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, the WaferPak full wafer contactor, the DiePak carrier\rand test 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, 2020, 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 its existing backlog of products, the sale of inventory on hand, deposits and down\rpayments against significant orders will be adequate to meet its working capital and capital equipment requirements. The Company\rbelieves its existing cash and cash equivalents will be sufficient to meet its anticipated cash needs over the next 12 months.\rThe Company’s future capital requirements will depend on many factors, including the Company’s growth rate, the timing\rand extent of its spending to support research and development activities, the timing and cost of establishing additional sales\rand marketing capabilities, the timing and cost to introduce new and enhanced products and the timing and cost to implement new\rmanufacturing technologies. In the event that additional financing is required from outside sources, the Company may not be able\rto raise it on terms acceptable to the Company or at all. Any additional debt financing obtained by the Company in the future could\ralso involve restrictive covenants relating to the Company’s capital-raising activities and other financial and operational\rmatters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including\rpotential acquisitions. Additionally, if the Company raises additional funds through further issuances of equity, convertible debt\rsecurities or other securities convertible into equity, its existing stockholders could suffer significant dilution in their percentage\rownership of the Company, and any new equity securities the Company issue could have rights, preferences and privileges senior\rto those of holders of the Company’s common stock. If the Company is unable to obtain adequate financing or financing on\rterms satisfactory to the Company when the Company requires it, the Company’s ability to continue to grow or support its\rbusiness and to respond to business challenges could 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.
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Transaction gains and losses that arise\rfrom exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements\rof Operations as incurred. See Note 13, Other (Expense) Income, Net for the detail of foreign exchange transaction gains and losses\rfor all periods presented.
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USE OF ESTIMATES:
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The preparation of financial statements\rin conformity with accounting principles generally accepted in the United States of America requires management to make\restimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and\rliabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting\rperiod. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial\rstatements include allowance for doubtful accounts, valuation of inventory at the lower of cost or net realizable value, 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 year ended May 31, 2020, 2019\ror 2018.
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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, 2020, approximately 13%, 62% and 25% of gross\raccounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2019, approximately\r49%, 25% and 26% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. Two\rcustomers accounted for 45% and 18% of gross accounts receivable as of May 31, 2020. Three customers accounted for 44%, 25% and\r21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 43%, 16% and 15% of net sales in fiscal 2020.\rFour customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal 2019. 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 . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . . 2 to 6 years
\r\rMachinery and equipment. . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . 3 to 6 years
\r\rTest equipment . . . . . . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . 4 to 6 years
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REVENUE RECOGNITION:
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In May 2014, the Financial Accounting Standards\rBoard (“FASB”) issued FASB Accounting Standards Code (“ASC”) Topic 606, Revenue from Contracts with\rCustomers (Topic 606), which was subsequently updated (collectively “ASC 606”). We adopted the standard as of June\r1, 2018, using the modified retrospective method. Under this method, we applied ASC 606 to contracts that were not complete as\rof June 1, 2018 and recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance\rof retained earnings. Results for reporting periods beginning after June 1, 2018 are presented in accordance with ASC 606. Under\rthe modified retrospective adoption method, prior period amounts are not adjusted and are reported in accordance with the accounting\rstandards in effect for those periods per FASB ASC Topic 605, Revenue Recognition, which is also referred to herein as “legacy\rGAAP.”
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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 2020, 2019 and 2018.
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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, 2020 and 2019.
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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 – 2019 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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On March 27, 2020, the Coronavirus Aid, Relief,\rand Economic Security Act (CARES Act) was passed into law. The CARES Act includes several significant business tax provisions including\rmodification to the taxable income limitation for utilization of net operating losses (NOLs) incurred in 2018, 2019 and 2020 and\rthe ability to carry back NOLs from those years for a period of up to five years, an increase to the limitation on deductibility\rof certain business interest expense, bonus depreciation for purchases of qualified improvement property and special deductions\ron certain corporate charitable contributions. The Company is currently analyzing the impact of these changes and therefore an\restimate of the impact to income taxes is not yet available.
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On June 29, 2020, California Governor Gavin\rNewsom signed Assembly Bill 85 (AB 85) into law as part of the California 2020 Budget Act, which temporarily suspends the use of\rCalifornia net operating losses and imposes a cap on the amount of business incentive tax credits that companies can utilize against\rtheir net income for tax years 2020, 2021, and 2022. The Company analyzed the provisions of AB 85 and determined there was no impact\ron its provision for income taxes for the current period and will continue to evaluate the impact, if any, AB 85 may have on its\rcondensed consolidated financial statements and disclosures.
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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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Financial Instruments
\r\rIn January 2016, the FASB issued an accounting\rstandard update related to the recognition and measurement of financial assets and financial liabilities. This standard changes\raccounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements\rfor financial instruments. In addition, this standard clarifies guidance related to the valuation allowance assessment when recognizing\rdeferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company adopted this new standard\rin fiscal year 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial\rstatements.
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Leases
\r\rIn February 2016, the FASB issued ASC Update\rNo. 2016-02, Leases (FASB ASC Topic 842, Leases). The Company adopted the standard as of June 1, 2019, using the modified retrospective\rapproach and the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method,\rthe Company applied the new leasing rules on the date of adoption and recognized the cumulative effect of initially applying the\rstandard as an adjustment to its opening balance sheet, rather than at the earliest comparative period presented in the financial\rstatements. Prior periods presented are in accordance with the previous lease guidance under FASB ASC Topic 840, Leases.
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In addition, the Company applied the package\rof practical expedients permitted under FASB ASC Topic 842 transition guidance to its entire lease portfolio at June 1, 2019. As\ra result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the\rclassification of any expired or existing leases or (iii) the treatment of initial direct costs for any existing leases. Furthermore,\rthe Company elected not to separate lease and non-lease components for the majority of its leases. Instead, for all applicable\rclasses of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with\rthat lease component as a single lease component.
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As a result of adopting FASB ASC Topic 842,\rLeases, on June 1, 2019, the Company recognized right-of-use assets of $2.7 million and corresponding liabilities of $2.8 million\rfor its existing operating lease portfolio on its consolidated balance sheet. Operating lease right-of-use assets are presented\ras long-term assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease\rliabilities, long-term on the Company’s consolidated balance sheet. There was no material impact to the Company’s consolidated\rstatements of operations or consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note\r“8. LEASES” for information regarding the Company’s lease portfolio as of May 31, 2020 as accounted for under\rFASB ASC Topic 842, Leases.
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Accounting Standards Not Yet Adopted
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Financial Instruments
\r\rIn June 2016, the FASB issued an accounting\rstandard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held\rbased on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of\rthe reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning\rin the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company\rdoes not expect a material impact of this accounting standard on its consolidated financial statements.
\r\r"}]},{"name":"rpt:f-803","factDimensions":{"xbrl:concept":"us-gaap:RevenueFromContractWithCustomerTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
2.\rREVENUE:
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Revenue\rrecognition
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The\rCompany recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration\rto which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify\rthe contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4)\rallocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further\rdescribed below.
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Performance\robligations include sales of systems, contactors, spare parts, and services, as well as installation and training services included\rin customer contracts.
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A\rcontract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price,\rthe Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company\rexpects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty\rperiod.
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For\rcontracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations\ron a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited\rto, historical discounting trends for products and services and pricing practices in different geographies.
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Revenue\rfor systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services\ris recognized over time as services are completed or ratably over the contractual period of generally one year or less.
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The\rCompany has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s\rstandard payment terms are less than one year.
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Disaggregation\rof revenue
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The\rfollowing tables show revenues by major product categories. Within each product category, contract terms, conditions and economic\rfactors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar.
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The\rCompany’s revenues by product category are as follows (in thousands):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Type of good / service: | \r | \r | \r | |||||||||
| Systems | \r | $ | 8,099 | \r | $ | 9,566 | \r | $ | 18,174 | |||
| Contactors | \r | 10,784 | \r | 6,154 | \r | 6,500 | ||||||
| Services | \r | 3,408 | \r | 5,336 | \r | 4,881 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 | ||||
| Product\r lines: | \r | \r | \r | |||||||||
| Wafer-level | \r | $ | 19,768 | \r | $ | 14,618 | \r | $ | 13,080 | |||
| Test During Burn-In | \r | 2,523 | \r | 6,438 | \r | 16,475 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
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The\rfollowing presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to\rlocation (in thousands):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Geographic region: | \r | \r | \r | |||||||||
| United States | \r | $ | 13,544 | \r | $ | 13,468 | \r | $ | 8,446 | |||
| Asia | \r | 7,556 | \r | 5,648 | \r | 19,973 | ||||||
| Europe | \r | 1,191 | \r | 1,940 | \r | 1,136 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
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With\rthe exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized\rat point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands):
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| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Timing of revenue recognition (in thousands): | \r | \r | \r | |||||||||
| Products and services transferred at a point in time | \r | $ | 19,948 | \r | $ | 18,473 | \r | $ | 27,337 | |||
| Services\r transferred over time | \r | 2,343 | \r | 2,583 | \r | 2,218 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
\r\r
Contract\rbalances
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A\rreceivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration\ris unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment\rupon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset.
\r\r\r\r
Contract\rliabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is\rrecognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period\ras a component of deferred revenue. Contract liabilities as of May 31, 2020 and 2019 were $192,000 and $1,734,000, respectively.\rDuring the fiscal years ended May 31, 2020 and 2019, the Company recognized $1,545,000 and $1,273,000 of revenues that were included\rin contract liabilities as of May 31, 2019 and 2018, respectively.
\r\r\r\r
Remaining\rperformance obligations
\r\r\r\r
On\rMay 31, 2020, the Company had $192,000 of remaining performance obligations, which were comprised of deferred service contracts\rand extended warranty contracts not yet delivered. The Company expects to recognize approximately 88% of its remaining performance\robligations as revenue in fiscal 2021, and an additional 12% in fiscal 2022 and thereafter. The foregoing excludes the value of\rother remaining performance obligations as they have original durations of one year or less, and also excludes information about\rvariable consideration allocated entirely to a wholly unsatisfied performance obligation.
