Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2020 | Jul. 31, 2020 | Nov. 29, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | AEHR TEST SYSTEMS | ||
Entity Central Index Key | 0001040470 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2020 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | CA | ||
Entity File Number | 000-22893 | ||
Entity Public Float | $ 38,433,844 | ||
Entity Common Stock, Shares Outstanding | 23,291,146 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 5,433 | $ 5,428 |
Accounts receivable, net | 3,717 | 4,859 |
Inventories | 7,989 | 9,061 |
Prepaid expenses and other | 512 | 686 |
Total current assets | 17,651 | 20,034 |
Property and equipment, net | 663 | 1,045 |
Operating lease right-of-use assets | 2,107 | 0 |
Other assets | 153 | 228 |
Total assets | 20,574 | 21,307 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable | 945 | 1,933 |
Accrued expenses | 1,439 | 2,034 |
Operating lease liabilities, short-term | 658 | 0 |
Customer deposits and deferred revenue, short-term | 170 | 1,545 |
Current portion of long-term debt | 653 | 0 |
Total current liabilities | 3,865 | 5,512 |
Operating lease liabilities, long-term | 1,605 | 0 |
Long-term debt, net of current portion | 1,026 | 0 |
Deferred rent | 0 | 153 |
Deferred revenue, long-term | 22 | 189 |
Total liabilities | 6,518 | 5,854 |
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: 23,107 shares and 22,669 shares at May 31, 2020 and 2019 respectively | 231 | 227 |
Additional paid-in capital | 85,898 | 84,499 |
Accumulated other comprehensive income | 2,234 | 2,230 |
Accumulated deficit | (74,286) | (71,484) |
Total Aehr Test Systems shareholders' equity | 14,077 | 15,472 |
Noncontrolling interest | (21) | (19) |
Total shareholders' equity | 14,056 | 15,453 |
Total liabilities and shareholders' equity | $ 20,574 | $ 21,307 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2020 | May 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in thousands) | 10,000 | 10,000 |
Preferred stock, shares issued (in thousands) | 0 | 0 |
Preferred stock, shares outstanding (in thousands) | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in thousands) | 75,000 | 75,000 |
Common stock, shares issued (in thousands) | 23,107 | 22,669 |
Common stock, shares outstanding (in thousands) | 23,107 | 22,669 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Income Statement [Abstract] | |||
Net sales | $ 22,291 | $ 21,056 | $ 29,555 |
Cost of sales | 13,920 | 13,454 | 17,169 |
Gross profit | 8,371 | 7,602 | 12,386 |
Operating expenses: | |||
Selling, general and administrative | 7,530 | 7,724 | 7,290 |
Research and development | 3,386 | 4,153 | 4,181 |
Restructuring | 220 | 725 | 0 |
Total operating expenses | 11,136 | 12,602 | 11,471 |
(Loss) income from operations | (2,765) | (5,000) | 915 |
Interest income (expense), net | 10 | (252) | (399) |
Other (expense) income, net | (11) | 44 | (61) |
(Loss) income before income tax (expense) benefit | (2,766) | (5,208) | 455 |
Income tax (expense) benefit | (36) | (27) | 73 |
Net (loss) income | (2,802) | (5,235) | 528 |
Less: Net income attributable to the noncontrolling interest | 0 | 0 | 0 |
Net (loss) income attributable to Aehr Test Systems common shareholders | $ (2,802) | $ (5,235) | $ 528 |
Net (loss) income per share - basic and diluted | $ (0.12) | $ (0.23) | $ 0.02 |
Shares used in per share calculation - basic (in thousands) | 22,882 | 22,387 | 21,732 |
Shares used in per share calculation - diluted (in thousands) | 22,882 | 22,387 | 22,782 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net (loss) income | $ (2,802) | $ (5,235) | $ 528 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation income (loss) | 2 | (61) | 42 |
Total comprehensive (loss) income | (2,800) | (5,296) | 570 |
Less: Comprehensive (loss) income attributable to noncontrolling interest | (2) | 1 | (1) |
Comprehensive (loss) income, attributable to Aehr Test Systems | $ (2,798) | $ (5,297) | $ 571 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Deficit) - 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 (in thousands) at May. 31, 2017 | 21,340 | ||||||
Beginning balance, amount at May. 31, 2017 | $ 213 | $ 81,128 | $ 2,249 | $ (66,777) | $ 16,813 | $ (19) | $ 16,794 |
Issuance of common stock under employee plans, shares (in thousands) | 803 | ||||||
Issuance of common stock under employee plans, amount | $ 8 | 917 | 0 | 0 | 925 | 0 | 925 |
Stock-based compensation | 0 | 996 | 0 | 0 | 996 | 0 | 996 |
Net (loss) income | 0 | 0 | 0 | 528 | 528 | 0 | 528 |
Foreign currency translation adjustment | $ 0 | 0 | 43 | 0 | 43 | (1) | 42 |
Ending balance, shares (in thousands) at May. 31, 2018 | 22,143 | ||||||
Ending 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) | 526 | ||||||
Issuance of common stock under employee plans, amount | $ 6 | 553 | 0 | 0 | 559 | 0 | 559 |
Stock-based compensation | 0 | 905 | 0 | 0 | 905 | 0 | 905 |
Net (loss) income | 0 | 0 | 0 | (5,235) | (5,235) | 0 | (5,235) |
Foreign currency translation adjustment | $ 0 | 0 | (62) | 0 | (62) | 1 | (61) |
Ending balance, shares (in thousands) at May. 31, 2019 | 22,669 | ||||||
Ending balance, amount at May. 31, 2019 | $ 227 | 84,499 | 2,230 | (71,484) | 15,472 | (19) | 15,453 |
Issuance of common stock under employee plans, shares (in thousands) | 444 | ||||||
Issuance of common stock under employee plans, amount | $ 4 | 499 | 0 | 0 | 503 | 0 | $ 503 |
Shares repurchased for tax withholdings on vesting of RSUs, shares (in thousands) | (6) | 6 | |||||
Shares repurchased for tax withholdings on vesting of RSUs | $ 0 | (10) | 0 | 0 | (10) | 0 | $ (10) |
Stock-based compensation | 0 | 910 | 0 | 0 | 910 | 0 | 910 |
Net (loss) income | 0 | 0 | 0 | (2,802) | (2,802) | 0 | (2,802) |
Foreign currency translation adjustment | $ 0 | 0 | 4 | 0 | 4 | (2) | 2 |
Ending balance, shares (in thousands) at May. 31, 2020 | 23,107 | ||||||
Ending balance, amount at May. 31, 2020 | $ 231 | $ 85,898 | $ 2,234 | $ (74,286) | $ 14,077 | $ (21) | $ 14,056 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (2,802) | $ (5,235) | $ 528 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
Stock-based compensation expense | 910 | 905 | 996 |
Recovery of doubtful accounts | 0 | (3) | (58) |
Depreciation and amortization | 384 | 431 | 417 |
Loss on disposal of assets | 45 | 0 | 0 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,161 | (2,043) | 1,260 |
Inventories | 1,164 | (112) | (2,073) |
Prepaid expenses and other | 271 | 84 | 59 |
Accounts payable | (1,024) | 210 | (1,095) |
Accrued expenses | (589) | 402 | 62 |
Customer deposits and deferred revenue | (1,542) | (355) | (1,482) |
Deferred rent | 0 | 90 | 63 |
Income taxes payable | (2) | (11) | (28) |
Net cash used in operating activities | (2,024) | (5,637) | (1,351) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (163) | (173) | (572) |
Net cash used in investing activities | (163) | (173) | (572) |
Cash flows from financing activities: | |||
Repayment of convertible notes | 0 | (6,110) | 0 |
Proceeds from long-term debt | 1,679 | 0 | 0 |
Proceeds from issuance of common stock under employee plans | 503 | 559 | 925 |
Shares repurchased for tax withholdings on vesting of restricted stock units | (10) | 0 | 0 |
Net cash provided by (used in) financing activities | 2,172 | (5,551) | 925 |
Effect of exchange rates on cash, cash equivalents and restricted cash | 20 | (59) | 43 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 5 | (11,420) | (955) |
Cash, cash equivalents and restricted cash, beginning of year | 5,508 | 16,928 | 17,883 |
Cash, cash equivalents and restricted cash, end of year | 5,513 | 5,508 | 16,928 |
Supplemental cash flow information: | |||
Cash paid during the year for Income taxes | 42 | 37 | 37 |
Cash paid during the year for Interest | 0 | 610 | 550 |
Supplemental disclosure of non-cash flow information: | |||
Net transfer of equipment between inventory and property and equipment | $ 112 | $ 119 | $ 0 |
1. ORGANIZATION AND SUMMARY OF
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BUSINESS: Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full wafer contact parallel test and burn-in systems, the MAX burn-in system, the 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 response, the Company took steps to minimize expense levels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood that it will have sufficient cash to support operations. At May 31, 2020, the Company had $5.4 million in cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections of existing accounts receivable, revenue from its existing backlog of products, the sale of inventory on hand, deposits and down payments against significant orders will be adequate to meet its working capital and capital equipment requirements. The Company believes its existing cash and cash equivalents will be sufficient to meet its anticipated cash needs over the next 12 months. The Company’s future capital requirements will depend on many factors, including the Company’s growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the timing and cost to introduce new and enhanced products and the timing and cost to implement new manufacturing technologies. In the event that additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to the Company or at all. Any additional debt financing obtained by the Company in the future could also involve restrictive covenants relating to the Company’s capital-raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if the Company raises additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, its existing stockholders could suffer significant dilution in their percentage ownership of the Company, and any new equity securities the Company issue could have rights, preferences and privileges senior to those of holders of the Company’s common stock. If the Company is unable to obtain adequate financing or financing on terms satisfactory to the Company when the Company requires it, the Company’s ability to continue to grow or support its business and to respond to business challenges could be significantly limited. CONSOLIDATION: 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. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity. Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 13, Other (Expense) Income, Net for the detail of foreign exchange transaction gains and losses for all periods presented. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or net realizable value, and warranty reserves. CASH EQUIVALENTS: Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value. 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 fiscal year ended May 31, 2020, 2019 or 2018. CONCENTRATION OF CREDIT RISK: The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2020, approximately 13%, 62% and 25% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2019, approximately 49%, 25% and 26% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. Two customers accounted for 45% and 18% of gross accounts receivable as of May 31, 2020. Three customers accounted for 44%, 25% and 21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 43%, 16% and 15% of net sales in fiscal 2020. Four customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal 2019. