California
|
|
94-2424084
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer Identification No.)
|
incorporation or
organization)
|
|
|
|
|
|
400 Kato
Terrace
|
|
|
Fremont,
CA
|
|
94539
|
(Address of
principal
|
|
(Zip
Code)
|
executive
offices)
|
|
|
PART I. FINANCIAL INFORMATION
|
|
|
|
ITEM 1. Condensed Consolidated Financial Statements
(Unaudited)
|
|
|
|
Condensed Consolidated Balance
Sheets at August 31, 2016 and May 31, 2016
|
4
|
|
|
Condensed Consolidated
Statements of Operations for the Three Months Ended August 31, 2016
and 2015
|
5
|
|
|
Condensed Consolidated
Statements of Comprehensive (Loss) Income for the Three Months
Ended August 31, 2016 and 2015
|
6
|
|
|
Condensed Consolidated
Statements of Cash Flows for the Three Months Ended August 31, 2016
and 2015
|
7
|
|
|
Notes to Condensed
Consolidated Financial Statements.
|
8
|
|
|
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
|
18
|
|
|
ITEM 3. Quantitative and Qualitative Disclosures About Market
Risks.
|
23
|
|
|
ITEM 4. Controls and Procedures
|
23
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
ITEM 1. Legal Proceedings
|
24
|
|
|
ITEM 1A. Risk Factors
|
24
|
|
|
ITEM 2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
31
|
|
|
ITEM 3. Defaults Upon Senior Securities
|
31
|
|
|
ITEM 4. Mine Safety Disclosures
|
31
|
|
|
ITEM 5. Other Information
|
31
|
|
|
ITEM 6. Exhibits
|
31
|
|
|
SIGNATURES
|
32
|
|
|
Index to Exhibits
|
33
|
|
August 31,
|
May 31,
|
|
2016
|
2016
|
|
(1)
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$2,342
|
$939
|
Accounts
receivable, net
|
1,774
|
522
|
Inventories
|
6,031
|
7,033
|
Prepaid
expenses and other current assets
|
305
|
254
|
|
|
|
Total
current assets
|
10,452
|
8,748
|
|
|
|
Property
and equipment, net
|
789
|
1,204
|
Other
assets
|
95
|
94
|
|
|
|
Total
assets
|
$11,336
|
$10,046
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$1,906
|
1,413
|
Accrued
expenses
|
1,372
|
1,553
|
Customer
deposits and deferred revenue, short-term
|
2,724
|
1,714
|
|
|
|
Total
current liabilities
|
6,002
|
4,680
|
|
|
|
Long-term
debt, net of debt issuance costs
|
6,006
|
5,962
|
Deferred
revenue, long-term
|
63
|
127
|
|
|
|
Total
liabilities
|
12,071
|
10,769
|
|
|
|
Aehr
Test Systems shareholders' deficit:
|
|
|
Common
stock, $0.01 par value: Authorized:
75,000;
|
|
|
Issued
and outstanding: 13,589 shares and 13,216
shares at August 31, 2016 and May
31, 2016, respectively
|
136
|
132
|
Additional
paid-in capital
|
58,784
|
58,052
|
Accumulated
other comprehensive income
|
2,245
|
2,237
|
Accumulated
deficit
|
(61,879)
|
(61,124)
|
|
|
|
Total
Aehr Test Systems shareholders' deficit
|
(714)
|
(703)
|
Noncontrolling
interest
|
(21)
|
(20)
|
|
|
|
Total
shareholders' deficit
|
(735)
|
(723)
|
|
|
|
Total
liabilities and shareholders' deficit
|
$11,336
|
$10,046
