2016, the FASB issued ASC Update No. 2016-02, Leases (FASB ASC Topic 842, Leases). The Company adopted the standard as of June 1, 2019, using the modified retrospective approach and the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leasing rules on the date of adoption and recognized the cumulative effect of initially applying the standard as an adjustment to its opening balance sheet, rather than at the earliest comparative period presented in the financial statements. Prior periods presented are in accordance with the previous lease guidance under FASB ASC Topic 840, Leases. In addition, the Company applied the package of practical expedients permitted under FASB ASC Topic 842 transition guidance to its entire lease portfolio at June 1, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases or (iii) the treatment of initial direct costs for any existing leases. Furthermore, the Company elected not to separate lease and non-lease components for the majority of its leases. Instead, for all applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. As a result of adopting FASB ASC Topic 842, Leases, on June 1, 2019, the Company recognized right-of-use assets of $2.7 million and corresponding liabilities of $2.8 million for its existing operating lease portfolio on its unaudited condensed consolidated balance sheet. Operating lease right-of-use assets are presented within Operating lease right-of-use assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease liabilities, long-term on the Company’s unaudited condensed consolidated balance sheet. There was no material impact to the Company’s unaudited condensed consolidated statements of operations or unaudited condensed consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note “11. LEASES” for information regarding the Company’s lease portfolio as of February 29, 2020 as accounted for under FASB ASC Topic 842, Leases. Accounting Standards Not Yet Adopted Financial Instruments In June 2016, the FASB issued an accounting standard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning in the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company does not expect a material impact of this accounting standard on its consolidated financial statements. |
3. REVENUE (Tables)
3. REVENUE (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The Company’s revenues by product category are as follows (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Type of good / service: Systems $ 2,138 $ 404 $ 8,099 $ 5,922 Contactors 3,094 1,445 7,790 3,541 Services 879 1,314 2,629 4,351 $ 6,111 $ 3,163 $ 18,518 $ 13,814 Product lines: Wafer-level $ 5,408 $ 2,046 $ 16,570 $ 8,240 Test During Burn-In 703 1,117 1,948 5,574 $ 6,111 $ 3,163 $ 18,518 $ 13,814 The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Geographic region: United States $ 5,014 $ 2,203 $ 12,698 $ 9,407 Asia 891 746 4,758 3,814 Europe 206 214 1,062 593 $ 6,111 $ 3,163 $ 18,518 $ 13,814 Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Timing of revenue recognition: Products and services transferred at a point in time $ 5,485 $ 2,507 $ 16,666 $ 11,897 Services transferred over time 626 656 1,852 1,917 $ 6,111 $ 3,163 $ 18,518 $ 13,814 |
4. EARNINGS PER SHARE (Tables)
4. EARNINGS PER SHARE (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | The following table presents the computation of basic and diluted net income (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Numerator: Net income (loss) $ 245 $ (3,201 ) $ 83 $ (5,345 ) Denominator for basic net income (loss) per share: Weighted average shares outstanding 22,937 22,459 22,823 22,314 Shares used in basic net income (loss) per share calculation 22,937 22,459 22,823 22,314 Effect of dilutive securities 193 — 117 — Denominator for diluted net income (loss) per share 23,130 22,459 22,940 22,314 Basic net income (loss) per share $ 0.01 $ (0.14 ) $ 0.00 $ (0.24 ) Diluted net income (loss) per share $ 0.01 $ (0.14 ) $ 0.00 $ (0.24 ) |
5. FAIR VALUE OF FINANCIAL IN_2