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers. The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits. CONCENTRATION OF SUPPLY RISK: The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products. INVENTORIES: Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or net realizable 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 sales 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: In May 2014, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Code (“ASC”) Topic 606, Revenue from Contracts with Customers Revenue Recognition The adoption of ASC 606 did not have a material impact on our consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit as of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption of the revenue standard to have a material impact to our net income on an ongoing basis. We sell our products primarily through a direct sales force. In certain international markets, we sell our products through independent distributors. We consider revenue to be earned when all of the following criteria are met: ● We have a contract with a customer that creates enforceable rights and obligations, ● Promised performance obligations are identified, ● The transaction price, or the amount we expect to receive, is determinable and ● We have satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless we are required to provide additional services. PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2020, 2019 and 2018. IMPAIRMENT OF LONG-LIVED ASSETS: In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required. ADVERTISING COSTS: The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented. SHIPPING AND HANDLING OF PRODUCTS: Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales. INCOME TAXES: Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized. A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2020 and 2019. The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes. Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2019 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed into law. The CARES Act includes several significant business tax provisions including modification to the taxable income limitation for utilization of net operating losses (NOLs) incurred in 2018, 2019 and 2020 and the ability to carry back NOLs from those years for a period of up to five years, an increase to the limitation on deductibility of certain business interest expense, bonus depreciation for purchases of qualified improvement property and special deductions on certain corporate charitable contributions. The Company is currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available. On June 29, 2020, California Governor Gavin Newsom signed Assembly Bill 85 (AB 85) into law as part of the California 2020 Budget Act, which temporarily suspends the use of California net operating losses and imposes a cap on the amount of business incentive tax credits that companies can utilize against their net income for tax years 2020, 2021, and 2022. The Company analyzed the provisions of AB 85 and determined there was no impact on its provision for income taxes for the current period and will continue to evaluate the impact, if any, AB 85 may have on its condensed consolidated financial statements and disclosures. COMPREHENSIVE (LOSS) INCOME: Comprehensive (loss) income generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive (loss) income, which are excluded from net (loss) income. Comprehensive (loss) income is included in the statements of comprehensive (loss) income. 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 consolidated balance sheet. Operating lease right-of-use assets are presented as long-term assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease liabilities, long-term on the Company’s consolidated balance sheet. There was no material impact to the Company’s consolidated statements of operations or consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note “8. LEASES” for information regarding the Company’s lease portfolio as of May 31, 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. |
2. REVENUE
2. REVENUE | 12 Months Ended |
May 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
2. REVENUE | 2. 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): Year Ended May 31, 2020 2019 2018 Type of good / service: Systems $ 8,099 $ 9,566 $ 18,174 Contactors 10,784 6,154 6,500 Services 3,408 5,336 4,881 $ 22,291 $ 21,056 $ 29,555 Product lines: Wafer-level $ 19,768 $ 14,618 $ 13,080 Test During Burn-In 2,523 6,438 16,475 $ 22,291 $ 21,056 $ 29,555 The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands): Year Ended May 31, 2020 2019 2018 Geographic region: United States $ 13,544 $ 13,468 $ 8,446 Asia 7,556 5,648 19,973 Europe 1,191 1,940 1,136 $ 22,291 $ 21,056 $ 29,555 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands): Year Ended May 31, 2020 2019 2018 Timing of revenue recognition (in thousands): Products and services transferred at a point in time $ 19,948 $ 18,473 $ 27,337 Services transferred over time 2,343 2,583 2,218 $ 22,291 $ 21,056 $ 29,555 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 May 31, 2020 and 2019 were $192,000 and $1,734,000, respectively. During the fiscal years ended May 31, 2020 and 2019, the Company recognized $1,545,000 and $1,273,000 of revenues that were included in contract liabilities as of May 31, 2019 and 2018, respectively. Remaining performance obligations On May 31, 2020, the Company had $192,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 88% of its remaining performance obligations as revenue in fiscal 2021, and an additional 12% in fiscal 2022 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. |
3. EARNINGS PER SHARE (''EPS'')
3. EARNINGS PER SHARE (''EPS'') | 12 Months Ended |
May 31, 2020 | |
Earnings Per Share [Abstract] | |
3. EARNINGS PER SHARE (''EPS'') | 3. 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, RSUs and ESPP 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, 2020 2019 2018 Numerator: Net (loss) income $ (2,802) $ (5,235) $ 528 Denominator for basic net (loss) income per share: Weighted-average shares outstanding 22,882 22,387 21,732 Shares used in basic net (loss) income per share calculation 22,882 22,387 21,732 Effect of dilutive securities. -- -- 1,050 Denominator for diluted net (loss) income per share 22,882 22,387 22,782 Basic net (loss) income per share $ (0.12) $ (0.23) $ 0.02 Diluted net (loss) income per share $ (0.12) $ (0.23) $ 0.02 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 period, as the effect would be anti-dilutive. In the fiscal years ended May 31, 2020 and 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 3,153,000 and 3,107,000 shares of common stock were outstanding on May 31, 2020 and 2019, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. Stock options to purchase 1,313,000 shares of common stock were outstanding as of May 31, 2018 but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 192,000 and 297,000 ESPP shares were outstanding on May 31, 2020 and 2019, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. RSUs for 10,000 shares and 23,000 shares were outstanding on May 31, 2020 and 2019, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. The 2,657,000 shares convertible under the Convertible Notes outstanding on May 31, 2018 were not included in the computation of diluted net income (loss) per share, because the inclusion of such shares would be anti-dilutive. |
4. FAIR VALUE OF FINANCIAL INST
4. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
May 31, 2020 | |
Fair Value Disclosures [Abstract] | |
4. FAIR VALUE OF FINANCIAL INSTRUMENTS | 4. 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 May 31, 2020 (in thousands): Balance as of May 31, 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 May 31, 2020 and 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 May 31, 2020 and 2019. There were no transfers between Level 1 and Level 2 fair value measurements during the fiscal years ended May 31, 2020 and 2019. 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. Based on the borrowing rates currently available to the Company for loans with similar terms, the carrying value of the debt approximates the fair value. |
5. ACCOUNTS RECEIVABLE
5. ACCOUNTS RECEIVABLE | 12 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
5. ACCOUNTS RECEIVABLE | 5. ACCOUNTS RECEIVABLE: Accounts receivable comprise (in thousands): May 31, 2020 2019 Accounts receivable $ 3,717 $ 4,859 Less: Allowance for doubtful accounts -- -- $ 3,717 $ 4,859 Additions Balance at charged to Balance beginning costs and at end of year expenses Deductions* of year Allowance for doubtful accounts receivable: May 31, 2020 $ 0 $ -- $ (0 ) $ -- May 31, 2019 $ 4 $ -- $ (4 ) $ -- * Deductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense. |
6. BALANCE SHEET DETAIL
6. BALANCE SHEET DETAIL | 12 Months Ended |
May 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
6. BALANCE SHEET DETAIL | 6. BALANCE SHEET DETAIL: May 31, (In Thousands) 2020 2019 Raw materials and sub-assemblies $ 5,055 $ 5,471 Work in process 2,917 3,580 Finished goods 17 10 $ 7,989 $ 9,061 PROPERTY AND EQUIPMENT, NET: May 31, (In Thousands) 2020 2019 Leasehold improvements $ 1,201 $ 1,154 Furniture and fixtures 612 983 Machinery and equipment 3,038 3,097 Test equipment 2,516 2,604 7,367 7,838 Less: Accumulated depreciation and amortization (6,704 ) (6,793 ) $ 663 $ 1,045 May 31, (In Thousands) 2020 2019 Payroll related $ 791 $ 990 Warranty 246 154 Professional services 173 162 Commissions and bonuses 139 168 Taxes payable 30 29 Investor relations 19 19 Restructuring 8 408 Material purchases -- 65 Other 33 39 $ 1,439 $ 2,034 CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM: May 31, (In Thousands) 2020 2019 Customer deposits $ -- $ 1,003 Deferred revenue 170 542 $ 170 $ 1,545 |
7. INCOME TAXES
7. INCOME TAXES | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
7. INCOME TAXES | 7. INCOME TAXES: Domestic and foreign components of (loss) income before income tax (expense) benefit are as follows (in thousands): Year Ended May 31, 2020 2019 2018 Domestic $ (2,751 ) $ (5,273 ) $ 433 Foreign (15 ) 65 22 $ (2,766 ) $ (5,208 ) $ 455 The income tax (expense) benefit consists of the following (in thousands): Year Ended May 31, 2020 2019 2018 Federal income taxes: Current $ -- $ -- $ 99 Deferred -- -- -- State income taxes: Current (30 ) (6 ) (22 ) Deferred -- -- -- Foreign income taxes: Current (6 ) (21 ) (4 ) Deferred -- -- -- $ (36 ) $ (27 ) $ 73 The Company’s effective tax rate differs from the U.S. federal statutory tax rate, as follows: Year Ended May 31, 2020 2019 2018 U.S. federal statutory tax rate 21.0 % 21.0 % 28.6 % State taxes, net of federal tax effect 1.4 (1.0 ) (16.7 ) Foreign rate differential. (21.5 ) (0.7 ) 39.4 Stock-based compensation (4.0 ) (2.8 ) 39.9 Research and development credit -- 1.5 5.9 Change in valuation allowance 4.3 (15.6 ) (1,349.2 ) Federal rate change impact -- -- 1,419.7 Federal AMT refund -- -- (20.0 ) ASU 2016-09 adoption -- -- (169.1 ) Other (2.5 ) (2.9 ) 5.4 Effective tax rate (1.3 )% (0.5 )% (16.1 )% The components of the net deferred tax assets and liabilities are as follows (in thousands): Year Ended May 31, 2020 2019 Deferred tax assets: Net operating losses $ 13,634 $ 13,475 Lease Liability 483 -- Credit carryforwards 5,089 4,995 Inventory reserves 1,005 790 Reserves and accruals 739 1,379 Other 319 298 21,269 20,937 Deferred tax liabilities: Operating lease right-of-use assets (449 ) -- Less: Valuation allowance (20,820 ) (20,937 ) Net deferred tax assets (liabilities) $ -- $ -- The valuation allowance decreased by $118,000 during fiscal 2020, increased by $813,000 during fiscal 2019, and decreased by $6,139,000 during fiscal 2018. As of May 31, 2020 and 2019, 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, 2020, the Company had federal and state net operating loss carryforwards of $54,601,000 and $29,386,000, respectively. The federal and state net operating loss carryforwards will begin to expire in 2024. Federal net operating losses of $3.7 million will carryforward indefinitely. At May 31, 2020, the Company also had federal and state research and development tax credit carryforwards of $2,026,000 and $5,825,000, respectively. The federal credit carryforward will begin to expire in 2022, 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 $34,000 for state purposes. The credits may be used to offset regular tax and do not expire. The Company has made no provision for U.S. income taxes on undistributed earnings of certain foreign subsidiaries because it is the Company’s intention to permanently reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional U.S. income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. Foreign net operating loss carryforwards of $378,000 are available to reduce future foreign taxable income. The foreign net operating losses will expire starting fiscal year 2021. 