|
|
|
|
|
Three Months
Ended
|
|
|
August
31,
|
|
|
2016
|
2015
|
|
|
|
Net
sales
|
$5,318
|
$6,633
|
Cost of
sales
|
3,112
|
3,250
|
Gross
profit
|
2,206
|
3,383
|
|
|
|
Operating
expenses:
|
|
|
Selling,
general and administrative
|
1,716
|
1,845
|
Research and
development
|
1,060
|
1,062
|
Total
operating expenses
|
2,776
|
2,907
|
|
|
|
(Loss)
income from operations
|
(570)
|
476
|
|
|
|
Interest
expense
|
(178)
|
(135)
|
Other expense,
net
|
(3)
|
(24)
|
|
|
|
(Loss)
income before income tax expense
|
(751)
|
317
|
|
|
|
Income tax
expense
|
(4)
|
(23)
|
|
|
|
Net (loss)
income
|
(755)
|
294
|
Less:
Net (loss) income attributable to the
noncontrolling interest
|
--
|
--
|
|
|
|
Net (loss) income
attributable to Aehr
Test
Systems common shareholders
|
$(755)
|
$294
|
|
|
|
|
|
|
Net (loss) income
per share
|
|
|
Basic
|
$(0.06)
|
$0.02
|
Diluted
|
$(0.06)
|
$0.02
|
|
|
|
Shares
used in per share calculations:
|
||
Basic
|
13,317
|
12,963
|
Diluted
|
13,317
|
13,814
|
|
Three Months
Ended
|
|
|
August
31,
|
|
|
2016
|
2015
|
|
|
|
Net (loss)
income
|
$(755)
|
$294
|
Other comprehensive
income, net of tax: Net change in
cumulative translation adjustments
|
7
|
18
|
|
|
|
Total comprehensive
(loss) income
|
(748)
|
312
|
Less: Comprehensive
loss attributable to the
noncontrolling interest
|
(1)
|
--
|
|
|
|
Comprehensive
(loss) income, attributable
to Aehr Test Systems common
shareholders
|
$(747)
|
$312
|
|
|
|
|
Three Months
Ended
|
|
|
August 31,
|
|
|
2016
|
2015
|
Cash
flows from operating activities:
|
|
|
Net
(loss) income
|
$(755)
|
$294
|
Adjustments
to reconcile net (loss) income to net
cash provided by (used in) operating activities:
|
|
|
Stock-based
compensation expense
|
319
|
319
|
Provision
for doubtful accounts
|
20
|
19
|
Amortization
of debt issuance costs
|
44
|
37
|
Depreciation
and amortization
|
68
|
37
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(1,250)
|
(1,257)
|
Inventories
|
1,374
|
(156)
|
Prepaid
expenses and other current assets
|
(52)
|
(201)
|
Accounts
payable
|
713
|
1,113
|
Accrued
expenses
|
(181)
|
505
|
Customer
deposits and deferred revenue
|
946
|
(2,804)
|
Income
taxes payable
|
(2)
|
(2)
|
Net
cash provided by (used in) operating activities
|
1,244
|
(2,096)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Purchases
of property and equipment
|
(21)
|
(21)
|
Net
cash used in investing activities
|
(21)
|
(21)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Proceeds from issuance of common stock under employee plans,
net of taxes paid related to
share settlement of equity awards
|
94
|
223
|
Net
cash provided by financing activities
|
94
|
223
|
|
|
|
Effect
of exchange rates on cash and cash equivalents
|
86
|
20
|
|
|
|
Net increase (decrease) in cash and cash
equivalents
|
1,403
|
(1,874)
|
|
|
|
Cash
