1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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BUSINESS:
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Aehr Test Systems (the “Company”)\rwas incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in\rthe semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full\rwafer contact parallel test and burn-in systems, the MAX burn-in system, WaferPak full wafer contactor, the DiePak carrier and\rtest fixtures.
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LIQUIDITY:
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Since inception, the Company has incurred\rsubstantial cumulative losses and negative cash flows from operations. In response, the Company took steps to minimize expense\rlevels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood\rthat it will have sufficient cash to support operations.
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At May 31, 2019, the Company had $5.4 million\rin cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections\rof existing accounts receivable, revenue from our existing backlog of products, the sale of inventory on hand, and deposits and\rdown payments against significant orders will be adequate to meet its working capital and capital equipment requirements. We believe\rour existing cash and cash equivalents will be sufficient to meet our anticipated cash needs over the next 12 months. Our future\rcapital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research\rand development activities, the timing and cost of establishing additional sales and marketing capabilities, the timing and cost\rto introduce new and enhanced products and the timing and cost to implement new manufacturing technologies. In the event that\radditional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. Any\radditional debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising\ractivities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and\rto pursue business opportunities, including potential acquisitions. Additionally, if we raise additional funds through further\rissuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer\rsignificant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences\rand privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms\rsatisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges\rcould be significantly limited.
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CONSOLIDATION:
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The consolidated financial statements include\rthe accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions\rhave been eliminated.
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FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS:
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Assets and liabilities of the Company’s\rforeign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros\rand New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses\rare translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that\rarise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as\ra separate component of shareholders’ equity (deficit).
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Transaction gains and losses that arise from\rexchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations\ras incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented.
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USE OF ESTIMATES:
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The preparation of financial\rstatements in conformity with accounting principles generally accepted in the United States of America requires management to\rmake estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets\rand liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the\rreporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated\rfinancial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and\rwarranty reserves.
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CASH EQUIVALENTS:
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Cash equivalents consist of money market\rinstruments purchased with an original maturity of three months or less. These investments are reported at fair value.
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ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:
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Accounts receivable are derived from the\rsale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers\rand burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The\rCompany maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also\rreviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company\rexercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general\reconomic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables\rare recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.\rNo significant adjustments to the allowance for doubtful accounts were recorded during the fiscal years ended May 31, 2019, 2018\ror 2017.
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CONCENTRATION OF CREDIT RISK:
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The Company sells its products primarily\rto semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2019, approximately 49%, 25% and 26% of gross\raccounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2018, approximately\r55%, 45% and 0% of gross accounts receivable were from customers located in North America, Asia, and Europe, respectively. Three\rcustomers accounted for 44%, 25% and 21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 38%, 32%\rand 11% of gross accounts receivable as of May 31, 2018. Four customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal\r2019. Three customers accounted for 34%, 26% and 13% of net sales in fiscal 2018. The Company performs ongoing credit evaluations\rof its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international\rcustomers.
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The Company’s cash and cash equivalents\rare generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests\rits excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund.\rThe money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds\ror short-term cash deposits.
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CONCENTRATION OF SUPPLY RISK:
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The Company relies on subcontractors to manufacture\rmany of the components and subassemblies used in its products. Quality or performance failures of the Company’s products\ror changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality\rproducts to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components\rand technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources.\rThe loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing\rand delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products.
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INVENTORIES:
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Inventories include material, labor and overhead,\rand are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated\rselling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess,\robsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company\radjusts inventory balances to approximate the lower of its manufacturing costs or net realizable value. If actual future demand\ror market conditions become less favorable than those projected by management, additional inventory write-downs may be required,\rand would be reflected in cost of sales in the period the revision is made.
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PROPERTY AND EQUIPMENT:
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Property and equipment are stated at cost\rless accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed\ras incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease.\rFurniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated\ruseful lives. The ranges of estimated useful lives are generally as follows:
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| Furniture and fixtures | \r2 to 6 years |
| Machinery and equipment | \r3 to 6 years |
| Test equipment | \r4 to 6 years |
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REVENUE RECOGNITION:
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In May 2014, the FASB issued FASB ASC Topic\r606, Revenue from Contracts with Customers (Topic 606), which was subsequently updated (collectively “ASC 606”).\rWe adopted the standard as of June 1, 2018, using the modified retrospective method. Under this method, we applied ASC 606 to contracts\rthat were not complete as of June 1, 2018 and recognized the cumulative effect of initially applying the standard as an adjustment\rto the opening balance of retained earnings. Results for reporting periods beginning after June 1, 2018 are presented in accordance\rwith ASC 606. Under the modified retrospective adoption method, prior period amounts are not adjusted and are reported in accordance\rwith the accounting standards in effect for those periods per FASB ASC Topic 605, Revenue Recognition, which is also referred\rto herein as “legacy GAAP.”
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The adoption of ASC 606 did not have a material\rimpact on our consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit as of the\radoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption\rof the revenue standard to have a material impact to our net income on an ongoing basis.
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We sell our products primarily through a\rdirect sales force. In certain international markets, we sell our products through independent distributors. We consider revenue\rto be earned when all of the following criteria are met:
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● We have a contract with a customer that creates enforceable\rrights and obligations,
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● Promised performance obligations are identified,
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● The transaction price, or the amount we expect to receive,\ris determinable and
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● We have satisfied the performance obligations to the customer.
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Transfer of control is evidenced upon passage\rof title and risk of loss to the customer unless we are required to provide additional services.
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PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE:
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Costs incurred in the research and development\rof new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the\rCompany’s products are charged to operations as incurred until technological feasibility of the software has been established.\rGenerally, technological feasibility is established when the software module performs its primary functions described in its original\rspecifications, contains features required for it to be usable in a production environment, is completely documented and the related\rhardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized.\rCapitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized\rcosts are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line\rmethods over ten years. No system software development costs were capitalized or amortized in fiscal 2019, 2018 and 2017.
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IMPAIRMENT OF LONG-LIVED ASSETS:
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In the event that facts and circumstances\rindicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation\ris required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying\rvalue to determine if a write-down is required.
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ADVERTISING COSTS:
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The Company expenses all advertising costs\ras incurred and the amounts were not material for all periods presented.
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SHIPPING AND HANDLING OF PRODUCTS:
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Amounts billed to customers for shipping\rand handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in\rcost of sales.
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INCOME TAXES:
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Income taxes have been provided using the\rliability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and\rtax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and\rlaws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances\rare established when it is determined that it is more likely than not that such assets will not be realized.
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A full valuation allowance was established\ragainst all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be\rrealized, as of May 31, 2019 and 2018.
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The Company accounts for uncertain tax positions\rconsistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and\rmeasurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in\ra tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The\rCompany recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
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Although the Company files U.S. federal,\rvarious state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany\rand Japan. Tax years 1996 – 2018 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers,\rresearch and development tax credits, or other tax attributes from those years.
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COMPREHENSIVE (LOSS) INCOME:
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Comprehensive (loss) income generally represents\rall changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized\rgains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive (loss)\rincome, which are excluded from net (loss) income. Comprehensive (loss) income is included in the statements of comprehensive (loss)\rincome.
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RECENT ACCOUNTING PRONOUNCEMENTS:
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Accounting Standards Adopted
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Revenue Recognition
\r\rIn May 2014, the FASB issued Accounting Standards\rCodification (“ASC”) Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently\rupdated (collectively “ASC 606”). The core principle of the standard is to recognize revenues when promised goods or\rservices are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods\ror services. The new standard defines a five-step process to achieve this core principle and, in doing so, it is possible more\rjudgment and estimates may be required within the revenue recognition process than required under legacy GAAP, including identifying\rperformance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and\rallocating the transaction price to each distinct performance obligation. The standard permits the use of either the retrospective\ror modified retrospective transition methods. It also requires expanded disclosures including the nature, amount, timing, and uncertainty\rof revenues and cash flows related to contracts with customers. Additionally, qualitative and quantitative disclosures are required\rabout customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill\ra contract.
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The Company adopted ASC 606 on June 1, 2018,\rthe first day of fiscal 2019, using the modified retrospective method. The Company applied ASC 606 to all contracts not completed\ras of the date of adoption in order to determine any adjustment to the opening balance of retained earnings. Under the modified\rretrospective adoption method, the comparative financial information has not been restated and continues to be reported under the\raccounting standards in effect for those periods, ASC 605, "Revenue Recognition", which is also referred to herein\ras "legacy GAAP."
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The adoption of ASC 606 did not have a material\rimpact on the Company’s consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit\ras of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, the Company does not\rexpect the adoption of the revenue standard to have a material impact to the Company’s net income on an ongoing basis.
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Classification of Certain Cash Receipts\rand Cash Payments
\r\rIn August 2016, the FASB issued authoritative\rguidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. The Company adopted\rthis new standard in fiscal year 2019. The adoption of this guidance did not have a significant impact on the Company’s consolidated\rfinancial statements.
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Intra-Entity Asset Transfers
\r\rIn October 2016, the FASB issued an accounting\rstandard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory)\rat the transaction date. The Company adopted this new standard in fiscal year 2019. The adoption of this guidance did not have\ra significant impact on the Company’s consolidated financial statements.
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Restricted Cash.
\r\rIn November 2016, the FASB issued authoritative\rguidance related to statements of cash flows. This guidance clarifies that amounts generally described as restricted cash and restricted\rcash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total\ramounts shown on the statement of cash flows. The Company adopted this new standard in fiscal year 2019. The adoption of this guidance\rdid not have a significant impact on the Company’s consolidated financial statements.
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Income Taxes
\r\rOn December 22, 2017, the US government enacted\rcomprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes\rbroad and complex changes to the US tax code including but not limited to (1) reducing the US federal corporate tax rate from 34%\rto 21%; (2) requiring companies to pay a one-time transition tax on certain repatriated earnings of foreign subsidiaries; (3) generally\reliminating US federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in US federal income\rof certain earnings of controlled foreign corporations; (5) creating a new limitation on deductible interest expense; (6) changing\rrules related to the uses and limitations of net operating loss carryforwards created in tax years beginning after December 31,\r2017, and (7) repealing the corporate alternative minimum tax regime, or AMT, effective December 31, 2017 and permitting existing\rminimum tax credits to offset the regular tax liability for any tax year. Consequently, the Company has accounted for the reduction\rof $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance for the fiscal year ended 2018,\rand recorded a benefit of $90,000 for the Company’s Federal refundable AMT credit.
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On December 22, 2017, the SEC staff issued\rStaff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax\rAct. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies\rto complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects\rof those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting\rfor certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a\rprovisional estimate in the financial statements. There are also certain transitional impacts of the Tax Act. As part of the transition\rto the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings\rof foreign subsidiaries. The Company is not subject to the transition tax. The one-time transition tax is based on post-1986 earnings\rand profits that were previously deferred from U.S. income tax. The Company has finalized its calculation of the total post-1986\rearnings and profits for its foreign corporations. Based on the Company’s net operating loss carryovers and valuation allowance,\rthere is no impact to its consolidated financial statements as a result of the completion of the analysis.
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Accounting Standards Not Yet Adopted
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Financial Instruments
\r\rIn January 2016, the FASB issued an accounting\rstandard update related to recognition and measurement of financial assets and financial liabilities. This standard changes accounting\rfor equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for\rfinancial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred\rtax assets resulting from unrealized losses on available-for-sale debt securities. This standard is effective for us in fiscal\ryear 2020. Early adoption is permitted. The Company does not expect a material impact of this new guidance on its consolidated\rfinancial statements.
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In June 2016, the FASB issued an accounting\rstandard update that requires measurement and recognition of expected credit losses for financial assets held based on historical\rexperience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount.\rThe accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a modified retrospective\rbasis, and early adoption in fiscal 2020 is permitted. The Company does not expect a material impact of this accounting standard\rupdate on its consolidated financial statements.
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Leases
\r\rIn February 2016, the FASB issued ASU No.\r2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency\rand comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements.\rThe Company will adopt ASU 2016-02 utilizing the modified retrospective transition method through a cumulative-effect adjustment\rat the beginning of its first quarter of 2020. The Company has reached conclusions on its accounting assessments to the new standard\rand anticipates recording right of use assets and lease liabilities, including deferred rent, of approximately $2.7 million on\rthe Company's Condensed Consolidated Balance Sheets for those leases currently classified as operating leases. However, the ultimate\rimpact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date.
\r\r"}]},{"name":"rpt:f-775","factDimensions":{"xbrl:concept":"us-gaap:RevenueFromContractWithCustomerTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"\r\r
2. REVENUE:
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Revenue recognition
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The Company recognizes revenue when promised\rgoods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be\rentitled in exchange for those goods or services by following a five-step process, (1) identify the contract with a customer, (2)\ridentify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price,\rand (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.
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Performance obligations include sales of\rsystems, contactors, spare parts, and services, as well as, installation and training services included in customer contracts.
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A contract’s transaction price is allocated\rto each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject\rto refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does\rnot grant return privileges, except for defective products during the warranty period.