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value by hierarchy | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of February 29, 2020 (in thousands): Balance as of February 29, 2020 Level 1 Level 2 Level 3 Money market funds $ 80 $ 80 $ -- $ -- Assets $ 80 $ 80 $ -- $ -- The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2019 (in thousands): Balance as of May 31, 2019 Level 1 Level 2 Level 3 Money market funds $ 3,017 $ 3,017 $ -- $ -- Assets $ 3,017 $ 3,017 $ -- $ -- |
7. INVENTORIES (Tables)
7. INVENTORIES (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are comprised of the following (in thousands): February 29, May 31, 2020 2019 Raw materials and sub-assemblies $ 6,449 $ 5,471 Work in process 2,875 3,580 Finished goods 6 10 $ 9,330 $ 9,061 |
8. PRODUCT WARRANTIES (Tables)
8. PRODUCT WARRANTIES (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Product Warranties Disclosures [Abstract] | |
Liability for product warranties | The following is a summary of changes in the Company's liability for product warranties during the three and nine months ended February 29, 2020 and February 28, 2019 (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Balance at the beginning of the period $ 190 $ 163 $ 154 $ 135 Accruals for warranties issued during the period 26 30 167 176 Consumption of reserves (30 ) (30 ) (135 ) (148 ) Balance at the end of the period $ 186 $ 163 $ 186 $ 163 |
9. CUSTOMER DEPOSITS AND DEFE_2
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Customer Deposits And Deferred Revenue Short-term | |
Customer deposits and deferred revenue | Customer deposits and deferred revenue, short-term (in thousands): February 29, May 31, 2020 2019 Customer deposits $ 135 $ 1,003 Deferred revenue 250 542 $ 385 $ 1,545 |
11. LEASES (Tables)
11. LEASES (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Leases [Abstract] | |
Supplemental cash flow information related to leases | The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Three Months Ended Nine Months Ended Cash paid for amounts included in the measurement of operating lease liabilities Operating cash flows from operating leases $ 184 $ 550 |
Future minimum lease payments under operating leases | The following table presents the maturities of the Company’s operating lease liabilities as of February 29, 2020 (in thousands): Fiscal year Operating Leases 2020 (excluding the first nine months of 2020) $ 187 2021 765 2022 779 2023 795 2024 132 Thereafter -- Total future minimum operating lease payments $ 2,658 Less: imputed interest 242 Present value of operating lease liabilities $ 2,416 |
13. STOCK-BASED COMPENSATION (T
13. STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Compensation costs related to the Company's stock-based compensation | The following table summarizes the stock-based compensation expense for the three and nine months ended February 29, 2020 and February 28, 2019 (in thousands): Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 19 $ 24 $ 58 $ 83 Selling, general and administrative 137 137 401 421 Research and development 51 64 152 201 Total stock-based compensation $ 207 $ 225 $ 611 $ 705 |
Fair value assumptions for option valuation model | The fair value of the Company’s stock options granted to employees for the three and nine months ended February 29, 2020 and February 28, 2019, were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 Expected term (in years) 5 5 5 5 Volatility 0.72 0.69 0.71 0.72 Risk-free interest rate 1.57 % 2.77 % 1.85 % 2.83 % Weighted average grant date fair value $ 1.37 $ 1.01 $ 0.98 $ 1.34 Nine Months Ended February 29, 2020 Expected term (in years) 0.5-2.0 Volatility 0.62-0.71 Expected dividend $ 0.00 Risk-free interest rates 1.56%-1.81 % Estimated forfeiture rate 0 % Weighted average grant date fair value $ 0.80 |
Stock option and RSU transactions | The following tables summarize the Company’s stock option and RSU transactions during the three and nine months ended February 29, 2020 (in thousands): Available Shares Balance, May 31, 2019 1,147 Options granted (527 ) Options cancelled 151 Options expired (119 ) Balance, August 31, 2019 652 Options reserved 1,196 Options granted (58 ) Options cancelled 280 Options expired (256 ) Balance, November 30, 2019 1,814 Options granted (6 ) Options cancelled 11 Options expired (8 ) Balance, February 29, 2020 1,811 |