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, 2017 $ 789 Increases related to prior year tax positions 889 Increases related to current year tax positions 107 Balance at May 31, 2018 $ 1,785 Decreases related to prior year tax positions (41 ) Increases related to current year tax positions 65 Balance at May 31, 2019 $ 1,809 Decreases related to prior year tax positions (11 ) Increases related to current year tax positions 54 Balance at May 31, 2020 $ 1,852 The ending balance of $1,852,000 of unrecognized tax benefits as of May 31, 2020, if recognized, would not impact the effective tax rate. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. As part of the transition to the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. The company is not subject to the transition tax. The one-time transition tax is based on post-1986 earnings and profits that were previously deferred from U.S. income tax. During fiscal 2020 the Company finalized its calculation of the transition tax and due to carryover losses and the valuation allowance the Company determined there was no impact to the financial statements as a result of the completion of the analysis. The Company also finalized its adjustment to the deferred tax assets and offset to the valuation allowance for the reduction in the U.S. corporate tax rate to 21% with no financial statement impact. The tax reform repealed the corporate alternative minimum tax, or AMT, effective December 31, 2017. The minimum tax credit is refundable for any tax year beginning after December 31, 2017 and before December 31, 2020 in an amount equal to 50% of the excess of the minimum tax credit over the allowable credit for the year against the regular tax liability. Any unused minimum tax credit carryforward is refundable in the following year. The company recorded a $91,000 benefit for its federal refundable AMT credit in Q3 fiscal 2018. 50% of the refundable credit was claimed through the fiscal year 2019 federal income tax return and received by the end of fiscal year 2020. The remaining 50% of the refundable credit will be claimed through the fiscal year 2020 federal income tax return. On December 18, 2019, the FASB issued Accounting Standards Update ASU 2019-12 on Simplifying the Accounting for Income Taxes. The board decided to remove the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example discontinued operations or other comprehensive income). There are also provisions related to state taxes and calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The Company has not yet adopted ASU 2019-12 and believes upon adoption there would be no material impact. On March 27, 2020, the CARES Act was signed into law. The CARES 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. Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2019 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years. |
8. LEASES
8. LEASES | 12 Months Ended |
May 31, 2020 | |
Leases [Abstract] | |
8. LEASES | 8. LEASES The Company leases most of its manufacturing and office space under operating leases. The Company entered into non-cancelable operating lease agreements for its United States manufacturing and office facilities and maintains equipment under non-cancelable operating leases in Germany. The Company’s principal administrative and production facilities are located in Fremont, California, in a 51,289 square foot building. The Company’s lease was renewed in February 2018 and expires in July 2023. The Company maintained a facility in Japan located in a 418 square foot office in Tokyo under a lease which expired in June 2020. The Company also maintained a 1,585 square foot warehouse in Yamanashi under a lease which expired in June 2020. The Company substantially closed its subsidiary Aehr Test Systems Japan K.K. in March 2020, completing the liquidation of the legal entity in July 2020, see Note 16, “Restructuring,” of the Notes to Consolidated Financial Statements. The Company leases a 492 square foot sales and support office in Utting, Germany. The lease, which began February 1, 1992 and expires on January 31, 2022, 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. 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 4 months 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 3.2 years at May 31, 2020 and the weighted-average discount rate was 5.5%. The Company’s operating lease cost under FASB ASC Topic 842 was $734,000 for the year ended May 31, 2020. Rent expense under FASB ASC Topic 840 was $787,000 for the year ended May 31, 2019. The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Year Ended May 31, 2020 Cash paid for amounts included in the measurement of operating lease liabilities Operating cash flows from operating leases $ 737 The following table presents the maturities of the Company’s operating lease liabilities as of May 31, 2020 (in thousands): Fiscal year Operating Leases 2021 $ 765 2022 779 2023 795 2024 134 2025 -- Thereafter -- Total future minimum operating lease payments $ 2,473 Less: imputed interest 210 Present value of operating lease liabilities $ 2,263 |
9. BORROWING AND FINANCING ARRA
9. BORROWING AND FINANCING ARRANGEMENTS | 12 Months Ended |
May 31, 2020 | |
Debt Disclosure [Abstract] | |
9. BORROWING AND FINANCING ARRANGEMENTS | 9. BORROWING AND FINANCING ARRANGEMENTS: On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). 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 which is collateralized by all the Company’s assets except intellectual property. The borrowing base is 80% of eligible accounts, as determined by SVB from the Company’s most recent borrowing base statement; provided, however, SVB 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 May 31, 2020, the Company had not drawn against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under the line at May 31, 2020 was $263,000. There are no financial covenants in the agreement. |
10. LONG-TERM DEBT
10. LONG-TERM DEBT | 12 Months Ended |
May 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
10. LONG-TERM DEBT | 10. LONG-TERM DEBT: On April 23, 2020, the Company obtained the PPP Loan in the aggregate amount of $1,678,789 from SVB. The PPP Loan was evidenced by a promissory note dated April 23, 2020 (the “Note”) that matures on April 23, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 23, 2020. The PPP Loan proceeds were used for payroll, health care benefits, rent and utilities. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company. The Company intends to apply for forgiveness of the PPP Loan with respect to these covered expenses. No assurance can be given that the Company will obtain forgiveness of the amount due under the loan in whole or in part. |
11. STOCKHOLDERS' EQUITY, COMPR
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION | 12 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION | 11. STOCKHOLDERS’ EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION: STOCK-BASED COMPENSATION: Stock-based compensation expense consists of expenses for stock options, restricted stock units, or RSUs, and employee stock purchase plan, or 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 expense 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 equity instruments. The following table summarizes the stock-based compensation expense for the fiscal years ended May 31, 2020, 2019 and 2018 (in thousands, except per share data): Year Ended May 31, 2020 2019 2018 Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, included in: Cost of sales $ 80 $ 104 $ 148 Selling, general and administrative 631 545 592 Research and development 199 256 256 Net effect on net (loss) income $ 910 $ 905 $ 996 Effect on net (loss) income per share: Basic $ 0.04 $ 0.04 $ 0.05 Diluted $ 0.04 $ 0.04 $ 0.04 As of May 31, 2020, 2019 and 2018, there were no stock-based compensation expenses capitalized as part of inventory. During fiscal 2020, 2019 and fiscal 2018, the Company recorded stock-based compensation related to stock options and restricted stock units of $751,000, $650,000 and $706,000, respectively. As of May 31, 2020, the total compensation expense related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plan, but not yet recognized, was $1,131,000 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 2.6 years. During fiscal 2020, 2019 and fiscal 2018, the Company recorded stock-based compensation related to its ESPP of $159,000, $255,000 and $290,000, respectively. The increase in fiscal 2018 is primarily due to employees increasing their ESPP elections during the fiscal year. As of May 31, 2020, the total compensation expense related to purchase rights under the ESPP but not yet recognized was $59,000. 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 method and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards. Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation expense recorded. 