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For contracts that contain multiple performance\robligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price\rbasis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for\rproducts and services and pricing practices in different geographies.
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Revenue for systems and spares are recognized\rat a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are\rcompleted or ratably over the contractual period of generally one year or less.
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The Company has elected the practical expedient\runder ASC 606 to not assess whether a contract has a significant financing component as the Company’s standard payment terms\rare less than one year.
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Disaggregation of revenue
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The following tables show revenues by major\rproduct categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount,\rtiming and uncertainty around revenue recognition and cash flow are substantially similar.
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The Company’s revenues by product category\rare as follows (in thousands):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Type of good / service: | \r | \r | \r | |||||||||
| Systems | \r | $ | 9,566 | \r | $ | 18,174 | \r | $ | 12,115 | |||
| Contactors | \r | 6,154 | \r | 6,500 | \r | 1,991 | ||||||
| Services | \r | 5,336 | \r | 4,881 | \r | 4,792 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 | ||||
| Product lines: | \r | \r | \r | |||||||||
| Wafer-level | \r | $ | 14,618 | \r | $ | 13,080 | \r | $ | 9,582 | |||
| Test During Burn-In | \r | 6,438 | \r | 16,475 | \r | 9,316 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
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The following presents information about\rthe Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Geographic region: | \r | \r | \r | |||||||||
| United States | \r | $ | 13,468 | \r | $ | 8,446 | \r | $ | 7,762 | |||
| Asia | \r | 5,648 | \r | 19,973 | \r | 10,439 | ||||||
| Europe | \r | 1,940 | \r | 1,136 | \r | 697 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
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With the exception of the amount of service\rcontracts and extended warranties, the Company’s product category revenues are recognized at point in time when control transfers\rto customers.
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| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Timing of revenue recognition (in thousands): | \r | \r | \r | |||||||||
| Products and services transferred at a point in time | \r | $ | 18,473 | \r | $ | 27,337 | \r | $ | 17,193 | |||
| Services transferred over time | \r | 2,583 | \r | 2,218 | \r | 1,705 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
\r\r
Contract balances
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A receivable is recognized in the period\rthe Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company\rusually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance\robligation, and therefore, a receivable is more commonly recorded than a contract asset.
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Contract liabilities include payments received\rin advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are\rreported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of deferred revenue. Contract\rliabilities as of May 31, 2019 and 2018 were $1,734,000 and $2,089,000, respectively. During the fiscal year ended May 31, 2019,\rthe Company recognized $1,273,000 of revenues that were included in contract liabilities as of May 31, 2018.
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Remaining performance obligations
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On May 31, 2019, the Company had $731,000\rof remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet\rdelivered. The Company expects to recognize approximately 74% of its remaining performance obligations as revenue in fiscal 2020,\rand an additional 26% in fiscal 2021 and thereafter. The foregoing excludes the value of other remaining performance obligations\ras they have original durations of one year or less, and also excludes information about variable consideration allocated entirely\rto a wholly unsatisfied performance obligation.
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Costs to obtain or fulfill a contract
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The Company generally expenses sales commissions\rwhen incurred as a component of selling, general and administrative expense as the amortization period is typically less than one\ryear. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory\rand fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment\rare immaterial due to the nature of the Company’s products and their respective manufacturing process.
\r\r"}]},{"name":"rpt:f-776","factDimensions":{"xbrl:concept":"us-gaap:EarningsPerShareTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
3. EARNINGS PER SHARE (“EPS”):
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Basic EPS is determined using the weighted\raverage number of common shares outstanding during the period. Diluted EPS is determined using the weighted average number of common\rshares and potential common shares (representing the dilutive effect of stock options, RSUs and ESPP shares) outstanding during\rthe period using the treasury stock method.
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The following table presents the computation\rof basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per\rshare data):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Numerator: Net (loss) income | \r | $ | (5,235 | ) | \r | $ | 528 | \r | $ | (5,653 | ) | |
| \r | \r | \r | ||||||||||
| Denominator for basic net (loss) income per share: | \r | \r | \r | |||||||||
| Weighted-average shares outstanding | \r | 22,387 | \r | 21,732 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Shares used in basic net (loss) income per share calculation | \r | 22,387 | \r | 21,732 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Effect of dilutive securities | \r | — | \r | 1,050 | \r | — | ||||||
| \r | \r | \r | ||||||||||
| \r | \r | \r | ||||||||||
| Denominator for diluted net (loss) income per share | \r | 22,387 | \r | 22,782 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Basic net (loss) income per share | \r | $ | (0.23 | ) | \r | $ | 0.02 | \r | $ | (0.35 | ) | |
| \r | \r | \r | ||||||||||
| Diluted net (loss) income per share | \r | $ | (0.23 | ) | \r | $ | 0.02 | \r | $ | (0.35 | ) |
\r\r
For the purpose of computing diluted earnings\rper share, the weighted average number of potential common shares does not include stock options with an exercise price greater\rthan the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. In the fiscal\ryears ended May 31, 2019 and 2017, potential common shares have not been included in the calculation of diluted net loss per share\ras the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss\rper share for these periods are the same. Stock options to purchase 3,107,000 and 3,074,000 shares of common stock were outstanding\ron May 31, 2019 and 2017, respectively, but were not included in the computation of diluted net loss per share, because the inclusion\rof such shares would be anti-dilutive. Stock options to purchase 1,313,000 shares of common stock were outstanding as of May 31,\r2018 but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive.\rESPP rights to purchase 297,000 and 169,000 ESPP shares were outstanding on May 31, 2019 and 2017, respectively, but were not included\rin the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. RSUs for 23,000\rshares and 32,000 shares were outstanding on May 31, 2019 and 2017, respectively, but were not included in the computation of diluted\rnet loss per share, because the inclusion of such shares would be anti-dilutive. The 2,657,000 shares convertible under the Convertible\rNotes outstanding on May 31, 2018 and 2017 were not included in the computation of diluted net income (loss) per share, because\rthe inclusion of such shares would be anti-dilutive.
\r\r"}]},{"name":"rpt:f-777","factDimensions":{"xbrl:concept":"us-gaap:FairValueDisclosuresTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
4. FAIR VALUE OF FINANCIAL INSTRUMENTS:
\r\r\r\r
The Company’s financial instruments\rare measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes\ra framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements.
\r\r\r\r
The guidance establishes a fair value hierarchy\rbased on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable\rinputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent\rsources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair\rvalue hierarchy consists of the following three levels:
\r\r\r\r
Level 1 - instrument valuations are obtained from real-time quotes\rfor transactions in active exchange markets involving identical assets.
\r\r\r\r
Level 2 - instrument valuations are obtained from readily-available\rpricing sources for comparable instruments.
\r\r\r\r
Level 3 - instrument valuations are obtained without observable market\rvalues and require a high level of judgment to determine the fair value.
\r\r\r\r
The following table summarizes the Company’s\rfinancial assets measured at fair value on a recurring basis as of May 31, 2019 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2019 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 3,017 | \r | $ | 3,017 | \r | $ | — | \r | $ | — | ||||
| Assets | \r | $ | 3,017 | \r | $ | 3,017 | \r | $ | — | \r | $ | — |
\r\r
The following table summarizes the Company’s financial\rassets measured at fair value on a recurring basis as of May 31, 2018 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2018 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 7,813 | \r | $ | 7,813 | \r | $ | — | \r | $ | — | ||||
| U.S. Treasury securities | \r | 5,983 | \r | 5,983 | \r | — | \r | — | ||||||||
| Assets | \r | $ | 13,796 | \r | $ | 13,796 | \r | $ | — | \r | $ | — |
\r\r
The U.S. Treasury securities as of May 31,\r2018 have maturities of three months and have no unrealized gain or loss.
\r\r\r\r
Included in Money market funds as of May\r31, 2019 and 2018 is $80,000 restricted cash representing a security deposit for the Company’s United States manufacturing\rand office space lease.
\r\r\r\r
There were no financial liabilities measured\rat fair value as of May 31, 2019 and 2018.
\r\r\r\r
There were no transfers between Level 1 and\rLevel 2 fair value measurements during the fiscal years ended May 31, 2019 and 2018.
\r\r\r\r
The carrying amounts of financial instruments\rincluding cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities, approximate fair value due\rto their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the carrying\rvalue of the debt approximates the fair value.
\r\r"}]},{"name":"rpt:f-778","factDimensions":{"xbrl:concept":"us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
5. ACCOUNTS RECEIVABLE:
\r\r\r\r
Accounts receivable comprise (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| Accounts receivable | \r | $ | 4,859 | \r | $ | 2,860 | ||
| Less: Allowance for doubtful accounts | \r | — | \r | (4 | ) | |||
| \r | $ | 4,859 | \r | $ | 2,856 |
\r\r
| \r | \r | Additions | \r | \r | ||||||||||||
| \r | Balance at | \r | charged to | \r | \r | Balance | ||||||||||
| \r | beginning | \r | costs and | \r | \r | at end | ||||||||||
| \r | of year | \r | expenses | \r | Deductions* | \r | of year | |||||||||
| Allowance for doubtful accounts receivable: | \r | \r | \r | \r | ||||||||||||
| May 31, 2019 | \r | $ | 4 | \r | $ | — | \r | $ | (4 | ) | \r | $ | — | |||
| \r | \r | \r | \r | |||||||||||||
| May 31, 2018 | \r | $ | 61 | \r | $ | 4 | \r | $ | (61 | ) | \r | $ | 4 |
\r\r
* Deductions include write-offs of uncollectible\raccounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense.
\r\r"}]},{"name":"rpt:f-779","factDimensions":{"xbrl:concept":"us-gaap:SupplementalBalanceSheetDisclosuresTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
6. BALANCE SHEET DETAIL:
\r\r\r\r
INVENTORIES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Raw materials and sub-assemblies | \r | $ | 5,471 | \r | $ | 5,747 | ||
| Work in process | \r | 3,580 | \r | 3,068 | ||||
| Finished goods | \r | 10 | \r | 234 | ||||
| \r | $ | 9,061 | \r | $ | 9,049 |
\r\r
PROPERTY AND EQUIPMENT, NET:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Leasehold improvements | \r | $ | 1,154 | \r | $ | 1,154 | ||
| Furniture and fixtures | \r | 983 | \r | 984 | ||||
| Machinery and equipment | \r | 3,097 | \r | 2,865 | ||||
| Test equipment | \r | 2,604 | \r | 2,595 | ||||
| \r | 7,838 | \r | 7,598 | |||||
| Less: Accumulated depreciation and amortization | \r | (6,793 | ) | \r | (6,395 | ) | ||
| \r | $ | 1,045 | \r | $ | 1,203 |
\r\r
Depreciation expense was $431,000, $417,000\rand $271,000 for fiscal 2019, 2018, and 2017, respectively.
\r\r\r\r
ACCRUED EXPENSES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Payroll related | \r | $ | 990 | \r | $ | 1,014 | ||
| Restructuring | \r | 408 | \r | — | ||||
| Commissions and bonuses | \r | 168 | \r | 101 | ||||
| Professional services | \r | 162 | \r | 163 | ||||
| Warranty | \r | 154 | \r | 135 | ||||
| Material purchases | \r | 65 | \r | — | ||||
| Taxes payable | \r | 29 | \r | 34 | ||||
| Investor relations | \r | 19 | \r | 19 | ||||
| Accrued interest | \r | — | \r | 139 | ||||
| Other | \r | 39 | \r | 41 | ||||
| \r | $ | 2,034 | \r | $ | 1,646 |
\r\r
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Customer deposits | \r | $ | 1,003 | \r | $ | 1,340 | ||
| Deferred revenue | \r | 542 | \r | 290 | ||||
| \r | $ | 1,545 | \r | $ | 1,630 |
7. INCOME TAXES:
\r\r\r\r
Domestic and foreign components of (loss)\rincome before income tax (expense) benefit are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||||
| Domestic | \r | $ | (5,273 | ) | \r | $ | 433 | \r | $ | (5,663 | ) | |||
| Foreign | \r | 65 | \r | 22 | \r | 35 | ||||||||
| \r | $ | (5,208 | ) | \r | $ | 455 | \r | $ | (5,628 | ) |
\r\r
The income tax (expense) benefit consists\rof the following (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Federal income taxes: | \r | \r | \r | |||||||||
| Current | \r | $ | — | \r | $ | 99 | \r | $ | — | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| State income taxes: | \r | \r | \r | |||||||||
| Current | \r | (6 | ) | \r | (22 | ) | \r | (8 | ) | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| Foreign income taxes: | \r | \r | \r | |||||||||
| Current | \r | (21 | ) | \r | (4 | ) | \r | (17 | ) | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| \r | $ | (27 | ) | \r | $ | 73 | \r | $ | (25 | ) |
\r\r
The Company’s effective tax rate differs\rfrom the U.S. federal statutory tax rate, as follows:
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| U.S. federal statutory tax rate | \r | 21.0 | % | \r | 28.6 | % | \r | 34.0 | % | |||
| State taxes, net of federal tax effect | \r | (1.0 | ) | \r | (16.7 | ) | \r | (0.1 | ) | |||
| Foreign rate differential | \r | (0.7 | ) | \r | 39.4 | \r | 0.1 | |||||
| Stock-based compensation | \r | (2.8 | ) | \r | 39.9 | \r | (2.8 | ) | ||||
| Research and development credit | \r | 1.5 | \r | 5.9 | \r | 3.1 | ||||||
| Change in valuation allowance | \r | (15.6 | ) | \r | (1,349.2 | ) | \r | (33.8 | ) | |||
| Federal rate change impact | \r | — | \r | 1,419.7 | \r | — | ||||||
| Federal AMT refund | \r | — | \r | (20.0 | ) | \r | — | |||||
| ASU 2016-09 adoption | \r | — | \r | (169.1 | ) | \r | — | |||||
| Other | \r | (2.9 | ) | \r | 5.4 | \r | (0.9 | ) | ||||
| Effective tax rate | \r | (0.5 | )% | \r | (16.1 | )% | \r | (0.4 | )% |
\r\r
The components of the net deferred tax\rassets are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| \r | \r | |||||||
| Net operating losses | \r | $ | 13,475 | \r | $ | 12,918 | ||
| Credit carryforwards | \r | 4,995 | \r | 4,952 | ||||
| Inventory reserves | \r | 790 | \r | 588 | ||||
| Reserves and accruals | \r | 1,379 | \r | 1,419 | ||||
| Other | \r | 298 | \r | 247 | ||||
| \r | \r | |||||||
| \r | 20,937 | \r | 20,124 | |||||
| \r | \r | |||||||
| Less: Valuation allowance | \r | (20,937 | ) | \r | (20,124 | ) | ||
| Net deferred tax assets | \r | $ | — | \r | $ | — |
\r\r
The valuation allowance increased by $813,000\rduring fiscal 2019, decreased by $6,139,000 during fiscal 2018, and increased by $1,635,000 during fiscal 2017. As of May 31, 2019\rand 2018, the Company concluded that it is more likely than not that the deferred tax assets will not be realized and therefore\rprovided a full valuation allowance against the deferred tax assets. The Company will continue to evaluate the need for a valuation\rallowance against its deferred tax assets on a quarterly basis.