Stock option transactions | The following table summarizes the stock option transactions during the three and nine months ended February 29, 2020 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2019 3,107 $ 2.20 $ 282 Options granted 527 $ 1.64 Options cancelled (151 ) $ 1.50 Options exercised (49 ) $ 1.27 Balances, August 31, 2019 3,434 $ 2.16 $ 41 Options granted 58 $ 1.77 Options cancelled (280 ) $ 2.19 Options exercised (85 ) $ 1.06 Balances, November 30, 2019 3,127 $ 2.18 $ 358 Options granted 6 $ 2.30 Options cancelled (11 ) $ 2.42 Options exercised (98 ) $ 1.34 Balances, February 29, 2020 3,024 $ 2.21 $ 544 Options fully vested and expected to vest at February 29, 2020 2,989 $ 2.21 $ 536 |
Options outstanding | The options outstanding and exercisable at February 29, 2020 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at February 29, 2020 at February 29, 2020 Range of 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 $ 1.09-$1.28 177 0.32 $ 1.28 177 0.32 $ 1.28 $ 1.64-$2.06 1,183 5.30 $ 1.76 520 4.28 $ 1.80 $ 2.10-$2.81 1,436 2.90 $ 2.43 1,166 2.31 $ 2.43 $ 3.46-$3.93 228 4.41 $ 3.85 162 4.44 $ 3.81 $ 1.09-$3.93 3,024 3.80 $ 2.21 2,025 2.81 $ 2.28 $ 301 |
14. SEGMENT INFORMATION (Tables
14. SEGMENT INFORMATION (Tables) | 9 Months Ended |
Feb. 29, 2020 | |
Segment Reporting [Abstract] | |
Company's operations in different geographic areas | The following table presents property and equipment information for geographic areas (in thousands): February 29, May 31, 2020 2019 United States $ 744 $ 1,005 Asia 39 40 Europe -- -- $ 783 $ 1,045 |
3. REVENUE (Details)
3. REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Net sales | $ 6,111 | $ 3,163 | $ 18,518 | $ 13,814 |
Systems | ||||
Net sales | 2,138 | 404 | 8,099 | 5,922 |
Contactors | ||||
Net sales | 3,094 | 1,445 | 7,790 | 3,541 |
Services | ||||
Net sales | 879 | 1,314 | 2,629 | 4,351 |
Wafer-level | ||||
Net sales | 5,408 | 2,046 | 16,570 | 8,240 |
Test During Burn-In | ||||
Net sales | $ 703 | $ 1,117 | $ 1,948 | $ 5,574 |
3. REVENUE (Details 1)
3. REVENUE (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Net sales | $ 6,111 | $ 3,163 | $ 18,518 | $ 13,814 |
US | ||||
Net sales | 5,014 | 2,203 | 12,698 | 9,407 |
Asia | ||||
Net sales | 891 | 746 | 4,758 | 3,814 |
Europe | ||||
Net sales | $ 206 | $ 214 | $ 1,062 | $ 593 |
3. REVENUE (Details 2)
3. REVENUE (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Net sales | $ 6,111 | $ 3,163 | $ 18,518 | $ 13,814 |
Products and services transferred at a point in time | ||||
Net sales | 5,485 | 2,507 | 16,666 | 11,897 |
Services transferred over time | ||||
Net sales | $ 626 | $ 656 | $ 1,852 | $ 1,917 |
3. REVENUE (Details Narrative)
3. REVENUE (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 29, 2020 | Feb. 29, 2020 | May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||||
Contract liabilities | $ 419 | $ 419 | $ 1,734 | ||
Recognition of contract liabilities | 135 | 1,316 | |||
Remaining performance obligations | $ 284 | $ 284 | |||
Remaining performance obligation revenue recognition | 67.00% | 33.00% |
4. EARNINGS PER SHARE (Details)
4. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Earnings Per Share [Abstract] | ||||
Numerator: Net income (loss) | $ 245 | $ (3,201) | $ 83 | $ (5,345) |
Denominator for basic net income (loss) per share: Weighted average shares outstanding (in thousands) | 22,937 | 22,459 | 22,823 | 22,314 |
Shares used in basic net income (loss) per share calculation (in thousands) | 22,937 | 22,459 | 22,823 | 22,314 |
Effect of dilutive securities (in thousands) | 193 | 0 | 117 | 0 |
Denominator for diluted net income (loss) per share (in thousands) | 23,130 | 22,459 | 22,940 | 22,314 |
Basic net income (loss) per share | $ 0.01 | $ (0.14) | $ 0 | $ (0.24) |
Diluted net income (loss) per share | $ 0.01 | $ (0.14) | $ 0 | $ (0.24) |
4. EARNINGS PER SHARE (Details
4. EARNINGS PER SHARE (Details Narrative) - shares | 9 Months Ended | |
Feb. 29, 2020 | Feb. 28, 2019 | |
Employee Stock Purchase Plan | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 327 | |
Convertible Notes | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 2,657 | |
Stock Options | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 2,505 | 3,220 |
Restricted Stock Units | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 34 |
5. FAIR VALUE OF FINANCIAL IN_3
