California
|
|
94-2424084
|
(State or other
jurisdiction of
|
|
(I.R.S. Employer
Identification No.)
|
incorporation or
organization)
|
|
|
|
|
|
400 Kato
Terrace
|
|
|
Fremont,
CA
|
|
94539
|
(Address of
principal
|
|
(Zip
Code)
|
executive
offices)
|
|
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
ITEM
1. Financial Statements (Unaudited)
|
|
|
|
Condensed
Consolidated Balance Sheets at November 30, 2017
and May 31, 2017
|
4
|
|
|
Condensed
Consolidated Statements of Operations for the Three
and Six Months Ended
November 30,
2017 and
2016
|
5
|
|
|
Condensed
Consolidated Statements of Comprehensive Income (Loss) for
the Three
and Six Months Ended
November 30,
2017 and
2016
|
6
|
|
|
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended
November 30,
2017 and
2016
|
7
|
|
|
Notes to Condensed Consolidated Financial
Statements
|
8
|
|
|
ITEM
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
20
|
|
|
ITEM
3. Quantitative and Qualitative Disclosures About Market
Risks
|
25
|
|
|
ITEM
4. Controls and Procedures
|
26
|
|
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
ITEM
1. Legal Proceedings
|
27
|
|
|
ITEM
1A. Risk Factors
|
27
|
|
|
ITEM
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
27
|
|
|
ITEM
3. Defaults Upon Senior Securities
|
27
|
|
|
ITEM
4. Mine Safety Disclosures
|
27
|
|
|
ITEM
5. Other Information
|
27
|
|
|
ITEM
6. Exhibits
|
27
|
|
|
SIGNATURES
|
28
|
|
|
Index to
Exhibits
|
29
|
|
November 30,
|
May 31,
|
|
2017
|
2017
|
|
(1)
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$9,959
|
$17,803
|
Short-term
investments
|
5,969
|
--
|
Accounts
receivable, net
|
3,490
|
4,010
|
Inventories
|
8,225
|
6,604
|
Prepaid
expenses and other current assets
|
2,098
|
961
|
|
|
|
Total
current assets
|
29,741
|
29,378
|
|
|
|
Property
and equipment, net
|
1,166
|
1,419
|
Other
assets
|
94
|
95
|
Total
assets
|
$31,001
|
$30,892
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$1,789
|
2,808
|
Accrued
expenses
|
1,607
|
1,609
|
Customer
deposits and deferred revenue, short-term
|
3,142
|
3,467
|
|
|
|
Total
current liabilities
|
6,538
|
7,884
|
|
|
|
Long-term
debt
|
6,110
|
6,110
|
Deferred
revenue, long-term
|
251
|
104
|
Total
liabilities
|
12,899
|
14,098
|
|
|
|
Aehr
Test Systems shareholders' equity:
|
|
|
Common
stock, $0.01 par value:
|
|
|
Authorized:
75,000 shares; Issued
and outstanding: 21,797 shares and 21,340
shares at November 30, 2017 and May
31, 2017, respectively
|
218
|
213
|
Additional
paid-in capital
|
82,304
|
81,128
|
Accumulated
other comprehensive income
|
2,306
|
2,249
|
Accumulated
deficit
|
(66,707)
|
(66,777)
|
|
|
|
Total
Aehr Test Systems shareholders' equity
|
18,121
|
16,813
|
Noncontrolling
interest
|
(19)
|
(19)
|
|
|
|
Total
shareholders' equity
|
18,102
|
16,794
|
Total
liabilities and shareholders' equity
|
$31,001
|
$30,892
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$7,923
|
$4,216
|
$14,893
|
$9,534
|
Cost
of sales
|
4,792
|
2,753
|
8,844
|
5,865
|
Gross
profit
|
3,131
|
1,463
|
6,049
|
3,669
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling,
general and administrative
|
1,854
|
1,707
|
3,645
|
3,423
|
Research
and development
|
1,090
|
1,040
|
2,045
|
2,100
|
Total
operating expenses
|
2,944
|
2,747
|
5,690
|
5,523
|
|
|
|
|
|
Income
(loss) from operations
|
187
|
(1,284)
|
359
|
(1,854)
|
|
|
|
|
|
Interest
expense, net
|
(105)
|
(181)
|
(212)
|
(359)
|
Other
(expense) income, net
|
(7)
|
43
|
(67)
|
40
|
|
|
|
|
|
Income
(loss) before income tax expense
|
75
|
(1,422)
|
80
|
(2,173)
|
|
|
|
|
|
Income
tax expense
|
(15)
|
(30)
|
(10)
|
(34)
|
Net
income (loss)
|
60
|
(1,452)
|
70
|
( 2,207)
|
Less:
Net income attributable to the noncontrolling
interest
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Net income (loss)
attributable to Aehr Test Systems
common shareholders
|
$60
|
$(1,452)
|
$70
|
$(2,207)
|
|
|
|
|
|
Net
income (loss) per share
|
|
|
|
|
Basic
|
$0.00
|
$(0.09)
|
$0.00
|
$(0.15)
|
Diluted
|
$0.00
|
$(0.09)
|
$0.00
|
$(0.15)
|
|
|
|
|
|
Shares
used in per share calculations:
|
|
|
|
|
Basic
|
21,645
|
16,029
|
21,531
|
14,673
|
Diluted
|
22,883
|
16,029
|
22,937
|
14,673
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Net income
(loss)
|
$60
|
$(1,452)
|
$70
|
$(2,207)
|
|
|
|
|
|
Other comprehensive
income (loss), net of tax:
Net
change in unrealized loss on investments
|
(3)
|
--
|
(3)
|
--
|
Net
change in cumulative translation adjustments
|
1
|
(55)
|
60
|
(48)
|
|
|
|
|
|
Total comprehensive
income (loss)
|
58
|
(1,507)
|
127
|
(2,255)
|
Less: Comprehensive
income attributable to the
noncontrolling interest
|
--
|
2
|
--
|
1
|
|
|
|
|
|
Comprehensive
income (loss), attributable
to Aehr Test Systems common
shareholders
|
$58
|
$(1,509)
|
$127
|
$(2,256)
|
|
Six Months
Ended
|
|
|
November
30,
|
|
|
2017
|
2016
|
Cash
flows from operating activities:
|
|
|
Net
income (loss)
|
$70
|
$(2,207)
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
Stock-based
compensation expense
|
580
|
534
|
(Recovery of) provision for doubtful accounts
|
(14)
|
12
|
Amortization
of debt issuance costs