\r\r\r\r
At May 31, 2019, the Company had federal\rand state net operating loss carryforwards of $53,803,000 and $29,504,000 respectively. The federal and state net operating loss\rcarryforwards will begin to expire in 2024. At May 31, 2019, the Company also had federal and state research and development tax\rcredit carryforwards of $2,071,000 and $5,609,000, respectively. The federal credit carryforward will begin to expire in 2022,\rand the California credit will carryforward indefinitely. These carryforwards may be subject to certain limitations on annual utilization\rin case of a change in ownership, as defined by tax law. The Company also has alternative minimum tax credit carryforwards of $34,000\rfor state purposes. The credits may be used to offset regular tax and do not expire.
\r\r\r\r
The Company has made no provision for U.S.\rincome taxes on undistributed earnings of certain foreign subsidiaries because it is the Company’s intention to permanently\rreinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional\rU.S. income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is\rnot practicable.
\r\r\r\r
Foreign net operating loss carryforwards\rof $345,000 are available to reduce future foreign taxable income. The foreign net operating losses will expire starting in fiscal\ryear 2021.
\r\r\r\r
The Company maintains liabilities for uncertain\rtax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based\ron the best information available. The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):
\r\r\r\r
| Beginning balance as of May 31, 2016 | \r | $ | 789 | |
| \r | ||||
| Decreases related to prior year tax positions | \r | — | ||
| Decreases related to lapse of statute of limitations | \r | — | ||
| \r | ||||
| Balance at May 31, 2017 | \r | $ | 789 | |
| \r | ||||
| Increases related to prior year tax positions | \r | 889 | ||
| Increases related to current year tax positions | \r | 107 | ||
| \r | ||||
| Balance at May 31, 2018 | \r | $ | 1,785 | |
| \r | ||||
| Decreases related to prior year tax positions | \r | (41 | ) | |
| Increases related to current year tax positions | \r | 65 | ||
| \r | ||||
| Balance at May 31, 2019 | \r | $ | 1,809 |
\r\r
The ending balance of $1,809,000 of unrecognized\rtax benefits as of May 31, 2019, if recognized, would not impact the effective tax rate.
\r\r\r\r
On December 22, 2017, the U.S. government\renacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). On December\r22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting\rfor the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act\renactment date for companies to complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must\rreflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent\rthat a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable\restimate, it must record a provisional estimate in the financial statements.
\r\r\r\r
As part of the transition to the new territorial\rtax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries.\rThe company is not subject to the transition tax. The one-time transition tax is based on post-1986 earnings and profits that were\rpreviously deferred from U.S. income tax. During fiscal 2019 the Company finalized its calculation of the transition tax and due\rto carryover losses and the valuation allowance the Company determined there was no impact to the financial statements as a result\rof the completion of the analysis.
\r\r\r\r
The Tax Act also repealed the corporate alternative\rminimum tax, or AMT, effective December 31, 2017. The Tax Act repealed the corporate alternative minimum tax regime and permits\rexisting minimum tax credits to offset the regular tax liability for any tax year. Further, the credit is refundable for any tax\ryear beginning after December 31, 2017 and before December 31, 2020 in an amount equal to 50% of the excess of the minimum tax\rcredit over the allowable credit for the year against the regular tax liability. Any unused minimum tax credit carryforward is\rrefundable in the following year. As result, the Company recorded a benefit of $90,000 for its federal refundable AMT credit in\rits fiscal 2018 tax provision.
\r\r\r\r
In addition, the reduction of U.S. federal\rcorporate tax rate reduces the corporate tax rate to 21%, effective January 1, 2018. Consequently, the Company has accounted for\rthe reduction of $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance.
\r\r\r\r
Although the Company files U.S. federal,\rvarious state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany\rand Japan. Tax years 1996 – 2018 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers,\rresearch and development tax credits, or other tax attributes from those years.
\r\r"}]},{"name":"rpt:f-781","factDimensions":{"xbrl:concept":"us-gaap:LongTermDebtTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
8. LONG-TERM DEBT:
\r\r\r\r
On April 10, 2015, the Company entered into\ra Convertible Note Purchase and Credit Facility Agreement (the “Purchase Agreement”) with QVT Fund LP and Quintessence\rFund L.P. (the “Purchasers”) providing for (a) the Company’s sale to the Purchasers of $4,110,000 in aggregate\rprincipal amount of 9.0% Convertible Secured Notes due 2017 (the “Convertible Notes”) and (b) a secured revolving loan\rfacility (the “Credit Facility”) in an aggregate principal amount of up to $2,000,000. On August 22, 2016 the Purchase\rAgreement was amended to extend the maturity date of the Convertible Notes to April 10, 2019, decrease the conversion price from\r$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\radditional equity awards.
\r\r\r\r
The maximum amount of $2,000,000 drawn against\rthe Credit Facility was converted to Convertible Notes, and at May 31, 2018 there was no remaining balance available to be drawn\ron the Credit Facility.
\r\r\r\r
The Convertible Notes bore interest at an\rannual rate of 9.0%. Interest was payable quarterly on March 1, June 1, September 1 and December 1 of each year. Debt issuance\rcosts of $356,000, which were accreted over the term of the original loan using the effective interest rate method, were offset\ragainst the loan balance.
\r\r\r\r
The conversion price for the Convertible\rNotes was $2.30 per share and was subject to adjustment upon the occurrence of certain specified events. Holders could convert\rall or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date.\rUpon conversion, the Company would deliver shares of its common stock to the holder of Convertible Notes electing such conversion.\rThe Company could not redeem the Convertible Notes prior to maturity.
\r\r\r\r
The Company’s obligations under the\rPurchase Agreement were secured by substantially all of the assets of the Company.
\r\r\r\r
On the maturity date of April 10, 2019, the\rCompany paid off the Convertible Notes in an aggregate principal amount of $6.1 million.
\r\r"}]},{"name":"rpt:f-782","factDimensions":{"xbrl:concept":"us-gaap:StockholdersEquityNoteDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
9. EQUITY:
\r\r\r\r
On August 8, 2016 the Company issued\r200,000 shares of its common stock to Semics Inc., a semiconductor test equipment provider that produces fully automatic wafer\rprobe systems, in consideration for cancellation of an outstanding invoice of $323,000 for capital equipment.
\r\r\r\r
On September 28, 2016, the Company sold 2,722,000\rshares of its common stock in a private placement transaction to certain institutional and accredited investors. The purchase price\rper share of the common stock sold in the private placement was $2.15, resulting in gross proceeds to the Company of $5,851,000,\rbefore offering expenses. The net proceeds after offering expenses were $5,299,000.
\r\r\r\r
On April 19, 2017, the Company completed\ra public offering of 4,423,000 shares of its common stock at a price to the public of $3.90 per share, including the underwriter’s\rexercise of its option to purchase 577,000 additional shares to cover over-allotments. The gross proceeds to the Company were $17,250,000,\rbefore underwriting discounts and offering expenses. The net proceeds after underwriting discounts and offering expenses were $15,832,000.
\r\r"}]},{"name":"rpt:f-783","factDimensions":{"xbrl:concept":"us-gaap:ShareholdersEquityAndShareBasedPaymentsTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
10. STOCKHOLDERS’ EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED\rCOMPENSATION:
\r\r\r\r
ACCUMULATED OTHER COMPREHENSIVE INCOME:
\r\r\r\r
Changes in the components of AOCI, net of\rtax, were as follows (in thousands):
\r\r\r\r
| \r | Cumulative \rTranslation \rAdjustments | \r | Unrealized Loss \ron Investments, \rNet | \r | Total | |||||||
| \r | \r | \r | ||||||||||
| Balance at May 31, 2017 | \r | $ | 2,249 | \r | $ | — | \r | $ | 2,249 | |||
| Other comprehensive income (loss) before reclassifications | \r | 43 | \r | — | \r | 43 | ||||||
| Amounts reclassified out of AOCI | \r | — | \r | — | \r | — | ||||||
| Other comprehensive income (loss), net of tax | \r | 43 | \r | — | \r | 43 | ||||||
| Balance at May 31, 2018 | \r | $ | 2,292 | \r | $ | — | \r | $ | 2,292 | |||
| Other comprehensive income (loss) before reclassifications | \r | (62 | ) | \r | — | \r | (62 | ) | ||||
| Amounts reclassified out of AOCI | \r | — | \r | — | \r | — | ||||||
| Other comprehensive income (loss), net of tax | \r | (62 | ) | \r | — | \r | (62 | ) | ||||
| Balance at May 31, 2019 | \r | $ | 2,230 | \r | $ | — | \r | $ | 2,230 |
\r\r
STOCK-BASED COMPENSATION:
\r\r\r\r
Stock-based compensation expense consists\rof expenses for stock options, restricted stock units, or RSUs, and employee stock purchase plan, or ESPP, purchase rights. Stock-based\rcompensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the\raward using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service\rperiod. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and\rare fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly\rtraded options. For RSUs, stock-based compensation expense is based on the fair value of the Company’s common stock at the\rgrant date. All of the Company’s stock-based compensation is accounted for as equity instruments.
\r\r\r\r
The following table summarizes the stock-based\rcompensation expense for the fiscal years ended May 31, 2019, 2018 and 2017 (in thousands, except per share data):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, \rincluded in: | \r | \r | \r | |||||||||
| \r | \r | \r | ||||||||||
| Cost of sales | \r | $ | 104 | \r | $ | 148 | \r | $ | 91 | |||
| Selling, general and administrative | \r | 545 | \r | 592 | \r | 714 | ||||||
| Research and development | \r | 256 | \r | 256 | \r | 194 | ||||||
| \r | \r | \r | ||||||||||
| Net effect on net income (loss) | \r | $ | 905 | \r | $ | 996 | \r | $ | 999 | |||
| \r | \r | \r | ||||||||||
| Effect on net income (loss) per share: | \r | \r | \r | |||||||||
| Basic | \r | $ | 0.04 | \r | $ | 0.05 | \r | $ | 0.06 | |||
| Diluted | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.06 |
\r\r
As of May 31, 2019, 2018 and 2017, there\rwere no stock-based compensation expenses capitalized as part of inventory.
\r\r\r\r
During fiscal 2019, 2018 and fiscal 2017, the Company\rrecorded stock-based compensation related to stock options and restricted stock units of $650,000, $706,000 and $884,000, respectively.
\r\r\r\r
As of May 31, 2019, the total compensation\rexpense related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plan, but not yet recognized, was\r$1,182,000 which is net of estimated forfeitures of $3,000. This expense will be amortized on a straight-line basis over a weighted\raverage period of approximately 3.0 years.
\r\r\r\r
During fiscal 2019, 2018 and fiscal 2017,\rthe Company recorded stock-based compensation related to its ESPP of $255,000, $290,000 and $115,000, respectively. The increase\rin fiscal 2018 is primarily due to employees increasing their ESPP elections during the fiscal year.
\r\r\r\r
As of May 31, 2019, the total compensation\rexpense related to purchase rights under the ESPP but not yet recognized was $179,000. This expense will be amortized on a straight-line\rbasis over a weighted average period of approximately 1.2 years.