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 |
Assets | ||
Investment securities | $ 80 | $ 3,017 |
Level 1 | ||
Assets | ||
Investment securities | 80 | 3,017 |
Level 2 | ||
Assets | ||
Investment securities | 0 | 0 |
Level 3 | ||
Assets | ||
Investment securities | 0 | 0 |
Money Market Funds | ||
Assets | ||
Investment securities | 80 | 3,017 |
Money Market Funds | Level 1 | ||
Assets | ||
Investment securities | 80 | 3,017 |
Money Market Funds | Level 2 | ||
Assets | ||
Investment securities | 0 | 0 |
Money Market Funds | Level 3 | ||
Assets | ||
Investment securities | $ 0 | $ 0 |
5. FAIR VALUE OF FINANCIAL IN_4
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Restricted cash representing a security deposit | $ 80 | $ 80 |
Financial liabilities at fair value | 0 | 0 |
Transfers between Level 1 and Level 2 fair value measurements | $ 0 | $ 0 |
6. ACCOUNTS RECEIVABLE, NET (De
6. ACCOUNTS RECEIVABLE, NET (Details Narrative) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 |
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | ||
Allowance for doubtful accounts customer trade receivables | $ 0 | $ 0 |
7. INVENTORIES (Details)
7. INVENTORIES (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 | |
Inventory, Net [Abstract] | |||
Raw materials and sub-assemblies | $ 6,449 | $ 5,471 | |
Work in process | 2,875 | 3,580 | |
Finished goods | 6 | 10 | |
Inventory | $ 9,330 | $ 9,061 | [1] |
[1] | The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date. |
8. PRODUCT WARRANTIES (Details)
8. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at the beginning of the period | $ 190 | $ 163 | $ 154 | $ 135 |
Accruals for warranties issued during the period | 26 | 30 | 167 | 176 |
Consumption of reserves | (30) | (30) | (135) | (148) |
Balance at the end of the period | $ 186 | $ 163 | $ 186 | $ 163 |
8. PRODUCT WARRANTIES (Details
8. PRODUCT WARRANTIES (Details Narrative) | 9 Months Ended |
Feb. 29, 2020 | |
Product Warranties Disclosures [Abstract] | |
Product warranties disclosures | The standard warranty period is one year for systems and ninety days for parts and services |
9. CUSTOMER DEPOSITS AND DEFE_3
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 |
Customer Deposits And Deferred Revenue Short-term | ||
Customer deposits | $ 135 | $ 1,003 |
Deferred revenue | 250 | 542 |
Total | $ 385 | $ 1,545 |
11. LEASES (Details)
11. LEASES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Feb. 29, 2020 | Feb. 29, 2020 | |
Cash paid for amounts included in measurement of operating lease liabilities: | ||
Operating cash flows from operating leases | $ 184 | $ 550 |
11. LEASES (Details 1)
11. LEASES (Details 1) $ in Thousands | Feb. 29, 2020USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2020 (excluding the first nine months of 2020) | $ 187 |
2021 | 765 |
2022 | 779 |
2023 | 795 |
2024 | 132 |
Thereafter | 0 |
Total future minimum operating lease payments | 2,658 |
Less: imputed interest | 242 |
Present value of operating lease liabilities | $ 2,416 |
11. LEASES (Details Narrative)
11. LEASES (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended |
Feb. 29, 2020USD ($) | Feb. 29, 2020USD ($) | |
Operating lease, weighted-average remaining lease term | 3 years 4 months 24 days | 3 years 4 months 24 days |
Operating lease, weighted-average discount rate | 5.50% | 5.50% |
Operating lease, cost | $ 183 | $ 548 |
Minimum | ||
Operating lease term | 1 year | 1 year |
Maximum | ||
Operating lease term | 3 years | 3 years |
12. BORROWING AND FINANCING A_2
12. BORROWING AND FINANCING ARRANGEMENTS (Details Narrative) $ in Thousands | 9 Months Ended |
Feb. 29, 2020USD ($) | |
Debt Disclosure [Abstract] | |
Line of credit, maximum borrowing capacity | $ 4,000 |
Variable interest rate | The greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%. |
Borrowing under revolving credit facility | $ 0 |
13. STOCK-BASED COMPENSATION (D
13. STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: | ||||
Total stock-based compensation | $ 207 | $ 225 | $ 611 | $ 705 |
Cost of Sales | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: | ||||
Total stock-based compensation | 19 | 24 | 58 | 83 |
Selling, General and Administrative | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: | ||||