\r\r\r\r
Costs\rto obtain or fulfill a contract
\r\r\r\r
The\rCompany generally expenses sales commissions when incurred as a component of selling, general and administrative expense as the\ramortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as\ra manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance\rfor those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and\rtheir respective manufacturing process.
\r\r"}]},{"name":"rpt:f-804","factDimensions":{"xbrl:concept":"us-gaap:FairValueDisclosuresTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
4. FAIR VALUE OF FINANCIAL INSTRUMENTS:
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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.
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Level 3 - instrument valuations are obtained without observable market\rvalues and require a high level of judgment to determine the fair value.
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The following table summarizes the Company’s\rfinancial assets measured at fair value on a recurring basis as of May 31, 2020 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2020 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 80 | \r | $ | 80 | \r | $ | -- | \r | $ | -- | ||||
| Assets | \r | $ | 80 | \r | $ | 80 | \r | $ | -- | \r | $ | -- |
\r\r
The\rfollowing table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2019\r(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
Included in Money market funds as of May\r31, 2020 and 2019 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, 2020 and 2019.
\r\r\r\r
There were no transfers between Level 1 and\rLevel 2 fair value measurements during the fiscal years ended May 31, 2020 and 2019.
\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-805","factDimensions":{"xbrl:concept":"us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
5.\rACCOUNTS RECEIVABLE:
\r\r\r\r
Accounts\rreceivable comprise (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| Accounts\r receivable | \r | $ | 3,717 | \r | $ | 4,859 | ||
| Less: Allowance for doubtful accounts | \r | -- | \r | -- | ||||
| \r | $ | 3,717 | \r | $ | 4,859 |
\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\r 31, 2020 | \r | $ | 0 | \r | $ | -- | \r | $ | (0 | ) | \r | $ | -- | |||
| \r | \r | \r | \r | |||||||||||||
| May\r 31, 2019 | \r | $ | 4 | \r | $ | -- | \r | $ | (4 | ) | \r | $ | -- |
\r\r
*\rDeductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance\rfor doubtful accounts credited to expense.
\r\r"}]},{"name":"rpt:f-806","factDimensions":{"xbrl:concept":"us-gaap:SupplementalBalanceSheetDisclosuresTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 | 2020 | \r | 2019 | ||||
| Raw materials and sub-assemblies | \r | $ | 5,055 | \r | $ | 5,471 | ||
| Work in process | \r | 2,917 | \r | 3,580 | ||||
| Finished goods | \r | 17 | \r | 10 | ||||
| \r | $ | 7,989 | \r | $ | 9,061 |
\r\r
During the year ended May 31, 2020\rand 2019, the Company wrote down $1,669,000 and $1,168,000 of inventory, respectively.
\r\r\r\r
PROPERTY AND EQUIPMENT, NET:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Leasehold improvements | \r | $ | 1,201 | \r | $ | 1,154 | ||
| Furniture and fixtures | \r | 612 | \r | 983 | ||||
| Machinery and equipment | \r | 3,038 | \r | 3,097 | ||||
| Test equipment | \r | 2,516 | \r | 2,604 | ||||
| \r | 7,367 | \r | 7,838 | |||||
| Less: Accumulated depreciation and amortization | \r | (6,704 | ) | \r | (6,793 | ) | ||
| \r | $ | 663 | \r | $ | 1,045 |
\r\r
Depreciation expense was $384,000,\r$431,000 and $417,000 for fiscal 2020, 2019, and 2018, respectively.
\r\r\r\r
ACCRUED EXPENSES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Payroll related | \r | $ | 791 | \r | $ | 990 | ||
| Warranty | \r | 246 | \r | 154 | ||||
| Professional services | \r | 173 | \r | 162 | ||||
| Commissions and bonuses | \r | 139 | \r | 168 | ||||
| Taxes payable | \r | 30 | \r | 29 | ||||
| Investor relations | \r | 19 | \r | 19 | ||||
| Restructuring | \r | 8 | \r | 408 | ||||
| Material purchases | \r | -- | \r | 65 | ||||
| Other | \r | 33 | \r | 39 | ||||
| \r | $ | 1,439 | \r | $ | 2,034 |
\r\r
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Customer deposits | \r | $ | -- | \r | $ | 1,003 | ||
| Deferred revenue | \r | 170 | \r | 542 | ||||
| \r | $ | 170 | \r | $ | 1,545 |
"}]},{"name":"rpt:f-807","factDimensions":{"xbrl:concept":"us-gaap:IncomeTaxDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
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 | 2020 | \r | 2019 | \r | 2018 | ||||||||
| Domestic | \r | $ | (2,751 | ) | \r | $ | (5,273 | ) | \r | $ | 433 | ||
| Foreign | \r | (15 | ) | \r | 65 | \r | 22 | ||||||
| \r | $ | (2,766 | ) | \r | $ | (5,208 | ) | \r | $ | 455 |
\r\r
The income tax (expense) benefit consists\rof the following (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Federal income taxes: | \r | \r | \r | |||||||||
| Current | \r | $ | -- | \r | $ | -- | \r | $ | 99 | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| State income taxes: | \r | \r | \r | |||||||||
| Current | \r | (30 | ) | \r | (6 | ) | \r | (22 | ) | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| Foreign income taxes: | \r | \r | \r | |||||||||
| Current | \r | (6 | ) | \r | (21 | ) | \r | (4 | ) | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| \r | $ | (36 | ) | \r | $ | (27 | ) | \r | $ | 73 |
\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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| U.S. federal statutory tax rate | \r | 21.0 | % | \r | 21.0 | % | \r | 28.6 | % | |||
| State taxes, net of federal tax effect | \r | 1.4 | \r | (1.0 | ) | \r | (16.7 | ) | ||||
| Foreign rate differential. | \r | (21.5 | ) | \r | (0.7 | ) | \r | 39.4 | ||||
| Stock-based compensation | \r | (4.0 | ) | \r | (2.8 | ) | \r | 39.9 | ||||
| Research and development credit | \r | -- | \r | 1.5 | \r | 5.9 | ||||||
| Change in valuation allowance | \r | 4.3 | \r | (15.6 | ) | \r | (1,349.2 | ) | ||||
| Federal rate change impact | \r | -- | \r | -- | \r | 1,419.7 | ||||||
| Federal AMT refund | \r | -- | \r | -- | \r | (20.0 | ) | |||||
| ASU 2016-09 adoption | \r | -- | \r | -- | \r | (169.1 | ) | |||||
| Other | \r | (2.5 | ) | \r | (2.9 | ) | \r | 5.4 | ||||
| Effective tax rate | \r | (1.3 | )% | \r | (0.5 | )% | \r | (16.1 | )% |
\r\r
The components of the net deferred tax assets\rand liabilities are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| \r | \r | |||||||
| Deferred tax assets: | \r | \r | ||||||
| Net operating losses | \r | $ | 13,634 | \r | $ | 13,475 | ||
| Lease Liability | \r | 483 | \r | -- | ||||
| Credit carryforwards | \r | 5,089 | \r | 4,995 | ||||
| Inventory reserves | \r | 1,005 | \r | 790 | ||||
| Reserves and accruals | \r | 739 | \r | 1,379 | ||||
| Other | \r | 319 | \r | 298 | ||||
| \r | 21,269 | \r | 20,937 | |||||
| \r | \r | |||||||
| Deferred tax liabilities: | \r | \r | ||||||
| Operating lease right-of-use assets | \r | (449 | ) | \r | -- | |||
| Less: Valuation allowance | \r | (20,820 | ) | \r | (20,937 | ) | ||
| Net deferred tax assets (liabilities) | \r | $ | -- | \r | $ | -- |
\r\r
The valuation allowance decreased by $118,000\rduring fiscal 2020, increased by $813,000 during fiscal 2019, and decreased by $6,139,000 during fiscal 2018. As of May 31, 2020\rand 2019, 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, 2020, the Company had federal\rand state net operating loss carryforwards of $54,601,000 and $29,386,000, respectively. The federal and state net operating loss\rcarryforwards will begin to expire in 2024. Federal net operating losses of $3.7 million will carryforward indefinitely. At May\r31, 2020, the Company also had federal and state research and development tax credit carryforwards of $2,026,000 and $5,825,000,\rrespectively. The federal credit carryforward will begin to expire in 2022, and the California credit will carryforward indefinitely.\rThese carryforwards may be subject to certain limitations on annual utilization in case of a change in ownership, as defined by\rtax law. The Company also has alternative minimum tax credit carryforwards of $34,000 for state purposes. The credits may be used\rto 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 $378,000 are available to reduce future foreign taxable income. The foreign net operating losses will expire starting 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, 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 | ||||
| Decreases related to prior year tax positions | \r | (11 | ) | |
| Increases related to current year tax positions | \r | 54 | ||
| \r | ||||
| Balance at May 31, 2020 | \r | $ | 1,852 |
\r\r
The ending balance of $1,852,000 of unrecognized\rtax benefits as of May 31, 2020, 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 2020 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. The Company also finalized its adjustment to the deferred tax assets and offset to the valuation\rallowance for the reduction in the U.S. corporate tax rate to 21% with no financial statement impact.
\r\r\r\r
The tax reform repealed the corporate alternative\rminimum tax, or AMT, effective December 31, 2017. The minimum tax credit is refundable for any tax year beginning after December\r31, 2017 and before December 31, 2020 in an amount equal to 50% of the excess of the minimum tax credit over the allowable credit\rfor the year against the regular tax liability. Any unused minimum tax credit carryforward is refundable in the following year.\rThe company recorded a $91,000 benefit for its federal refundable AMT credit in Q3 fiscal 2018. 50% of the refundable credit was\rclaimed through the fiscal year 2019 federal income tax return and received by the end of fiscal year 2020. The remaining 50% of\rthe refundable credit will be claimed through the fiscal year 2020 federal income tax return.