|
--
|
89
|
Depreciation
and amortization
|
190
|
129
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
592
|
(972)
|
Inventories
|
(1,249)
|
1,335
|
Prepaid
expenses and other current assets
|
(1,135)
|
(138)
|
Accounts
payable
|
(1,005)
|
721
|
Accrued
expenses
|
5
|
(201)
|
Customer
deposits and deferred revenue
|
(178)
|
(739)
|
Income
taxes payable
|
(9)
|
21
|
Net
cash used in operating activities
|
(2,153)
|
(1,416)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Purchases
of investments
|
(5,972)
|
--
|
Purchases
of property and equipment
|
(313)
|
(88)
|
Net
cash used in investing activities
|
(6,285)
|
(88)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Proceeds
from issuance of common stock under private placement, net of
issuance costs
|
--
|
5,299
|
Proceeds
from issuance of common stock under employee plans, net of taxes
paid related to share settlement of equity awards
|
601
|
463
|
Net
cash provided by financing activities
|
601
|
5,762
|
|
|
|
Effect
of exchange rates on cash and cash equivalents
|
(7)
|
(43)
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
(7,844)
|
4,215
|
|
|
|
Cash
and cash equivalents, beginning of period
|
17,803
|
939
|
Cash
and cash equivalents, end of period
|
$9,959
|
$5,154
|
|
|
|
Supplemental
disclosure of non-cash flow information:
|
|
|
Fair
value of common stock issued to settle accounts
payable
|
$--
|
$323
|
Transfers
of property and equipment to inventories
|
$372
|
$372
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
Stock-based
compensation in the form of employee stock options, RSUs and ESPP
purchase rights, included in:
|
|
|
|
|
Cost
of sales
|
$57
|
$23
|
$79
|
$47
|
Selling,
general and administrative
|
218
|
141
|
368
|
388
|
Research
and development
|
89
|
51
|
133
|
99
|
Total
stock-based compensation
|
$364
|
$215
|
$580
|
$534
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Expected
term (in years)
|
4
|
4
|
4
|
4
|
Volatility
|
0.74
|
0.81
|
0.77
|
0.81
|
Risk-free
interest rate
|
1.92%
|
1.10%
|
1.77%
|
1.02%
|
Weighted
average grant date fair value
|
$1.93
|
$1.66
|
$2.22
|
$1.09
|
|
Available
|
|
Shares
|
Balance,
May 31, 2017
|
2,169
|
|
|
Options
granted
|
(224)
|
RSUs
granted
|
(64)
|
Shares
cancelled
|
--
|
|
|
Balance,
August 31, 2017
|
1,881
|
|
|
Options
granted
|
(41)
|
RSUs
granted
|
--
|
Shares
cancelled
|
--
|
|
|
Balance,
November 30, 2017
|
1,840
|
|
Outstanding Options
|
||
|
|
Weighted
|
|
|
Number
|
Average
|
Aggregate
|
|
of
|
Exercise
|
Intrinsic
|
|
Shares
|
Price
|
Value
|
Balances,
May 31, 2017
|
3,074
|
$1.73
|
$8,763
|
|
|
|
|
Options
granted
|
224
|
$3.93
|
|
Options
cancelled
|
--
|
$--
|
|
Options
exercised
|
(189)
|
$1.23
|
|
|
|
|
|
Balances,
August 31, 2017
|
3,109
|
$1.92
|
$4,612
|
|
|
|
|
Options
granted
|
41
|
$3.46
|
|
Options
cancelled
|
--
|
$--
|
|
Options
exercised
|
(132)
|
$1.46
|
|
|
|
|
|
Balances,
November 30, 2017
|
3,018
|
$1.96
|
$2,230
|
|
|
|
|
Options
fully vested and expected to vest
at November 30, 2017
|
2,984
|
$1.95
|
$2,220
|
|
|
|
|
|
Options
Outstanding
|
Options
Exercisable
|
|||||
|
at November 30,
2017
|
at November 30,
2017
|
|||||
Range of
Exercise
Prices
|
Number
Outstanding Shares
|
Weighted Average
Remaining Contractual Life (Years)
|
Weighted Average
Exercise Price
|
Number
Exercisable Shares
|
Weighted Average
Remaining Contractual Life (Years)
|
Weighted Average
Exercise Price
|
Aggregate
Intrinsic Value
|
$0.59-$0.97
|
424
|
1.31
|
$0.68
|
424
|
1.31
|
$0.68
|
|
$1.09-$1.36
|
645
|
2.11
|
$1.27
|
645
|
2.10
|
$1.27
|
|
$1.68-$2.06
|
487
|
4.73
|
$1.74
|
276
|
4.03
|
$1.79
|
|
$2.10-$2.81
|
1,197
|
4.01
|
$2.45
|
953
|
3.99
|
$2.47
|
|
$3.46-$3.93
|
265
|
6.66
|
$3.88
|
22
|
6.66
|
$3.88
|
|
$0.59-$3.93
|
3,018
|
3.57
|
$1.96
|
2,320
|
3.00
|
$1.74
|
$1,985
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Numerator:
Net income (loss)
|
$60
|
$(1,452)
|
$70
|
$(2,207)
|
|
|
|
|
|
Denominator
for basic net income (loss) per
share:
|
|
|
|
|
Weighted
average shares outstanding
|
21,645
|
16,029
|
21,531
|
14,673
|
|
|
|
|
|
Shares
used in basic net income (loss) per
share calculation
|
21,645
|
16,029
|
21,531
|
14,673
|
Effect
of dilutive securities
|
1,238
|
--
|
1,406
|
--
|
|
|
|
|
|
Denominator
for diluted net income (loss) per
share
|
22,883
|
16,029
|
22,937
|
14,673
|
|
|
|
|
|
Basic
net income (loss) per share
|
$0.00
|
$(0.09)
|
$0.00
|
$(0.15)
|
Diluted
net income (loss) per share
|
$0.00
|
$(0.09)
|
$0.00
|
$(0.15)
|
|
Cost
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|
|
|
|
Cash
|
$1,802
|
$--
|
$1,802
|
Cash
equivalents:
|
|
|
|
Money
market funds
|
4,164
|
--
|
4,164
|
U.S.
Treasury securities
|
3,993
|
--
|
3,993
|
Total
Cash equivalents
|
8,157
|
--
|
8,157
|
Total
Cash and Cash equivalents
|
$9,959
|
$--
|
$9,959
|
Short-term
investments:
|
|
|
|
U.S.
Treasury securities
|
$5,972
|
$3
|
$5,969
|
Total
Cash, Cash equivalents and Investments
|
$15,931
|
$3
|
$15,928
|
|
Balance as of
|
|
|
|
|
November 30, 2017
|
Level 1
|
Level 2
|
Level 3
|
Money
market funds
|
$4,164
|
$4,164
|
$--
|
$--
|
U.S.