\r\r\r\r
Valuation Assumptions
\r\r\r\r
Valuation and Amortization Method. The Company\restimates the fair value of stock options granted using the Black-Scholes option valuation method and a single option award approach.\rThe fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the\rawards, which is generally the vesting period.
\r\r\r\r
Expected Term. The Company’s expected\rterm represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based\ron historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations\rof future employee behavior as evidenced by changes to the terms of its stock-based awards.
\r\r\r\r
Volatility. Volatility is a measure of the\ramounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected\rvolatility) during a period. The Company uses the historical volatility for the past five years, which matches the expected term\rof most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six\rmonths, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based\rcompensation expense recorded.
\r\r\r\r
Risk-Free Interest Rate. The Company bases\rthe risk-free interest rate used in the Black-Scholes option valuation method on the implied yield in effect at the time of option\rgrant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the\rESPP.
\r\r\r\r
Fair Value. The fair values of the Company’s\rstock options granted to employees in fiscal 2019, 2018 and 2017 were estimated using the following weighted average assumptions\rin the Black-Scholes option valuation method:
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 5 | \r | 4 | \r | 4 | ||||||
| Volatility | \r | 0.72 | \r | 0.77 | \r | 0.81 | ||||||
| Risk-free interest rates | \r | 2.83 | % | \r | 1.95 | % | \r | 1.02 | % | |||
| Weighted-average grant date fair value | \r | $ | 1.33 | \r | $ | 2.07 | \r | $ | 1.09 |
\r\r
The fair value of our ESPP purchase rights\rfor the fiscal 2019, 2018 and 2017 was estimated using the following weighted-average assumptions:
\r\r\r\r
| \r | Year End May 31, | \r|||||||||||
| \r | 2019 | \r | 2018 | \r\r | 2017 | \r|||||||
| \r | \r | \r | \r | \r | ||||||||
| Expected term (in years) | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | \r | \r | 0.5 – 2.0 | \r | ||||
| Volatility | \r | 0.48 – 0.78 | \r | 0.56 – 0.81 | \r | \r | 0.79 – 1.08 | \r | ||||
| Risk-free interest rates | \r | 2.33%-2.82 | % | \r | 1.92%-2.25 | % | \r\r | 0.48%-0.80 | % | \r|||
| Weighted-average grant date fair value | \r | $ | 1.14 | \r | $ | 1.01 | \r | \r | $ | 1.65 | \r |
\r\r
EQUITY INCENTIVE PLAN:
\r\r\r\r
In October 2006, the Company’s 2006\rEquity Incentive Plan was approved by the shareholders, which provides for granting of incentive stock options, non-statutory stock\roptions, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and other stock\ror cash awards as the Company’s Board of Directors may determine.
\r\r\r\r
In October 2016, the Company’s 2016\rEquity Incentive Plan was approved by the Company’s shareholders. The 2016 Equity Incentive Plan replaced our 2006 Equity\rIncentive Plan, which was scheduled to expire in October 2016, and will continue in effect until 2026. A total of 2,238,000 shares\rof common stock have been reserved for issuance under the Company’s 2016 Equity Incentive Plan, which includes 1,438,000\rshares that remained available for issuance under the 2006 Equity Incentive Plan. See the Company’s Registration Statement\ron Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 for further information regarding the 2016 Equity\rIncentive Plan.
\r\r\r\r
As of May 31, 2019, out of the 4,277,000\rshares authorized for grant under the 2016 Equity Incentive Plan, 3,129,000 stock options and RSUs were outstanding. As of May\r31, 2018, out of the 4,718,000 shares authorized for grant under the 2016 Equity Incentive Plan, 2,906,000 stock options and RSUs\rwere outstanding.
\r\r\r\r
The following tables summarize the Company’s\rstock option and RSU transactions during fiscal 2019, 2018 and 2017 (in thousands):
\r\r\r\r
| \r | Available | |||
| \r | Shares | |||
| Balance, May 31, 2016 | \r | 1,847 | ||
| \r | ||||
| Additional shares reserved | \r | 2,238 | ||
| Options granted | \r | (368 | ) | |
| RSUs granted | \r | (157 | ) | |
| Options terminated | \r | 55 | ||
| Plan shares expired | \r | (1,446 | ) | |
| \r | ||||
| Balance, May 31, 2017 | \r | 2,169 | ||
| \r | ||||
| Options granted | \r | (338 | ) | |
| RSUs granted | \r | (64 | ) | |
| RSUs cancelled | \r | 33 | ||
| Options terminated | \r | 16 | ||
| Plan shares expired | \r | (4 | ) | |
| \r | ||||
| Balance, May 31, 2018 | \r | 1,812 | ||
| \r | ||||
| Options granted | \r | (804 | ) | |
| RSUs cancelled | \r | 8 | ||
| Options terminated | \r | 195 | ||
| Plan shares expired | \r | (64 | ) | |
| \r | ||||
| Balance, May 31, 2019 | \r | 1,147 |
\r\r
The following table summarized the stock\roption transactions during fiscal 2019, 2018 and 2017 (in thousands, except per share data):
\r\r\r\r
| \r | Outstanding Options | |||||||||||
| \r | \r | Weighted | \r | |||||||||
| \r | Number | \r | Average | \r | Aggregate | |||||||
| \r | of | \r | Exercise | \r | Intrinsic | |||||||
| \r | Shares | \r | Price | \r | Value | |||||||
| Balances, May 31, 2016 | \r | 3,201 | \r | $ | 1.66 | \r | $ | 189 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 368 | \r | $ | 1.83 | \r | ||||||
| Options terminated | \r | (55 | ) | \r | $ | 1.42 | \r | |||||
| Options exercised | \r | (440 | ) | \r | $ | 1.35 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2017 | \r | 3,074 | \r | $ | 1.73 | \r | $ | 8,763 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 338 | \r | $ | 3.56 | \r | ||||||
| Options terminated | \r | (16 | ) | \r | $ | 2.72 | \r | |||||
| Options exercised | \r | (537 | ) | \r | $ | 1.17 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2018 | \r | 2,859 | \r | $ | 2.04 | \r | $ | 1,987 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 804 | \r | $ | 2.19 | \r | ||||||
| Options terminated | \r | (195 | ) | \r | $ | 2.32 | \r | |||||
| Options exercised | \r | (361 | ) | \r | $ | 0.85 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2019 | \r | 3,107 | \r | $ | 2.20 | \r | $ | 283 | ||||
| \r | \r | \r | ||||||||||
| Options fully vested and expected to vest at May 31, 2019 | \r | 3,079 | \r | $ | 2.20 | \r | $ | 282 |
\r\r
The options outstanding and exercisable at\rMay 31, 2019 were in the following exercise price ranges (in thousands, except per share data):
\r\r\r\r
| \r | Options Outstanding | \r | Options Exercisable | |||||||||||||||||||||||||||
| \r | at May 31, 2019 | \r | at May 31, 2019 | |||||||||||||||||||||||||||
Range of | \r | Number \rOutstanding \rShares | \r |
Weighted | \r | Weighted \rAverage \rExercise Price | \r | Number \rExercisable \rShares | \r | Weighted \rAverage \rRemaining \rContractual Life \r(Years) | \r | Weighted \rAverage \rExercise Price | \r | Aggregate Intrinsic \rValue | ||||||||||||||||
| $ | 0.80-$0.97 | \r | 47 | \r | 0.52 | \r | $ | 0.85 | \r | 47 | \r | 0.52 | \r | $ | 0.85 | \r | ||||||||||||||
| $ | 1.09-$1.28 | \r | 456 | \r | 0.78 | \r | $ | 1.28 | \r | 456 | \r | 0.78 | \r | $ | 1.28 | \r | ||||||||||||||
| $ | 1.65-$2.06 | \r | 761 | \r | 4.57 | \r | $ | 1.83 | \r | 427 | \r | 3.50 | \r | $ | 1.79 | \r | ||||||||||||||
| $ | 2.10-$2.81 | \r | 1,600 | \r | 3.55 | \r | $ | 2.43 | \r | 1,244 | \r | 2.81 | \r | $ | 2.44 | \r | ||||||||||||||
| $ | 3.46-$3.93 | \r | 243 | \r | 5.16 | \r | $ | 3.85 | \r | 140 | \r | 5.20 | \r | $ | 3.79 | \r | ||||||||||||||
| \r | \r | \r | \r | \r | \r | \r | ||||||||||||||||||||||||
| $ | 0.80-$3.93 | \r | 3,107 | \r | 3.47 | \r | $ | 2.20 | \r | 2,314 | \r | 2.64 | \r | $ | 2.14 | \r | $ | 274 |
\r\r
The total intrinsic values of options exercised\rwere $338,000, $1,058,000 and $810,000 during fiscal 2019, 2018 and 2017, respectively. The weighted average contractual life of\rthe options exercisable and expected to be exercisable at May 31, 2019 was 3.46 years.
\r\r\r\r
Options to purchase 2,314,000, 2,312,000\rand 2,422,000 shares were exercisable at May 31, 2019, 2018 and 2017, respectively. These exercisable options had weighted average\rexercise prices of $2.14, $1.89 and $1.63 as of May 31, 2019, 2018 and 2017, respectively.
\r\r\r\r
During the fiscal year ended May 31, 2019,\rthere were no RSUs granted to employees. During the fiscal year ended May 31, 2019, 16,000 RSUs became fully vested and 8,000 RSUs\rwere cancelled. 23,000 RSUs were outstanding and unvested at May 31, 2019. The intrinsic value of the outstanding and unvested\rRSUs at May 31, 2019 was $40,000. During the fiscal year ended May 31, 2018, RSUs for 64,000 shares were granted to employees.\rThe market value on the date of the grant of these RSUs was $3.93 per share. During the fiscal year ended May 31, 2018, 16,000\rRSUs became fully vested and 33,000 RSUs were cancelled. 47,000 RSUs were outstanding and unvested at May 31, 2018. The intrinsic\rvalue of the outstanding and unvested RSUs at May 31, 2018 was $122,000. During the fiscal year ended May 31, 2017, RSUs for 74,000\rshares were granted to employees. The market value on the date of the grant of these RSUs was $1.68 per share. 42,000 RSUs became\rfully vested during the fiscal year ended May 31, 2017, and 32,000 RSUs were outstanding and unvested at May 31, 2017. The intrinsic\rvalue of the outstanding and unvested RSUs at May 31, 2017 was $145,000.
\r\r\r\r
There were no RSUs granted to members of\rthe Board of Directors during fiscal 2019 and 2018. During the fiscal year ended May 31, 2017, RSUs for 83,000 shares were granted\rto members of the Company’s Board of Directors. The weighted average market value on the date of the grant of these RSUs\rwas $1.86 per share. All of these RSUs were fully vested at May 31, 2017.
\r\r\r\r
EMPLOYEE STOCK PURCHASE PLAN:
\r\r\r\r
In October 2006, the\rCompany’s shareholders approved the 2006 Employee Stock Purchase Plan. In October 2016, the Company’s\rshareholders approved the Company’s Amended and Restated 2006 Employee Stock Purchase Plan (the “Purchase\rPlan”), which amended and restated the 2006 Employee Stock Purchase Plan. The Purchase Plan extended the term of the\r2006 Employee Stock Purchase Plan indefinitely. See the Company’s Registration Statement on Form S-8 filed with the\rSecurities and Exchange Commission on November 14, 2016 and November 21, 2018 for further information regarding the Purchase\rPlan. The Purchase Plan has consecutive, overlapping, twenty-four month offering periods. Each twenty-four-month offering\rperiod includes four six-month purchase periods. The offering periods generally begin on the first trading day on or after\rApril 1 and October 1 each year. All employees who work a minimum of 20 hours per week and are customarily employed by the\rCompany (or an affiliate thereof) for at least five months per calendar year are eligible to participate. Under the Purchase\rPlan, shares are purchased through employee payroll deductions at exercise prices equal to 85% of the lesser of the fair\rmarket value of the Company’s common stock at either the first day of an offering period or the last day of the\rpurchase period. If a participant’s rights to purchase stock under all employee stock purchase plans of the Company\raccrue at a rate which exceeds $25,000 worth of stock for a calendar year, such participant may not be granted an option to\rpurchase stock under the Purchase Plan. The maximum number of shares a participant may purchase during a single purchase\rperiod is 3,000 shares. In October 2018, the Company’s shareholders approved an amendment to the Purchase Plan to\rincrease the number of shares authorized for issuance thereunder by an additional 350,000 shares of the Company’s\rcommon stock. After such amendment, a total of 1,850,000 shares of the Company’s common stock have been authorized for\rissuance under the Purchase Plan. During the fiscal years ended May 31, 2019, 2018 and 2017, ESPP purchase rights of 379,000,\r359,000, and 1,000 shares, respectively, were granted. For the fiscal years ended May 31, 2019, 2018 and 2017, approximately\r125,000, 237,000 and 151,000 shares of common stock, respectively, were issued under the Purchase Plan. As of May 31, 2019, a\rtotal of 1,481,000 shares have been issued under the Purchase Plan, and 369,000 ESPP shares remain available for\rissuance.