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. Fair Value. The fair values of the Company’s stock options granted to employees in fiscal 2020, 2019 and 2018 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: Year Ended May 31, 2020 2019 2018 Expected term (in years) 5 5 4 Volatility 0.72 0.72 0.77 Risk-free interest rates 1.56 % 2.83 % 1.95 % Weighted-average grant date fair value $ 0.95 $ 1.33 $ 2.07 The fair value of our ESPP purchase rights for the fiscal 2020, 2019 and 2018 was estimated using the following weighted-average assumptions: Year End May 31, 2020 2019 2018 Expected term (in years) 0.5 – 2.0 0.5 – 2.0 0.5 – 2.0 Volatility 0.62 – 0.77 0.48 – 0.78 0.56 – 0.81 Risk-free interest rates 0.14%–1.81% 2.33%–2.82% 1.92%–2.25% Weighted-average grant date fair value $ 0.79 $ 1.14 $ 1.01 EQUITY INCENTIVE PLAN: In October 2006, the Company’s 2006 Equity Incentive Plan was approved by the shareholders, which provides for granting of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and other stock or cash awards as the Company’s Board of Directors may determine. In October 2016, the Company’s 2016 Equity Incentive Plan was approved by the Company’s shareholders. The 2016 Equity Incentive Plan replaced our 2006 Equity Incentive Plan, which was scheduled to expire in October 2016, and will continue in effect until 2026. A total of 3,435,000 shares of common stock have been reserved for issuance under the Company’s 2016 Equity Incentive Plan, which includes 1,835,000 shares that remained available for issuance under the 2006 Equity Incentive Plan. See the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 22, 2019 for further information regarding the 2016 Equity Incentive Plan. As of May 31, 2020, out of the 4,813,000 shares authorized for grant under the 2016 Equity Incentive Plan, 3,163,000 stock options and RSUs were outstanding. As of May 31, 2019, out of the 4,277,000 shares authorized for grant under the 2016 Equity Incentive Plan, 3,129,000 stock options and RSUs were outstanding. The following tables summarize the Company’s stock option and RSU transactions during fiscal 2020, 2019 and 2018 (in thousands): Available Shares Balance, May 31, 2017 2,169 Options granted (338 ) RSUs granted (64 ) RSUs cancelled 33 Options terminated 16 Options expired (4 ) Balance, May 31, 2018 1,812 Options granted (804 ) RSUs cancelled 8 Options terminated 195 Options expired (64 ) Balance, May 31, 2019 1,147 Additional shares reserved 1,196 Options granted (738 ) RSUs granted (25 ) Shares withheld for taxes and not issued 6 Options terminated 457 Options expired (393 ) Balance, May 31, 2020 1,650 The following table summarized the stock option transactions during fiscal 2020, 2019 and 2018 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2017 3,074 $ 1.73 $ 8,763 Options granted 338 $ 3.56 Options terminated (16 ) $ 2.72 Options exercised (537 ) $ 1.17 Balances, May 31, 2018 2,859 $ 2.04 $ 1,987 Options granted 804 $ 2.19 Options terminated (195 ) $ 2.32 Options exercised (361 ) $ 0.85 Balances, May 31, 2019 3,107 $ 2.20 $ 283 Options granted 738 $ 1.61 Options terminated (457 ) $ 1.98 Options exercised (235 ) $ 1.22 Balances, May 31, 2020 3,153 $ 2.17 $ 102 Options fully vested and expected to vest at May 31, 2020 3,115 $ 2.17 $ 101 The options outstanding and exercisable at May 31, 2020 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at May 31, 2020 at May 31, 2020 Range of Exercise Number Outstanding Shares Weighted Average Weighted Average Exercise Number Exercisable Shares Weighted Average Weighted Average Exercise Aggregate Intrinsic Value $ 1.22-$1.28 248 2.10 $ 1.26 176 0.19 $ 1.28 $ 1.64-$1.77 945 5.35 $ 1.66 487 4.66 $ 1.68 $ 2.03-$2.46 1,223 3.70 $ 2.21 858 3.03 $ 2.19 $ 2.63-$2.81 511 1.29 $ 2.70 510 1.28 $ 2.70 $ 3.46-$3.93 226 4.16 $ 3.84 172 4.18 $ 3.82 $ 1.22-$3.93 3,153 3.71 $ 2.17 2,203 2.85 $ 2.25 $ 67 The total intrinsic values of options exercised were $160,000, $338,000 and $1,058,000 during fiscal 2020, 2019 and 2018, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2020 was 3.69 years. Options to purchase 2,203,000, 2,314,000 and 2,312,000 shares were exercisable at May 31, 2020, 2019 and 2018, respectively. These exercisable options had weighted average exercise prices of $2.25, $2.14 and $1.89 as of May 31, 2020, 2019 and 2018, respectively. During the fiscal year ended May 31, 2020, RSUs for 10,000 shares, net of 6,000 shares withheld to settle payroll taxes, were granted and fully vested to employees. The market value on the date of the grant of these RSUs was $1.64 per share. During the fiscal year ended May 31, 2020, 13,000 RSUs became fully vested and there was no cancellation. 10,000 RSUs were outstanding and unvested at May 31, 2020. The intrinsic value of the outstanding and unvested RSUs at May 31, 2020 was $16,000. During the fiscal year ended May 31, 2019, there were no RSUs granted to employees. During the fiscal year ended May 31, 2019, 16,000 RSUs became fully vested and 8,000 RSUs were cancelled. 23,000 RSUs were outstanding and unvested at May 31, 2019. The intrinsic value of the outstanding and unvested RSUs at May 31, 2019 was $40,000. During the fiscal year ended May 31, 2018, RSUs for 64,000 shares were granted to employees. The market value on the date of the grant of these RSUs was $3.93 per share. During the fiscal year ended May 31, 2018, 16,000 RSUs became fully vested and 33,000 RSUs were cancelled. 47,000 RSUs were outstanding and unvested at May 31, 2018. The intrinsic value of the outstanding and unvested RSUs at May 31, 2018 was $122,000. During the fiscal year ended May 31, 2020, RSUs for 9,000 shares were granted and fully vested to members of the Company’s Board of Directors. The weighted average market value on the date of the grant of these RSUs was $1.64 per share. There were no RSUs granted to members of the Board of Directors during fiscal 2019 and 2018. EMPLOYEE STOCK PURCHASE PLAN: In October 2006, the Company’s shareholders approved the 2006 Employee Stock Purchase Plan. In October 2016, the Company’s shareholders approved the Company’s Amended and Restated 2006 Employee Stock Purchase Plan (the “Purchase Plan”), which amended and restated the 2006 Employee Stock Purchase Plan. The Purchase Plan extended the term of the 2006 Employee Stock Purchase Plan indefinitely. See the Company’s Registration Statements on Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 and November 21, 2018 for further information regarding the Purchase Plan. The 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. 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 Purchase Plan, shares are purchased through employee payroll deductions at exercise prices equal to 85% of the lesser of the fair market value of the Company’s common stock at either the first day of an offering period or the last day of the purchase period. If a participant’s rights to purchase stock under all employee stock purchase plans of the Company accrue at a rate which exceeds $25,000 worth of stock for a calendar year, such participant may not be granted an option to purchase stock under the Purchase Plan. The maximum number of shares a participant may purchase during a single purchase period is 3,000 shares. In October 2018, the Company’s shareholders approved an amendment to the Purchase Plan to increase the number of shares authorized for issuance thereunder by an additional 350,000 shares of the Company’s common stock. After such amendment, a total of 1,850,000 shares of the Company’s common stock have been authorized for issuance under the Purchase Plan. During the fiscal years ended May 31, 2020, 2019 and 2018, ESPP purchase rights of 55,000, 379,000, and 359,000 shares, respectively, were granted. For the fiscal years ended May 31, 2020, 2019 and 2018, approximately 136,000, 125,000 and 237,000 shares of common stock, respectively, were issued under the Purchase Plan. As of May 31, 2020, a total of 1,617,000 shares have been issued under the Purchase Plan, and 233,000 ESPP shares remain available for issuance. |
12. EMPLOYEE BENEFIT PLANS
12. EMPLOYEE BENEFIT PLANS | 12 Months Ended |
May 31, 2020 | |
Retirement Benefits [Abstract] | |
12. EMPLOYEE BENEFIT PLANS | 12. EMPLOYEE BENEFIT PLANS: EMPLOYEE STOCK OWNERSHIP PLAN: The Company has a non-contributory, trusteed employee stock ownership plan for full-time employees who have completed three consecutive months of service and for part-time employees who have completed one year of service and have attained an age of 21. The Company can contribute either shares of the Company’s stock or cash to the plan. The contribution is determined annually by the Company and cannot exceed 15% of the annual aggregate salaries of those employees eligible for participation in the plan. On May 31, 2007, the Company converted the Aehr Test Systems Employee Stock Bonus Plan into the Aehr Test Systems Employee Stock Ownership Plan (the “Plan”). The stock bonus plan was converted to an employee stock ownership plan (“ESOP”) to enable the Plan to better comply with changes in the law regarding Company stock. Individuals’ account balances vest at a rate of 20% per year commencing upon completion of two years of service. Non-vested balances, which are forfeited following termination of employment, are allocated to the remaining employees in the Plan. Under the Plan provisions, each employee who reaches age fifty-five (55) and has been a participant in the Plan for ten years will be offered an election each year to direct the transfer of up to 25% of his/her ESOP account to the employee self-directed account in the Savings and Retirement Plan. For anyone who met the above prerequisites, the first election to diversify holdings was offered after May 31, 2008. In the sixth year, employees will be able to diversify up to 50% of their ESOP accounts. Contributions of $60,000 per year were authorized for the plan during fiscal 2020, 2019 and 2018. The contribution amounts are recorded as compensation expense, in the period authorized and included in accrued expenses, in the period authorized. Contributions of 34,000 shares were made to the ESOP during fiscal 2020 for fiscal 2019. Contributions of 23,000 shares were made to the ESOP during fiscal 2019 for fiscal 2018. Contributions of 13,000 shares were made to the ESOP during fiscal 2018 for fiscal 2017. The contribution for fiscal 2020 will be made in fiscal 2021. 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 2020, 2019 and 2018. |
13. OTHER (EXPENSE) INCOME, NET
13. OTHER (EXPENSE) INCOME, NET | 12 Months Ended |
May 31, 2020 | |
Other Income and Expenses [Abstract] | |
13. OTHER (EXPENSE) INCOME, NET | 13. OTHER (EXPENSE) INCOME, NET: Other (expense) income, net comprises the following (in thousands): Year Ended May 31, 2020 2019 2018 Foreign exchange (loss) gain $ (12 ) $ 43 $ (63 ) Other income, net 1 1 2 $ (11 ) $ 44 $ (61 ) |
14. PRODUCT WARRANTIES
14. PRODUCT WARRANTIES | 12 Months Ended |
May 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
14. PRODUCT WARRANTIES | 14. 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. Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2020 and 2019 (in thousands): May 31, 2020 2019 Balance at the beginning of the year $ 154 $ 135 Accruals for warranties issued during the year 299 214 Consumption of reserves (207 ) (195 ) Balance at the end of the year $ 246 $ 154 The accrued warranty balance is included in accrued expenses on the consolidated balance sheets. |
15. SEGMENT INFORMATION
15. SEGMENT INFORMATION | 12 Months Ended |
May 31, 2020 | |
Segment Reporting [Abstract] | |
15. SEGMENT INFORMATION | 15. 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 “2. 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): May 31, 2020 2019 United States $ 662 $ 1,005 Asia 1 40 Europe -- -- $ 663 $ 1,045 There were no revenues through distributors for the fiscal years ended May 31, 2020 and 2019. The Company’s 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. RESTRUCTURING
16. RESTRUCTURING | 12 Months Ended |
May 31, 2020 | |
Restructuring Charges [Abstract] | |
16. RESTRUCTURING | 16. RESTRUCTURING: During the fiscal year ended May 31, 2019, the Company implemented a restructuring plan in order to streamline its operations and better align its structure with its objectives going forward. In connection with the restructuring plan, the Company recognized $725,000 of restructuring charges related to employee termination expenses during the fiscal year ended May 31, 2019. The Company paid $317,000 of the restructuring charge during fiscal year ended May 31, 2019. At May 31, 2019, the balance of $408,000 of the restructuring charge was included in accrued expenses on the accompanying condensed consolidated balance sheets and is expected to be paid in fiscal year 2020. The Company does not expect to incur any further expenses in connection with this restructuring plan. There were no restructuring charges incurred for the fiscal years ended May 31, 2018. |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS | 12 Months Ended |