and cash equivalents, beginning of period
|
939
|
5,527
|
|
|
|
Cash
and cash equivalents, end of period
|
$2,342
|
$3,653
|
|
|
|
Supplemental
disclosure of non-cash flow information:
|
|
|
Net
change in capitalized share-based compensation
|
$--
|
$(20)
|
Fair
value of common stock issued to settle accounts payable
|
$323
|
$--
|
Transfers
of property and equipment to inventories
|
$372
|
$--
|
|
Three Months Ended
|
|
|
August 31,
|
|
|
2016
|
2015
|
Stock-based compensation in the form of employee stock
options, RSUs and ESPP purchase rights, included in:
|
|
|
Cost
of sales
|
$24
|
$22
|
Selling,
general and administrative
|
247
|
238
|
Research
and development
|
48
|
59
|
Total
stock-based compensation
|
$319
|
$319
|
|
August 31,
|
|
2016
|
|
|
Expected
term (in years)
|
4
|
Volatility
|
0.82
|
Expected
dividend
|
$0.00
|
Risk-free
interest rate
|
1.01%
|
Weighted
average grant date fair value
|
$1.00
|
|
Available
|
|
Shares
|
Balance,
May 31, 2016
|
1,847
|
|
|
Options
granted
|
(318)
|
RSUs
granted
|
(138)
|
Shares cancelled
|
46
|
|
|
Balance,
August 31, 2016
|
1,437
|
|
|
|
Outstanding Options
|
||
|
|
Weighted
|
|
|
Number
|
Average
|
Aggregate
|
|
of
|
Exercise
|
Intrinsic
|
|
Shares
|
Price
|
Value
|
Balances,
May 31, 2016
|
3,201
|
$1.66
|
$189
|
|
|
|
|
Options
granted
|
318
|
$1.68
|
|
Options
cancelled
|
(46)
|
$1.40
|
|
Options
exercised
|
(91)
|
$1.32
|
|
|
|
|
|
Balances,
August 31, 2016
|
3,382
|
$1.67
|
$2,694
|
|
|
|
|
Options fully vested and expected to vest at August 31,
2016
|
3,314
|
$1.67
|
$2,640
|
Options
exercisable at August 31, 2016
|
2,379
|
$1.52
|
$2,235
|
|
Options
Outstanding
|
Options
Exercisable
|
|||||
|
at August 31,
2016
|
at August 31,
2016
|
|||||
Range of
Exercise
Prices
|
Number
Outstanding
Shares
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted Average
Exercise Price
|
Number
Exercisable
Shares
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic Value
|
$0.59-$0.97
|
565
|
2.57
|
$0.68
|
565
|
2.57
|
$0.68
|
|
$1.09-$1.40
|
1,039
|
3.03
|
$1.28
|
923
|
2.91
|
$1.28
|
|
$1.68-$2.06
|
548
|
5.88
|
$1.77
|
215
|
4.60
|
$1.90
|
|
$2.10-$2.71
|
1,230
|
5.20
|
$2.43
|
676
|
5.12
|
$2.45
|
|
$0.59-$2.71
|
3,382
|
4.21
|
$1.67
|
2,379
|
3.61
|
$1.52
|
$
2,235
|
|
Three Months Ended
|
|
|
August 31,
|
|
|
2016
|
2015
|
|
|
|
Numerator:
Net (loss) income
|
$(755)
|
$294
|
|
|
|
Denominator for basic net (loss) income per
share:
|
|
|
Weighted
average shares outstanding
|
13,317
|
12,963
|
|
|
|
Shares used in basic net (loss) income per share
calculation
|
13,317
|
12,963
|
Effect
of dilutive securities
|
--
|
851
|
|
|
|
Denominator for diluted net (loss) income per
share
|
13,317
|
13,814
|
|
|
|
Basic
net (loss) income per share
|
$(0.06)
|
$0.02
|
|
|
|
Diluted
net (loss) income per share
|
$(0.06)
|
$0.02
|
|
Balance as of
|
|
|
|
|
August 31, 2016