"}]},{"name":"rpt:f-784","factDimensions":{"xbrl:concept":"us-gaap:CompensationAndEmployeeBenefitPlansTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"11. EMPLOYEE BENEFIT PLANS:
\r\r\r\r
EMPLOYEE STOCK OWNERSHIP PLAN:
\r\r\r\r
The Company has a non-contributory, trusteed\remployee stock ownership plan for full-time employees who have completed three consecutive months of service and for part-time\remployees who have completed one year of service and have attained an age of 21. The Company can contribute either shares of the\rCompany’s stock or cash to the plan. The contribution is determined annually by the Company and cannot exceed 15% of the\rannual aggregate salaries of those employees eligible for participation in the plan. On May 31, 2007, the Company converted the\rAehr Test Systems Employee Stock Bonus Plan into the Aehr Test Systems Employee Stock Ownership Plan (the “Plan”).\rThe stock bonus plan was converted to an employee stock ownership plan (“ESOP”) to enable the Plan to better comply\rwith changes in the law regarding Company stock. Individuals’ account balances vest at a rate of 20% per year commencing\rupon completion of two years of service. Non-vested balances, which are forfeited following termination of employment, are allocated\rto the remaining employees in the Plan. Under the Plan provisions, each employee who reaches age fifty-five (55) and has been a\rparticipant in the Plan for ten years will be offered an election each year to direct the transfer of up to 25% of his/her ESOP\raccount to the employee self-directed account in the Savings and Retirement Plan. For anyone who met the above prerequisites, the\rfirst election to diversify holdings was offered after May 31, 2008. In the sixth year, employees will be able to diversify up\rto 50% of their ESOP accounts. Contributions of $60,000 per year were authorized for the plan during fiscal 2019, 2018 and 2017.\rThe contribution amounts are recorded as compensation expense, in the period authorized and included in accrued expenses, in the\rperiod authorized. Contributions of 23,000 shares were made to the ESOP during fiscal 2019 for fiscal 2018. Contributions of 13,000\rshares were made to the ESOP during fiscal 2018 for fiscal 2017. Contributions of 59,000 shares were made to the ESOP during fiscal\r2017 for fiscal 2016. The contribution for fiscal 2019 will be made in fiscal 2020. Shares held in the ESOP are included in the\rEPS calculation.
\r\r\r\r
401(K) PLAN:
\r\r\r\r
The Company maintains a defined contribution savings\rplan (the “401(k) Plan”) to provide retirement income to all qualified employees of the Company. The 401(k) Plan is\rintended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan is funded by voluntary\rpre-tax contributions from employees. Contributions are invested, as directed by the participant, in investment funds available\runder the 401(k) Plan. The Company is not required to make, and did not make, any contributions to the 401(k) Plan during fiscal\r2019, 2018 and 2017.
"}]},{"name":"rpt:f-785","factDimensions":{"xbrl:concept":"us-gaap:OtherIncomeAndOtherExpenseDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"12. OTHER INCOME (EXPENSE), NET:
\r\r\r\r
Other income (expense), net comprises the\rfollowing (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Foreign exchange gain (loss) | \r | $ | 43 | \r | $ | (63 | ) | \r | $ | (21 | ) | |
| Other income, net | \r | 1 | \r | 2 | \r | — | ||||||
| \r | $ | 44 | \r | $ | (61 | ) | \r | $ | (21 | ) |
"}]},{"name":"rpt:f-786","factDimensions":{"xbrl:concept":"us-gaap:ProductWarrantyDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
13. PRODUCT WARRANTIES:
\r\r\r\r
The Company provides for the estimated cost\rof product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product\rquality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s\rwarranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product\rfailure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates,\rrevisions to the estimated warranty liability would be required.
\r\r\r\r
The standard warranty period is one year\rfor systems and ninety days for parts and service.
\r\r\r\r
Following is a summary of changes in the\rCompany’s liability for product warranties during the fiscal years ended May 31, 2019 and 2018 (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| \r | \r | |||||||
| Balance at the beginning of the year | \r | $ | 135 | \r | $ | 113 | ||
| Accruals for warranties issued during the year | \r | 214 | \r | 329 | ||||
| Consumption of reserves | \r | (195 | ) | \r | (307 | ) | ||
| \r | \r | |||||||
| Balance at the end of the year | \r | $ | 154 | \r | $ | 135 |
\r\r
The accrued warranty balance is included\rin accrued expenses on the consolidated balance sheets.
\r\r"}]},{"name":"rpt:f-787","factDimensions":{"xbrl:concept":"us-gaap:SegmentReportingDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
14. SEGMENT INFORMATION:
\r\r\r\r
The Company has only one reportable segment.\rThe information for revenue category by type, product line, geography and timing of revenue recognition, is summarized in Note\r“2. REVENUE.”
\r\r\r\r
Property and equipment information is based\ron the physical location of the assets. The following table presents property and equipment information for geographic areas (in\rthousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| United States | \r | $ | 1,005 | \r | $ | 1,156 | ||
| Asia | \r | 40 | \r | 40 | ||||
| Europe | \r | — | \r | 7 | ||||
| \r | $ | 1,045 | \r | $ | 1,203 |
\r\r
There were no revenues through distributors\rfor the fiscal years ended May 31, 2019 and 2018.
\r\r\r\r
The Company’s Japanese and German subsidiaries\rprimarily comprise the foreign operations. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese\ror European customers. Net sales from outside the United States include those of Aehr Test Systems Japan K.K. and Aehr Test Systems\rGmbH.
\r\r"}]},{"name":"rpt:f-788","factDimensions":{"xbrl:concept":"us-gaap:RestructuringAndRelatedActivitiesDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
15. RESTRUCTURING:
\r\r\r\r
During the fiscal year ended May 31, 2019,\rthe Company implemented a restructuring plan in order to streamline its operations and better align its structure with its objectives\rgoing forward. In connection with the restructuring plan, the Company recognized $725,000 of restructuring charges related to employee\rtermination expenses during the fiscal year ended May 31, 2019. The Company paid $317,000 of the restructuring charge during fiscal\ryear ended May 31, 2019. At May 31, 2019, the balance of $408,000 of the restructuring charge was included in accrued expenses\ron the accompanying condensed consolidated balance sheets, and is expected to be paid in fiscal year 2020. The Company does not\rexpect to incur any further expenses in connection with this restructuring plan. There were no restructuring charges incurred for\rthe fiscal years ended May 31, 2018 and 2017.
\r\r"}]},{"name":"rpt:f-789","factDimensions":{"xbrl:concept":"us-gaap:RelatedPartyTransactionsDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
16. RELATED PARTY TRANSACTIONS:
\r\r\r\r
Mario M. Rosati, one of the Company’s\rdirectors, is also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which has served as the Company’s\routside corporate counsel and has received compensation at normal commercial rates for these services. The amounts of transactions\rduring fiscal years ended May 31, 2019, 2018 and 2017 were $90,000, $64,000, and $440,000, respectively. At May 31, 2019 and 2018,\rthe Company had $13,000 and $5,000, respectively, payable to Wilson Sonsini Goodrich & Rosati.
\r\r"}]},{"name":"rpt:f-790","factDimensions":{"xbrl:concept":"us-gaap:CommitmentsAndContingenciesDisclosureTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
17. COMMITMENTS AND CONTINGENCIES:
\r\r\r\r
COMMITMENTS
\r\r\r\r
The Company leases most of its manufacturing\rand office space under operating leases. The Company entered into non-cancelable operating lease agreements for its United States\rmanufacturing and office facilities and maintains equipment under non-cancelable operating leases in Germany. The Company’s\rprincipal administrative and production facilities are located in Fremont, California, in a 51,289 square foot building. The Company’s\rlease was renewed in February 2018 and expires in July 2023. The Company’s facility in Japan is located in a 418 square foot\roffice in Tokyo under a cancellable lease which expires in June 2022. The Company also maintains a 1,585 square foot warehouse\rin Yamanashi under a lease which expires in May 2020. The Company leases a 492 square foot sales and support office in Utting,\rGermany. The lease, which began February 1, 1992 and expires on January 31, 2021, contains an automatic twelve months renewal,\rat rates to be determined, if no notice is given prior to six months from expiry. Under the lease agreements, the Company is responsible\rfor payments of utilities, taxes and insurance.
\r\r\r\r
Minimum annual rentals payments under non-cancellable\roperating leases in each of the next five fiscal years and thereafter are as follows (in thousands):
\r\r\r\r
| Years Ending May 31, | \r | ||||
| 2020 | \r | $ | 762 | ||
| 2021 | \r | 766 | |||
| 2022 | \r | 772 | |||
| 2023 | \r | 795 | |||
| 2024 | \r | 133 | |||
| Thereafter | \r | — | |||
Total | \r | $ | 3,228 |
\r\r
Rental expense for the fiscal years ended\rMay 31, 2019, 2018 and 2017 was $787,000, $587,000 and $509,000, respectively.
\r\r\r\r
At both May 31, 2019 and 2018, the Company\rhad restricted cash of $80,000 held by a financial institution, representing a security deposit for its United States manufacturing\rand office space lease. This amount is included in other assets on the consolidated balance sheets.
\r\r\r\r
PURCHASE OBLIGATIONS
\r\r\r\r
The Company has purchase obligations to certain\rsuppliers. In some cases the products the Company purchases are unique and have provisions against cancellation of the order. At\rMay 31, 2019, the Company had $2,525,000 of purchase obligations which are due within the following 12 months. This amount does\rnot include contractual obligations recorded on the consolidated balance sheets as liabilities.
\r\r\r\r
CONTINGENCIES
\r\r\r\r
The Company may, from time to time, be involved\rin legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of\rany litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement\rthat will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash\rflows.
\r\r\r\r
In the normal course of business to facilitate\rsales of its products, the Company indemnifies other parties, including customers, with respect to certain matters, for example,\rincluding against losses arising from a breach of representations or covenants, or from intellectual property infringement or other\rclaims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition,\rthe Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain\rsimilar indemnification obligations to the Company’s agents.
\r\r\r\r
It is not possible to determine the maximum\rpotential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique\rfacts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have\rnot had a material impact on the Company’s operating results, financial position or cash flows.
\r\r"}]},{"name":"rpt:f-791","factDimensions":{"xbrl:concept":"us-gaap:QuarterlyFinancialInformationTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
18. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED):
\r\r\r\r
The following tables (presented in thousands,\rexcept per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four\rquarters of the fiscal years ended May 31, 2019 and 2018. The unaudited quarterly information has been prepared on the same basis\ras the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting\ronly of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results\rfor any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited\rconsolidated financial statements of the Company’s and the notes thereto included elsewhere herein.
\r\r\r\r
| \r | Three Months Ended | |||||||||||||||
| \r | Aug. 31, | \r | Nov. 30, | \r | Feb. 28, | \r | May 31, | |||||||||
| \r | 2018 | \r | 2018 | \r | 2019 | \r | 2019 | |||||||||
| Net sales | \r | $ | 4,740 | \r | $ | 5,911 | \r | $ | 3,163 | \r | $ | 7,242 | ||||
| Gross profit | \r | $ | 1,553 | \r | $ | 2,398 | \r | $ | 272 | \r | $ | 3,379 | ||||
| Net (loss) income | \r | $ | (1,515 | ) | \r | $ | (629 | ) | \r | $ | (3,201 | ) | \r | $ | 110 | |
| Net (loss) income per share basic and diluted | \r | $ | (0.07 | ) | \r | $ | (0.03 | ) | \r | $ | (0.14 | ) | \r | $ | 0.00 |
\r\r
| \r | Three Months Ended | |||||||||||||||
| \r | Aug. 31, | \r | Nov. 30, | \r | Feb. 28, | \r | May 31, | |||||||||
| \r | 2017 | \r | 2017 | \r | 2018 | \r | 2018 | |||||||||
| Net sales | \r | $ | 6,970 | \r | $ | 7,923 | \r | $ | 7,393 | \r | $ | 7,269 | ||||
| Gross profit | \r | $ | 2,918 | \r | $ | 3,131 | \r | $ | 3,176 | \r | $ | 3,161 | ||||
| Net income | \r | $ | 10 | \r | $ | 60 | \r | $ | 267 | \r | $ | 191 | ||||
| Net income per share basic and diluted | \r | $ | 0.00 | \r | $ | 0.00 | \r | $ | 0.01 | \r | $ | 0.01 |
\r\r
"}]},{"name":"rpt:f-792","factDimensions":{"xbrl:concept":"us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
BUSINESS:
\r\r\r\r
Aehr Test Systems (the “Company”)\rwas incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in\rthe semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full\rwafer contact parallel test and burn-in systems, the MAX burn-in system, WaferPak full wafer contactor, the DiePak carrier and\rtest fixtures.
\r\r"}]},{"name":"rpt:f-793","factDimensions":{"xbrl:concept":"AEHR:Liquidity","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
LIQUIDITY:
\r\r\r\r
Since inception, the Company has incurred\rsubstantial cumulative losses and negative cash flows from operations. In response, the Company took steps to minimize expense\rlevels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood\rthat it will have sufficient cash to support operations.