Treasury securities
|
9,962
|
9,962
|
--
|
--
|
Certificate
of deposit
|
50
|
--
|
50
|
--
|
Assets
|
$14,176
|
$14,126
|
$50
|
$--
|
|
Balance as of
|
|
|
|
|
May 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
Money
market funds
|
$15,516
|
$15,516
|
$--
|
$--
|
Certificate
of deposit
|
50
|
--
|
50
|
--
|
Assets
|
$15,566
|
$15,516
|
$50
|
$--
|
|
|
|
|
|
|
November 30,
|
May 31,
|
|
2017
|
2017
|
Raw
materials and sub-assemblies
|
$5,020
|
$4,268
|
Work
in process
|
2,970
|
2,059
|
Finished
goods
|
235
|
277
|
|
$8,225
|
$6,604
|
|
United
|
|
|
|
|
States
|
Asia
|
Europe
|
Total
|
Three
months ended November 30, 2017:
|
|
|
|
|
Net
sales
|
$1,964
|
$5,909
|
$50
|
$7,923
|
Property
and equipment, net
|
1,116
|
39
|
11
|
1,166
|
|
|
|
|
|
Six
months ended November 30, 2017:
|
|
|
|
|
Net
sales
|
$3,254
|
$11,569
|
$70
|
$14,893
|
Property
and equipment, net
|
1,116
|
39
|
11
|
1,166
|
|
|
|
|
|
Three
months ended November 30, 2016:
|
|
|
|
|
Net
sales
|
$1,709
|
$2,256
|
$251
|
$4,216
|
Property
and equipment, net
|
740
|
39
|
14
|
793
|
|
|
|
|
|
Six
months ended November 30, 2016:
|
|
|
|
|
Net
sales
|
$4,873
|
$4,166
|
$495
|
$9,534
|
Property
and equipment, net
|
740
|
39
|
14
|
793
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Balance
at the beginning of the period
|
$119
|
$90
|
$113
|
$155
|
|
|
|
|
|
Accruals
for warranties issued during
the period
|
152
|
11
|
246
|
11
|
Accruals
and adjustments (change in estimates) related
to pre-existing warranties during the
period
|
--
|
--
|
--
|
(54)
|
|
|
|
|
|
Settlement
made during the period (in
cash or in kind)
|
(138)
|
(29)
|
(226)
|
(40)
|
|
|
|
|
|
Balance
at the end of the period
|
$133
|
$72
|
$133
|
$72
|
|
Cumulative Translation Adjustments
|
Unrealized Loss on Investments, Net
|
Total
|
|
|
|
|
Balance
at May 31, 2017
|
$2,249
|
$--
|
$2,249
|
Other
comprehensive income (loss) before reclassifications
|
60
|
(3)
|
57
|
Amounts
reclassified out of AOCI
|
--
|
--
|
--
|
Other
comprehensive income (loss), net of tax
|
60
|
(3)
|
57
|
Balance
at November 30, 2017
|
$2,309
|
$(3)
|
$2,306
|
|
November 30,
|
May 31,
|
|
2017
|
2017
|
Customer
deposits
|
$2,755
|
$3,264
|
Deferred
revenue
|
387
|
203
|
|
$3,142
|
$3,467
|
|
Three Months Ended
|
Six Months Ended
|
||
|
November 30,
|
November 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
Cost
of sales
|
60.5
|
65.3
|
59.4
|
61.5
|
Gross
profit
|
39.5
|
34.7
|
40.6
|
38.5
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling,
general and administrative
|
23.4
|
40.5
|
24.5
|
35.9
|
Research
and development
|
13.7
|
24.7
|
13.7
|
22.0
|
|
|
|
|
|
Total
operating expenses
|
37.1
|
65.2
|
38.2
|
57.9
|
|
|
|
|
|
Income
(loss) from operations
|
2.4
|
(30.5)
|
2.4
|
(19.4)
|
|
|
|
|
|
Interest
expense, net
|
(1.3)
|
(4.3)
|
(1.4)
|
(3.8)
|
Other
(expense) income, net
|
(0.2)
|
1.1
|
(0.5)
|
0.4
|
|
|
|
|
|
Income
(loss) before income tax expense
|
0.9
|
(33.7)
|
0.5
|
(22.8)
|
|
|
|
|
|
Income
tax expense
|
(0.1)
|
(0.7)
|
--
|
(0.3)
|
Net
income (loss)
|
0.8
|
(34.4)
|
0.5
|
(23.1)
|
Less:
Net income attributable to the
noncontrolling interest
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Net
income (loss) attributable to Aehr
Test Systems common shareholders
|
0.8%
|
(34.4)%
|
0.5%
|
(23.1)%
|
|
Aehr Test
Systems (Registrant) |
|
|
|
|
|
|
Date: January 12, 2018 |
By:
|
/s/
GAYN
ERICKSON
|
|
|
|
Gayn
Erickson
|
|
|
|
President
and Chief Executive Officer
|
|
Date: January 12, 2018 |
By:
|
/s/
KENNETH
B. SPINK
|
|
|
|
Kenneth B.
Spink
|
|
|
|
Vice
President of Finance and Chief Financial
Officer
|
|
Exhibit No.
|
|
Description
|
3.1(1)
|
|
Amended and
Restated Bylaws of Registrant.
|
|
|
|
|
Certification of
Chief Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of
Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934, as amended,
as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of
2002.
|
|
|
|
|
|
Certification of
Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
|
|
101.INS
|
|
XBRL Instance
Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy
Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy
Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy
Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy
Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy
Extension Presentation Linkbase Document
|
|
|
/s/
GAYN
ERICKSON
|
|
|
|
Gayn
Erickson
|
|
|
|
President and Chief
Executive Officer
|
|
|
/s/
KENNETH
B. SPINK
|
|
|
|
Kenneth B.
Spink
|
|
|
|
Vice President of
Finance and Chief Financial
Officer
|
|
|
/s/
GAYN
ERICKSON
|
|
|
|
Gayn
Erickson
|
|
|
|
President and Chief
Executive Officer
|
|
|
/s/
KENNETH
B. SPINK
|
|
|
|
Kenneth B.