|
Level 1
|
Level 2
|
Level 3
|
Money
market funds
|
$1
|
$1
|
$--
|
$--
|
Certificate
of deposit
|
50
|
--
|
50
|
--
|
Assets
|
$51
|
$1
|
$50
|
$--
|
|
|
|
|
|
|
Balance as of
|
|
|
|
|
May 31, 2016
|
Level 1
|
Level 2
|
Level 3
|
Money
market funds
|
$1
|
$1
|
$--
|
$--
|
Certificate
of deposit
|
50
|
--
|
50
|
--
|
Assets
|
$51
|
$1
|
$50
|
$--
|
|
|
|
|
|
|
August 31,
|
May 31,
|
|
2016
|
2016
|
Raw
materials and sub-assemblies
|
$2,802
|
$2,839
|
Work
in process
|
2,970
|
4,151
|
Finished
goods
|
259
|
43
|
|
$6,031
|
$7,033
|
|
United
|
|
|
|
|
States
|
Asia
|
Europe
|
Total
|
Three
months ended August 31, 2016:
|
|
|
|
|
Net
sales
|
$3,164
|
$1,910
|
$244
|
$5,318
|
Property
and equipment, net
|
733
|
42
|
14
|
789
|
|
|
|
|
|
Three
months ended August 31, 2015:
|
|
|
|
|
Net
sales
|
$718
|
$5,381
|
$534
|
$6,633
|
Property
and equipment, net
|
418
|
34
|
13
|
465
|
|
|
|
|
|
|
Three Months Ended
|
|
|
August 31,
|
|
|
2016
|
2015
|
|
|
|
Balance
at the beginning of the period
|
$155
|
$137
|
|
|
|
Accruals for warranties issued during the
period
|
--
|
109
|
Accruals
and adjustments (change in estimates) related to
pre-existing warranties during the period
|
(54)
|
--
|
Settlement made during the period (in cash or in
kind)
|
(11)
|
(27)
|
|
|
|
Balance
at the end of the period
|
$90
|
$219
|
|
August 31,
|
May 31,
|
|
2016
|
2016
|
Customer
deposits
|
$2,034
|
$540
|
Deferred
revenue
|
690
|
1,174
|
|
$2,724
|
$1,714
|
|
August 31,
|
May 31,
|
|
2016
|
2016
|
Principal
|
$6,110
|
$6,110
|
Unamortized
debt issuance costs
|
(104)
|
(148)
|
|
$6,006
|
$5,962
|
|
Three Months Ended
|
|
|
August 31,
|
|
|
2016
|
2015
|
|
|
|
Net
sales
|
100.0%
|
100.0%
|
Cost
of sales
|
58.5
|
49.0
|
Gross
profit
|
41.5
|
51.0
|
|
|
|
Operating
expenses:
|
|
|
Selling,
general and administrative
|
32.3
|
27.8
|
Research
and development
|
19.9
|
16.0
|
|
|
|
Total
operating expenses
|
52.2
|
43.8
|
|
|
|
(Loss)
income from operations
|
(10.7)
|
7.2
|
|
|
|
Interest
expense
|
(3.3)
|
(2.0)
|
Other
expense, net
|
(0.1)
|
(0.4)
|
|
|
|
(Loss)
income before income tax expense
|
(14.1)
|
4.8
|
|
|
|
Income
tax expense
|
(0.1)
|
(0.4)
|
|
|
|
Net
(loss) income
|
(14.2)
|
4.4
|
Less: Net (loss) income attributable
to
the noncontrolling interest
|
--
|
--
|
Net
(loss) income attributable to Aehr Test Systems common
shareholders
|
(14.2)%
|
4.4%
|
|
Aehr Test
Systems
(Registrant)
|
|
|
|
|
|
|
Date: October 14,
2016
|
|
/s/
GAYN
ERICKSON
|
|
|
|
Gayn Erickson |
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Date: October 14,
2016
|
|
/s/
KENNETH
B. SPINK
|
|
|
|
Kenneth B.
Spink
|
|
|
|
Vice
President of Finance and Chief Financial
Officer
|
|
Exhibit No.
|
Description |
|
|
10.1(1)
|
Amendment to the
Aehr Test Systems Convertible Note Purchase and Credit Facility
Agreement and 9.0% Notes.