May 31, 2020 | |
Related Party Transactions [Abstract] | |
17. RELATED PARTY TRANSACTIONS | 17. RELATED PARTY TRANSACTIONS: Mario M. Rosati, one of the Company’s directors, was also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which has served as the Company’s outside corporate counsel and has received compensation at normal commercial rates for these services. Mario M. Rosati retired from Wilson Sonsini Goodrich & Rosati on January 31, 2020. The amounts of transactions during fiscal years ended May 31, 2020, 2019 and 2018 were $78,000, $90,000, and $64,000, respectively. At May 31, 2020 the Company had a prepayment to Wilson Sonsini Goodrich & Rosati of $14,000 and at May 31, 2019 had a payable to Wilson Sonsini Goodrich & Rosati of $13,000. |
18. COMMITMENTS AND CONTINGENCI
18. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
18. COMMITMENTS AND CONTINGENCIES | 18. COMMITMENTS AND CONTINGENCIES: COMMITMENTS At both May 31, 2020 and 2019, the Company had restricted cash of $80,000 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, 2020, the Company had $2,196,000 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 may, from time to time, be involved in legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, with respect to certain matters, for example, including against losses arising from a breach of representations or covenants, or from intellectual property infringement or other claims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have not had a material impact on the Company’s operating results, financial position or cash flows. |
19. SELECTED QUARTERLY CONSOLID
19. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
May 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
19. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 19. 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, 2020 and 2019. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein. Three Months Ended Aug. 31, Nov. 30, Feb. 29, May 31, 2019 2019 2020 2020 Net sales $ 5,533 $ 6,874 $ 6,111 $ 3,773 Gross profit (loss) $ 2,271 $ 3,202 $ 2,991 $ (93 ) Net (loss) income $ (413 ) $ 251 $ 245 $ (2,885 ) Net (loss) income per share basic and diluted $ (0.02 ) $ 0.01 $ 0.01 $ (0.13 ) Three Months Ended Aug. 31, Nov. 30, Feb. 28, May 31, 2018 2018 2019 2019 Net sales $ 4,740 $ 5,911 $ 3,163 $ 7,242 Gross profit $ 1,553 $ 2,398 $ 272 $ 3,379 Net (loss) income $ (1,515 ) $ (629 ) $ (3,201 ) $ 110 Net (loss) income per share basic and diluted $ (0.07 ) $ (0.03 ) $ (0.14 ) $ 0.00 |
1. ORGANIZATION AND SUMMARY O_2
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 31, 2020 | |
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 Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full wafer contact parallel test and burn-in systems, the MAX burn-in system, the 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 response, the Company took steps to minimize expense levels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood that it will have sufficient cash to support operations. At May 31, 2020, the Company had $5.4 million in cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections of existing accounts receivable, revenue from its existing backlog of products, the sale of inventory on hand, deposits and down payments against significant orders will be adequate to meet its working capital and capital equipment requirements. The Company believes its existing cash and cash equivalents will be sufficient to meet its anticipated cash needs over the next 12 months. The Company’s future capital requirements will depend on many factors, including the Company’s growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the timing and cost to introduce new and enhanced products and the timing and cost to implement new manufacturing technologies. In the event that additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to the Company or at all. Any additional debt financing obtained by the Company in the future could also involve restrictive covenants relating to the Company’s capital-raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if the Company raises additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, its existing stockholders could suffer significant dilution in their percentage ownership of the Company, and any new equity securities the Company issue could have rights, preferences and privileges senior to those of holders of the Company’s common stock. If the Company is unable to obtain adequate financing or financing on terms satisfactory to the Company when the Company requires it, the Company’s ability to continue to grow or support its business and to respond to business challenges could be significantly limited. |
CONSOLIDATION: | CONSOLIDATION: 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. |
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: | FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity. Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 13, Other (Expense) Income, Net for the detail of foreign exchange transaction gains and losses for all periods presented. |
USE OF ESTIMATES: | USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or net realizable value, and warranty reserves. |
CASH EQUIVALENTS: | CASH EQUIVALENTS: Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value. |
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 fiscal year ended May 31, 2020, 2019 or 2018. |
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, 2020, approximately 13%, 62% and 25% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2019, approximately 49%, 25% and 26% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. Two customers accounted for 45% and 18% of gross accounts receivable as of May 31, 2020. Three customers accounted for 44%, 25% and 21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 43%, 16% and 15% of net sales in fiscal 2020. Four customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal 2019. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers. The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits. |
CONCENTRATION OF SUPPLY RISK: | CONCENTRATION OF SUPPLY RISK: The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products. |
INVENTORIES: | INVENTORIES: Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or net realizable 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 sales 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: In May 2014, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Code (“ASC”) Topic 606, Revenue from Contracts with Customers Revenue Recognition The adoption of ASC 606 did not have a material impact on our consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit as of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption of the revenue standard to have a material impact to our net income on an ongoing basis. We sell our products primarily through a direct sales force. In certain international markets, we sell our products through independent distributors. We consider revenue to be earned when all of the following criteria are met: ● We have a contract with a customer that creates enforceable rights and obligations, ● Promised performance obligations are identified, ● The transaction price, or the amount we expect to receive, is determinable and ● We have satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless we are required to provide additional services. |
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: | PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2020, 2019 and 2018. |
IMPAIRMENT OF LONG-LIVED ASSETS: | IMPAIRMENT OF LONG-LIVED ASSETS: In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required. |
ADVERTISING COSTS: | ADVERTISING COSTS: The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented. |
SHIPPING AND HANDLING OF PRODUCTS: | SHIPPING AND HANDLING OF PRODUCTS: Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales. |
INCOME TAXES: | INCOME TAXES: Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized. A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2020 and 2019. The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes. Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2019 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed into law. The CARES Act includes several significant business tax provisions including modification to the taxable income limitation for utilization of net operating losses (NOLs) incurred in 2018, 2019 and 2020 and the ability to carry back NOLs from those years for a period of up to five years, an increase to the limitation on deductibility of certain business interest expense, bonus depreciation for purchases of qualified improvement property and special deductions on certain corporate charitable contributions. The Company is currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available. On June 29, 2020, California Governor Gavin Newsom signed Assembly Bill 85 (AB 85) into law as part of the California 2020 Budget Act, which temporarily suspends the use of California net operating losses and imposes a cap on the amount of business incentive tax credits that companies can utilize against their net income for tax years 2020, 2021, and 2022. The Company analyzed the provisions of AB 85 and determined there was no impact on its provision for income taxes for the current period and will continue to evaluate the impact, if any, AB 85 may have on its condensed consolidated financial statements and disclosures. |
COMPREHENSIVE (LOSS) INCOME: | COMPREHENSIVE (LOSS) INCOME: Comprehensive (loss) income generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive (loss) income, which are excluded from net (loss) income. Comprehensive (loss) income is included in the statements of comprehensive (loss) income. |
RECENT ACCOUNTING PRONOUNCEMENTS: | 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 consolidated balance sheet. Operating lease right-of-use assets are presented as long-term assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease liabilities, long-term on the Company’s consolidated balance sheet. There was no material impact to the Company’s consolidated statements of operations or consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note “8. LEASES” for information regarding the Company’s lease portfolio as of May 31, 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. |
1. ORGANIZATION AND SUMMARY O_3
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
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 |
2. REVENUE (Tables)
2. REVENUE (Tables) | 12 Months Ended |
May 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The Company’s revenues by product category are as follows (in thousands): Year Ended May 31, 2020 2019 2018 Type of good / service: Systems $ 8,099 $ 9,566 $ 18,174 Contactors 10,784 6,154 6,500 Services 3,408 5,336 4,881 $ 22,291 $ 21,056 $ 29,555 Product lines: Wafer-level $ 19,768 $ 14,618 $ 13,080 Test During Burn-In 2,523 6,438 16,475 $ 22,291 $ 21,056 $ 29,555 The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands): Year Ended May 31, 2020 2019 2018 Geographic region: United States $ 13,544 $ 13,468 $ 8,446 Asia 7,556 5,648 19,973 Europe 1,191 1,940 1,136 $ 22,291 $ 21,056 $ 29,555 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands): Year Ended May 31, 2020 2019 2018 Timing of revenue recognition (in thousands): Products and services transferred at a point in time $ 19,948 $ 18,473 $ 27,337 Services transferred over time 2,343 2,583 2,218 $ 22,291 $ 21,056 $ 29,555 |