\r\r\r\r
At May 31, 2019, the Company had $5.4 million\rin cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections\rof existing accounts receivable, revenue from our existing backlog of products, the sale of inventory on hand, and deposits and\rdown payments against significant orders will be adequate to meet its working capital and capital equipment requirements. We believe\rour existing cash and cash equivalents will be sufficient to meet our anticipated cash needs over the next 12 months. Our future\rcapital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research\rand development activities, the timing and cost of establishing additional sales and marketing capabilities, the timing and cost\rto introduce new and enhanced products and the timing and cost to implement new manufacturing technologies. In the event that\radditional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. Any\radditional debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising\ractivities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and\rto pursue business opportunities, including potential acquisitions. Additionally, if we raise additional funds through further\rissuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer\rsignificant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences\rand privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms\rsatisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges\rcould be significantly limited.
\r\r"}]},{"name":"rpt:f-794","factDimensions":{"xbrl:concept":"us-gaap:ConsolidationPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CONSOLIDATION:
\r\r\r\r
The consolidated financial statements include\rthe accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions\rhave been eliminated.
\r\r"}]},{"name":"rpt:f-795","factDimensions":{"xbrl:concept":"us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS:
\r\r\r\r
Assets and liabilities of the Company’s\rforeign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros\rand New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses\rare translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that\rarise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as\ra separate component of shareholders’ equity (deficit).
\r\r\r\r
Transaction gains and losses that arise from\rexchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations\ras incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented.
\r\r"}]},{"name":"rpt:f-796","factDimensions":{"xbrl:concept":"us-gaap:UseOfEstimates","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
USE OF ESTIMATES:
\r\r\r\r
The preparation of financial\rstatements in conformity with accounting principles generally accepted in the United States of America requires management to\rmake estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets\rand liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the\rreporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated\rfinancial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and\rwarranty reserves.
\r\r"}]},{"name":"rpt:f-797","factDimensions":{"xbrl:concept":"us-gaap:CashAndCashEquivalentsPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CASH EQUIVALENTS:
\r\r\r\r
Cash equivalents consist of money market\rinstruments purchased with an original maturity of three months or less. These investments are reported at fair value.
\r\r"}]},{"name":"rpt:f-798","factDimensions":{"xbrl:concept":"us-gaap:ReceivablesTradeAndOtherAccountsReceivableAllowanceForDoubtfulAccountsPolicy","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:
\r\r\r\r
Accounts receivable are derived from the\rsale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers\rand burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The\rCompany maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also\rreviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company\rexercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general\reconomic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables\rare recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.\rNo significant adjustments to the allowance for doubtful accounts were recorded during the fiscal years ended May 31, 2019, 2018\ror 2017.
\r\r"}]},{"name":"rpt:f-799","factDimensions":{"xbrl:concept":"us-gaap:ConcentrationRiskCreditRisk","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CONCENTRATION OF CREDIT RISK:
\r\r\r\r
The Company sells its products primarily\rto semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2019, approximately 49%, 25% and 26% of gross\raccounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2018, approximately\r55%, 45% and 0% of gross accounts receivable were from customers located in North America, Asia, and Europe, respectively. Three\rcustomers accounted for 44%, 25% and 21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 38%, 32%\rand 11% of gross accounts receivable as of May 31, 2018. Four customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal\r2019. Three customers accounted for 34%, 26% and 13% of net sales in fiscal 2018. The Company performs ongoing credit evaluations\rof its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international\rcustomers.
\r\r\r\r
The Company’s cash and cash equivalents\rare generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests\rits excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund.\rThe money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds\ror short-term cash deposits.
\r\r"}]},{"name":"rpt:f-800","factDimensions":{"xbrl:concept":"AEHR:ConcentrationOfSupplyRiskPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CONCENTRATION OF SUPPLY RISK:
\r\r\r\r
The Company relies on subcontractors to manufacture\rmany of the components and subassemblies used in its products. Quality or performance failures of the Company’s products\ror changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality\rproducts to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components\rand technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources.\rThe loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing\rand delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products.
\r\r"}]},{"name":"rpt:f-801","factDimensions":{"xbrl:concept":"us-gaap:InventoryPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
INVENTORIES:
\r\r\r\r
Inventories include material, labor and overhead,\rand are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated\rselling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess,\robsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company\radjusts inventory balances to approximate the lower of its manufacturing costs or net realizable value. If actual future demand\ror market conditions become less favorable than those projected by management, additional inventory write-downs may be required,\rand would be reflected in cost of sales in the period the revision is made.
\r\r"}]},{"name":"rpt:f-802","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
PROPERTY AND EQUIPMENT:
\r\r\r\r
Property and equipment are stated at cost\rless accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed\ras incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease.\rFurniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated\ruseful lives. The ranges of estimated useful lives are generally as follows:
\r\r\r\r
| Furniture and fixtures | \r2 to 6 years |
| Machinery and equipment | \r3 to 6 years |
| Test equipment | \r4 to 6 years |
"}]},{"name":"rpt:f-803","factDimensions":{"xbrl:concept":"us-gaap:RevenueRecognitionPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
REVENUE RECOGNITION:
\r\r\r\r
In May 2014, the FASB issued FASB ASC Topic\r606, Revenue from Contracts with Customers (Topic 606), which was subsequently updated (collectively “ASC 606”).\rWe adopted the standard as of June 1, 2018, using the modified retrospective method. Under this method, we applied ASC 606 to contracts\rthat were not complete as of June 1, 2018 and recognized the cumulative effect of initially applying the standard as an adjustment\rto the opening balance of retained earnings. Results for reporting periods beginning after June 1, 2018 are presented in accordance\rwith ASC 606. Under the modified retrospective adoption method, prior period amounts are not adjusted and are reported in accordance\rwith the accounting standards in effect for those periods per FASB ASC Topic 605, Revenue Recognition, which is also referred\rto herein as “legacy GAAP.”
\r\r\r\r
The adoption of ASC 606 did not have a material\rimpact on our consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit as of the\radoption date and reported revenue would not have been different under legacy GAAP. Additionally, we do not expect the adoption\rof the revenue standard to have a material impact to our net income on an ongoing basis.
\r\r\r\r
We sell our products primarily through a\rdirect sales force. In certain international markets, we sell our products through independent distributors. We consider revenue\rto be earned when all of the following criteria are met:
\r\r\r\r
● We have a contract with a customer that creates enforceable\rrights and obligations,
\r\r\r\r
● Promised performance obligations are identified,
\r\r\r\r
● The transaction price, or the amount we expect to receive,\ris determinable and
\r\r\r\r
● We have satisfied the performance obligations to the customer.
\r\r\r\r
Transfer of control is evidenced upon passage\rof title and risk of loss to the customer unless we are required to provide additional services.
\r\r"}]},{"name":"rpt:f-804","factDimensions":{"xbrl:concept":"us-gaap:ResearchAndDevelopmentExpensePolicy","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE:
\r\r\r\r
Costs incurred in the research and development\rof new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the\rCompany’s products are charged to operations as incurred until technological feasibility of the software has been established.\rGenerally, technological feasibility is established when the software module performs its primary functions described in its original\rspecifications, contains features required for it to be usable in a production environment, is completely documented and the related\rhardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized.\rCapitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized\rcosts are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line\rmethods over ten years. No system software development costs were capitalized or amortized in fiscal 2019, 2018 and 2017.
\r\r"}]},{"name":"rpt:f-805","factDimensions":{"xbrl:concept":"us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
IMPAIRMENT OF LONG-LIVED ASSETS:
\r\r\r\r
In the event that facts and circumstances\rindicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation\ris required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying\rvalue to determine if a write-down is required.
\r\r"}]},{"name":"rpt:f-806","factDimensions":{"xbrl:concept":"us-gaap:AdvertisingCostsPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
ADVERTISING COSTS:
\r\r\r\r
The Company expenses all advertising costs\ras incurred and the amounts were not material for all periods presented.
\r\r"}]},{"name":"rpt:f-807","factDimensions":{"xbrl:concept":"us-gaap:ShippingAndHandlingCostPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
SHIPPING AND HANDLING OF PRODUCTS:
\r\r\r\r
Amounts billed to customers for shipping\rand handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in\rcost of sales.
\r\r"}]},{"name":"rpt:f-808","factDimensions":{"xbrl:concept":"us-gaap:IncomeTaxPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
INCOME TAXES:
\r\r\r\r
Income taxes have been provided using the\rliability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and\rtax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and\rlaws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances\rare established when it is determined that it is more likely than not that such assets will not be realized.
\r\r\r\r
A full valuation allowance was established\ragainst all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be\rrealized, as of May 31, 2019 and 2018.
\r\r\r\r
The Company accounts for uncertain tax positions\rconsistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and\rmeasurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in\ra tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The\rCompany recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
\r\r\r\r
Although the Company files U.S. federal,\rvarious state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany\rand Japan. Tax years 1996 – 2018 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers,\rresearch and development tax credits, or other tax attributes from those years.
\r\r"}]},{"name":"rpt:f-809","factDimensions":{"xbrl:concept":"us-gaap:ComprehensiveIncomePolicyPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
COMPREHENSIVE (LOSS) INCOME:
\r\r\r\r
Comprehensive (loss) income generally represents\rall changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized\rgains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive (loss)\rincome, which are excluded from net (loss) income. Comprehensive (loss) income is included in the statements of comprehensive (loss)\rincome.
\r\r"}]},{"name":"rpt:f-810","factDimensions":{"xbrl:concept":"us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
RECENT ACCOUNTING PRONOUNCEMENTS:
\r\r\r\r
Accounting Standards Adopted
\r\r\r\r
Revenue Recognition
\r\rIn May 2014, the FASB issued Accounting Standards\rCodification (“ASC”) Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently\rupdated (collectively “ASC 606”). The core principle of the standard is to recognize revenues when promised goods or\rservices are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods\ror services. The new standard defines a five-step process to achieve this core principle and, in doing so, it is possible more\rjudgment and estimates may be required within the revenue recognition process than required under legacy GAAP, including identifying\rperformance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and\rallocating the transaction price to each distinct performance obligation. The standard permits the use of either the retrospective\ror modified retrospective transition methods. It also requires expanded disclosures including the nature, amount, timing, and uncertainty\rof revenues and cash flows related to contracts with customers. Additionally, qualitative and quantitative disclosures are required\rabout customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill\ra contract.
\r\r\r\r
The Company adopted ASC 606 on June 1, 2018,\rthe first day of fiscal 2019, using the modified retrospective method. The Company applied ASC 606 to all contracts not completed\ras of the date of adoption in order to determine any adjustment to the opening balance of retained earnings. Under the modified\rretrospective adoption method, the comparative financial information has not been restated and continues to be reported under the\raccounting standards in effect for those periods, ASC 605, "Revenue Recognition", which is also referred to herein\ras "legacy GAAP."
\r\r\r\r
The adoption of ASC 606 did not have a material\rimpact on the Company’s consolidated financial statements as of June 1, 2018. No adjustment was recorded to accumulated deficit\ras of the adoption date and reported revenue would not have been different under legacy GAAP. Additionally, the Company does not\rexpect the adoption of the revenue standard to have a material impact to the Company’s net income on an ongoing basis.
\r\r\r\r
Classification of Certain Cash Receipts\rand Cash Payments
\r\rIn August 2016, the FASB issued authoritative\rguidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. The Company adopted\rthis new standard in fiscal year 2019. The adoption of this guidance did not have a significant impact on the Company’s consolidated\rfinancial statements.
\r\r\r\r
Intra-Entity Asset Transfers
\r\rIn October 2016, the FASB issued an accounting\rstandard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory)\rat the transaction date. The Company adopted this new standard in fiscal year 2019. The adoption of this guidance did not have\ra significant impact on the Company’s consolidated financial statements.
\r\r\r\r
Restricted Cash.
\r\rIn November 2016, the FASB issued authoritative\rguidance related to statements of cash flows. This guidance clarifies that amounts generally described as restricted cash and restricted\rcash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total\ramounts shown on the statement of cash flows. The Company adopted this new standard in fiscal year 2019. The adoption of this guidance\rdid not have a significant impact on the Company’s consolidated financial statements.
\r\r\r\r
Income Taxes
\r\rOn December 22, 2017, the US government enacted\rcomprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes\rbroad and complex changes to the US tax code including but not limited to (1) reducing the US federal corporate tax rate from 34%\rto 21%; (2) requiring companies to pay a one-time transition tax on certain repatriated earnings of foreign subsidiaries; (3) generally\reliminating US federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in US federal income\rof certain earnings of controlled foreign corporations; (5) creating a new limitation on deductible interest expense; (6) changing\rrules related to the uses and limitations of net operating loss carryforwards created in tax years beginning after December 31,\r2017, and (7) repealing the corporate alternative minimum tax regime, or AMT, effective December 31, 2017 and permitting existing\rminimum tax credits to offset the regular tax liability for any tax year. Consequently, the Company has accounted for the reduction\rof $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance for the fiscal year ended 2018,\rand recorded a benefit of $90,000 for the Company’s Federal refundable AMT credit.