|
|
|
Certification
of Chief Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification
of Chief Financial Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification of
Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
Document
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Sep. 30, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | AEHR TEST SYSTEMS | |
Entity Central Index Key | 0001040470 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 16,356,481 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2017 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Aug. 31, 2016 |
May 31, 2016 |
---|---|---|
Condensed Consolidated Balance Sheets Parenthetical | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 13,589,000 | 13,216,000 |
Common stock, shares outstanding | 13,589,000 | 13,216,000 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
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Aug. 31, 2016 |
Aug. 31, 2015 |
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Income Statement [Abstract] | ||
Net sales | $ 5,318 | $ 6,633 |
Cost of sales | 3,112 | 3,250 |
Gross profit | 2,206 | 3,383 |
Operating expenses: | ||
Selling, general and administrative | 1,716 | 1,845 |
Research and development | 1,060 | 1,062 |
Total operating expenses | 2,776 | 2,907 |
(Loss) income from operations | (570) | 476 |
Interest expense | (178) | (135) |
Other expense, net | (3) | (24) |
(Loss) income before income tax expense | (751) | 317 |
Income tax expense | (4) | (23) |
Net (loss) income | (755) | 294 |
Less: Net (loss) income attributable to the noncontrolling interest | 0 | 0 |
Net (loss) income attributable to Aehr Test Systems common shareholders | $ (755) | $ 294 |
Net (loss) income per share: Basic | $ (0.06) | $ 0.02 |
Net (loss) income per share: Diluted | $ (0.06) | $ 0.02 |
Shares used in per share calculations: Basic (in thousands) | 13,317 | 12,963 |
Shares used in per share calculations: Diluted (in thousands) | 13,317 | 13,814 |
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Aug. 31, 2016 |
Aug. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (755) | $ 294 |
Other comprehensive income, net of tax: Net change in cumulative translation adjustment | 7 | 18 |
Total comprehensive (loss) income | (748) | 312 |
Less: Comprehensive loss attributable to the noncontrolling interest | (1) | 0 |
Comprehensive (loss) income, attributable to Aehr Test Systems common shareholders | $ (747) | $ 312 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | ||||
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Aug. 31, 2016 |
Aug. 31, 2015 |
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Cash flows from operating activities: | |||||
Net (loss) income | $ (755) | $ 294 | |||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||||
Stock-based compensation expense | 319 | 319 | |||
Provision for doubtful accounts | 20 | 19 | |||
Amortization of debt issuance costs | 44 | 37 | |||
Depreciation and amortization | 68 | 37 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (1,250) | (1,257) | |||
Inventories | 1,374 | (156) | |||
Prepaid expenses and other current assets | (52) | (201) | |||
Accounts payable | 713 | 1,113 | |||
Accrued expenses | (181) | 505 | |||
Customer deposits and deferred revenue | 946 | (2,804) | |||
Income taxes payable | (2) | (2) | |||
Net cash provided by (used in) operating activities | 1,244 | (2,096) | |||
Cash flows from investing activities: | |||||
Purchases of property and equipment | (21) | (21) | |||
Net cash used in investing activities | (21) | (21) | |||
Cash flows from financing activities: | |||||
Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards | 94 | 223 | |||
Net cash provided by financing activities | 94 | 223 | |||
Effect of exchange rates on cash and cash equivalents | 86 | 20 | |||
Net increase (decrease) in cash and cash equivalents | 1,403 | (1,874) | |||
Cash and cash equivalents, beginning of period | 939 | [1] | 5,527 | ||
Cash and cash equivalents, end of period | 2,342 | 3,653 | |||
Supplemental disclosure of non-cash flow information | |||||
Net change in capitalized share-based compensation | 0 | (20) | |||
Fair value of common stock issued to settle accounts payable | 323 | 0 | |||
Transfers of property and equipment to inventories | $ 372 | $ 0 | |||
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1. BASIS OF PRESENTATION |
3 Months Ended |
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Aug. 31, 2016 | |
Disclosure Text Block [Abstract] | |
1. BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION
The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2016 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2016. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.
PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company," "we," "us," and "our"). All significant intercompany balances have been eliminated in consolidation. For our majority owned subsidiary, Aehr Test Systems Japan K.K., we reflected the noncontrolling interest of the portion we do not own on our Condensed Consolidated Balance Sheets in Shareholders Deficit and in the Condensed Consolidated Statements of Operations.
ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.