Spink
|
|
|
|
Vice President of
Finance and Chief Financial
Officer
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Nov. 30, 2017 |
Dec. 29, 2017 |
|
Document And Entity Information | ||
Entity Registrant Name | AEHR TEST SYSTEMS | |
Entity Central Index Key | 0001040470 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,802,037 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2018 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Nov. 30, 2017 |
May 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in thousands) | 75,000 | 75,000 |
Common stock, shares issued (in thousands) | 21,797 | 21,340 |
Common stock, shares outstanding (in thousands) | 21,797 | 21,340 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Income Statement [Abstract] | ||||
Net sales | $ 7,923 | $ 4,216 | $ 14,893 | $ 9,534 |
Cost of sales | 4,792 | 2,753 | 8,844 | 5,865 |
Gross profit | 3,131 | 1,463 | 6,049 | 3,669 |
Operating expenses: | ||||
Selling, general and administrative | 1,854 | 1,707 | 3,645 | 3,423 |
Research and development | 1,090 | 1,040 | 2,045 | 2,100 |
Total operating expenses | 2,944 | 2,747 | 5,690 | 5,523 |
Income (loss) from operations | 187 | (1,284) | 359 | (1,854) |
Interest expense, net | (105) | (181) | (212) | (359) |
Other (expense) income, net | (7) | 43 | (67) | 40 |
Income (loss) before income tax expense | 75 | (1,422) | 80 | (2,173) |
Income tax expense | (15) | (30) | (10) | (34) |
Net income (loss) | 60 | (1,452) | 70 | (2,207) |
Less: Net income attributable to the noncontrolling interest | 0 | 0 | 0 | 0 |
Net income (loss) attributable to Aehr Test Systems common shareholders | $ 60 | $ (1,452) | $ 70 | $ (2,207) |
Net income (loss) per share basic | $ 0 | $ (0.09) | $ 0 | $ (0.15) |
Net income (loss) per share diluted | $ 0 | $ (0.09) | $ 0 | $ (0.15) |
Shares used in per share calculations: basic (in thousands) | 21,645 | 16,029 | 21,531 | 14,673 |
Shares used in per share calculations: diluted (in thousands) | 22,883 | 16,029 | 22,937 | 14,673 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 60 | $ (1,452) | $ 70 | $ (2,207) |
Other comprehensive income (loss), net of tax: Net change in unrealized loss on investments | (3) | 0 | (3) | 0 |
Net change in cumulative translation adjustments | 1 | (55) | 60 | (48) |
Total comprehensive income (loss) | 58 | (1,507) | 127 | (2,255) |
Less: Comprehensive income attributable to the noncontrolling interest | 0 | 2 | 0 | 1 |
Comprehensive income (loss), attributable to Aehr Test Systems common shareholders | $ 58 | $ (1,509) | $ 127 | $ (2,256) |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
||||
Cash flows from operating activities: | |||||
Net income (loss) | $ 70 | $ (2,207) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||
Stock-based compensation expense | 580 | 534 | |||
(Recovery of) provision for doubtful accounts | (14) | 12 | |||
Amortization of debt issuance costs | 0 | 89 | |||
Depreciation and amortization | 190 | 129 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | 592 | (972) | |||
Inventories | (1,249) | 1,335 | |||
Prepaid expenses and other assets | (1,135) | (138) | |||
Accounts payable | (1,005) | 721 | |||
Accrued expenses | 5 | (201) | |||
Customer deposits and deferred revenue | (178) | (739) | |||
Income taxes payable | (9) | 21 | |||
Net cash used in operating activities | (2,153) | (1,416) | |||
Cash flows from investing activities: | |||||
Purchase of investments | (5,972) | 0 | |||
Purchases of property and equipment | (313) | (88) | |||
Net cash used in investing activities | (6,285) | (88) | |||
Cash flows from financing activities: | |||||
Proceeds from issuance of common stock under private placement, net of issuance costs | 0 | 5,299 | |||
Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards | 601 | 463 | |||
Net cash provided by financing activities | 601 | 5,762 | |||
Effect of exchange rates on cash and cash equivalents | (7) | (43) | |||
Net (decrease) increase in cash and cash equivalents | (7,844) | 4,215 | |||
Cash and cash equivalents, beginning of period | 17,803 | [1] | 939 | ||
Cash and cash equivalents, end of period | 9,959 | 5,154 | |||
Supplemental disclosure of non-cash flow information: | |||||
Fair value of common stock issued to settle accounts payable | 0 | 323 | |||
Transfer of property and equipment to inventories | $ 372 | $ 372 | |||
|
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES |
6 Months Ended |
---|---|
Nov. 30, 2017 | |
Disclosure Text Block [Abstract] | |
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2017 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2017. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.
PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). All significant intercompany balances have been eliminated in consolidation. For the Company’s majority owned subsidiary, Aehr Test Systems Japan K.K., the noncontrolling interest of the portion the Company does not own was reflected on the Condensed Consolidated Balance Sheets in Shareholders’ Equity and in the Condensed Consolidated Statements of Operations.
ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates.
REVENUE RECOGNITION. The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) goods or services have been delivered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition.
Revenue related to the multiple elements is allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used.
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system, and the Company shipped the first system in July 2016. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer.
The Company recognizes revenue in certain circumstances before physical delivery has occurred. In these arrangements, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the products, the customer has requested the products be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the products are segregated from inventory and normal billing and credit terms granted.
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped.
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee.
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2017. There have been no significant changes in our significant accounting policies during the six months ended November 30, 2017.
|
2. STOCK-BASED COMPENSATION |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. STOCK-BASED COMPENSATION | 2. 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 cost for stock options and ESPP purchase rights are measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, stock-based compensation cost is based on the fair value of the Company’s common stock at the grant date. All of the Company’s stock-based compensation is accounted for as an equity instrument. See Notes 11 and 12 in the Company’s Annual Report on Form 10-K for fiscal 2017 filed on August 29, 2017 for further information regarding the 2016 Equity Incentive Plan and the Amended and Restated 2006 ESPP.
The following table summarizes the stock-based compensation expense related to the Company’s stock-based incentive plans for the three and six months ended November 30, 2017 and 2016 (in thousands):
As of November 30, 2017 and 2016, there were no stock-based compensation costs capitalized as part of inventory.
During the three months ended November 30, 2017 and 2016, the Company recorded stock-based compensation related to stock options and RSUs of $207,000 and $185,000, respectively. During the six months ended November 30, 2017 and 2016, the Company recorded stock-based compensation related to stock options and RSUs of $408,000 and $464,000, respectively.
As of November 30, 2017, the total compensation cost related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plans, but not yet recognized, was approximately $1,316,000, which is net of estimated forfeitures of $3,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.5 years.
During the three months ended November 30, 2017 and 2016, the Company recorded stock-based compensation related to the ESPP of $157,000 and $30,000, respectively. During the six months ended November 30, 2017 and 2016, the Company recorded stock-based compensation related to the ESPP of $172,000 and $70,000, respectively. The increase in the three and six months ended November 30, 2017 is primarily due to employees increasing their ESPP elections during the current ESPP purchase period.
As of November 30, 2017, the total compensation cost related to purchase rights under the ESPP but not yet recognized was approximately $49,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 0.3 years.