\r\r\r\r
On December 18, 2019, the FASB issued Accounting\rStandards Update ASU 2019-12 on Simplifying the Accounting for Income Taxes. The board decided to remove the exception to the incremental\rapproach for intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for\rexample discontinued operations or other comprehensive income). There are also provisions related to state taxes and calculating\rincome taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The Company has not yet adopted\rASU 2019-12 and believes upon adoption there would be no material impact.
\r\r\r\r
On March 27, 2020, the CARES Act was signed\rinto law. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain\rpayroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest\rdeduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company is\rcurrently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available.
\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 – 2019 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-808","factDimensions":{"xbrl:concept":"us-gaap:LesseeOperatingLeasesTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
8. LEASES
\r\r\r\r
The Company leases most of its\rmanufacturing and office space under operating leases. The Company entered into non-cancelable operating lease agreements for\rits United States manufacturing and office facilities and maintains equipment under non-cancelable operating leases in\rGermany. The Company’s principal administrative and production facilities are located in Fremont, California, in a\r51,289 square foot building. The Company’s lease was renewed in February 2018 and expires in July 2023. The Company\rmaintained a facility in Japan located in a 418 square foot office in Tokyo under a lease which expired in June 2020. The\rCompany also maintained a 1,585 square foot warehouse in Yamanashi under a lease which expired in June 2020. The Company\rsubstantially closed its subsidiary Aehr Test Systems Japan K.K. in March 2020, completing the liquidation of the legal\rentity in July 2020, see Note 16, “Restructuring,” of the Notes to Consolidated Financial Statements. The Company\rleases a 492 square foot sales and support office in Utting, Germany. The lease, which began February 1, 1992 and expires on\rJanuary 31, 2022, contains an automatic twelve months renewal, at rates to be determined, if no notice is given prior to six\rmonths from expiry. Under the lease agreements, the Company is responsible for payments of utilities, taxes and\rinsurance.
\r\r\r\r
The Company has only operating leases for\rreal estate including corporate offices, warehouse space and certain equipment. A lease with an initial term of 12 months or less\ris generally not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the\runderlying asset, or renew the arrangement that the Company is reasonably certain to exercise (short-term leases). The Company\rrecognizes lease expense on a straight-line basis over the lease term for short-term leases that the Company does not record on\rits balance sheet. The Company’s operating leases have remaining lease terms of 4 months to 3 years.
\r\r\r\r
The Company determines whether an arrangement\ris or contains a lease based on the unique facts and circumstances present at the inception of the arrangement. Operating lease\rliabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected\rlease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes\rthe appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term\rat an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be\rrequired for items such as initial direct costs paid or incentives received.
\r\r\r\r
The weighted-average remaining lease term\rfor the Company’s operating leases was 3.2 years at May 31, 2020 and the weighted-average discount rate was 5.5%.
\r\r\r\r
The Company’s operating lease cost\runder FASB ASC Topic 842 was $734,000 for the year ended May 31, 2020. Rent expense under FASB ASC Topic 840\rwas $787,000 for the year ended May 31, 2019.
\r\r\r\r
The following table presents supplemental\rcash flow information related to the Company’s operating leases (in thousands):
\r\r\r\r
| \r | Year Ended May 31, 2020 | |||
| Cash paid for amounts included in the measurement of operating lease liabilities | \r | |||
| Operating cash flows from operating leases | \r | $ | 737 |
\r\r
The following table presents the maturities\rof the Company’s operating lease liabilities as of May 31, 2020 (in thousands):
\r\r\r\r
| Fiscal year | \r | Operating Leases | |||
| 2021 | \r | $ | 765 | ||
| 2022 | \r | 779 | |||
| 2023 | \r | 795 | |||
| 2024 | \r | 134 | |||
| 2025 | \r | -- | |||
| Thereafter | \r | -- | |||
| Total future minimum operating lease payments | \r | $ | 2,473 | ||
| Less: imputed interest | \r | 210 | |||
| Present value of operating lease liabilities | \r | $ | 2,263 |
"}]},{"name":"rpt:f-809","factDimensions":{"xbrl:concept":"us-gaap:DebtDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
9. BORROWING AND FINANCING ARRANGEMENTS:
\r\r\r\r
On January 16, 2020, the Company\rentered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”).\rPursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $4.0 million or (ii)\rthe amount available under the borrowing base minus (b) the outstanding principal balance of any advances, under a revolving\rline of credit which is collateralized by all the Company’s assets except intellectual property. The borrowing base is 80% of\religible accounts, as determined by SVB from the Company’s most recent borrowing base statement; provided, however, SVB\rhas the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of certain\revents or conditions, which may adversely affect the collateral or its value. Subject to an event of default, the principal\ramount outstanding under the revolving line of credit will accrue interest at a floating per annum rate equal to the greater\rof (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s\radjusted quick ratio, and (b) 4.75%. Interest is payable monthly on the last calendar day of each month and the outstanding\rprincipal amount, the unpaid interest and all other obligations are due on the maturity date, which is 364 days from the\reffective date of January 13, 2020. At May 31, 2020, the Company had not drawn against the credit facility and was in\rcompliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under\rthe line at May 31, 2020 was $263,000. There are no financial covenants in the agreement.
\r\r"}]},{"name":"rpt:f-810","factDimensions":{"xbrl:concept":"us-gaap:LongTermDebtTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
10. LONG-TERM DEBT:
\r\r\r\r
On April 23, 2020, the Company obtained the\rPPP Loan in the aggregate amount of $1,678,789 from SVB. The PPP Loan was evidenced by a promissory note dated April 23, 2020 (the\r“Note”) that matures on April 23, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on\rNovember 23, 2020. The PPP Loan proceeds were used for payroll, health care benefits, rent and utilities.
\r\r\r\r
Under the terms of the\rCARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such\rforgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs, covered\rrent and mortgage obligations, and covered utility payments incurred by the Company. The Company intends to apply for forgiveness\rof the PPP Loan with respect to these covered expenses. No assurance can be given that the Company will obtain forgiveness of the\ramount due under the loan in whole or in part.
\r\r"}]},{"name":"rpt:f-811","factDimensions":{"xbrl:concept":"us-gaap:ShareholdersEquityAndShareBasedPaymentsTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
11. STOCKHOLDERS’ EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED\rCOMPENSATION:
\r\r\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, 2020, 2019 and 2018 (in thousands, except per share data):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, included in: | \r | \r | \r | |||||||||
| \r | \r | \r | ||||||||||
| Cost of sales | \r | $ | 80 | \r | $ | 104 | \r | $ | 148 | |||
| Selling, general and administrative | \r | 631 | \r | 545 | \r | 592 | ||||||
| Research and development | \r | 199 | \r | 256 | \r | 256 | ||||||
| \r | \r | \r | ||||||||||
| Net effect on net (loss) income | \r | $ | 910 | \r | $ | 905 | \r | $ | 996 | |||
| \r | \r | \r | ||||||||||
| Effect on net (loss) income per share: | \r | \r | \r | |||||||||
| Basic | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.05 | |||
| Diluted | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.04 |
\r\r
As of May 31, 2020, 2019 and 2018, there\rwere no stock-based compensation expenses capitalized as part of inventory.
\r\r\r\r
During fiscal 2020, 2019 and fiscal 2018, the Company\rrecorded stock-based compensation related to stock options and restricted stock units of $751,000, $650,000 and $706,000, respectively.
\r\r\r\r
As of May 31, 2020, the total compensation\rexpense related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plan, but not yet recognized, was\r$1,131,000 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 2.6 years.
\r\r\r\r
During fiscal 2020, 2019 and fiscal 2018,\rthe Company recorded stock-based compensation related to its ESPP of $159,000, $255,000 and $290,000, 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, 2020, the total compensation\rexpense related to purchase rights under the ESPP but not yet recognized was $59,000. This expense will be amortized on a straight-line\rbasis over a weighted average period of approximately 0.8 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 2020, 2019 and 2018 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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 5 | \r | 5 | \r | 4 | ||||||
| Volatility | \r | 0.72 | \r | 0.72 | \r | 0.77 | ||||||
| Risk-free interest rates | \r | 1.56 | % | \r | 2.83 | % | \r | 1.95 | % | |||
| Weighted-average grant date fair value | \r | $ | 0.95 | \r | $ | 1.33 | \r | $ | 2.07 |
\r\r
The fair value of our ESPP purchase rights\rfor the fiscal 2020, 2019 and 2018 was estimated using the following weighted-average assumptions:
\r\r\r\r
| \r | Year End May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | ||||||
| Volatility | \r | 0.62 – 0.77 | \r | 0.48 – 0.78 | \r | 0.56 – 0.81 | ||||||
| Risk-free interest rates | \r | 0.14%–1.81% | \r | 2.33%–2.82% | \r | 1.92%–2.25% | ||||||
| Weighted-average grant date fair value | \r | $ | 0.79 | \r | $ | 1.14 | \r | $ | 1.01 |
\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 3,435,000 shares\rof common stock have been reserved for issuance under the Company’s 2016 Equity Incentive Plan, which includes 1,835,000\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 22, 2019 for further information regarding the 2016 Equity\rIncentive Plan.
\r\r\r\r
As of May 31, 2020, out of the 4,813,000\rshares authorized for grant under the 2016 Equity Incentive Plan, 3,163,000 stock options and RSUs were outstanding. As of May\r31, 2019, out of the 4,277,000 shares authorized for grant under the 2016 Equity Incentive Plan, 3,129,000 stock options and RSUs\rwere outstanding.