SIGNIFICANT ACCOUNTING POLICIES. The Companys significant accounting policies are disclosed in the Companys Annual Report on Form 10-K for the year ended May 31, 2016. There have been no changes in our significant accounting policies during the three months ended August 31, 2016. |
2. STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. STOCK-BASED COMPENSATION | 2. STOCK-BASED COMPENSATION
Stock-based compensation expense consists of expenses for stock options, restricted stock units, or RSUs, and employee stock purchase plan, or ESPP, purchase rights. Stock-based compensation cost for stock options and ESPP purchase rights are measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employees requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Companys employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, stock-based compensation cost is based on the fair value of the Companys common stock at the grant date. All of the Companys stock-based compensation is accounted for as an equity instrument. See Notes 10 and 11 in the Companys Annual Report on Form 10-K for fiscal 2016 filed on August 29, 2016 for further information regarding the stock option plan and the ESPP.
The following table summarizes the stock-based compensation expense related to the Companys stock-based incentive plans for the three months ended August 31, 2016 and 2015 (in thousands):
As of August 31, 2016 and 2015, there were no stock-based compensation costs capitalized as part of inventory.
During the three months ended August 31, 2016 and 2015, the Company recorded stock-based compensation related to stock options and RSUs of $279,000 and $286,000, respectively.
As of August 31, 2016, the total compensation cost related to unvested stock-based awards under the Companys 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was approximately $1,258,000, which is net of estimated forfeitures of $3,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.5 years.
During the three months ended August 31, 2016 and 2015, the Company recorded stock-based compensation related to the ESPP of $40,000 and $33,000, respectively.
As of August 31, 2016, the total compensation cost related to purchase rights under the ESPP but not yet recognized was approximately $98,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 1.1 years.
Valuation Assumptions
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
Expected Term. The Companys expected term represents the period that the Companys stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards.
Expected Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past four or five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPPs four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation cost recorded.
Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation model.
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP.
Estimated Forfeitures. When estimating forfeitures, the Company considers voluntary termination behavior as well as analysis of actual option forfeitures.
Fair Value. The fair value of the Companys stock options granted to employees for the three months ended August 31, 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:
There were no stock options granted to employees for the three months ended August 31, 2015.
During the three months ended August 31, 2016, RSUs were granted for 138,000 shares. The market value on the date of the grant was $1.68 per share.
There were no ESPP purchase rights granted to employees for the three months ended August 31, 2016 and 2015.
The following tables summarize the Companys stock option and RSU transactions during three months ended August 31, 2016 (in thousands):
The following table summarizes the stock option transactions during the three months ended August 31, 2016 (in thousands, except per share data):
The options outstanding and exercisable at August 31, 2016 were in the following exercise price ranges (in thousands, except per share data):
The total intrinsic value of options exercised during the three months ended August 31, 2016 was $52,000. The total intrinsic value of options exercised during the three months ended August 31, 2015 was $60,000. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at August 31, 2016 was 4.21 years.
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3. EARNINGS PER SHARE |
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3. EARNINGS PER SHARE | 3. EARNINGS PER SHARE
Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, RSUs and employee stock purchase plan shares) outstanding during the period using the treasury stock method.
The following table presents the computation of basic and diluted net loss per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data):
For the purpose of computing diluted earnings per share, the weighted average number of potential common shares does not include stock options with an exercise price greater than the average fair value of the Companys common stock for the period, as the effect would be anti-dilutive. In the three months ended August 31, 2016, potential common shares have not been included in the calculation of diluted net loss per share as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for this period are the same. Stock options to purchase 3,382,000 shares of common stock, RSUs for 74,000 shares and ESPP rights to purchase 304,000 ESPP shares were outstanding as of August 31, 2016 but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. Stock options to purchase 1,371,000 shares of common stock and ESPP rights to purchase 175,000 ESPP shares were outstanding as of August 31, 2015, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.
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4. FAIR VALUE OF FINANCIAL INSTRUMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. FAIR VALUE OF FINANCIAL INSTRUMENTS | 4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Companys financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements.
The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entitys pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments.
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value.