Valuation Assumptions
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards.
Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past four or five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation cost recorded.
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP.
Fair Value. The fair value of the Company’s stock options granted to employees for the three and six months ended November 30, 2017 and 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:
There were no ESPP purchase rights granted for the three and six months ended November 30, 2017 and 2016.
The following tables summarize the Company’s stock option and RSU transactions during the three and six months ended November 30, 2017 (in thousands):
The following table summarizes the stock option transactions during the three and six months ended November 30, 2017 (in thousands, except per share data):
The options outstanding and exercisable at November 30, 2017 were in the following exercise price ranges (in thousands, except per share data):
The total intrinsic value of options exercised during the three and six months ended November 30, 2017 was $269,000 and $745,000, respectively. The total intrinsic value of options exercised during the three and six months ended November 30, 2016 was $359,000 and $411,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at November 30, 2017 was 3.56 years.
There were no RSUs granted to employees for the three months ended November 30, 2017 or 2016. During the six months ended November 30, 2017, RSUs for 64,000 shares were granted. The market value on the date of the grant of these RSUs was $3.93 per share. During the six months ended November 30, 2016, RSUs for 138,000 shares were granted. The market value on the date of the grant of these RSUs was $1.68 per share. 4,000 and 7,000 RSUs became fully vested during the three and six months ended November 30, 2017, respectively. 89,000 RSUs were unvested at November 30, 2017. The intrinsic value of the unvested RSUs at November 30, 2017 was $227,000.
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3. EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. EARNINGS PER SHARE | 3. EARNINGS PER SHARE
Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, RSUs and ESPP shares) outstanding during the period using the treasury stock method.
The following table presents the computation of basic and diluted net income (loss) per share attributable to the Company’s common shareholders (in thousands, except per share data):
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. Stock options to purchase 263,000 shares of common stock were outstanding as of November 30, 2017 but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. In the three and six months ended November 30, 2016, 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 this period are the same. Stock options to purchase 3,229,000 shares of common stock, RSUs for 72,000 shares and ESPP rights to purchase 246,000 ESPP shares were outstanding as of November 30, 2016, 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 at November 30, 2017 and 2016 were not included in the computation of diluted net income (loss) per share, because the inclusion of such shares would be anti-dilutive.
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4. CASH, CASH EQUIVALENTS AND INVESTMENTS |
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4. CASH, CASH EQUIVALENTS AND INVESTMENTS | 4. CASH, CASH EQUIVALENTS AND INVESTMENTS
The following table summarizes the Company’s cash, cash equivalents and investments by security type at November 30, 2017 (in thousands):
Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (“AOCI”), net of any related tax effect. Upon realization, those amounts are reclassified from AOCI to results of operations.
The unrealized loss as of November 30, 2017 is not considered other-than-temporary.
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5. FAIR VALUE OF FINANCIAL INSTRUMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements.
The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments.
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value.
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of November 30, 2017 (in thousands):
The U.S. Treasury securities have maturities of three and six months
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2017 (in thousands):
There were no financial liabilities measured at fair value as of November 30, 2017 and May 31, 2017.
There were no transfers between Level 1 and Level 2 fair value measurements during the three and six months ended November 30, 2017.
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.
The Company has, at times, invested in debt and equity of private companies, and may do so again in the future, as part of its business strategy.
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6. ACCOUNTS RECEIVABLE, NET |
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Nov. 30, 2017 | |
Accounts Receivable, Net, Current [Abstract] | |
6. ACCOUNTS RECEIVABLE, NET | 6. ACCOUNTS RECEIVABLE, NET
Accounts receivable represent customer trade receivables and is presented net of allowances for doubtful accounts of $47,000 at November 30, 2017 and $61,000 at May 31, 2017. Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. The Company’s allowance for doubtful accounts is based upon historical experience and review of trade receivables by aging category to identify specific customers with known disputes or collection issues. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.
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7. INVENTORIES |
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7. INVENTORIES | 7. INVENTORIES
Inventories are comprised of the following (in thousands):
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8. SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. SEGMENT INFORMATION | 8. SEGMENT INFORMATION
The Company operates in one reportable segment: the design, manufacture and marketing of advanced test and burn-in products to the semiconductor manufacturing industry.
The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands).
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.
Sales to the Company’s five largest customers accounted for approximately 94% and 96% of its net sales in the three and six months ended November 30, 2017, respectively. Two customers accounted for approximately 43% and 34% of the Company’s net sales in the three months ended November 30, 2017. Two customers accounted for approximately 43%, and 39% of the Company’s net sales in the six months ended November 30, 2017. Sales to the Company’s five largest customers accounted for approximately 96% and 95% of its net sales in the three and six months ended November 30, 2016, respectively. Two customers accounted for approximately 60% and 22% of the Company’s net sales in the three months ended November 30, 2016. Three customers accounted for approximately 50%, 19% and 16% of the Company’s net sales in the six months ended November 30, 2016. No other customers represented more than 10% of the Company’s net sales in the six months ended November 30, 2017 and 2016.
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9. PRODUCT WARRANTIES |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. PRODUCT WARRANTIES | 9. PRODUCT WARRANTIES
The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required.
The standard warranty period is one year for systems and ninety days for parts and service.
The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 30, 2017 and 2016 (in thousands):
The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets.
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10. ACCUMULATED OTHER COMPREHENSIVE INCOME |
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10. ACCUMULATED OTHER COMPREHENSIVE INCOME | 10. ACCUMULATED OTHER COMPREHENSIVE INCOME
Changes in the components of AOCI, net of tax, were as follows (in thousands):
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11. INCOME TAXES |
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Nov. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
11. INCOME TAXES | 11. INCOME TAXES
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
Since fiscal 2009, a full valuation allowance was established against all deferred tax assets as management determined that it is more likely than not that certain deferred tax assets will not be realized.
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
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 1997 - 2016 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years.
On December 22, 2017, the “Tax Cuts and Jobs Act” was signed into law, significantly impacting several sections of the Internal Revenue Code. The Company is currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available.
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12. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM |
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12. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | 12. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM
Customer deposits and deferred revenue, short-term (in thousands):
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13. LONG-TERM DEBT |
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Nov. 30, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
13. LONG-TERM DEBT | 13. LONG-TERM DEBT
On April 10, 2015, the Company entered into a Convertible Note Purchase and Credit Facility Agreement (the “Purchase Agreement”) with QVT Fund LP and Quintessence Fund L.P. (the “Purchasers”) providing for (a) the Company’s sale to the Purchasers of $4,110,000 in aggregate principal amount of 9.0% Convertible Secured Notes due 2017 (the “Convertible Notes”) and (b) a secured revolving loan facility (the “Credit Facility”) in an aggregate principal amount of up to $2,000,000. On August 22, 2016 the Purchase Agreement was amended to extend the maturity date of the Convertible Notes to April 10, 2019, decrease the conversion price from $2.65 per share to $2.30 per share, decrease the forced conversion price from $7.50 per share to $6.51 per share, and allow for additional equity awards.