\r\r\r\r
On December 22, 2017, the SEC staff issued\rStaff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax\rAct. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies\rto complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects\rof those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting\rfor certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a\rprovisional estimate in the financial statements. There are also certain transitional impacts of the Tax Act. As part of the transition\rto the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings\rof foreign subsidiaries. The Company is not subject to the transition tax. The one-time transition tax is based on post-1986 earnings\rand profits that were previously deferred from U.S. income tax. The Company has finalized its calculation of the total post-1986\rearnings and profits for its foreign corporations. Based on the Company’s net operating loss carryovers and valuation allowance,\rthere is no impact to its consolidated financial statements as a result of the completion of the analysis.
\r\r\r\r
Accounting Standards Not Yet Adopted
\r\r\r\r
Financial Instruments
\r\rIn January 2016, the FASB issued an accounting\rstandard update related to recognition and measurement of financial assets and financial liabilities. This standard changes accounting\rfor equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for\rfinancial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred\rtax assets resulting from unrealized losses on available-for-sale debt securities. This standard is effective for us in fiscal\ryear 2020. Early adoption is permitted. The Company does not expect a material impact of this new guidance on its consolidated\rfinancial statements.
\r\r\r\r
In June 2016, the FASB issued an accounting\rstandard update that requires measurement and recognition of expected credit losses for financial assets held based on historical\rexperience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount.\rThe accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a modified retrospective\rbasis, and early adoption in fiscal 2020 is permitted. The Company does not expect a material impact of this accounting standard\rupdate on its consolidated financial statements.
\r\r\r\r
Leases
\r\rIn February 2016, the FASB issued ASU No.\r2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency\rand comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements.\rThe Company will adopt ASU 2016-02 utilizing the modified retrospective transition method through a cumulative-effect adjustment\rat the beginning of its first quarter of 2020. The Company has reached conclusions on its accounting assessments to the new standard\rand anticipates recording right of use assets and lease liabilities, including deferred rent, of approximately $2.7 million on\rthe Company's Condensed Consolidated Balance Sheets for those leases currently classified as operating leases. However, the ultimate\rimpact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date.
\r\r"}]},{"name":"rpt:f-811","factDimensions":{"xbrl:concept":"AEHR:ScheduleUsefulLifeForPropertyAndEquipmentTableTextblock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The ranges of estimated useful lives are generally as follows:
\r\r\r\r
| Furniture and fixtures | \r2 to 6 years |
| Machinery and equipment | \r3 to 6 years |
| Test equipment | \r4 to 6 years |
"}]},{"name":"rpt:f-812","factDimensions":{"xbrl:concept":"us-gaap:DisaggregationOfRevenueTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The Company’s revenues by product category\rare as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Type of good / service: | \r | \r | \r | |||||||||
| Systems | \r | $ | 9,566 | \r | $ | 18,174 | \r | $ | 12,115 | |||
| Contactors | \r | 6,154 | \r | 6,500 | \r | 1,991 | ||||||
| Services | \r | 5,336 | \r | 4,881 | \r | 4,792 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 | ||||
| Product lines: | \r | \r | \r | |||||||||
| Wafer-level | \r | $ | 14,618 | \r | $ | 13,080 | \r | $ | 9,582 | |||
| Test During Burn-In | \r | 6,438 | \r | 16,475 | \r | 9,316 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
\r\r
The following presents information about\rthe Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Geographic region: | \r | \r | \r | |||||||||
| United States | \r | $ | 13,468 | \r | $ | 8,446 | \r | $ | 7,762 | |||
| Asia | \r | 5,648 | \r | 19,973 | \r | 10,439 | ||||||
| Europe | \r | 1,940 | \r | 1,136 | \r | 697 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
\r\r
With the exception of the amount of service\rcontracts and extended warranties, the Company’s product category revenues are recognized at point in time when control transfers\rto customers.
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Timing of revenue recognition (in thousands): | \r | \r | \r | |||||||||
| Products and services transferred at a point in time | \r | $ | 18,473 | \r | $ | 27,337 | \r | $ | 17,193 | |||
| Services transferred over time | \r | 2,583 | \r | 2,218 | \r | 1,705 | ||||||
| \r | $ | 21,056 | \r | $ | 29,555 | \r | $ | 18,898 |
"}]},{"name":"rpt:f-813","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table presents the computation\rof basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per\rshare data):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Numerator: Net (loss) income | \r | $ | (5,235 | ) | \r | $ | 528 | \r | $ | (5,653 | ) | |
| \r | \r | \r | ||||||||||
| Denominator for basic net (loss) income per share: | \r | \r | \r | |||||||||
| Weighted-average shares outstanding | \r | 22,387 | \r | 21,732 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Shares used in basic net (loss) income per share calculation | \r | 22,387 | \r | 21,732 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Effect of dilutive securities | \r | — | \r | 1,050 | \r | — | ||||||
| \r | \r | \r | ||||||||||
| \r | \r | \r | ||||||||||
| Denominator for diluted net (loss) income per share | \r | 22,387 | \r | 22,782 | \r | 16,267 | ||||||
| \r | \r | \r | ||||||||||
| Basic net (loss) income per share | \r | $ | (0.23 | ) | \r | $ | 0.02 | \r | $ | (0.35 | ) | |
| \r | \r | \r | ||||||||||
| Diluted net (loss) income per share | \r | $ | (0.23 | ) | \r | $ | 0.02 | \r | $ | (0.35 | ) |
"}]},{"name":"rpt:f-814","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table summarizes the Company’s\rfinancial assets measured at fair value on a recurring basis as of May 31, 2019 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2019 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 3,017 | \r | $ | 3,017 | \r | $ | — | \r | $ | — | ||||
| Assets | \r | $ | 3,017 | \r | $ | 3,017 | \r | $ | — | \r | $ | — |
\r\r
The following table summarizes the Company’s financial\rassets measured at fair value on a recurring basis as of May 31, 2018 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2018 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 7,813 | \r | $ | 7,813 | \r | $ | — | \r | $ | — | ||||
| U.S. Treasury securities | \r | 5,983 | \r | 5,983 | \r | — | \r | — | ||||||||
| Assets | \r | $ | 13,796 | \r | $ | 13,796 | \r | $ | — | \r | $ | — |
"}]},{"name":"rpt:f-815","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
Accounts receivable comprise (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| Accounts receivable | \r | $ | 4,859 | \r | $ | 2,860 | ||
| Less: Allowance for doubtful accounts | \r | — | \r | (4 | ) | |||
| \r | $ | 4,859 | \r | $ | 2,856 |
\r\r
| \r | \r | Additions | \r | \r | ||||||||||||
| \r | Balance at | \r | charged to | \r | \r | Balance | ||||||||||
| \r | beginning | \r | costs and | \r | \r | at end | ||||||||||
| \r | of year | \r | expenses | \r | Deductions* | \r | of year | |||||||||
| Allowance for doubtful accounts receivable: | \r | \r | \r | \r | ||||||||||||
| May 31, 2019 | \r | $ | 4 | \r | $ | — | \r | $ | (4 | ) | \r | $ | — | |||
| \r | \r | \r | \r | |||||||||||||
| May 31, 2018 | \r | $ | 61 | \r | $ | 4 | \r | $ | (61 | ) | \r | $ | 4 |
\r\r
* Deductions include write-offs of uncollectible\raccounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense.
\r\r"}]},{"name":"rpt:f-816","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfInventoryCurrentTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
INVENTORIES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Raw materials and sub-assemblies | \r | $ | 5,471 | \r | $ | 5,747 | ||
| Work in process | \r | 3,580 | \r | 3,068 | ||||
| Finished goods | \r | 10 | \r | 234 | ||||
| \r | $ | 9,061 | \r | $ | 9,049 |
"}]},{"name":"rpt:f-817","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
PROPERTY AND EQUIPMENT, NET:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Leasehold improvements | \r | $ | 1,154 | \r | $ | 1,154 | ||
| Furniture and fixtures | \r | 983 | \r | 984 | ||||
| Machinery and equipment | \r | 3,097 | \r | 2,865 | ||||
| Test equipment | \r | 2,604 | \r | 2,595 | ||||
| \r | 7,838 | \r | 7,598 | |||||
| Less: Accumulated depreciation and amortization | \r | (6,793 | ) | \r | (6,395 | ) | ||
| \r | $ | 1,045 | \r | $ | 1,203 |
"}]},{"name":"rpt:f-818","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
ACCRUED EXPENSES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Payroll related | \r | $ | 990 | \r | $ | 1,014 | ||
| Restructuring | \r | 408 | \r | — | ||||
| Commissions and bonuses | \r | 168 | \r | 101 | ||||
| Professional services | \r | 162 | \r | 163 | ||||
| Warranty | \r | 154 | \r | 135 | ||||
| Material purchases | \r | 65 | \r | — | ||||
| Taxes payable | \r | 29 | \r | 34 | ||||
| Investor relations | \r | 19 | \r | 19 | ||||
| Accrued interest | \r | — | \r | 139 | ||||
| Other | \r | 39 | \r | 41 | ||||
| \r | $ | 2,034 | \r | $ | 1,646 |
"}]},{"name":"rpt:f-819","factDimensions":{"xbrl:concept":"AEHR:CustomerDepositsAndDeferredRevenueTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2019 | \r | 2018 | ||||
| Customer deposits | \r | $ | 1,003 | \r | $ | 1,340 | ||
| Deferred revenue | \r | 542 | \r | 290 | ||||
| \r | $ | 1,545 | \r | $ | 1,630 |
Domestic and foreign components of (loss)\rincome before income tax (expense) benefit are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||||
| Domestic | \r | $ | (5,273 | ) | \r | $ | 433 | \r | $ | (5,663 | ) | |||
| Foreign | \r | 65 | \r | 22 | \r | 35 | ||||||||
| \r | $ | (5,208 | ) | \r | $ | 455 | \r | $ | (5,628 | ) |
"}]},{"name":"rpt:f-827","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The income tax (expense) benefit consists\rof the following (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Federal income taxes: | \r | \r | \r | |||||||||
| Current | \r | $ | — | \r | $ | 99 | \r | $ | — | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| State income taxes: | \r | \r | \r | |||||||||
| Current | \r | (6 | ) | \r | (22 | ) | \r | (8 | ) | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| Foreign income taxes: | \r | \r | \r | |||||||||
| Current | \r | (21 | ) | \r | (4 | ) | \r | (17 | ) | |||
| Deferred | \r | — | \r | — | \r | — | ||||||
| \r | $ | (27 | ) | \r | $ | 73 | \r | $ | (25 | ) |
"}]},{"name":"rpt:f-828","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The Company’s effective tax rate differs\rfrom the U.S. federal statutory tax rate, as follows:
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| U.S. federal statutory tax rate | \r | 21.0 | % | \r | 28.6 | % | \r | 34.0 | % | |||
| State taxes, net of federal tax effect | \r | (1.0 | ) | \r | (16.7 | ) | \r | (0.1 | ) | |||
| Foreign rate differential | \r | (0.7 | ) | \r | 39.4 | \r | 0.1 | |||||
| Stock-based compensation | \r | (2.8 | ) | \r | 39.9 | \r | (2.8 | ) | ||||
| Research and development credit | \r | 1.5 | \r | 5.9 | \r | 3.1 | ||||||
| Change in valuation allowance | \r | (15.6 | ) | \r | (1,349.2 | ) | \r | (33.8 | ) | |||
| Federal rate change impact | \r | — | \r | 1,419.7 | \r | — | ||||||
| Federal AMT refund | \r | — | \r | (20.0 | ) | \r | — | |||||
| ASU 2016-09 adoption | \r | — | \r | (169.1 | ) | \r | — | |||||