\r\r\r\r
The following tables summarize the Company’s\rstock option and RSU transactions during fiscal 2020, 2019 and 2018 (in thousands):
\r\r\r\r
| \r | Available | |||
| \r | Shares | |||
| Balance, May 31, 2017 | \r | 2,169 | ||
| \r | ||||
| Options granted | \r | (338 | ) | |
| RSUs granted | \r | (64 | ) | |
| RSUs cancelled | \r | 33 | ||
| Options terminated | \r | 16 | ||
| Options expired | \r | (4 | ) | |
| \r | ||||
| Balance, May 31, 2018 | \r | 1,812 | ||
| \r | ||||
| Options granted | \r | (804 | ) | |
| RSUs cancelled | \r | 8 | ||
| Options terminated | \r | 195 | ||
| Options expired | \r | (64 | ) | |
| \r | ||||
| Balance, May 31, 2019 | \r | 1,147 | ||
| \r | ||||
| Additional shares reserved | \r | 1,196 | ||
| Options granted | \r | (738 | ) | |
| RSUs granted | \r | (25 | ) | |
| Shares withheld for taxes and not issued | \r | 6 | ||
| Options terminated | \r | 457 | ||
| Options expired | \r | (393 | ) | |
| \r | ||||
| Balance, May 31, 2020 | \r | 1,650 |
\r\r
The following table summarized the stock\roption transactions during fiscal 2020, 2019 and 2018 (in thousands, except per share data):
\r\r\r\r
| \r | \r | Outstanding Options | \r||||||||||
| \r | \r | \r | \r | \r | Weighted | \r\r | \r | \r | ||||
| \r | \r | Number | \r\r | \r | Average | \r\r | \r | Aggregate | \r||||
| \r | \r | of | \r\r | \r | Exercise | \r\r | \r | Intrinsic | \r||||
| \r | \r | Shares | \r\r | \r | Price | \r\r | \r | Value | \r||||
| Balances, May 31, 2017 | \r\r | \r | 3,074 | \r\r | \r | $ | \r1.73 | \r\r | \r | $ | \r8,763 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 338 | \r\r | \r | $ | \r3.56 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (16 | \r) | \r\r | $ | \r2.72 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (537 | \r) | \r\r | $ | \r1.17 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2018 | \r\r | \r | 2,859 | \r\r | \r | $ | \r2.04 | \r\r | \r | $ | \r1,987 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 804 | \r\r | \r | $ | \r2.19 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (195 | \r) | \r\r | $ | \r2.32 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (361 | \r) | \r\r | $ | \r0.85 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2019 | \r\r | \r | 3,107 | \r\r | \r | $ | \r2.20 | \r\r | \r | $ | \r283 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 738 | \r\r | \r | $ | \r1.61 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (457 | \r) | \r\r | $ | \r1.98 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (235 | \r) | \r\r | $ | \r1.22 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2020 | \r\r | \r | 3,153 | \r\r | \r | $ | \r2.17 | \r\r | \r | $ | \r102 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options fully vested and expected to vest at May 31, 2020 | \r\r | \r | 3,115 | \r\r | \r | $ | \r2.17 | \r\r | \r | $ | \r101 | \r
\r\r
The options outstanding and exercisable at\rMay 31, 2020 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, 2020 | \r | at May 31, 2020 | |||||||||||||||||||||||||||
Range of Exercise | \r | Number Outstanding Shares | \r | Weighted Average \rRemaining Contractual Life \r(Years) | \r | Weighted Average Exercise \rPrice | \r | Number Exercisable Shares | \r | Weighted Average \rRemaining Contractual Life \r(Years) | \r | Weighted Average Exercise \rPrice | \r | Aggregate Intrinsic Value | ||||||||||||||||
| $ | \r1.22-$1.28 | \r | 248 | \r | 2.10 | \r | $ | 1.26 | \r | 176 | \r | 0.19 | \r | $ | 1.28 | \r | ||||||||||||||
| $ | \r1.64-$1.77 | \r | 945 | \r | 5.35 | \r | $ | 1.66 | \r | 487 | \r | 4.66 | \r | $ | 1.68 | \r | ||||||||||||||
| $ | \r2.03-$2.46 | \r | 1,223 | \r | 3.70 | \r | $ | 2.21 | \r | 858 | \r | 3.03 | \r | $ | 2.19 | \r | ||||||||||||||
| $ | \r2.63-$2.81 | \r | 511 | \r | 1.29 | \r | $ | 2.70 | \r | 510 | \r | 1.28 | \r | $ | 2.70 | \r | ||||||||||||||
| $ | \r3.46-$3.93 | \r | 226 | \r | 4.16 | \r | $ | 3.84 | \r | 172 | \r | 4.18 | \r | $ | 3.82 | \r | ||||||||||||||
| \r | \r | \r | \r | \r | \r | \r | \r | |||||||||||||||||||||||
| $ | \r1.22-$3.93 | \r | 3,153 | \r | 3.71 | \r | $ | 2.17 | \r | 2,203 | \r | 2.85 | \r | $ | 2.25 | \r | $ | 67 |
\r\r
The total intrinsic values of options exercised\rwere $160,000, $338,000 and $1,058,000 during fiscal 2020, 2019 and 2018, respectively. The weighted average contractual life of\rthe options exercisable and expected to be exercisable at May 31, 2020 was 3.69 years.
\r\r\r\r
Options to purchase 2,203,000, 2,314,000\rand 2,312,000 shares were exercisable at May 31, 2020, 2019 and 2018, respectively. These exercisable options had weighted average\rexercise prices of $2.25, $2.14 and $1.89 as of May 31, 2020, 2019 and 2018, respectively.
\r\r\r\r
During the fiscal year ended May 31,\r2020, RSUs for 10,000 shares, net of 6,000 shares withheld to settle payroll taxes, were granted and fully vested to\remployees. The market value on the date of the grant of these RSUs was $1.64 per share. During the fiscal year ended May 31,\r2020, 13,000 RSUs became fully vested and there was no cancellation. 10,000 RSUs were outstanding and unvested at May 31,\r2020. The intrinsic value of the outstanding and unvested RSUs at May 31, 2020 was $16,000. During the fiscal year ended May\r31, 2019, there were no RSUs granted to employees. During the fiscal year ended May 31, 2019, 16,000 RSUs became fully vested\rand 8,000 RSUs were cancelled. 23,000 RSUs were outstanding and unvested at May 31, 2019. The intrinsic value of the\routstanding and unvested RSUs at May 31, 2019 was $40,000. During the fiscal year ended May 31, 2018, RSUs for 64,000 shares\rwere granted to employees. The market value on the date of the grant of these RSUs was $3.93 per share. During the fiscal\ryear ended May 31, 2018, 16,000 RSUs became fully vested and 33,000 RSUs were cancelled. 47,000 RSUs were outstanding and\runvested at May 31, 2018. The intrinsic value of the outstanding and unvested RSUs at May 31, 2018 was $122,000.
\r\r\r\r
During the fiscal year ended May 31, 2020,\rRSUs for 9,000 shares were granted and fully vested to members of the Company’s Board of Directors. The weighted average\rmarket value on the date of the grant of these RSUs was $1.64 per share. There were no RSUs granted to members of the Board of\rDirectors during fiscal 2019 and 2018.
\r\r\r\r
EMPLOYEE STOCK PURCHASE PLAN:
\r\r\r\r
In October 2006, the Company’s shareholders\rapproved the 2006 Employee Stock Purchase Plan. In October 2016, the Company’s shareholders approved the Company’s\rAmended and Restated 2006 Employee Stock Purchase Plan (the “Purchase Plan”), which amended and restated the 2006 Employee\rStock Purchase Plan. The Purchase Plan extended the term of the 2006 Employee Stock Purchase Plan indefinitely. See the Company’s\rRegistration Statements on Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 and November 21, 2018\rfor further information regarding the Purchase Plan. The Purchase Plan has consecutive, overlapping, twenty-four month offering\rperiods. Each twenty-four-month offering period includes four six-month purchase periods. The offering periods generally begin\ron the first trading day on or after April 1 and October 1 each year. All employees who work a minimum of 20 hours per week and\rare customarily employed by the Company (or an affiliate thereof) for at least five months per calendar year are eligible to participate.\rUnder the Purchase Plan, shares are purchased through employee payroll deductions at exercise prices equal to 85% of the lesser\rof the fair market value of the Company’s common stock at either the first day of an offering period or the last day of the\rpurchase period. If a participant’s rights to purchase stock under all employee stock purchase plans of the Company accrue\rat a rate which exceeds $25,000 worth of stock for a calendar year, such participant may not be granted an option to purchase stock\runder the Purchase Plan. The maximum number of shares a participant may purchase during a single purchase period is 3,000 shares.\rIn October 2018, the Company’s shareholders approved an amendment to the Purchase Plan to increase the number of shares authorized\rfor issuance thereunder by an additional 350,000 shares of the Company’s common stock. After such amendment, a total of 1,850,000\rshares of the Company’s common stock have been authorized for issuance under the Purchase Plan. During the fiscal years ended\rMay 31, 2020, 2019 and 2018, ESPP purchase rights of 55,000, 379,000, and 359,000 shares, respectively, were granted. For the fiscal\ryears ended May 31, 2020, 2019 and 2018, approximately 136,000, 125,000 and 237,000 shares of common stock, respectively, were\rissued under the Purchase Plan. As of May 31, 2020, a total of 1,617,000 shares have been issued under the Purchase Plan, and 233,000\rESPP shares remain available for issuance.
\r\r"}]},{"name":"rpt:f-812","factDimensions":{"xbrl:concept":"us-gaap:CompensationAndEmployeeBenefitPlansTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
12. 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 2020, 2019 and 2018.\rThe contribution amounts are recorded as compensation expense, in the period authorized and included in accrued expenses, in the\rperiod authorized. Contributions of 34,000 shares were made to the ESOP during fiscal 2020 for fiscal 2019. Contributions of 23,000\rshares were made to the ESOP during fiscal 2019 for fiscal 2018. Contributions of 13,000 shares were made to the ESOP during fiscal\r2018 for fiscal 2017. The contribution for fiscal 2020 will be made in fiscal 2021. 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\rsavings plan (the “401(k) Plan”) to provide retirement income to all qualified employees of the Company. The 401(k)\rPlan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan is funded\rby voluntary pre-tax contributions from employees. Contributions are invested, as directed by the participant, in investment funds\ravailable under the 401(k) Plan. The Company is not required to make, and did not make, any contributions to the 401(k) Plan during\rfiscal 2020, 2019 and 2018.