The Convertible Notes bear interest at an annual rate of 9.0% and will mature on April 10, 2019 unless repurchased or converted prior to that date. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. Debt issuance costs of $356,000, which were accreted over the term of the original loan using the effective interest rate method, were offset against the loan balance.
The conversion price for the Convertible Notes is $2.30 per share and is subject to adjustment upon the occurrence of certain specified events. Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
The maximum amount of $2,000,000 drawn against the Credit Facility has been converted to Convertible Notes, and at November 30, 2017 there was no remaining balance available to be drawn on the Credit Facility.
The Company’s obligations under the Purchase Agreement are secured by substantially all of the assets of the Company.
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14. RECENT ACCOUNTING PRONOUNCEMENTS |
6 Months Ended |
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Nov. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
14. RECENT ACCOUNTING PRONOUNCEMENTS | 14. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued an accounting standard update related to revenue from contracts with customers. This standard sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The standard provides alternative methods of initial adoption and will become effective for the Company beginning in the first quarter of fiscal 2019. The FASB has issued several updates to the standard which i) defer the original effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017. ii) clarify the application of the principal versus agent guidance. and iii) clarify the guidance on inconsequential and perfunctory promises and licensing. In May 2016, the FASB issued an update to address certain narrow aspects of the guidance including collectibility criterion, collection of sales taxes from customers, noncash consideration, contract modifications and completed contracts. This issuance does not change the core principle of the guidance in the initial topic issued in May 2014. In December 2016, the FASB issued updated guidance regarding revenue from contracts with customers. Some topics that could impact the Company include corrections and improvements around the following: contract costs impairment testing, disclosure of remaining performance obligations and prior period obligations, contract modifications, and contract asset versus receivable. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In July 2015, the FASB issued an accounting standard update that requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance does not have a significant impact on the Company’s consolidated financial statements.
In November 2015, the FASB issued an accounting standard update related to deferred tax assets and liabilities. This standard simplifies the presentation of deferred income taxes to be classified as noncurrent in the consolidated balance sheet. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance does not have a significant impact on the Company’s consolidated financial statements.
In January 2016, the FASB issued an accounting standard update related to recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This standard is effective for us in fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In February 2016, the FASB issued authoritative guidance related to leases. This guidance requires management to present all leases greater than one year on the balance sheet as a liability to make payments and an asset as the right to use the underlying asset for the lease term. This new standard will be effective for us in fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In March 2016, the FASB released an accounting standard update that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance does not have a significant impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued an accounting standard update 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 collectibility of the reported amount. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
In August 2016, the FASB issued authoritative guidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated statements of cash flows.
In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a modified retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
In November 2016, the FASB issued authoritative guidance related to statements of cash flows. This guidance clarifies that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
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1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES (Policies) |
6 Months Ended |
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Nov. 30, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2017 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2017. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.
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PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). All significant intercompany balances have been eliminated in consolidation. For the Company’s majority owned subsidiary, Aehr Test Systems Japan K.K., the noncontrolling interest of the portion the Company does not own was reflected on the Condensed Consolidated Balance Sheets in Shareholders’ Equity and in the Condensed Consolidated Statements of Operations.
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ACCOUNTING ESTIMATES | ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates.
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REVENUE RECOGNITION | REVENUE RECOGNITION. The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) goods or services have been delivered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition.
Revenue related to the multiple elements is allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used.
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system, and the Company shipped the first system in July 2016. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer.
The Company recognizes revenue in certain circumstances before physical delivery has occurred. In these arrangements, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the products, the customer has requested the products be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the products are segregated from inventory and normal billing and credit terms granted.
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped.
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee.
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration.
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SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2017. There have been no significant changes in our significant accounting policies during the six months ended November 30, 2017.
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2. STOCK-BASED COMPENSATION (Tables) |
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Compensation costs related to the Company's stock-based compensation |
The following table summarizes the stock-based compensation expense related to the Company’s stock-based incentive plans for the three and six months ended November 30, 2017 and 2016 (in thousands):
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Assumptions for options valuation model | Fair Value. The fair value of the Company’s stock options granted to employees for the three and six months ended November 30, 2017 and 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:
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Stock option and RSU transactions | The following tables summarize the Company’s stock option and RSU transactions during the three and six months ended November 30, 2017 (in thousands):
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Stock option transactions | The following table summarizes the stock option transactions during the three and six months ended November 30, 2017 (in thousands, except per share data):
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Options outstanding | The options outstanding and exercisable at November 30, 2017 were in the following exercise price ranges (in thousands, except per share data):
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3. EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | The following table presents the computation of basic and diluted net income (loss) per share attributable to the Company’s common shareholders (in thousands, except per share data):
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4. CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables) |
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Cash, cash equivalents and investments by security type | The following table summarizes the Company’s cash, cash equivalents and investments by security type at November 30, 2017 (in thousands):
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5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Fair value by hierarchy | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of November 30, 2017 (in thousands):
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2017 (in thousands):
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7. INVENTORIES (Tables) |
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Inventories |
Inventories are comprised of the following (in thousands):
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8. SEGMENT INFORMATION (Tables) |
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Company's operations in different geographic areas | The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands).