3. EARNINGS PER SHARE (''EPS'_2
3. EARNINGS PER SHARE (''EPS'') (Tables) | 12 Months Ended |
May 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | 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, 2020 2019 2018 Numerator: Net (loss) income $ (2,802) $ (5,235) $ 528 Denominator for basic net (loss) income per share: Weighted-average shares outstanding 22,882 22,387 21,732 Shares used in basic net (loss) income per share calculation 22,882 22,387 21,732 Effect of dilutive securities. -- -- 1,050 Denominator for diluted net (loss) income per share 22,882 22,387 22,782 Basic net (loss) income per share $ (0.12) $ (0.23) $ 0.02 Diluted net (loss) income per share $ (0.12) $ (0.23) $ 0.02 |
4. FAIR VALUE OF FINANCIAL IN_2
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
May 31, 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 May 31, 2020 (in thousands): Balance as of May 31, 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 $ — $ — |
5. ACCOUNTS RECEIVABLE (Tables)
5. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
Accounts receivable | Accounts receivable comprise (in thousands): May 31, 2020 2019 Accounts receivable $ 3,717 $ 4,859 Less: Allowance for doubtful accounts -- -- $ 3,717 $ 4,859 Additions Balance at charged to Balance beginning costs and at end of year expenses Deductions* of year Allowance for doubtful accounts receivable: May 31, 2020 $ 0 $ -- $ (0 ) $ -- May 31, 2019 $ 4 $ -- $ (4 ) $ -- * Deductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense. |
6. BALANCE SHEET DETAIL (Tables
6. BALANCE SHEET DETAIL (Tables) | 12 Months Ended |
May 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | INVENTORIES: May 31, (In Thousands) 2020 2019 Raw materials and sub-assemblies $ 5,055 $ 5,471 Work in process 2,917 3,580 Finished goods 17 10 $ 7,989 $ 9,061 |
Property and equipment, net | PROPERTY AND EQUIPMENT, NET: May 31, (In Thousands) 2020 2019 Leasehold improvements $ 1,201 $ 1,154 Furniture and fixtures 612 983 Machinery and equipment 3,038 3,097 Test equipment 2,516 2,604 7,367 7,838 Less: Accumulated depreciation and amortization (6,704 ) (6,793 ) $ 663 $ 1,045 |
Accrued expenses | ACCRUED EXPENSES: May 31, (In Thousands) 2020 2019 Payroll related $ 791 $ 990 Warranty 246 154 Professional services 173 162 Commissions and bonuses 139 168 Taxes payable 30 29 Investor relations 19 19 Restructuring 8 408 Material purchases -- 65 Other 33 39 $ 1,439 $ 2,034 |
Customer deposits and deferred revenue, short-term | CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM: May 31, (In Thousands) 2020 2019 Customer deposits $ -- $ 1,003 Deferred revenue 170 542 $ 170 $ 1,545 |
7. INCOME TAXES (Tables)
7. INCOME TAXES (Tables) | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Domestic and foreign components of (loss) income before income tax (expense) benefit | Domestic and foreign components of (loss) income before income tax (expense) benefit are as follows (in thousands): Year Ended May 31, 2020 2019 2018 Domestic $ (2,751 ) $ (5,273 ) $ 433 Foreign (15 ) 65 22 $ (2,766 ) $ (5,208 ) $ 455 |
Income tax (expense) benefit | The income tax (expense) benefit consists of the following (in thousands): Year Ended May 31, 2020 2019 2018 Federal income taxes: Current $ -- $ -- $ 99 Deferred -- -- -- State income taxes: Current (30 ) (6 ) (22 ) Deferred -- -- -- Foreign income taxes: Current (6 ) (21 ) (4 ) Deferred -- -- -- $ (36 ) $ (27 ) $ 73 |
Income tax reconciliation | The Company’s effective tax rate differs from the U.S. federal statutory tax rate, as follows: Year Ended May 31, 2020 2019 2018 U.S. federal statutory tax rate 21.0 % 21.0 % 28.6 % State taxes, net of federal tax effect 1.4 (1.0 ) (16.7 ) Foreign rate differential. (21.5 ) (0.7 ) 39.4 Stock-based compensation (4.0 ) (2.8 ) 39.9 Research and development credit -- 1.5 5.9 Change in valuation allowance 4.3 (15.6 ) (1,349.2 ) Federal rate change impact -- -- 1,419.7 Federal AMT refund -- -- (20.0 ) ASU 2016-09 adoption -- -- (169.1 ) Other (2.5 ) (2.9 ) 5.4 Effective tax rate (1.3 )% (0.5 )% (16.1 )% |
Net deferred tax assets and liabilities | The components of the net deferred tax assets and liabilities are as follows (in thousands): Year Ended May 31, 2020 2019 Deferred tax assets: Net operating losses $ 13,634 $ 13,475 Lease Liability 483 -- Credit carryforwards 5,089 4,995 Inventory reserves 1,005 790 Reserves and accruals 739 1,379 Other 319 298 21,269 20,937 Deferred tax liabilities: Operating lease right-of-use assets (449 ) -- Less: Valuation allowance (20,820 ) (20,937 ) Net deferred tax assets (liabilities) $ -- $ -- |
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, 2017 $ 789 Increases related to prior year tax positions 889 Increases related to current year tax positions 107 Balance at May 31, 2018 $ 1,785 Decreases related to prior year tax positions (41 ) Increases related to current year tax positions 65 Balance at May 31, 2019 $ 1,809 Decreases related to prior year tax positions (11 ) Increases related to current year tax positions 54 Balance at May 31, 2020 $ 1,852 |
8. LEASES (Tables)
8. LEASES (Tables) | 12 Months Ended |
May 31, 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): Year Ended May 31, 2020 Cash paid for amounts included in the measurement of operating lease liabilities Operating cash flows from operating leases $ 737 |
Maturity of operating lease liabilities | The following table presents the maturities of the Company’s operating lease liabilities as of May 31, 2020 (in thousands): Fiscal year Operating Leases 2021 $ 765 2022 779 2023 795 2024 134 2025 -- Thereafter -- Total future minimum operating lease payments $ 2,473 Less: imputed interest 210 Present value of operating lease liabilities $ 2,263 |
11. STOCKHOLDERS' EQUITY, COM_2
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
Compensation costs related to the Company's stock-based compensation | The following table summarizes the stock-based compensation expense for the fiscal years ended May 31, 2020, 2019 and 2018 (in thousands, except per share data): Year Ended May 31, 2020 2019 2018 Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, included in: Cost of sales $ 80 $ 104 $ 148 Selling, general and administrative 631 545 592 Research and development 199 256 256 Net effect on net (loss) income $ 910 $ 905 $ 996 Effect on net (loss) income per share: Basic $ 0.04 $ 0.04 $ 0.05 Diluted $ 0.04 $ 0.04 $ 0.04 |
Fair value assumptions for Option Valuation Model | The fair values of the Company’s stock options granted to employees in fiscal 2020, 2019 and 2018 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method: Year Ended May 31, 2020 2019 2018 Expected term (in years) 5 5 4 Volatility 0.72 0.72 0.77 Risk-free interest rates 1.56 % 2.83 % 1.95 % Weighted-average grant date fair value $ 0.95 $ 1.33 $ 2.07 |
Fair value assumption of the ESPP Purchase Rights | The fair value of our ESPP purchase rights for the fiscal 2020, 2019 and 2018 was estimated using the following weighted-average assumptions: Year End May 31, 2020 2019 2018 Expected term (in years) 0.5 – 2.0 0.5 – 2.0 0.5 – 2.0 Volatility 0.62 – 0.77 0.48 – 0.78 0.56 – 0.81 Risk-free interest rates 0.14%–1.81% 2.33%–2.82% 1.92%–2.25% Weighted-average grant date fair value $ 0.79 $ 1.14 $ 1.01 |
Stock option and RSU transactions | The following tables summarize the Company’s stock option and RSU transactions during fiscal 2020, 2019 and 2018 (in thousands): Available Shares Balance, May 31, 2017 2,169 Options granted (338 ) RSUs granted (64 ) RSUs cancelled 33 Options terminated 16 Options expired (4 ) Balance, May 31, 2018 1,812 Options granted (804 ) RSUs cancelled 8 Options terminated 195 Options expired (64 ) Balance, May 31, 2019 1,147 Additional shares reserved 1,196 Options granted (738 ) RSUs granted (25 ) Shares withheld for taxes and not issued 6 Options terminated 457 Options expired (393 ) Balance, May 31, 2020 1,650 |
Stock option transactions | The following table summarized the stock option transactions during fiscal 2020, 2019 and 2018 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2017 3,074 $ 1.73 $ 8,763 Options granted 338 $ 3.56 Options terminated (16 ) $ 2.72 Options exercised (537 ) $ 1.17 Balances, May 31, 2018 2,859 $ 2.04 $ 1,987 Options granted 804 $ 2.19 Options terminated (195 ) $ 2.32 Options exercised (361 ) $ 0.85 Balances, May 31, 2019 3,107 $ 2.20 $ 283 Options granted 738 $ 1.61 Options terminated (457 ) $ 1.98 Options exercised (235 ) $ 1.22 Balances, May 31, 2020 3,153 $ 2.17 $ 102 Options fully vested and expected to vest at May 31, 2020 3,115 $ 2.17 $ 101 |
Options outstanding | The options outstanding and exercisable at May 31, 2020 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at May 31, 2020 at May 31, 2020 Range of Exercise Number Outstanding Shares Weighted Average Weighted Average Exercise Number Exercisable Shares Weighted Average Weighted Average Exercise Aggregate Intrinsic Value $ 1.22-$1.28 248 2.10 $ 1.26 176 0.19 $ 1.28 $ 1.64-$1.77 945 5.35 $ 1.66 487 4.66 $ 1.68 $ 2.03-$2.46 1,223 3.70 $ 2.21 858 3.03 $ 2.19 $ 2.63-$2.81 511 1.29 $ 2.70 510 1.28 $ 2.70 $ 3.46-$3.93 226 4.16 $ 3.84 172 4.18 $ 3.82 $ 1.22-$3.93 3,153 3.71 $ 2.17 2,203 2.85 $ 2.25 $ 67 |
13. OTHER (EXPENSE) INCOME, N_2
13. OTHER (EXPENSE) INCOME, NET (Tables) | 12 Months Ended |
May 31, 2020 | |
Other Income and Expenses [Abstract] | |
Other (expense) income, net | Other (expense) income, net comprises the following (in thousands): Year Ended May 31, 2020 2019 2018 Foreign exchange (loss) gain $ (12 ) $ 43 $ (63 ) Other income, net 1 1 2 $ (11 ) $ 44 $ (61 ) |
14. PRODUCT WARRANTIES (Tables)
14. PRODUCT WARRANTIES (Tables) | 12 Months Ended |
May 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Liability for product warranties | Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2020 and 2019 (in thousands): May 31, 2020 2019 Balance at the beginning of the year $ 154 $ 135 Accruals for warranties issued during the year 299 214 Consumption of reserves (207 ) (195 ) Balance at the end of the year $ 246 $ 154 |
15. SEGMENT INFORMATION (Tables
15. SEGMENT INFORMATION (Tables) | 12 Months Ended |
May 31, 2020 | |
Segment Reporting [Abstract] | |
Property and equipment by geographic region | 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): May 31, 2020 2019 United States $ 662 $ 1,005 Asia 1 40 Europe -- -- $ 663 $ 1,045 |
19. SELECTED QUARTERLY CONSOL_2
19. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Tables) | 12 Months Ended |
May 31, 2020 | |
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, 2020 and 2019. Three Months Ended Aug. 31, Nov. 30, Feb. 29, May 31, 2019 2019 2020 2020 Net sales $ 5,533 $ 6,874 $ 6,111 $ 3,773 Gross profit (loss) $ 2,271 $ 3,202 $ 2,991 $ (93 ) Net (loss) income $ (413 ) $ 251 $ 245 $ (2,885 ) Net (loss) income per share basic and diluted $ (0.02 ) $ 0.01 $ 0.01 $ (0.13 ) Three Months Ended Aug. 31, Nov. 30, Feb. 28, May 31, 2018 2018 2019 2019 Net sales $ 4,740 $ 5,911 $ 3,163 $ 7,242 Gross profit $ 1,553 $ 2,398 $ 272 $ 3,379 Net (loss) income $ (1,515 ) $ (629 ) $ (3,201 ) $ 110 Net (loss) income per share basic and diluted $ (0.07 ) $ (0.03 ) $ (0.14 ) $ 0.00 |
1. ORGANIZATION AND SUMMARY O_4
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
May 31, 2020 | |
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 O_5
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
May 31, 2020 | May 31, 2019 | May 31, 2018 | Jun. 01, 2019 | |
Cash and cash equivalents | $ 5,433 | $ 5,428 | $ 16,848 | |