\r\r"}]},{"name":"rpt:f-813","factDimensions":{"xbrl:concept":"us-gaap:OtherIncomeAndOtherExpenseDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
13. OTHER (EXPENSE) INCOME, NET:
\r\r\r\r
Other (expense) income, net comprises the\rfollowing (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Foreign exchange (loss) gain | \r | $ | (12 | ) | \r | $ | 43 | \r | $ | (63 | ) | |
| Other income, net | \r | 1 | \r | 1 | \r | 2 | ||||||
| \r | $ | (11 | ) | \r | $ | 44 | \r | $ | (61 | ) |
"}]},{"name":"rpt:f-814","factDimensions":{"xbrl:concept":"us-gaap:ProductWarrantyDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
14. 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, 2020 and 2019 (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| \r | \r | |||||||
| Balance at the beginning of the year | \r | $ | 154 | \r | $ | 135 | ||
| Accruals for warranties issued during the year | \r | 299 | \r | 214 | ||||
| Consumption of reserves | \r | (207 | ) | \r | (195 | ) | ||
| \r | \r | |||||||
| Balance at the end of the year | \r | $ | 246 | \r | $ | 154 |
\r\r
The accrued warranty balance is included\rin accrued expenses on the consolidated balance sheets.
\r\r"}]},{"name":"rpt:f-815","factDimensions":{"xbrl:concept":"us-gaap:SegmentReportingDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
15. 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 | 2020 | \r | 2019 | |||||
| United States | \r | $ | 662 | \r | $ | 1,005 | ||
| Asia | \r | 1 | \r | 40 | ||||
| Europe | \r | -- | \r | -- | ||||
| \r | $ | 663 | \r | $ | 1,045 |
\r\r
There were no revenues through distributors\rfor the fiscal years ended May 31, 2020 and 2019.
\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-816","factDimensions":{"xbrl:concept":"us-gaap:RestructuringAndRelatedActivitiesDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
16. RESTRUCTURING:
\r\r\r\r
During the fiscal year ended May 31,\r2020, the Company approved the dissolution of Aehr Test Systems Japan K.K (“ATS-Japan”), a majority owned\rsubsidiary. In connection with the dissolution plan, the Company recognized approximately $220,000 in the fourth quarter of fiscal\r2020 related to severance payments for individuals impacted in this reduction, legal fees associated with the dissolution process,\rand write-off of assets. The ATS-J subsidiary was dissolved in March 2020. The liquidation process occurred from March 2020 through\rthe final liquidation in July 2020, allowing creditors time to submit claims and time for ATS-J to wind down and disposition any\rassets. The Company expects the dissolution of ATS-Japan will result in a cost saving of approximately $90,000 each quarter beginning\rin fiscal 2021.
\r\r\r\r
During the fiscal year ended May 31,\r2019, the Company implemented a restructuring plan in order to streamline its operations and better align its structure with\rits objectives going forward. In connection with the restructuring plan, the Company recognized $725,000 of restructuring\rcharges related to employee termination expenses during the fiscal year ended May 31, 2019. The Company paid $317,000 of the\rrestructuring charge during fiscal year ended May 31, 2019. At May 31, 2019, the balance of $408,000 of the restructuring\rcharge was included in accrued expenses on the accompanying condensed consolidated balance sheets and is expected to be paid\rin fiscal year 2020. The Company does not expect to incur any further expenses in connection with this restructuring plan.\rThere were no restructuring charges incurred for the fiscal years ended May 31, 2018.
\r\r"}]},{"name":"rpt:f-817","factDimensions":{"xbrl:concept":"us-gaap:RelatedPartyTransactionsDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
17. RELATED PARTY TRANSACTIONS:
\r\r\r\r
Mario M. Rosati, one of the Company’s\rdirectors, was 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. Mario M. Rosati retired\rfrom Wilson Sonsini Goodrich & Rosati on January 31, 2020. The amounts of transactions during fiscal years ended May 31, 2020,\r2019 and 2018 were $78,000, $90,000, and $64,000, respectively. At May 31, 2020 the Company had a prepayment to Wilson Sonsini\rGoodrich & Rosati of $14,000 and at May 31, 2019 had a payable to Wilson Sonsini Goodrich & Rosati of $13,000.
\r\r"}]},{"name":"rpt:f-818","factDimensions":{"xbrl:concept":"us-gaap:CommitmentsAndContingenciesDisclosureTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
18. COMMITMENTS AND CONTINGENCIES:
\r\r\r\r
COMMITMENTS
\r\r\r\r
At both May 31, 2020 and 2019, 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, 2020, the Company had $2,196,000 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-819","factDimensions":{"xbrl:concept":"us-gaap:QuarterlyFinancialInformationTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
19. 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, 2020 and 2019. 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. 29, | \r | May 31, | |||||||||
| \r | 2019 | \r | 2019 | \r | 2020 | \r | 2020 | |||||||||
| Net sales | \r | $ | 5,533 | \r | $ | 6,874 | \r | $ | 6,111 | \r | $ | 3,773 | ||||
| Gross profit (loss) | \r | $ | 2,271 | \r | $ | 3,202 | \r | $ | 2,991 | \r | $ | (93 | ) | |||
| Net (loss) income | \r | $ | (413 | ) | \r | $ | 251 | \r | $ | 245 | \r | $ | (2,885 | ) | ||
| Net (loss) income per share basic and diluted | \r | $ | (0.02 | ) | \r | $ | 0.01 | \r | $ | 0.01 | \r | $ | (0.13 | ) |
\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 |
"}]},{"name":"rpt:f-820","factDimensions":{"xbrl:concept":"us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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, the WaferPak full wafer contactor, the DiePak carrier\rand test fixtures.
\r\r"}]},{"name":"rpt:f-821","factDimensions":{"xbrl:concept":"AEHR:Liquidity","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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, 2020, 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 its existing backlog of products, the sale of inventory on hand, deposits and down\rpayments against significant orders will be adequate to meet its working capital and capital equipment requirements. The Company\rbelieves its existing cash and cash equivalents will be sufficient to meet its anticipated cash needs over the next 12 months.\rThe Company’s future capital requirements will depend on many factors, including the Company’s growth rate, the timing\rand extent of its spending to support research and development activities, the timing and cost of establishing additional sales\rand marketing capabilities, the timing and cost to introduce new and enhanced products and the timing and cost to implement new\rmanufacturing technologies. In the event that additional financing is required from outside sources, the Company may not be able\rto raise it on terms acceptable to the Company or at all. Any additional debt financing obtained by the Company in the future could\ralso involve restrictive covenants relating to the Company’s capital-raising activities and other financial and operational\rmatters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including\rpotential acquisitions. Additionally, if the Company raises additional funds through further issuances of equity, convertible debt\rsecurities or other securities convertible into equity, its existing stockholders could suffer significant dilution in their percentage\rownership of the Company, and any new equity securities the Company issue could have rights, preferences and privileges senior\rto those of holders of the Company’s common stock. If the Company is unable to obtain adequate financing or financing on\rterms satisfactory to the Company when the Company requires it, the Company’s ability to continue to grow or support its\rbusiness and to respond to business challenges could be significantly limited.
\r\r"}]},{"name":"rpt:f-822","factDimensions":{"xbrl:concept":"us-gaap:ConsolidationPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-823","factDimensions":{"xbrl:concept":"us-gaap:UseOfEstimates","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
USE OF ESTIMATES:
\r\r\r\r
The preparation of financial statements\rin conformity with accounting principles generally accepted in the United States of America requires management to make\restimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and\rliabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting\rperiod. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial\rstatements include allowance for doubtful accounts, valuation of inventory at the lower of cost or net realizable value, and\rwarranty reserves.
\r\r"}]},{"name":"rpt:f-824","factDimensions":{"xbrl:concept":"us-gaap:CashAndCashEquivalentsPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-825","factDimensions":{"xbrl:concept":"us-gaap:ReceivablesTradeAndOtherAccountsReceivableAllowanceForDoubtfulAccountsPolicy","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 year ended May 31, 2020, 2019\ror 2018.
\r\r"}]},{"name":"rpt:f-826","factDimensions":{"xbrl:concept":"us-gaap:ConcentrationRiskCreditRisk","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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, 2020, approximately 13%, 62% and 25% of gross\raccounts receivable were from customers located in North America, Asia and Europe, respectively. As of May 31, 2019, approximately\r49%, 25% and 26% of gross accounts receivable were from customers located in North America, Asia and Europe, respectively. Two\rcustomers accounted for 45% and 18% of gross accounts receivable as of May 31, 2020. Three customers accounted for 44%, 25% and\r21% of gross accounts receivable as of May 31, 2019. Three customers accounted for 43%, 16% and 15% of net sales in fiscal 2020.\rFour customers accounted for 36%, 14%, 12% and 10% of net sales in fiscal 2019. 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-827","factDimensions":{"xbrl:concept":"AEHR:ConcentrationOfSupplyRiskPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-828","factDimensions":{"xbrl:concept":"us-gaap:InventoryPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-829","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . . 2 to 6 years
\r\rMachinery and equipment. . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . 3 to 6 years
\r\rTest equipment . . . . . . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . 4 to 6 years
\r\r"}]},{"name":"rpt:f-830","factDimensions":{"xbrl:concept":"us-gaap:RevenueRecognitionPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
REVENUE RECOGNITION:
\r\r\r\r
In May 2014, the Financial Accounting Standards\rBoard (“FASB”) issued FASB Accounting Standards Code (“ASC”) Topic 606, Revenue from Contracts with\rCustomers (Topic 606), which was subsequently updated (collectively “ASC 606”). We adopted the standard as of June\r1, 2018, using the modified retrospective method. Under this method, we applied ASC 606 to contracts that were not complete as\rof June 1, 2018 and recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance\rof retained earnings. Results for reporting periods beginning after June 1, 2018 are presented in accordance with ASC 606. Under\rthe modified retrospective adoption method, prior period amounts are not adjusted and are reported in accordance with the accounting\rstandards in effect for those periods per FASB ASC Topic 605, Revenue Recognition, which is also referred to herein as “legacy\rGAAP.”