The following table summarizes the Companys financial assets measured at fair value on a recurring basis as of August 31, 2016 (in thousands):
The following table summarizes the Companys financial assets measured at fair value on a recurring basis as of May 31, 2016 (in thousands):
There were no financial liabilities measured at fair value as of August 31, 2016 and May 31, 2016.
There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended August 31, 2016 and May 31, 2016.
The carrying amounts of financial instruments including cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the carrying value of the debt approximates the fair value.
The Company has, at times, invested in debt and equity of private companies, and may do so again in the future, as part of its business strategy. |
5. ACCOUNTS RECEIVABLE, NET |
3 Months Ended |
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Aug. 31, 2016 | |
Accounts Receivable, Net, Current [Abstract] | |
5. ACCOUNTS RECEIVABLE | 5. ACCOUNTS RECEIVABLE, NET
Accounts receivable represents customer trade receivables and is presented net of allowance for doubtful accounts of $28,000 at August 31, 2016 and $8,000 at May 31, 2016. Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. The Companys allowance for doubtful accounts is based upon historical experience and review of trade receivables by aging category to identify specific customers with known disputes or collection issues. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. |
6. INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. INVENTORIES | 6. INVENTORIES
Inventories are comprised of the following (in thousands):
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7. SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7. SEGMENT INFORMATION | 7. SEGMENT INFORMATION
The Company operates in one reportable segment: the design, manufacture and marketing of advanced test and burn-in products to the semiconductor manufacturing industry.
The following presents information about the Companys operations in different geographic areas. Net sales are based upon ship-to location (in thousands).
The Companys Japanese and German subsidiaries primarily comprise the foreign operations. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese or European customers. Net sales from outside the United States include those of Aehr Test Systems Japan K.K. and Aehr Test Systems GmbH.
Sales to the Companys five largest customers accounted for approximately 93% and 96% of its net sales for the three months ended August 31, 2016 and 2015, respectively. Three customers accounted for approximately 42%, 27% and 17% of the Companys net sales in the three months ended August 31, 2016. Two customers accounted for approximately 67% and 11% of the Companys net sales in the three months ended August 31, 2015. No other customers represented more than 10% of the Company's net sales for either of the three months ended August 31, 2016 and 2015.
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8. PRODUCT WARRANTIES |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. PRODUCT WARRANTIES | 8. PRODUCT WARRANTIES
The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Companys warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Companys estimates, revisions to the estimated warranty liability would be required.
The standard warranty period is one year for systems and ninety days for parts and service.
The following is a summary of changes in the Company's liability for product warranties during the three months ended August 31, 2016 and 2015 (in thousands):
The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets. |
9. INCOME TAXES |
3 Months Ended |
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Aug. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
9. INCOME TAXES | 9. INCOME TAXES
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
Since fiscal 2009, a full valuation allowance was established against all deferred tax assets as management determined that it is more likely than not that certain deferred tax assets will not be realized.
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a more likely than not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
Although the Company files U.S. federal, various state, and foreign tax returns, the Companys only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1997 - 2016 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years.
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10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM |
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Aug. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Customer Deposits And Deferred Revenue Short-term | ||||||||||||||||||||||||||||||||||||||||||||||
10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM | 10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM
Customer deposits and deferred revenue, short-term (in thousands):
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11. LONG-TERM DEBT |
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Long-term Debt, Unclassified [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
11. LONG-TERM DEBT | 11. LONG-TERM DEBT
On April 10, 2015, the Company entered into a Convertible Note Purchase and Credit Facility Agreement (the Purchase Agreement) with QVT Fund LP and Quintessence Fund L.P. (the Purchasers) providing for (a) the Companys sale to the Purchasers of $4,110,000 in aggregate principal amount of 9.0% Convertible Secured Notes due 2017 (the Convertible Notes) and (b) a secured revolving loan facility (the Credit Facility) in an aggregate principal amount of up to $2,000,000. On August 22, 2016 the Purchase Agreement was amended to extend the maturity date of the Convertible Notes to April 10, 2019, decrease the conversion price from $2.65 per share to $2.30 per share, decrease the forced conversion price from $7.50 per share to $6.51 per share, and allow for additional equity awards.