Allowance for doubtful accounts | 0 | 0 | 0 | |
System software development costs were capitalized or amortized | 0 | 0 | $ 0 | |
Operating lease right-of-use assets | 2,107 | $ 0 | ||
Operating lease liabilities | $ 2,263 | |||
FASB ASC Topic 842 | ||||
Operating lease right-of-use assets | $ 2,700 | |||
Operating lease liabilities | $ 2,800 | |||
North America | Accounts Receivable | ||||
Concentration risk | 13.00% | 49.00% | ||
Asia | Accounts Receivable | ||||
Concentration risk | 62.00% | 25.00% | ||
Europe | Accounts Receivable | ||||
Concentration risk | 25.00% | 26.00% | ||
Customer One | Accounts Receivable | ||||
Concentration risk | 45.00% | 44.00% | ||
Customer One | Net Sales | ||||
Concentration risk | 43.00% | 36.00% | ||
Customer Two | Accounts Receivable | ||||
Concentration risk | 18.00% | 25.00% | ||
Customer Two | Net Sales | ||||
Concentration risk | 16.00% | 14.00% | ||
Customer Three | Accounts Receivable | ||||
Concentration risk | 21.00% | |||
Customer Three | Net Sales | ||||
Concentration risk | 15.00% | 12.00% | ||
Customer Four | Net Sales | ||||
Concentration risk | 10.00% |
2. REVENUE (Details)
2. REVENUE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Net sales | $ 22,291 | $ 21,056 | $ 29,555 |
Systems | |||
Net sales | 8,099 | 9,566 | 18,174 |
Contactors | |||
Net sales | 10,784 | 6,154 | 6,500 |
Services | |||
Net sales | 3,408 | 5,336 | 4,881 |
Wafer-Level | |||
Net sales | 19,768 | 14,618 | 13,080 |
Test During Burn-In | |||
Net sales | $ 2,523 | $ 6,438 | $ 16,475 |
2. REVENUE (Details 1)
2. REVENUE (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Net sales | $ 22,291 | $ 21,056 | $ 29,555 |
United States | |||
Net sales | 13,544 | 13,468 | 8,446 |
Asia | |||
Net sales | 7,556 | 5,648 | 19,973 |
Europe | |||
Net sales | $ 1,191 | $ 1,940 | $ 1,136 |
2. REVENUE (Details 2)
2. REVENUE (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Net sales | $ 22,291 | $ 21,056 | $ 29,555 |
Products and Services Transferred at a Point in Time | |||
Net sales | 19,948 | 18,473 | 27,337 |
Services Transferred over Time | |||
Net sales | $ 2,343 | $ 2,583 | $ 2,218 |
2. REVENUE (Details Narrative)
2. REVENUE (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
May 31, 2020 | May 31, 2019 | May 31, 2022 | May 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||||
Contract liabilities | $ 192 | $ 1,734 | ||
Recognition of contract liabilities | 1,545 | $ 1,273 | ||
Remaining performance obligations | $ 192 | |||
Remaining performance obligation revenue recognition | 12.00% | 88.00% |
3. EARNINGS PER SHARE (''EPS'_3
3. EARNINGS PER SHARE (''EPS'') (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May 31, 2020 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Earnings Per Share [Abstract] | |||||||||||
Numerator: Net (loss) income | $ (2,885) | $ 245 | $ 251 | $ (413) | $ 110 | $ (3,201) | $ (629) | $ (1,515) | $ (2,802) | $ (5,235) | $ 528 |
Denominator for basic net (loss) income per share: Weighted average shares outstanding (in thousands) | 22,882 | 22,387 | 21,732 | ||||||||
Shares used in basic net (loss) income per share calculation (in thousands) | 22,882 | 22,387 | 21,732 | ||||||||
Effect of dilutive securities (in thousands) | 0 | 0 | 1,050 | ||||||||
Denominator for diluted net (loss) income per share (in thousands) | 22,882 | 22,387 | 22,782 | ||||||||
Basic net (loss) income per share | $ (.12) | $ (0.23) | $ 0.02 | ||||||||
Diluted net (loss) income per share | $ (0.12) | $ (0.23) | $ 0.02 |
3. EARNINGS PER SHARE (''EPS'_4
3. EARNINGS PER SHARE (''EPS'') (Details Narrative) - shares | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Employee Stock Purchase Plan | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 192 | 297 | |
Convertible Notes | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 2,657 | ||
Stock Option | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 3,153 | 3,107 | 1,313 |
Restricted Stock Units | |||
Options not included in the computation of diluted net (loss) income per share (in thousands) | 10 | 23 |
4. FAIR VALUE OF FINANCIAL IN_3
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | May 31, 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 |
4. FAIR VALUE OF FINANCIAL IN_4
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Restricted cash | $ 80 | $ 80 |
Financial liabilities at fair value | 0 | 0 |
Transfer between Level 1 and Level 2 fair value measurements | $ 0 | $ 0 |
5. ACCOUNTS RECEIVABLE (Details
5. ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | ||
Receivables [Abstract] | |||||
Accounts receivable, gross | $ 3,717 | $ 4,859 | |||
Less: Allowance for doubtful accounts | $ 0 | $ 4 | 0 | 0 | |
Accounts receivable, net | $ 3,717 | $ 4,859 | |||
Allowance for doubtful accounts, beginning | 0 | 4 | |||
Allowance for doubtful accounts, additions charged to costs and expenses | 0 | 0 | |||
Allowance for doubtful accounts, deductions | [1] | 0 | (4) | ||
Allowance for doubtful accounts, ending | $ 0 | $ 0 | |||
[1] | Deductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense. |
6. BALANCE SHEET DETAIL (Detail
6. BALANCE SHEET DETAIL (Details) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Inventory, Net [Abstract] | ||
Raw materials and sub-assemblies | $ 5,055 | $ 5,471 |
Work in process | 2,917 | 3,580 |
Finished goods | 17 | 10 |
Inventory | $ 7,989 | $ 9,061 |
6. BALANCE SHEET DETAIL (Deta_2
6. BALANCE SHEET DETAIL (Details 1) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Property, Plant and Equipment, Net [Abstract] | ||
Leasehold improvements | $ 1,201 | $ 1,154 |
Furniture and fixtures | 612 | 983 |
Machinery and equipment | 3,038 | 3,097 |
Test equipment | 2,516 | 2,604 |
Property and equipment, gross | 7,367 | 7,838 |
Less: Accumulated depreciation and amortization | (6,704) | (6,793) |
Property and equipment, net | $ 663 | $ 1,045 |
6. BALANCE SHEET DETAIL (Deta_3
6. BALANCE SHEET DETAIL (Details 2) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 | May 31, 2018 |
Accrued Liabilities [Abstract] | |||
Payroll related | $ 791 | $ 990 | |
Warranty | 246 | 154 | $ 135 |
Professional services | 173 | 162 | |
Commissions and bonuses | 139 | 168 | |
Taxes payable | 30 | 29 | |
Investor relations | 19 | 19 | |
Restructuring | 8 | 408 | |
Material purchases | 0 | 65 | |
Other | 33 | 39 | |
Accrued expenses | $ 1,439 | $ 2,034 |
6. BALANCE SHEET DETAIL (Deta_4
6. BALANCE SHEET DETAIL (Details 3) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Customer Deposits And Deferred Revenue Details [Abstract] | ||
Customer deposits | $ 0 | $ 1,003 |
Deferred revenue | 170 | 542 |
Customer deposits and deferred revenue | $ 170 | $ 1,545 |
6. BALANCE SHEET DETAIL (Deta_5
6. BALANCE SHEET DETAIL (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Property, Plant and Equipment [Abstract] | |||
Inventory write down | $ 1,669 | $ 1,168 | |
Depreciation expense | $ 384 | $ 431 | $ 417 |
7. INCOME TAXES (Details)
7. INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (2,751) | $ (5,273) | $ 433 |
Foreign | (15) | 65 | 22 |
(Loss) income before income tax (expense) benefit | $ (2,766) | $ (5,208) | $ 455 |
7. INCOME TAXES (Details 1)
7. INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Federal income taxes: | |||
Current | $ 0 | $ 0 | $ 99 |
Deferred | 0 | 0 | 0 |
State income taxes: | |||
Current | (30) | (6) | (22) |
Deferred | 0 | 0 | 0 |
Foreign income taxes: | |||
Current | (6) | (21) | (4) |
Deferred | 0 | 0 | 0 |
Income tax (expense) benefit | $ (36) | $ (27) | $ 73 |
7. INCOME TAXES (Details 2)
7. INCOME TAXES (Details 2) | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
U.S. federal statutory tax rate | 21.00% | 21.00% | 28.60% |
State taxes, net of federal tax effect | 1.40% | (1.00%) | (16.70%) |
Foreign rate differential | (21.50%) | (0.70%) | 39.40% |
Stock-based compensation | (4.00%) | (2.80%) | 39.90% |
Research and development credit | 0.00% | 1.50% | 5.90% |
Change in valuation allowance | 4.30% | (15.60%) | (1349.20%) |
Federal rate change impact | 0.00% | 0.00% | 1419.70% |
Federal AMT refund | (0.00%) | (0.00%) | (20.00%) |
ASU 2016-09 adoption | 0.00% | 0.00% | (169.10%) |
Other | (2.50%) | (2.90%) | 5.40% |
Effective tax rate | (1.30%) | (0.50%) | (16.10%) |
7. INCOME TAXES (Details 3)
7. INCOME TAXES (Details 3) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Deferred tax assets: | ||
Net operating losses | $ 13,634 | $ 13,475 |
Lease liability | 483 | 0 |
Credit carryforwards | 5,089 | 4,995 |
Inventory reserves | 1,005 | 790 |
Reserves and accruals | 739 | 1,379 |
Other | 319 | 298 |
Gross deferred tax assets | 21,269 | 20,937 |
Deferred tax liabilities: | ||
Operating lease right-of-use assets | (449) | 0 |
Less: Valuation allowance | (20,820) | (20,937) |
Net deferred tax assets | $ 0 | $ 0 |
7. INCOME TAXES (Details 4)
7. INCOME TAXES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefit, beginning | $ 1,809 | $ 1,785 | $ 789 |
Decreases related to prior year tax positions | (11) | (41) | |
Increases related to prior year tax positions | 889 | ||
Increases related to current year tax positions | 54 | 65 | 107 |
Unrecognized tax benefit, ending | $ 1,852 | $ 1,809 | $ 1,785 |
7. INCOME TAXES (Details Narrat
7. INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
May 31, 2020 | May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Valuation allowance | $ (118) | $ 813 | $ (6,139) | |
Unrecognized tax benefits | 1,852 | $ 1,809 | 1,785 | $ 789 |
Federal refundable AMT credit | $ 91 | |||
Federal | ||||
Net operating loss carryforward | 54,601 | |||
Indefinite tax credit carryforwards | 3,700 | |||
Research and development tax credit carryforwards | 2,026 | |||
State | ||||
Net operating loss carryforward | 29,386 | |||
Research and development tax credit carryforwards | 5,825 | |||
Alternative minimum tax credit carryforwards | 34 | |||
Foreign | ||||
Net operating loss carryforward | $ 378 |
8. LEASES (Details)
8. LEASES (Details) $ in Thousands | 12 Months Ended |
May 31, 2020USD ($) | |
Cash paid for amounts included in measurement of operating lease liabilities: | |
Operating cash flows from operating leases | $ 737 |
8. LEASES (Details 1)
8. LEASES (Details 1) $ in Thousands | May 31, 2020USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2021 | $ 765 |
2022 | 779 |
2023 | 795 |
2024 | 134 |
2025 | 0 |
Thereafter | 0 |
Total future minimum operating lease payments | 2,473 |
Less: imputed interest | 210 |
Present value of operating lease liabilities | $ 2,263 |
8. LEASES (Details Narrative)
8. LEASES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Operating lease, weighted-average remaining lease term | 3 years 2 months 12 days | |
Operating lease, weighted-average discount rate | 5.50% | |
Operating lease, cost | $ 734 | |
Rent expense | $ 787 | |
Minimum | ||
Operating lease term | 4 months | |
Maximum | ||
Operating lease term | 3 years |
9. BORROWING AND FINANCING AR_2
9. BORROWING AND FINANCING ARRANGEMENTS (Details Narrative) - Silicon Valley Bank $ in Thousands | 12 Months Ended |
May 31, 2020USD ($) | |
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 |
Balance available to borrow under the line of credit | $ 263 |
10. LONG-TERM DEBT (Details Nar
10. LONG-TERM DEBT (Details Narrative) - Silicon Valley Bank $ in Thousands | Apr. 23, 2020USD ($) |
PPP loan | $ 1,678,789 |
Interest rate | 1.00% |
11. STOCKHOLDERS' EQUITY, COM_3
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 910 | $ 905 | $ 996 |
Effect on net (loss) income per share, basic | $ .04 | $ 0.04 | $ 0.05 |