\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-831","factDimensions":{"xbrl:concept":"us-gaap:ResearchAndDevelopmentExpensePolicy","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 2020, 2019 and 2018.
\r\r"}]},{"name":"rpt:f-832","factDimensions":{"xbrl:concept":"us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-833","factDimensions":{"xbrl:concept":"us-gaap:AdvertisingCostsPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-834","factDimensions":{"xbrl:concept":"us-gaap:ShippingAndHandlingCostPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-835","factDimensions":{"xbrl:concept":"us-gaap:IncomeTaxPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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, 2020 and 2019.
\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 – 2019 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\r\r
On March 27, 2020, the Coronavirus Aid, Relief,\rand Economic Security Act (CARES Act) was passed into law. The CARES Act includes several significant business tax provisions including\rmodification to the taxable income limitation for utilization of net operating losses (NOLs) incurred in 2018, 2019 and 2020 and\rthe ability to carry back NOLs from those years for a period of up to five years, an increase to the limitation on deductibility\rof certain business interest expense, bonus depreciation for purchases of qualified improvement property and special deductions\ron certain corporate charitable contributions. The Company is currently analyzing the impact of these changes and therefore an\restimate of the impact to income taxes is not yet available.
\r\r\r\r
On June 29, 2020, California Governor Gavin\rNewsom signed Assembly Bill 85 (AB 85) into law as part of the California 2020 Budget Act, which temporarily suspends the use of\rCalifornia net operating losses and imposes a cap on the amount of business incentive tax credits that companies can utilize against\rtheir net income for tax years 2020, 2021, and 2022. The Company analyzed the provisions of AB 85 and determined there was no impact\ron its provision for income taxes for the current period and will continue to evaluate the impact, if any, AB 85 may have on its\rcondensed consolidated financial statements and disclosures.
\r\r"}]},{"name":"rpt:f-836","factDimensions":{"xbrl:concept":"us-gaap:ComprehensiveIncomePolicyPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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-837","factDimensions":{"xbrl:concept":"us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
RECENT ACCOUNTING PRONOUNCEMENTS:
\r\r\r\r
Accounting Standards Adopted
\r\r\r\r
Financial Instruments
\r\rIn January 2016, the FASB issued an accounting\rstandard update related to the recognition and measurement of financial assets and financial liabilities. This standard changes\raccounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements\rfor financial instruments. In addition, this standard clarifies guidance related to the valuation allowance assessment when recognizing\rdeferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company adopted this new standard\rin fiscal year 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial\rstatements.
\r\r\r\r
Leases
\r\rIn February 2016, the FASB issued ASC Update\rNo. 2016-02, Leases (FASB ASC Topic 842, Leases). The Company adopted the standard as of June 1, 2019, using the modified retrospective\rapproach and the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method,\rthe Company applied the new leasing rules on the date of adoption and recognized the cumulative effect of initially applying the\rstandard as an adjustment to its opening balance sheet, rather than at the earliest comparative period presented in the financial\rstatements. Prior periods presented are in accordance with the previous lease guidance under FASB ASC Topic 840, Leases.
\r\r\r\r
In addition, the Company applied the package\rof practical expedients permitted under FASB ASC Topic 842 transition guidance to its entire lease portfolio at June 1, 2019. As\ra result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the\rclassification of any expired or existing leases or (iii) the treatment of initial direct costs for any existing leases. Furthermore,\rthe Company elected not to separate lease and non-lease components for the majority of its leases. Instead, for all applicable\rclasses of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with\rthat lease component as a single lease component.
\r\r\r\r
As a result of adopting FASB ASC Topic 842,\rLeases, on June 1, 2019, the Company recognized right-of-use assets of $2.7 million and corresponding liabilities of $2.8 million\rfor its existing operating lease portfolio on its consolidated balance sheet. Operating lease right-of-use assets are presented\ras long-term assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease\rliabilities, long-term on the Company’s consolidated balance sheet. There was no material impact to the Company’s consolidated\rstatements of operations or consolidated statements of cash flows as a result of FASB ASC Topic 842, Leases. Please refer to Note\r“8. LEASES” for information regarding the Company’s lease portfolio as of May 31, 2020 as accounted for under\rFASB ASC Topic 842, Leases.
\r\r\r\r
Accounting Standards Not Yet Adopted
\r\r\r\r
Financial Instruments
\r\rIn June 2016, the FASB issued an accounting\rstandard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held\rbased on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of\rthe reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning\rin the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company\rdoes not expect a material impact of this accounting standard on its consolidated financial statements.
\r\r"}]},{"name":"rpt:f-838","factDimensions":{"xbrl:concept":"AEHR:ScheduleUsefulLifeForPropertyAndEquipmentTableTextblock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The ranges of estimated useful lives are generally as follows:
\r\r\r\r
Furniture and fixtures . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . . 2 to 6 years
\r\rMachinery and equipment. . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . 3 to 6 years
\r\rTest equipment . . . . . . . . . . . . . . . . . . . . . . . . .\r. . . . . . . . . . . . 4 to 6 years
\r\r"}]},{"name":"rpt:f-839","factDimensions":{"xbrl:concept":"us-gaap:DisaggregationOfRevenueTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| Type of good / service: | \r | \r | \r | |||||||||
| Systems | \r | $ | 8,099 | \r | $ | 9,566 | \r | $ | 18,174 | |||
| Contactors | \r | 10,784 | \r | 6,154 | \r | 6,500 | ||||||
| Services | \r | 3,408 | \r | 5,336 | \r | 4,881 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 | ||||
| Product lines: | \r | \r | \r | |||||||||
| Wafer-level | \r | $ | 19,768 | \r | $ | 14,618 | \r | $ | 13,080 | |||
| Test During Burn-In | \r | 2,523 | \r | 6,438 | \r | 16,475 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
\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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| Geographic region: | \r | \r | \r | |||||||||
| United States | \r | $ | 13,544 | \r | $ | 13,468 | \r | $ | 8,446 | |||
| Asia | \r | 7,556 | \r | 5,648 | \r | 19,973 | ||||||
| Europe | \r | 1,191 | \r | 1,940 | \r | 1,136 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
\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. The following presents revenue based on timing of recognition (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Timing of revenue recognition (in thousands): | \r | \r | \r | |||||||||
| Products and services transferred at a point in time | \r | $ | 19,948 | \r | $ | 18,473 | \r | $ | 27,337 | |||
| Services transferred over time | \r | 2,343 | \r | 2,583 | \r | 2,218 | ||||||
| \r | $ | 22,291 | \r | $ | 21,056 | \r | $ | 29,555 |
"}]},{"name":"rpt:f-840","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
Accounts\rreceivable comprise (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| Accounts\r receivable | \r | $ | 3,717 | \r | $ | 4,859 | ||
| Less: Allowance for doubtful accounts | \r | -- | \r | -- | ||||
| \r | $ | 3,717 | \r | $ | 4,859 |
\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\r 31, 2020 | \r | $ | 0 | \r | $ | -- | \r | $ | (0 | ) | \r | $ | -- | |||
| \r | \r | \r | \r | |||||||||||||
| May\r 31, 2019 | \r | $ | 4 | \r | $ | -- | \r | $ | (4 | ) | \r | $ | -- |
\r\r
*\rDeductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance\rfor doubtful accounts credited to expense.