| Other | \r | (2.9 | ) | \r | 5.4 | \r | (0.9 | ) | ||||
| Effective tax rate | \r | (0.5 | )% | \r | (16.1 | )% | \r | (0.4 | )% |
"}]},{"name":"rpt:f-829","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The components of the net deferred tax\rassets are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| \r | \r | |||||||
| Net operating losses | \r | $ | 13,475 | \r | $ | 12,918 | ||
| Credit carryforwards | \r | 4,995 | \r | 4,952 | ||||
| Inventory reserves | \r | 790 | \r | 588 | ||||
| Reserves and accruals | \r | 1,379 | \r | 1,419 | ||||
| Other | \r | 298 | \r | 247 | ||||
| \r | \r | |||||||
| \r | 20,937 | \r | 20,124 | |||||
| \r | \r | |||||||
| Less: Valuation allowance | \r | (20,937 | ) | \r | (20,124 | ) | ||
| Net deferred tax assets | \r | $ | — | \r | $ | — |
"}]},{"name":"rpt:f-830","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfUnrecognizedTaxBenefitsRollForwardTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):
\r\r\r\r
| Beginning balance as of May 31, 2016 | \r | $ | 789 | |
| \r | ||||
| Decreases related to prior year tax positions | \r | — | ||
| Decreases related to lapse of statute of limitations | \r | — | ||
| \r | ||||
| Balance at May 31, 2017 | \r | $ | 789 | |
| \r | ||||
| Increases related to prior year tax positions | \r | 889 | ||
| Increases related to current year tax positions | \r | 107 | ||
| \r | ||||
| Balance at May 31, 2018 | \r | $ | 1,785 | |
| \r | ||||
| Decreases related to prior year tax positions | \r | (41 | ) | |
| Increases related to current year tax positions | \r | 65 | ||
| \r | ||||
| Balance at May 31, 2019 | \r | $ | 1,809 |
"}]},{"name":"rpt:f-831","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEmployeeServiceShareBasedCompensationAllocationOfRecognizedPeriodCostsTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table summarizes the stock-based\rcompensation expense for the fiscal years ended May 31, 2019, 2018 and 2017 (in thousands, except per share data):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, \rincluded in: | \r | \r | \r | |||||||||
| \r | \r | \r | ||||||||||
| Cost of sales | \r | $ | 104 | \r | $ | 148 | \r | $ | 91 | |||
| Selling, general and administrative | \r | 545 | \r | 592 | \r | 714 | ||||||
| Research and development | \r | 256 | \r | 256 | \r | 194 | ||||||
| \r | \r | \r | ||||||||||
| Net effect on net income (loss) | \r | $ | 905 | \r | $ | 996 | \r | $ | 999 | |||
| \r | \r | \r | ||||||||||
| Effect on net income (loss) per share: | \r | \r | \r | |||||||||
| Basic | \r | $ | 0.04 | \r | $ | 0.05 | \r | $ | 0.06 | |||
| Diluted | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.06 |
"}]},{"name":"rpt:f-832","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
Fair Value. The fair values of the Company’s\rstock options granted to employees in fiscal 2019, 2018 and 2017 were estimated using the following weighted average assumptions\rin the Black-Scholes option valuation method:
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 5 | \r | 4 | \r | 4 | ||||||
| Volatility | \r | 0.72 | \r | 0.77 | \r | 0.81 | ||||||
| Risk-free interest rates | \r | 2.83 | % | \r | 1.95 | % | \r | 1.02 | % | |||
| Weighted-average grant date fair value | \r | $ | 1.33 | \r | $ | 2.07 | \r | $ | 1.09 |
The fair value of our ESPP purchase rights\rfor the fiscal 2019, 2018 and 2017 was estimated using the following weighted-average assumptions:
\r\r\r\r
| \r | Year End May 31, | \r|||||||||||
| \r | 2019 | \r | 2018 | \r\r | 2017 | \r|||||||
| \r | \r | \r | \r | \r | ||||||||
| Expected term (in years) | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | \r | \r | 0.5 – 2.0 | \r | ||||
| Volatility | \r | 0.48 – 0.78 | \r | 0.56 – 0.81 | \r | \r | 0.79 – 1.08 | \r | ||||
| Risk-free interest rates | \r | 2.33%-2.82 | % | \r | 1.92%-2.25 | % | \r\r | 0.48%-0.80 | % | \r|||
| Weighted-average grant date fair value | \r | $ | 1.14 | \r | $ | 1.01 | \r | \r | $ | 1.65 | \r |
The following tables summarize the Company’s\rstock option and RSU transactions during fiscal 2019, 2018 and 2017 (in thousands):
\r\r\r\r
| \r | Available | |||
| \r | Shares | |||
| Balance, May 31, 2016 | \r | 1,847 | ||
| \r | ||||
| Additional shares reserved | \r | 2,238 | ||
| Options granted | \r | (368 | ) | |
| RSUs granted | \r | (157 | ) | |
| Options terminated | \r | 55 | ||
| Plan shares expired | \r | (1,446 | ) | |
| \r | ||||
| Balance, May 31, 2017 | \r | 2,169 | ||
| \r | ||||
| Options granted | \r | (338 | ) | |
| RSUs granted | \r | (64 | ) | |
| RSUs cancelled | \r | 33 | ||
| Options terminated | \r | 16 | ||
| Plan shares expired | \r | (4 | ) | |
| \r | ||||
| Balance, May 31, 2018 | \r | 1,812 | ||
| \r | ||||
| Options granted | \r | (804 | ) | |
| RSUs cancelled | \r | 8 | ||
| Options terminated | \r | 195 | ||
| Plan shares expired | \r | (64 | ) | |
| \r | ||||
| Balance, May 31, 2019 | \r | 1,147 |
The following table summarized the stock\roption transactions during fiscal 2019, 2018 and 2017 (in thousands, except per share data):
\r\r\r\r
| \r | Outstanding Options | |||||||||||
| \r | \r | Weighted | \r | |||||||||
| \r | Number | \r | Average | \r | Aggregate | |||||||
| \r | of | \r | Exercise | \r | Intrinsic | |||||||
| \r | Shares | \r | Price | \r | Value | |||||||
| Balances, May 31, 2016 | \r | 3,201 | \r | $ | 1.66 | \r | $ | 189 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 368 | \r | $ | 1.83 | \r | ||||||
| Options terminated | \r | (55 | ) | \r | $ | 1.42 | \r | |||||
| Options exercised | \r | (440 | ) | \r | $ | 1.35 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2017 | \r | 3,074 | \r | $ | 1.73 | \r | $ | 8,763 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 338 | \r | $ | 3.56 | \r | ||||||
| Options terminated | \r | (16 | ) | \r | $ | 2.72 | \r | |||||
| Options exercised | \r | (537 | ) | \r | $ | 1.17 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2018 | \r | 2,859 | \r | $ | 2.04 | \r | $ | 1,987 | ||||
| \r | \r | \r | ||||||||||
| Options granted | \r | 804 | \r | $ | 2.19 | \r | ||||||
| Options terminated | \r | (195 | ) | \r | $ | 2.32 | \r | |||||
| Options exercised | \r | (361 | ) | \r | $ | 0.85 | \r | |||||
| \r | \r | \r | ||||||||||
| Balances, May 31, 2019 | \r | 3,107 | \r | $ | 2.20 | \r | $ | 283 | ||||
| \r | \r | \r | ||||||||||
| Options fully vested and expected to vest at May 31, 2019 | \r | 3,079 | \r | $ | 2.20 | \r | $ | 282 |
The options outstanding and exercisable at\rMay 31, 2019 were in the following exercise price ranges (in thousands, except per share data):
\r\r\r\r
| \r | Options Outstanding | \r | Options Exercisable | |||||||||||||||||||||||||||
| \r | at May 31, 2019 | \r | at May 31, 2019 | |||||||||||||||||||||||||||
Range of | \r | Number \rOutstanding \rShares | \r |
Weighted | \r | Weighted \rAverage \rExercise Price | \r | Number \rExercisable \rShares | \r | Weighted \rAverage \rRemaining \rContractual Life \r(Years) | \r | Weighted \rAverage \rExercise Price | \r | Aggregate Intrinsic \rValue | ||||||||||||||||
| $ | 0.80-$0.97 | \r | 47 | \r | 0.52 | \r | $ | 0.85 | \r | 47 | \r | 0.52 | \r | $ | 0.85 | \r | ||||||||||||||
| $ | 1.09-$1.28 | \r | 456 | \r | 0.78 | \r | $ | 1.28 | \r | 456 | \r | 0.78 | \r | $ | 1.28 | \r | ||||||||||||||
| $ | 1.65-$2.06 | \r | 761 | \r | 4.57 | \r | $ | 1.83 | \r | 427 | \r | 3.50 | \r | $ | 1.79 | \r | ||||||||||||||
| $ | 2.10-$2.81 | \r | 1,600 | \r | 3.55 | \r | $ | 2.43 | \r | 1,244 | \r | 2.81 | \r | $ | 2.44 | \r | ||||||||||||||
| $ | 3.46-$3.93 | \r | 243 | \r | 5.16 | \r | $ | 3.85 | \r | 140 | \r | 5.20 | \r | $ | 3.79 | \r | ||||||||||||||
| \r | \r | \r | \r | \r | \r | \r | ||||||||||||||||||||||||
| $ | 0.80-$3.93 | \r | 3,107 | \r | 3.47 | \r | $ | 2.20 | \r | 2,314 | \r | 2.64 | \r | $ | 2.14 | \r | $ | 274 |
Other income (expense), net comprises the\rfollowing (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2019 | \r | 2018 | \r | 2017 | |||||||
| Foreign exchange gain (loss) | \r | $ | 43 | \r | $ | (63 | ) | \r | $ | (21 | ) | |
| Other income, net | \r | 1 | \r | 2 | \r | — | ||||||
| \r | $ | 44 | \r | $ | (61 | ) | \r | $ | (21 | ) |
Following is a summary of changes in the\rCompany’s liability for product warranties during the fiscal years ended May 31, 2019 and 2018 (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| \r | \r | |||||||
| Balance at the beginning of the year | \r | $ | 135 | \r | $ | 113 | ||
| Accruals for warranties issued during the year | \r | 214 | \r | 329 | ||||
| Consumption of reserves | \r | (195 | ) | \r | (307 | ) | ||
| \r | \r | |||||||
| Balance at the end of the year | \r | $ | 154 | \r | $ | 135 |
Minimum annual rentals payments under non-cancellable\roperating leases in each of the next five fiscal years and thereafter are as follows (in thousands):
\r\r\r\r
| Years Ending May 31, | \r | ||||
| 2020 | \r | $ | 762 | ||
| 2021 | \r | 766 | |||
| 2022 | \r | 772 | |||
| 2023 | \r | 795 | |||
| 2024 | \r | 133 | |||
| Thereafter | \r | — | |||
Total | \r | $ | 3,228 |
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The following tables (presented in thousands,\rexcept per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four\rquarters of the fiscal years ended May 31, 2019 and 2018.
\r\r\r\r
| \r | Three Months Ended | |||||||||||||||
| \r | Aug. 31, | \r | Nov. 30, | \r | Feb. 28, | \r | May 31, | |||||||||
| \r | 2018 | \r | 2018 | \r | 2019 | \r | 2019 | |||||||||
| Net sales | \r | $ | 4,740 | \r | $ | 5,911 | \r | $ | 3,163 | \r | $ | 7,242 | ||||
| Gross profit | \r | $ | 1,553 | \r | $ | 2,398 | \r | $ | 272 | \r | $ | 3,379 | ||||
| Net (loss) income | \r | $ | (1,515 | ) | \r | $ | (629 | ) | \r | $ | (3,201 | ) | \r | $ | 110 | |
| Net (loss) income per share basic and diluted | \r | $ | (0.07 | ) | \r | $ | (0.03 | ) | \r | $ | (0.14 | ) | \r | $ | 0.00 |
\r\r
| \r | Three Months Ended | |||||||||||||||
| \r | Aug. 31, | \r | Nov. 30, | \r | Feb. 28, | \r | May 31, | |||||||||
| \r | 2017 | \r | 2017 | \r | 2018 | \r | 2018 | |||||||||
| Net sales | \r | $ | 6,970 | \r | $ | 7,923 | \r | $ | 7,393 | \r | $ | 7,269 | ||||
| Gross profit | \r | $ | 2,918 | \r | $ | 3,131 | \r | $ | 3,176 | \r | $ | 3,161 | ||||
| Net income | \r | $ | 10 | \r | $ | 60 | \r | $ | 267 | \r | $ | 191 | ||||
| Net income per share basic and diluted | \r | $ | 0.00 | \r | $ | 0.00 | \r | $ | 0.01 | \r | $ | 0.01 |
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Changes in the components of AOCI, net of\rtax, were as follows (in thousands):
\r\r\r\r
| \r | Cumulative \rTranslation \rAdjustments | \r | Unrealized Loss \ron Investments, \rNet | \r | Total | |||||||
| \r | \r | \r | ||||||||||
| Balance at May 31, 2017 | \r | $ | 2,249 | \r | $ | — | \r | $ | 2,249 | |||
| Other comprehensive income (loss) before reclassifications | \r | 43 | \r | — | \r | 43 | ||||||
| Amounts reclassified out of AOCI | \r | — | \r | — | \r | — | ||||||
| Other comprehensive income (loss), net of tax | \r | 43 | \r | — | \r | 43 | ||||||
| Balance at May 31, 2018 | \r | $ | 2,292 | \r | $ | — | \r | $ | 2,292 | |||
| Other comprehensive income (loss) before reclassifications | \r | (62 | ) | \r | — | \r | (62 | ) | ||||
| Amounts reclassified out of AOCI | \r | — | \r | — | \r | — | ||||||
| Other comprehensive income (loss), net of tax | \r | (62 | ) | \r | — | \r | (62 | ) | ||||
| Balance at May 31, 2019 | \r | $ | 2,230 | \r | $ | — | \r | $ | 2,230 |
"}]},{"name":"rpt:f-968","factDimensions":{"xbrl:concept":"us-gaap:LongLivedAssetsByGeographicAreasTableTextBlock","xbrl:period":"2018-06-01T00:00:00/2019-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
Property and equipment information is based\ron the physical location of the assets. The following table presents property and equipment information for geographic areas (in\rthousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2019 | \r | 2018 | |||||
| United States | \r | $ | 1,005 | \r | $ | 1,156 | ||
| Asia | \r | 40 | \r | 40 | ||||
| Europe | \r | — | \r | 7 | ||||
| \r | $ | 1,045 | \r | $ | 1,203 |