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9. PRODUCT WARRANTIES (Tables) |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for product warranties | The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 30, 2017 and 2016 (in thousands):
|
10. ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the components of AOCI |
Changes in the components of AOCI, net of tax, were as follows (in thousands):
|
12. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Customer Deposits And Deferred Revenue Short-term Tables | ||||||||||||||||||||||||||||||||||||||||||||||
Customer deposits and deferred revenue | Customer deposits and deferred revenue, short-term (in thousands):
|
2. STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||||
Total stock-based compensation | $ 364 | $ 215 | $ 580 | $ 534 |
Cost of Sales | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||||
Total stock-based compensation | 57 | 23 | 79 | 47 |
Selling, General and Administrative | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||||
Total stock-based compensation | 218 | 141 | 368 | 388 |
Research and Development | ||||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||||
Total stock-based compensation | $ 89 | $ 51 | $ 133 | $ 99 |
2. STOCK-BASED COMPENSATION (Details 1) - Stock Options - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Expected term (in years) | 4 years | 4 years | 4 years | 4 years |
Volatility | 74.00% | 81.00% | 77.00% | 81.00% |
Risk-free interest rate | 1.92% | 1.10% | 1.77% | 1.02% |
Weighted average grant date fair value | $ 1.93 | $ 1.66 | $ 2.22 | $ 1.09 |
2. STOCK-BASED COMPENSATION (Details 2) - Stock Option and RSU Transactions - shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2017 |
Aug. 31, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Available Shares, Beginning (in thousands) | 1,881 | 2,169 | 2,169 | ||
Options granted (in thousands) | (41) | (224) | |||
RSUs granted (in thousands) | 0 | (64) | 0 | (64) | (138) |
Shares cancelled (in thousands) | 0 | 0 | |||
Available Shares, Ending (in thousands) | 1,840 | 1,881 | 1,840 |
2. STOCK-BASED COMPENSATION (Details 3) - Outstanding Options Stock Option Transactions - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2017 |
Aug. 31, 2017 |
|
Options Outstanding, Beginning (in thousands) | 3,109 | 3,074 |
Options granted (in thousands) | 41 | 224 |
Options cancelled (in thousands) | 0 | 0 |
Options exercised (in thousand) | (132) | (189) |
Options Outstanding, Ending (in thousands) | 3,018 | 3,109 |
Weighted Average Exercise Price Outstanding, Beginning | $ 1.92 | $ 1.73 |
Weighted Average Exercise Price Granted | 3.46 | 3.93 |
Weighted Average Exercise Price Cancelled | 0.00 | 0.00 |
Weighted Average Exercise Price Exercised | 1.46 | 1.23 |
Weighted Average Exercise Price Outstanding, Ending | $ 1.96 | $ 1.92 |
Aggregate Intrinsic Value, beginning balance | $ 4,612 | $ 8,763 |
Aggregate Intrinsic Value, ending balance | $ 2,230 | $ 4,612 |
Options fully vested and expected to vest, ending (in thousands) | 2,984 | |
Weighted Average Exercise Price for Options fully vested and expected to vest, ending | $ 1.95 | |
Aggregate Intrinsic Value for Options fully vested and expected to vest, ending | $ 2,220 |
2. STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, $ in Thousands |
6 Months Ended |
---|---|
Nov. 30, 2017
USD ($)
$ / shares
shares
| |
$0.59-$0.97 | |
Options Outstanding, Ending (in thousands) | shares | 424 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 1 year 3 months 22 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 0.68 |
Options exercisable shares, ending (in thousands) | shares | 424 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 1 year 3 months 22 days |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 0.68 |
$1.09-$1.36 | |
Options Outstanding, Ending (in thousands) | shares | 645 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 2 years 1 month 10 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.27 |
Options exercisable shares, ending (in thousands) | shares | 645 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 2 years 1 month 6 days |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 1.27 |
$1.68-$2.06 | |
Options Outstanding, Ending (in thousands) | shares | 487 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 4 years 8 months 23 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.74 |
Options exercisable shares, ending (in thousands) | shares | 276 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 4 years 11 days |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 1.79 |
$2.10-$2.81 | |
Options Outstanding, Ending (in thousands) | shares | 1,197 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 4 years 4 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 2.45 |
Options exercisable shares, ending (in thousands) | shares | 953 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 11 months 26 days |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 2.47 |
$3.46-$3.93 | |
Options Outstanding, Ending (in thousands) | shares | 265 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 6 years 7 months 28 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 3.88 |
Options exercisable shares, ending (in thousands) | shares | 22 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 6 years 7 months 28 days |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 3.88 |
$0.59-$3.93 | |
Options Outstanding, Ending (in thousands) | shares | 3,018 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 3 years 6 months 25 days |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.96 |
Options exercisable shares, ending (in thousands) | shares | 2,320 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 1.74 |
Aggregate Intrinsic Value for Options exercisable, ending | $ | $ 1,985 |
2. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2017 |
Aug. 31, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Stock-based compensation costs capitalized as part of inventory | $ 0 | $ 0 | $ 0 | $ 0 | |
Intrinsic value of options exercised | 269 | 359 | $ 745 | 411 | |
Weighted average remaining contractual life of the options exercisable and expected to be exercisable | 3 years 6 months 22 days | ||||
Stock Option and RSU Transactions | |||||
Stock-based compensation expense related to stock options and RSUs | $ 207 | $ 185 | $ 408 | $ 464 | |
Restricted Stock Units granted (in thousands) | 0 | 64 | 0 | 64 | 138 |
Market value on the date of the grant | $ 3.93 | $ 1.68 | |||
Restricted Stock Units vested (in thousands) | 4 | 7 | |||
Restricted Stock Units unvested (in thousands) | 89 | 89 | |||
Restricted Stock Units unvested intrinsic value | $ 227 | $ 227 | |||
2006 and 2016 Equity Incentive Plans | |||||
Unrecognized stock-based compensation | 1,316 | 1,316 | |||
Estimated forfeitures of unvested stock based awards, amount | 3 | $ 3 | |||
Weighted average period for recognition of costs | 2 years 6 months | ||||
Employee Stock Purchase Plan | |||||
Weighted average period for recognition of costs | 3 months 18 days | ||||
Stock-based compensation related to the ESPP | 157 | $ 30 | $ 172 | $ 70 | |
Compensation cost related to purchase rights under the ESPP but not yet recognized | $ 49 | $ 49 | |||
ESPP purchase right granted (in thousands) | 0 | 0 | 0 | 0 |
3. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Numerator: Net income (loss) | $ 60 | $ (1,452) | $ 70 | $ (2,207) |