\r\r"}]},{"name":"rpt:f-841","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfInventoryCurrentTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
INVENTORIES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Raw materials and sub-assemblies | \r | $ | 5,055 | \r | $ | 5,471 | ||
| Work in process | \r | 2,917 | \r | 3,580 | ||||
| Finished goods | \r | 17 | \r | 10 | ||||
| \r | $ | 7,989 | \r | $ | 9,061 |
"}]},{"name":"rpt:f-842","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
PROPERTY AND EQUIPMENT, NET:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Leasehold improvements | \r | $ | 1,201 | \r | $ | 1,154 | ||
| Furniture and fixtures | \r | 612 | \r | 983 | ||||
| Machinery and equipment | \r | 3,038 | \r | 3,097 | ||||
| Test equipment | \r | 2,516 | \r | 2,604 | ||||
| \r | 7,367 | \r | 7,838 | |||||
| Less: Accumulated depreciation and amortization | \r | (6,704 | ) | \r | (6,793 | ) | ||
| \r | $ | 663 | \r | $ | 1,045 |
"}]},{"name":"rpt:f-843","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
ACCRUED EXPENSES:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Payroll related | \r | $ | 791 | \r | $ | 990 | ||
| Warranty | \r | 246 | \r | 154 | ||||
| Professional services | \r | 173 | \r | 162 | ||||
| Commissions and bonuses | \r | 139 | \r | 168 | ||||
| Taxes payable | \r | 30 | \r | 29 | ||||
| Investor relations | \r | 19 | \r | 19 | ||||
| Restructuring | \r | 8 | \r | 408 | ||||
| Material purchases | \r | -- | \r | 65 | ||||
| Other | \r | 33 | \r | 39 | ||||
| \r | $ | 1,439 | \r | $ | 2,034 |
"}]},{"name":"rpt:f-844","factDimensions":{"xbrl:concept":"AEHR:CustomerDepositsAndDeferredRevenueTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
\r\r\r\r
| \r | May 31, | |||||||
| (In Thousands) | \r | 2020 | \r | 2019 | ||||
| Customer deposits | \r | $ | -- | \r | $ | 1,003 | ||
| Deferred revenue | \r | 170 | \r | 542 | ||||
| \r | $ | 170 | \r | $ | 1,545 |
"}]},{"name":"rpt:f-845","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
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 | 2020 | \r | 2019 | \r | 2018 | ||||||||
| Domestic | \r | $ | (2,751 | ) | \r | $ | (5,273 | ) | \r | $ | 433 | ||
| Foreign | \r | (15 | ) | \r | 65 | \r | 22 | ||||||
| \r | $ | (2,766 | ) | \r | $ | (5,208 | ) | \r | $ | 455 |
"}]},{"name":"rpt:f-846","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| Federal income taxes: | \r | \r | \r | |||||||||
| Current | \r | $ | -- | \r | $ | -- | \r | $ | 99 | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| State income taxes: | \r | \r | \r | |||||||||
| Current | \r | (30 | ) | \r | (6 | ) | \r | (22 | ) | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| Foreign income taxes: | \r | \r | \r | |||||||||
| Current | \r | (6 | ) | \r | (21 | ) | \r | (4 | ) | |||
| Deferred | \r | -- | \r | -- | \r | -- | ||||||
| \r | $ | (36 | ) | \r | $ | (27 | ) | \r | $ | 73 |
"}]},{"name":"rpt:f-847","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| U.S. federal statutory tax rate | \r | 21.0 | % | \r | 21.0 | % | \r | 28.6 | % | |||
| State taxes, net of federal tax effect | \r | 1.4 | \r | (1.0 | ) | \r | (16.7 | ) | ||||
| Foreign rate differential. | \r | (21.5 | ) | \r | (0.7 | ) | \r | 39.4 | ||||
| Stock-based compensation | \r | (4.0 | ) | \r | (2.8 | ) | \r | 39.9 | ||||
| Research and development credit | \r | -- | \r | 1.5 | \r | 5.9 | ||||||
| Change in valuation allowance | \r | 4.3 | \r | (15.6 | ) | \r | (1,349.2 | ) | ||||
| Federal rate change impact | \r | -- | \r | -- | \r | 1,419.7 | ||||||
| Federal AMT refund | \r | -- | \r | -- | \r | (20.0 | ) | |||||
| ASU 2016-09 adoption | \r | -- | \r | -- | \r | (169.1 | ) | |||||
| Other | \r | (2.5 | ) | \r | (2.9 | ) | \r | 5.4 | ||||
| Effective tax rate | \r | (1.3 | )% | \r | (0.5 | )% | \r | (16.1 | )% |
"}]},{"name":"rpt:f-848","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The components of the net deferred tax assets\rand liabilities are as follows (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| \r | \r | |||||||
| Deferred tax assets: | \r | \r | ||||||
| Net operating losses | \r | $ | 13,634 | \r | $ | 13,475 | ||
| Lease Liability | \r | 483 | \r | -- | ||||
| Credit carryforwards | \r | 5,089 | \r | 4,995 | ||||
| Inventory reserves | \r | 1,005 | \r | 790 | ||||
| Reserves and accruals | \r | 739 | \r | 1,379 | ||||
| Other | \r | 319 | \r | 298 | ||||
| \r | 21,269 | \r | 20,937 | |||||
| \r | \r | |||||||
| Deferred tax liabilities: | \r | \r | ||||||
| Operating lease right-of-use assets | \r | (449 | ) | \r | -- | |||
| Less: Valuation allowance | \r | (20,820 | ) | \r | (20,937 | ) | ||
| Net deferred tax assets (liabilities) | \r | $ | -- | \r | $ | -- |
"}]},{"name":"rpt:f-849","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfUnrecognizedTaxBenefitsRollForwardTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","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, 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 | ||||
| Decreases related to prior year tax positions | \r | (11 | ) | |
| Increases related to current year tax positions | \r | 54 | ||
| \r | ||||
| Balance at May 31, 2020 | \r | $ | 1,852 |
"}]},{"name":"rpt:f-850","factDimensions":{"xbrl:concept":"us-gaap:LeaseCostTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table presents supplemental\rcash flow information related to the Company’s operating leases (in thousands):
\r\r\r\r
| \r | Year Ended May 31, 2020 | |||
| Cash paid for amounts included in the measurement of operating lease liabilities | \r | |||
| Operating cash flows from operating leases | \r | $ | 737 |
"}]},{"name":"rpt:f-851","factDimensions":{"xbrl:concept":"us-gaap:LesseeOperatingLeaseLiabilityMaturityTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table presents the maturities\rof the Company’s operating lease liabilities as of May 31, 2020 (in thousands):
\r\r\r\r
| Fiscal year | \r | Operating Leases | |||
| 2021 | \r | $ | 765 | ||
| 2022 | \r | 779 | |||
| 2023 | \r | 795 | |||
| 2024 | \r | 134 | |||
| 2025 | \r | -- | |||
| Thereafter | \r | -- | |||
| Total future minimum operating lease payments | \r | $ | 2,473 | ||
| Less: imputed interest | \r | 210 | |||
| Present value of operating lease liabilities | \r | $ | 2,263 |
"}]},{"name":"rpt:f-852","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEmployeeServiceShareBasedCompensationAllocationOfRecognizedPeriodCostsTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table summarizes the stock-based\rcompensation expense for the fiscal years ended May 31, 2020, 2019 and 2018 (in thousands, except per share data):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Stock-based compensation in the form of stock options, RSUs, and ESPP purchase rights, included in: | \r | \r | \r | |||||||||
| \r | \r | \r | ||||||||||
| Cost of sales | \r | $ | 80 | \r | $ | 104 | \r | $ | 148 | |||
| Selling, general and administrative | \r | 631 | \r | 545 | \r | 592 | ||||||
| Research and development | \r | 199 | \r | 256 | \r | 256 | ||||||
| \r | \r | \r | ||||||||||
| Net effect on net (loss) income | \r | $ | 910 | \r | $ | 905 | \r | $ | 996 | |||
| \r | \r | \r | ||||||||||
| Effect on net (loss) income per share: | \r | \r | \r | |||||||||
| Basic | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.05 | |||
| Diluted | \r | $ | 0.04 | \r | $ | 0.04 | \r | $ | 0.04 |
"}]},{"name":"rpt:f-853","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The fair values of the Company’s\rstock options granted to employees in fiscal 2020, 2019 and 2018 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 | 2020 | \r | 2019 | \r | 2018 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 5 | \r | 5 | \r | 4 | ||||||
| Volatility | \r | 0.72 | \r | 0.72 | \r | 0.77 | ||||||
| Risk-free interest rates | \r | 1.56 | % | \r | 2.83 | % | \r | 1.95 | % | |||
| Weighted-average grant date fair value | \r | $ | 0.95 | \r | $ | 1.33 | \r | $ | 2.07 |
"}]},{"name":"rpt:f-854","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfShareBasedPaymentAwardEmployeeStockPurchasePlanValuationAssumptionsTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The fair value of our ESPP purchase rights\rfor the fiscal 2020, 2019 and 2018 was estimated using the following weighted-average assumptions:
\r\r\r\r
| \r | Year End May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| \r | \r | \r | ||||||||||
| Expected term (in years) | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | \r | 0.5 – 2.0 | ||||||
| Volatility | \r | 0.62 – 0.77 | \r | 0.48 – 0.78 | \r | 0.56 – 0.81 | ||||||
| Risk-free interest rates | \r | 0.14%–1.81% | \r | 2.33%–2.82% | \r | 1.92%–2.25% | ||||||
| Weighted-average grant date fair value | \r | $ | 0.79 | \r | $ | 1.14 | \r | $ | 1.01 |
"}]},{"name":"rpt:f-855","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfShareBasedCompensationActivityTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following tables summarize the Company’s\rstock option and RSU transactions during fiscal 2020, 2019 and 2018 (in thousands):
\r\r\r\r
| \r | Available | |||
| \r | Shares | |||
| Balance, May 31, 2017 | \r | 2,169 | ||
| \r | ||||
| Options granted | \r | (338 | ) | |
| RSUs granted | \r | (64 | ) | |
| RSUs cancelled | \r | 33 | ||
| Options terminated | \r | 16 | ||
| Options expired | \r | (4 | ) | |
| \r | ||||
| Balance, May 31, 2018 | \r | 1,812 | ||
| \r | ||||
| Options granted | \r | (804 | ) | |
| RSUs cancelled | \r | 8 | ||
| Options terminated | \r | 195 | ||
| Options expired | \r | (64 | ) | |
| \r | ||||
| Balance, May 31, 2019 | \r | 1,147 | ||
| \r | ||||
| Additional shares reserved | \r | 1,196 | ||
| Options granted | \r | (738 | ) | |
| RSUs granted | \r | (25 | ) | |
| Shares withheld for taxes and not issued | \r | 6 | ||
| Options terminated | \r | 457 | ||
| Options expired | \r | (393 | ) | |
| \r | ||||
| Balance, May 31, 2020 | \r | 1,650 |
"}]},{"name":"rpt:f-856","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The following table summarized the stock\roption transactions during fiscal 2020, 2019 and 2018 (in thousands, except per share data):
\r\r\r\r
| \r | \r | Outstanding Options | \r||||||||||
| \r | \r | \r | \r | \r | Weighted | \r\r | \r | \r | ||||
| \r | \r | Number | \r\r | \r | Average | \r\r | \r | Aggregate | \r||||
| \r | \r | of | \r\r | \r | Exercise | \r\r | \r | Intrinsic | \r||||
| \r | \r | Shares | \r\r | \r | Price | \r\r | \r | Value | \r||||