Total stock-based compensation | 137 | 137 | 401 | 421 |
Research and Development | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: | ||||
Total stock-based compensation | $ 51 | $ 64 | $ 152 | $ 201 |
13. STOCK-BASED COMPENSATION _2
13. STOCK-BASED COMPENSATION (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Stock Options | ||||
Expected term (in years) | 5 years | 5 years | 5 years | 5 years |
Volatility | 72.00% | 69.00% | 71.00% | 72.00% |
Risk-free interest rate | 1.57% | 2.77% | 1.85% | 2.83% |
Weighted average grant date fair value | $ 1.37 | $ 1.01 | $ 0.98 | $ 1.34 |
Employee Stock Purchase Plan | ||||
Expected dividend | $ 0 | |||
Estimated forfeiture rate | 0.00% | |||
Weighted average grant date fair value | $ 0.80 | |||
Employee Stock Purchase Plan | Minimum | ||||
Expected term (in years) | 6 months | |||
Volatility | 62.00% | |||
Risk-free interest rate | 1.56% | |||
Employee Stock Purchase Plan | Maximum | ||||
Expected term (in years) | 2 years | |||
Volatility | 71.00% | |||
Risk-free interest rate | 1.81% |
13. STOCK-BASED COMPENSATION _3
13. STOCK-BASED COMPENSATION (Details 2) - Stock Option and RSU Transactions - shares | 3 Months Ended | ||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | |
Available shares, beginning (in thousands) | 1,814 | 652 | 1,147 |
Options reserved (in thousands) | 1,196 | ||
Options granted (in thousands) | (6) | (58) | (527) |
Options cancelled (in thousands) | 11 | 280 | 151 |
Options expired (in thousands) | (8) | (256) | (119) |
Available shares, ending (in thousands) | 1,811 | 1,814 | 652 |
13. STOCK-BASED COMPENSATION _4
13. STOCK-BASED COMPENSATION (Details 3) - Outstanding Options Stock Option Transactions - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | |
Options outstanding, beginning (in thousands) | 3,127 | 3,434 | 3,107 |
Options granted (in thousands) | 6 | 58 | 527 |
Options cancelled (in thousands) | (11) | (280) | (151) |
Options exercised (in thousand) | (98) | (85) | (49) |
Options outstanding, ending (in thousands) | 3,024 | 3,127 | 3,434 |
Weighted average exercise price outstanding, beginning | $ 2.18 | $ 2.16 | $ 2.20 |
Weighted average exercise price granted | 2.30 | 1.77 | 1.64 |
Weighted average exercise price cancelled | 2.42 | 2.19 | 1.50 |
Weighted average exercise price exercised | 1.34 | 1.06 | 1.27 |
Weighted average exercise price outstanding, ending | $ 2.21 | $ 2.18 | $ 2.16 |
Aggregate intrinsic value, beginning balance | $ 358 | $ 41 | $ 282 |
Aggregate intrinsic value, ending balance | $ 544 | $ 358 | $ 41 |
Options fully vested and expected to vest, ending (in thousands) | 2,989 | ||
Weighted average exercise price for options fully vested and expected to vest, ending | $ 2.21 | ||
Aggregate intrinsic value for options fully vested and expected to vest, ending | $ 536 |
13. STOCK-BASED COMPENSATION _5
13. STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, $ in Thousands | 9 Months Ended |
Feb. 29, 2020USD ($)$ / sharesshares | |
$1.09-$1.28 | |
Options outstanding, ending (in thousands) | shares | 177 |
Weighted average remaining contractual life (years) options outstanding | 3 months 29 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.28 |
Options exercisable shares, ending (in thousands) | shares | 177 |
Weighted average remaining contractual life (years) options exercisable | 3 months 29 days |
Weighted average exercise price for options exercisable, ending | $ / shares | $ 1.28 |
$1.64-$2.06 | |
Options outstanding, ending (in thousands) | shares | 1,183 |
Weighted average remaining contractual life (years) options outstanding | 5 years 3 months 18 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.76 |
Options exercisable shares, ending (in thousands) | shares | 520 |
Weighted average remaining contractual life (years) options exercisable | 4 years 3 months 11 days |
Weighted average exercise price for options exercisable, ending | $ / shares | $ 1.8 |
$2.10-$2.81 | |
Options outstanding, ending (in thousands) | shares | 1,436 |
Weighted average remaining contractual life (years) options outstanding | 2 years 10 months 24 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.43 |
Options exercisable shares, ending (in thousands) | shares | 1,166 |