Denominator for basic net income (loss) per share: Weighted average shares outstanding (in thousands) | 21,645 | 16,029 | 21,531 | 14,673 |
Shares used in basic net income (loss) per share calculation (in thousands) | 21,645 | 16,029 | 21,531 | 14,673 |
Effect of dilutive securities (in thousands) | 1,238 | 0 | 1,406 | 0 |
Denominator for diluted net income (loss) per share (in thousands) | 22,883 | 16,029 | 22,937 | 14,673 |
Basic net income (loss) per share | $ 0 | $ (0.09) | $ 0 | $ (0.15) |
Diluted net income (loss) per share | $ 0 | $ (0.09) | $ 0 | $ (0.15) |
3. EARNINGS PER SHARE (Details Narrative) - shares |
6 Months Ended | |
---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Employee Stock Purchase Plan | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 246 | |
Convertible Notes | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 2,657 | 2,657 |
Stock Options | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 263 | 3,229 |
Restricted Stock Units | ||
Options not included in the computation of diluted net income (loss) per share (in thousands) | 72 |
4. CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
[1] | Nov. 30, 2016 |
May 31, 2016 |
||
---|---|---|---|---|---|---|---|
Cash, cost | $ 1,802 | ||||||
Cash, estimated fair value | 1,802 | ||||||
Cash equivalents, cost | 8,157 | ||||||
Cash equivalents, estimated fair value | 8,157 | ||||||
Cash and cash equivalents, cost | 9,959 | $ 17,803 | $ 5,154 | $ 939 | |||
Cash and cash equivalents, estimated fair value | 9,959 | $ 17,803 | $ 5,154 | $ 939 | |||
Short-term investments, gross unrealized loss | 3 | ||||||
Cash, cash equivalents, and investments, cost | 15,931 | ||||||
Cash, cash equivalents, and investments, gross unrealized loss | 3 | ||||||
Cash, cash equivalents, and investments, estimated fair value | 15,928 | ||||||
Money Market Funds At Carrying Value | |||||||
Cash equivalents, cost | 4,164 | ||||||
Cash equivalents, estimated fair value | 4,164 | ||||||
U.S. Treasury securities | |||||||
Cash equivalents, cost | 3,993 | ||||||
Cash equivalents, estimated fair value | 3,993 | ||||||
Short-term investments, cost | 5,972 | ||||||
Short-term investments, gross unrealized loss | 3 | ||||||
Short-term investments, estimated fair value | 5,969 | ||||||
Cash, cash equivalents, and investments, gross unrealized loss | $ 3 | ||||||
|
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
---|---|---|
Money market funds | $ 4,164 | $ 15,516 |
U.S. Treasury securities | 9,962 | 0 |
Certificate of deposit | 50 | 50 |
Assets | 14,176 | 15,566 |
Level 1 | ||
Money market funds | 4,164 | 15,516 |
U.S. Treasury securities | 9,962 | 0 |
Certificate of deposit | 0 | 0 |
Assets | 14,126 | 15,516 |
Level 2 | ||
Money market funds | 0 | 0 |
U.S. Treasury securities | 0 | 0 |
Certificate of deposit | 50 | 50 |
Assets | 50 | 50 |
Level 3 | ||
Money market funds | 0 | 0 |
U.S. Treasury securities | 0 | 0 |
Certificate of deposit | 0 | 0 |
Assets | $ 0 | $ 0 |
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Transfers between Level 1 and Level 2 fair value measurements | $ 0 | $ 0 |
6. ACCOUNTS RECEIVABLE, NET (Details Narrative) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
---|---|---|
Accounts Receivable, Net, Current [Abstract] | ||
Allowance for doubtful accounts customer trade receivables | $ 47 | $ 61 |
7. INVENTORIES (Details) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
|||
---|---|---|---|---|---|
Inventory, Net [Abstract] | |||||
Raw materials and sub-assemblies | $ 5,020 | $ 4,268 | |||
Work in process | 2,970 | 2,059 | |||
Finished goods | 235 | 277 | |||
Inventory | $ 8,225 | $ 6,604 | [1] | ||
|
8. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Net sales | $ 7,923 | $ 4,216 | $ 14,893 | $ 9,534 |
Property and equipment, net | 1,166 | 793 | 1,166 | 793 |
US | ||||
Net sales | 1,964 | 1,709 | 3,254 | 4,873 |
Property and equipment, net | 1,116 | 740 | 1,116 | 740 |
Asia | ||||
Net sales | 5,909 | 2,256 | 11,569 | 4,166 |
Property and equipment, net | 39 | 39 | 39 | 39 |
Europe | ||||
Net sales | 50 | 251 | 70 | 495 |
Property and equipment, net | $ 11 | $ 14 | $ 11 | $ 14 |
8. SEGMENT INFORMATION (Details Narrative) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Five Largest Customers | ||||
Customers accounted for 10% or more of total revenues | 94.00% | 96.00% | 96.00% | 95.00% |
Customer A | ||||
Customers accounted for 10% or more of total revenues | 43.00% | 60.00% | 43.00% | 50.00% |
Customer B | ||||
Customers accounted for 10% or more of total revenues | 34.00% | 22.00% | 39.00% | 19.00% |
Customer C | ||||
Customers accounted for 10% or more of total revenues | 16.00% |
9. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Nov. 30, 2017 |
Nov. 30, 2016 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at the beginning of the period | $ 119 | $ 90 | $ 113 | $ 155 |
Accruals for warranties issued during the period | 152 | 11 | 246 | 11 |
Accruals and adjustments (change in estimates) related to pre-existing warranties during the period | 0 | 0 | 0 | (54) |
Settlement made during the period (in cash or in kind) | (138) | (29) | (226) | (40) |
Balance at the end of the period | $ 133 | $ 72 | $ 133 | $ 72 |
9. PRODUCT WARRANTIES (Details Narrative) |
6 Months Ended |
---|---|
Nov. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Standard warranty period | The standard warranty period is one year for systems and ninety days for parts and service. |
10. ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2017
USD ($)
| ||||
Accumulated other comprehensive income, beginning | $ 2,249 | [1] | ||
Other comprehensive income (loss) before reclassifications | 57 | |||
Other comprehensive income (loss), net of tax | 57 | |||
Accumulated other comprehensive income, ending | 2,306 | |||
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||
Accumulated other comprehensive income, beginning | 2,249 | |||
Other comprehensive income (loss) before reclassifications | 60 | |||
Other comprehensive income (loss), net of tax | 60 | |||
Accumulated other comprehensive income, ending | 2,309 | |||
Unrealized loss on Investments, Net | ||||
Accumulated other comprehensive income, beginning | 0 | |||
Other comprehensive income (loss) before reclassifications | (3) | |||
Other comprehensive income (loss), net of tax | (3) | |||
Accumulated other comprehensive income, ending | $ (3) | |||
|
12. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) - USD ($) $ in Thousands |
Nov. 30, 2017 |
May 31, 2017 |
---|---|---|
Customer Deposits And Deferred Revenue Short-term Details | ||
Customer deposits | $ 2,755 | $ 3,264 |
Deferred revenue | 387 | 203 |
Total | $ 3,142 | $ 3,467 |
13. LONG-TERM DEBT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2016 |
Apr. 10, 2015 |
|
Debt Disclosure [Abstract] | |||
Convertible debt, principal amount | $ 6,110 | $ 4,110 | |
Convertible note, interest rate | 9.00% | ||
Convertible note, maturity | Apr. 10, 2019 | ||
Convertible note, interest payment | Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. |
||
Debt issuance costs | $ 356 | ||
Amortization of debt issuance costs | $ 0 | $ 89 | |
Conversion price for the Convertible Notes | $ 2.30 | ||
Convertible Notes, Terms of Conversion Feature | The conversion price for the Convertible Notes is $2.30 per share and is subject to adjustment upon the occurrence of certain specified events. Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
|
||
Line of credit, maximum borrowing capacity | $ 2,000 |
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