| Balances, May 31, 2017 | \r\r | \r | 3,074 | \r\r | \r | $ | \r1.73 | \r\r | \r | $ | \r8,763 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 338 | \r\r | \r | $ | \r3.56 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (16 | \r) | \r\r | $ | \r2.72 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (537 | \r) | \r\r | $ | \r1.17 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2018 | \r\r | \r | 2,859 | \r\r | \r | $ | \r2.04 | \r\r | \r | $ | \r1,987 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 804 | \r\r | \r | $ | \r2.19 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (195 | \r) | \r\r | $ | \r2.32 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (361 | \r) | \r\r | $ | \r0.85 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2019 | \r\r | \r | 3,107 | \r\r | \r | $ | \r2.20 | \r\r | \r | $ | \r283 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options granted | \r\r | \r | 738 | \r\r | \r | $ | \r1.61 | \r\r | \r | \r | \r | |
| Options terminated | \r\r | \r | (457 | \r) | \r\r | $ | \r1.98 | \r\r | \r | \r | \r | |
| Options exercised | \r\r | \r | (235 | \r) | \r\r | $ | \r1.22 | \r\r | \r | \r | \r | |
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Balances, May 31, 2020 | \r\r | \r | 3,153 | \r\r | \r | $ | \r2.17 | \r\r | \r | $ | \r102 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Options fully vested and expected to vest at May 31, 2020 | \r\r | \r | 3,115 | \r\r | \r | $ | \r2.17 | \r\r | \r | $ | \r101 | \r
"}]},{"name":"rpt:f-857","factDimensions":{"xbrl:concept":"us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingAndExercisableTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The options outstanding and exercisable at\rMay 31, 2020 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, 2020 | \r | at May 31, 2020 | |||||||||||||||||||||||||||
Range of Exercise | \r | Number Outstanding Shares | \r | Weighted Average \rRemaining Contractual Life \r(Years) | \r | Weighted Average Exercise \rPrice | \r | Number Exercisable Shares | \r | Weighted Average \rRemaining Contractual Life \r(Years) | \r | Weighted Average Exercise \rPrice | \r | Aggregate Intrinsic Value | ||||||||||||||||
| $ | \r1.22-$1.28 | \r | 248 | \r | 2.10 | \r | $ | 1.26 | \r | 176 | \r | 0.19 | \r | $ | 1.28 | \r | ||||||||||||||
| $ | \r1.64-$1.77 | \r | 945 | \r | 5.35 | \r | $ | 1.66 | \r | 487 | \r | 4.66 | \r | $ | 1.68 | \r | ||||||||||||||
| $ | \r2.03-$2.46 | \r | 1,223 | \r | 3.70 | \r | $ | 2.21 | \r | 858 | \r | 3.03 | \r | $ | 2.19 | \r | ||||||||||||||
| $ | \r2.63-$2.81 | \r | 511 | \r | 1.29 | \r | $ | 2.70 | \r | 510 | \r | 1.28 | \r | $ | 2.70 | \r | ||||||||||||||
| $ | \r3.46-$3.93 | \r | 226 | \r | 4.16 | \r | $ | 3.84 | \r | 172 | \r | 4.18 | \r | $ | 3.82 | \r | ||||||||||||||
| \r | \r | \r | \r | \r | \r | \r | \r | |||||||||||||||||||||||
| $ | \r1.22-$3.93 | \r | 3,153 | \r | 3.71 | \r | $ | 2.17 | \r | 2,203 | \r | 2.85 | \r | $ | 2.25 | \r | $ | 67 |
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Other (expense) income, net\rcomprises the following (in thousands):
\r\r\r\r
| \r | Year Ended May 31, | |||||||||||
| \r | 2020 | \r | 2019 | \r | 2018 | |||||||
| Foreign exchange (loss) gain | \r | $ | (12 | ) | \r | $ | 43 | \r | $ | (63 | ) | |
| Other income, net | \r | 1 | \r | 1 | \r | 2 | ||||||
| \r | $ | (11 | ) | \r | $ | 44 | \r | $ | (61 | ) |
"}]},{"name":"rpt:f-859","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfProductWarrantyLiabilityTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
Following is a summary of changes in the\rCompany’s liability for product warranties during the fiscal years ended May 31, 2020 and 2019 (in thousands):
\r\r\r\r
| \r | May 31, | |||||||
| \r | 2020 | \r | 2019 | |||||
| \r | \r | |||||||
| Balance at the beginning of the year | \r | $ | 154 | \r | $ | 135 | ||
| Accruals for warranties issued during the year | \r | 299 | \r | 214 | ||||
| Consumption of reserves | \r | (207 | ) | \r | (195 | ) | ||
| \r | \r | |||||||
| Balance at the end of the year | \r | $ | 246 | \r | $ | 154 |
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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 | 2020 | \r | 2019 | |||||
| United States | \r | $ | 662 | \r | $ | 1,005 | ||
| Asia | \r | 1 | \r | 40 | ||||
| Europe | \r | -- | \r | -- | ||||
| \r | $ | 663 | \r | $ | 1,045 |
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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, 2020 and 2019.
\r\r\r\r
| \r | Three Months Ended | |||||||||||||||
| \r | Aug. 31, | \r | Nov. 30, | \r | Feb. 29, | \r | May 31, | |||||||||
| \r | 2019 | \r | 2019 | \r | 2020 | \r | 2020 | |||||||||
| Net sales | \r | $ | 5,533 | \r | $ | 6,874 | \r | $ | 6,111 | \r | $ | 3,773 | ||||
| Gross profit (loss) | \r | $ | 2,271 | \r | $ | 3,202 | \r | $ | 2,991 | \r | $ | (93 | ) | |||
| Net (loss) income | \r | $ | (413 | ) | \r | $ | 251 | \r | $ | 245 | \r | $ | (2,885 | ) | ||
| Net (loss) income per share basic and diluted | \r | $ | (0.02 | ) | \r | $ | 0.01 | \r | $ | 0.01 | \r | $ | (0.13 | ) |
\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 |
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The following table summarizes the Company’s\rfinancial assets measured at fair value on a recurring basis as of May 31, 2020 (in thousands):
\r\r\r\r
| \r | Balance as of | \r | \r | \r | ||||||||||||
| \r | May 31, 2020 | \r | Level 1 | \r | Level 2 | \r | Level 3 | |||||||||
| Money market funds | \r | $ | 80 | \r | $ | 80 | \r | $ | -- | \r | $ | -- | ||||
| Assets | \r | $ | 80 | \r | $ | 80 | \r | $ | -- | \r | $ | -- |
\r\r
The\rfollowing table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2019\r(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 | $ | — |
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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.
\r\r\r\r
Transaction gains and losses that arise\rfrom exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements\rof Operations as incurred. See Note 13, Other (Expense) Income, Net for the detail of foreign exchange transaction gains and losses\rfor all periods presented.
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3.\rEARNINGS PER SHARE (“EPS”):
\r\r\r\r
Basic\rEPS is determined using the weighted average number of common shares outstanding during the period. Diluted EPS is determined\rusing the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options,\rRSUs and ESPP shares) outstanding during the period using the treasury stock method.
\r\r\r\r
The\rfollowing table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common\rshareholders (in thousands, except per share data):
\r\r\r\r
| \r | \r | Year Ended May 31, | ||||||||||
| \r | \r | 2020 | \r\r | 2019 | \r\r | 2018 | ||||||
| Numerator: Net (loss) income | \r\r | $ | \r(2,802) | \r\r | \r | $ | \r(5,235) | \r\r | \r | $ | \r528 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Denominator for basic net (loss) income per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Weighted-average shares outstanding | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 21,732 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Shares used in basic net (loss) income per share calculation | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 21,732 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Effect of dilutive securities. | \r\r | \r | -- | \r\r | \r | \r | -- | \r\r | \r | \r | 1,050 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Denominator for diluted net (loss) income per\r share | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 22,782 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Basic net (loss) income per share | \r\r | $ | \r(0.12) | \r\r | \r | $ | \r(0.23) | \r\r | \r | $ | \r0.02 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Diluted net (loss) income per share | \r\r | $ | \r(0.12) | \r\r | \r | $ | \r(0.23) | \r\r | \r | $ | \r0.02 | \r
\r\r
For\rthe purpose of computing diluted earnings per share, the weighted average number of potential common shares does not include stock\roptions with an exercise price greater than the average fair value of the Company’s common stock for the period, as the\reffect would be anti-dilutive. In the fiscal years ended May 31, 2020 and 2019, potential common shares have not been included\rin the calculation of diluted net loss per share as the effect would be anti-dilutive. As such, the numerator and the denominator\rused in computing both basic and diluted net loss per share for these periods are the same. Stock options to purchase 3,153,000\rand 3,107,000 shares of common stock were outstanding on May 31, 2020 and 2019, respectively, but were not included in the computation\rof diluted net loss per share, because the inclusion of such shares would be anti-dilutive. Stock options to purchase 1,313,000\rshares of common stock were outstanding as of May 31, 2018 but were not included in the computation of diluted net income per\rshare, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 192,000 and 297,000 ESPP shares were\routstanding on May 31, 2020 and 2019, respectively, but were not included in the computation of diluted net loss per share, because\rthe inclusion of such shares would be anti-dilutive. RSUs for 10,000 shares and 23,000 shares were outstanding on May 31, 2020\rand 2019, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such\rshares would be anti-dilutive. The 2,657,000 shares convertible under the Convertible Notes outstanding on May 31, 2018 were not\rincluded in the computation of diluted net income (loss) per share, because the inclusion of such shares would be anti-dilutive.
\r\r\r\r
"}]},{"name":"rpt:f-975","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock","xbrl:period":"2019-06-01T00:00:00/2020-06-01T00:00:00","xbrl:entity":"cik:0001040470"},"factValues":[{"value":"
The\rfollowing table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common\rshareholders (in thousands, except per share data):
\r\r\r\r
| \r | \r | Year Ended May 31, | ||||||||||
| \r | \r | 2020 | \r\r | 2019 | \r\r | 2018 | ||||||
| Numerator: Net (loss) income | \r\r | $ | \r(2,802) | \r\r | \r | $ | \r(5,235) | \r\r | \r | $ | \r528 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Denominator for basic net (loss) income per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Weighted-average shares outstanding | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 21,732 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Shares used in basic net (loss) income per share calculation | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 21,732 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Effect of dilutive securities. | \r\r | \r | -- | \r\r | \r | \r | -- | \r\r | \r | \r | 1,050 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Denominator for diluted net (loss) income per\r share | \r\r | \r | 22,882 | \r\r | \r | \r | 22,387 | \r\r | \r | \r | 22,782 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Basic net (loss) income per share | \r\r | $ | \r(0.12) | \r\r | \r | $ | \r(0.23) | \r\r | \r | $ | \r0.02 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Diluted net (loss) income per share | \r\r | $ | \r(0.12) | \r\r | \r | $ | \r(0.23) | \r\r | \r | $ | \r0.02 | \r
\r\r
"}]}]}}