Weighted average remaining contractual life (years) options exercisable | 2 years 3 months 22 days |
Weighted average exercise price for options exercisable, ending | $ / shares | $ 2.43 |
$3.46-$3.93 | |
Options outstanding, ending (in thousands) | shares | 228 |
Weighted average remaining contractual life (years) options outstanding | 4 years 44 months 28 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 3.85 |
Options exercisable shares, ending (in thousands) | shares | 162 |
Weighted average remaining contractual life (years) options exercisable | 4 years 5 months 8 days |
Weighted average exercise price for options exercisable, ending | $ / shares | $ 3.81 |
$1.09-$3.93 | |
Options outstanding, ending (in thousands) | shares | 3,024 |
Weighted average remaining contractual life (years) options outstanding | 3 years 9 months 18 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.21 |
Options exercisable shares, ending (in thousands) | shares | 2,025 |
Weighted average remaining contractual life (years) options exercisable | 2 years 9 months 22 days |
Weighted average exercise price for options exercisable, ending | $ / shares | $ 2.28 |
Aggregate intrinsic value for options exercisable | $ | $ 301 |
13. STOCK-BASED COMPENSATION _6
13. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Stock-based compensation costs capitalized as part of inventory | $ 0 | $ 0 | $ 0 | $ 0 |
Intrinsic value of options exercised | 92 | 160 | $ 159 | 322 |
Weighted average remaining contractual life of the options exercisable and expected to be exercisable | 3 years 9 months 11 days | |||
Stock Option and RSU Transactions | ||||
Stock-based compensation expense related to stock options and RSUs | $ 166 | $ 166 | $ 480 | $ 505 |
Restricted Stock Units granted (in thousands) | 0 | 0 | 0 | 0 |
Restricted Stock Units vested (in thousands) | 3 | 4 | 10 | 13 |
Restricted Stock Units unvested (in thousands) | 13 | 34 | 13 | 34 |
Restricted Stock Units unvested intrinsic value | $ 27 | $ 50 | $ 27 | $ 50 |
2016 Equity Incentive Plan | ||||
Unrecognized stock-based compensation | 1,244 | 1,244 | ||
Estimated forfeitures of unvested stock based awards, amount | 3 | $ 3 | ||
Weighted average period for recognition of costs | 2 years 8 months 12 days | |||
Employee Stock Purchase Plan | ||||
Weighted average period for recognition of costs | 9 months 18 days | |||
Stock-based compensation related to the ESPP | 41 | $ 59 | $ 131 | $ 200 |
Compensation cost related to purchase rights under the ESPP but not yet recognized | $ 77 | $ 77 | ||
ESPP purchase right granted (in thousands) | 0 | 0 | 38 | 327 |
ESPP shares issued (in thousands) | 71 | 64 | ||
ESPP shares available for issuance (in thousands) | 299 | 299 |
14. SEGMENT INFORMATION (Detail
14. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | Feb. 29, 2020 | May 31, 2019 | |
Property and equipment, net | $ 783 | $ 1,045 | [1] |
US | |||
Property and equipment, net | 744 | 1,005 | |
Asia | |||
Property and equipment, net | 39 | 40 | |
Europe | |||
Property and equipment, net | $ 0 | $ 0 | |
[1] | The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date. |
14. SEGMENT INFORMATION (Deta_2
14. SEGMENT INFORMATION (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | May 31, 2019 | [1] | |
Operating lease right-of-use assets | $ 2,260 | $ 2,260 | $ 0 | |||
Five Largest Customers | ||||||
Customers accounted for 10% or more of total revenues | 94.00% | 90.00% | 89.00% | 81.00% | ||
Customer A | ||||||
Customers accounted for 10% or more of total revenues | 71.00% | 27.00% | 51.00% | 31.00% | ||
Customer B | ||||||
Customers accounted for 10% or more of total revenues | 25.00% | 18.00% | 18.00% | |||
Customer C | ||||||
Customers accounted for 10% or more of total revenues | 22.00% | 16.00% | ||||
Customer D | ||||||
Customers accounted for 10% or more of total revenues | 13.00% | 12.00% | ||||
[1] | The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date. |
15. SUBSEQUENT EVENT (Details N
15. SUBSEQUENT EVENT (Details Narrative) $ in Thousands | 9 Months Ended |
Feb. 29, 2020USD ($) | |
Subsequent Events [Abstract] | |
Severance payable | $ 150 |
Quarterly cost saving from dissolution of ATS - Japan | $ 90 |