Effect on net (loss) income per share, diluted | $ .04 | $ 0.04 | $ 0.04 |
Cost of Sales | |||
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 80 | $ 104 | $ 148 |
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 | 631 | 545 | 592 |
Research and Development | |||
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights included in: | |||
Total stock-based compensation | $ 199 | $ 256 | $ 256 |
11. STOCKHOLDERS' EQUITY, COM_4
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 1) - Stock Option - $ / shares | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Expected term (in years) | 5 years | 5 years | 4 years |
Volatility | 72.00% | 72.00% | 77.00% |
Risk-free interest rates | 1.56% | 2.83% | 1.95% |
Weighted-average grant date fair value | $ .95 | $ 1.33 | $ 2.07 |
11. STOCKHOLDERS' EQUITY, COM_5
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 2) - Employee Stock Purchase Plan - $ / shares | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Weighted-average grant date fair value | $ .79 | $ 1.14 | $ 1.01 |
Minimum | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Volatility | 62.00% | 48.00% | 56.00% |
Risk-free interest rates | 0.14% | 2.33% | 1.92% |
Maximum | |||
Expected term (in years) | 2 years | 2 years | 2 years |
Volatility | 77.00% | 78.00% | 81.00% |
Risk-free interest rates | 1.81% | 2.82% | 2.25% |
11. STOCKHOLDERS' EQUITY, COM_6
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 3) - shares | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
RSUs granted (in thousands) | (10) | 0 | (64) |
Shares withheld for taxes and not issued (in thousands) | 6 | ||
Stock Option and RSU Transactions | |||
Available shares, beginning (in thousands) | 1,147 | 1,812 | 2,169 |
Additional shares reserved (in thousands) | 1,196 | ||
Options granted (in thousands) | (738) | (804) | (338) |
RSUs granted (in thousands) | (25) | (64) | |
RSUs cancelled (in thousands) | 8 | 33 | |
Shares withheld for taxes and not issued (in thousands) | 6 | ||
Options terminated (in thousands) | 457 | 195 | 16 |
Options expired (in thousands) | (393) | (64) | (4) |
Available shares, ending (in thousands) | 1,650 | 1,147 | 1,812 |
11. STOCKHOLDERS' EQUITY, COM_7
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 4) - Outstanding Options Stock Option Transactions - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Options outstanding, beginning (in thousands) | 3,107 | 2,859 | 3,074 |
Options granted (in thousands) | 738 | 804 | 338 |
Options terminated (in thousands) | (457) | (195) | (16) |
Options exercised (in thousands) | (235) | (361) | (537) |
Options outstanding, ending (in thousands) | 3,153 | 3,107 | 2,859 |
Options fully vested and expected to vest (in thousands) | 3,115 | ||
Weighted average exercise price outstanding, beginning | $ 2.20 | $ 2.04 | $ 1.73 |
Weighted average exercise price granted | 1.61 | 2.19 | 3.56 |
Weighted average exercise price terminated | 1.98 | 2.32 | 2.72 |
Weighted average exercise price exercised | 1.22 | 0.85 | 1.17 |
Weighted average exercise price outstanding, ending | 2.17 | $ 2.20 | $ 2.04 |
Weighted average exercise price fully vested and expected to vest | $ 2.17 | ||
Aggregate intrinsic value, beginning | $ 283 | $ 1,987 | $ 8,763 |
Aggregate intrinsic value, ending | 102 | $ 283 | $ 1,987 |
Aggregate intrinsic value for options fully vested and expected to vest | $ 101 |
11. STOCKHOLDERS' EQUITY, COM_8
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 5) $ / shares in Units, $ in Thousands | 12 Months Ended |
May 31, 2020USD ($)$ / sharesshares | |
Option exercisable shares (in thousands) | shares | 2,203 |
Weighted average exercise price for options exercisable | $ / shares | $ 2.25 |
$1.22-$1.28 | |
Options outstanding, ending (in thousands) | shares | 248 |
Weighted average remaining contractual life (Years) options outstanding | 2 years 1 month 6 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.26 |
Option exercisable shares (in thousands) | shares | 176 |
Weighted average remaining contractual life (Years) options exercisable | 2 months 8 days |
Weighted average exercise price for options exercisable | $ / shares | $ 1.28 |
$1.64-$1.77 | |
Options outstanding, ending (in thousands) | shares | 945 |
Weighted average remaining contractual life (Years) options outstanding | 5 years 4 months 6 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.66 |
Option exercisable shares (in thousands) | shares | 487 |
Weighted average remaining contractual life (Years) options exercisable | 4 years 7 months 28 days |
Weighted average exercise price for options exercisable | $ / shares | $ 1.68 |
$2.03-$2.46 | |
Options outstanding, ending (in thousands) | shares | 1,223 |
Weighted average remaining contractual life (Years) options outstanding | 3 years 8 months 12 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.21 |
Option exercisable shares (in thousands) | shares | 858 |
Weighted average remaining contractual life (Years) options exercisable | 3 years 11 days |
Weighted average exercise price for options exercisable | $ / shares | $ 2.19 |
$2.63-$2.81 | |
Options outstanding, ending (in thousands) | shares | 511 |
Weighted average remaining contractual life (Years) options outstanding | 1 year 3 months 14 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.70 |
Option exercisable shares (in thousands) | shares | 510 |
Weighted average remaining contractual life (Years) options exercisable | 1 year 3 months 11 days |
Weighted average exercise price for options exercisable | $ / shares | $ 2.70 |
$3.46-$3.93 | |
Options outstanding, ending (in thousands) | shares | 226 |
Weighted average remaining contractual life (Years) options outstanding | 4 years 1 month 28 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 3.84 |
Option exercisable shares (in thousands) | shares | 172 |
Weighted average remaining contractual life (Years) options exercisable | 4 years 2 months 5 days |
Weighted average exercise price for options exercisable | $ / shares | $ 3.82 |
$1.22-$3.93 | |
Options outstanding, ending (in thousands) | shares | 3,153 |
Weighted average remaining contractual life (Years) options outstanding | 3 years 8 months 16 days |
Weighted average exercise price outstanding, ending | $ / shares | $ 2.17 |
Option exercisable shares (in thousands) | shares | 2,203 |
Weighted average remaining contractual life (Years) options exercisable | 2 years 10 months 6 days |
Weighted average exercise price for options exercisable | $ / shares | $ 2.25 |
Aggregate intrinsic value for options exercisable | $ | $ 67 |
11. STOCKHOLDERS' EQUITY, COM_9
11. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Total intrinsic values of options exercised | $ 160 | $ 338 | $ 1,058 |
Weighted average contractual life of the options exercisable and expected to be exercisable | 3 years 8 months 8 days | ||
Exercisable options to purchase (in thousands) | 2,203 | 2,314 | 2,312 |
Weighted average exercise prices | $ 2.25 | $ 2.14 | $ 1.89 |
Restricted Stock Units granted (in thousands) | 10 | 0 | 64 |
Shares withheld for taxes and not issued (in thousands) | 6 | ||
Market value on the date of the grant | $ 1.64 | $ 3.93 | |
RSUs vested (in thousands) | 13 | 16 | 16 |
RSUs unvested (in thousands) | 10 | 23 | 47 |
Intrinsic value of RSUs, nonvested | $ 16 | $ 40 | $ 122 |
Stock Option and RSU | |||
Stock-based compensation expense related to stock options and RSUs | 751 | $ 650 | $ 706 |
RSUs cancelled (in thousands) | 8 | 33 | |
2016 Equity Incentive Plan | |||
Unrecognized stock-based compensation | 1,131 | ||
Estimated forfeitures of unvested stock based awards, amount | $ 3 | ||
Weighted average period for recognition of costs | 2 years 7 months 6 days | ||
Shares reserved for issuance (in thousands) | 3,435 | ||
Authorized shares (in thousands) | 4,813 | 4,277 | |
Outstanding shares (in thousands) | 3,163 | 3,129 | |
Employee Stock Purchase Plan | |||
Unrecognized stock-based compensation | $ 59 | ||
Weighted average period for recognition of costs | 9 months 18 days | ||
Stock-based compensation related to the ESPP | $ 159 | $ 255 | $ 290 |
Maximum calendar year contribution per employee | $ 25 | $ 25 | $ 25 |
Maximum number of shares a participant may purchase (in thousands) | 3 | 3 | 3 |
ESPP purchase right granted (in thousands) | 55 | 379 | 359 |
ESPP shares issued (in thousands) | 136 | 125 | 237 |
Total shares issued under ESPP plan (in thousands) | 1,617 | ||
ESPP Shares available for issuance (in thousands) | 233 | ||
2006 Equity Incentive Plan | |||
Shares remained available under plan (in thousands) | 1,835 | ||
Board Of Directors | |||
Restricted Stock Units granted (in thousands) | 9 | 0 | 0 |
Market value on the date of the grant | $ 1.64 |
12. EMPLOYEE BENEFIT PLANS (Det
12. EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |||
Contributions to ESOP | $ 60 | $ 60 | $ 60 |
Shares contributed to the ESOP during fiscal year (in thousands) | 34 | 23 | 13 |
13. OTHER (EXPENSE) INCOME, N_3
13. OTHER (EXPENSE) INCOME, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Other Income and Expenses [Abstract] | |||
Foreign exchange (loss) gain | $ (12) | $ 43 | $ (63) |
Other income, net | 1 | 1 | 2 |
Other (expense) income, net | $ (11) | $ 44 | $ (61) |
14. PRODUCT WARRANTIES (Details
14. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the year | $ 154 | $ 135 |
Accruals for warranties issued during the year | 299 | 214 |
Consumption of reserves | (207) | (195) |
Balance at the end of the year | $ 246 | $ 154 |
14. PRODUCT WARRANTIES (Detai_2
14. PRODUCT WARRANTIES (Details Narrative) | 12 Months Ended |
May 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Standard warranty period | The standard warranty period is one year for systems and ninety days for parts and service. |
15. SEGMENT INFORMATION (Detail
15. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Property and equipment, net | $ 663 | $ 1,045 |
United States | ||
Property and equipment, net | 662 | 1,005 |
Asia | ||
Property and equipment, net | 1 | 40 |
Europe | ||
Property and equipment, net | $ 0 | $ 0 |
16. RESTRUCTURING (Details Narr
16. RESTRUCTURING (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Restructuring Charges [Abstract] | |||
Restructuring charges | $ 220 | $ 725 | $ 0 |
Restructuring charges paid | 317 | ||
Restructuring charges included in accrued expenses | $ 8 | $ 408 |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Related Party Transactions [Abstract] | |||
Transactions with Wilson Sonsini Goodrich & Rosati | $ 78 | $ 90 | $ 64 |
Payable to Wilson Sonsini Goodrich & Rosati | $ 13 | ||
Prepayment to Wilson Sonsini Goodrich & Rosati | $ 14 |
18. COMMITMENTS AND CONTINGEN_2
18. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Restricted cash | $ 80 | $ 80 |
Purchase obligation | $ 2,196 |
19. SELECTED QUARTERLY CONSOL_3
19. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May 31, 2020 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2020 | May 31, 2019 | May 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 3,773 | $ 6,111 | $ 6,874 | $ 5,533 | $ 7,242 | $ 3,163 | $ 5,911 | $ 4,740 | $ 22,291 | $ 21,056 | $ 29,555 |
Gross profit (loss) | (93) | 2,991 | 3,202 | 2,271 | 3,379 | 272 | 2,398 | 1,553 | 8,371 | 7,602 | 12,386 |
Net (loss) income | $ (2,885) | $ 245 | $ 251 | $ (413) | $ 110 | $ (3,201) | $ (629) | $ (1,515) | $ (2,802) | $ (5,235) | $ 528 |
Net (loss) income per share basic and diluted | $ (.13) | $ .01 | $ .01 | $ (.02) | $ 0 | $ (0.14) | $ (0.03) | $ (0.07) | $ (0.12) | $ (0.23) | $ 0.02 |