The Convertible Notes bear interest at an annual rate of 9.0% and will mature on April 10, 2019 unless repurchased or converted prior to that date. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. Debt issuance costs of $356,000, which is being accreted over the term of the original loan using the effective interest rate method, were offset against the loan balance. During three months ended August 31, 2016, $44,000 of amortization costs was recognized as interest expense. Unamortized debt issuance costs of $104,000 were offset against the loan balance at August 31, 2016.
The conversion price for the Convertible Notes is $2.30 per share of the Companys common stock and is subject to adjustment upon the occurrence of certain specified events (as adjusted, the Conversion Price). Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
On April 14, 2016, $900,000 drawn against the Credit Facility was converted to Convertible Notes. On July 17, 2016, $1,100,000 drawn against the Credit Facility was converted to Convertible Notes. At August 31, 2016 there was no remaining balance on the Credit Facility.
The Companys obligations under the Purchase Agreement are secured by substantially all of the assets of the Company.
Long-term debt, net of debt issuance costs (in thousands):
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12. EQUITY |
3 Months Ended |
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Aug. 31, 2016 | |
Equity [Abstract] | |
12. EQUITY | 12. EQUITY
On August 8, 2016 the Company issued 200,000 shares of its common stock to Semics Inc., a semiconductor test equipment provider that produces fully automatic wafer probe systems, in consideration for cancellation of an outstanding invoice of $323,000 for capital equipment. |
13. RECENT ACCOUNTING PRONOUNCEMENTS |
3 Months Ended |
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Aug. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
13. RECENT ACCOUNTING PRONOUNCEMENTS | 13. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (IFRS), the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in US GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The ASU provides alternative methods of initial adoption and will become effective for us beginning in the first quarter of fiscal 2019. The FASB has issued several updates to the standard which i) defer the original effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017 (ASU 2015-14). ii) clarify the application of the principal versus agent guidance (ASU 2016-08). and iii) clarify the guidance on inconsequential and perfunctory promises and licensing (ASU 2016-10). In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients, to address certain narrow aspects of the guidance including collectibility criterion, collection of sales taxes from customers, noncash consideration, contract modifications and completed contracts. This issuance does not change the core principle of the guidance in the initial topic issued in May 2014. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Going Concern. This standard requires management to evaluate the conditions or events that raise substantial doubt about the entitys ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard will apply to all entities and will be effective for us in fiscal year 2017, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In July 2015, the FASB issued ASU No. 2015-11, Inventory. This standard requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This new standard will be effective for us in fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In November 2015, FASB issued ASU No. 2015-17, Income Taxes. This standard simplifies the presentation of deferred income taxes to be classified as noncurrent in the consolidated balance sheet. This new standard will be effective for us in fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In February 2016, FASB issued ASU No. 2016-02, Leases. This standard requires management to present all leases greater than one year on the balance sheet as a liability to make payments and an asset as the right to use the underlying asset for the lease term. This new standard will be effective for us in fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. This standard changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for us in fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In March 2016, FASB released ASU 2016-09, Compensation - Stock Compensation. The standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The accounting standard will be effective for the Company beginning the first quarter of fiscal 2018, and early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. |
14. SUBSEQUENT EVENT |
3 Months Ended |
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Aug. 31, 2016 | |
Subsequent Events [Abstract] | |
14. SUBSEQUENT EVENT | 14. SUBSEQUENT EVENT:
On September 28, 2016, the Company sold 2,721,540 shares of its common stock in a private placement transaction with certain institutional and accredited investors. The purchase price per share of the common stock sold in the private placement was $2.15, resulting in gross proceeds to the Company of $5,851,000, before offering expenses. The net proceeds after offering expenses were $5,389,000. |
1. BASIS OF PRESENTATION (Policies) |
3 Months Ended |
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Aug. 31, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION |
BASIS OF PRESENTATION. The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2016 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2016. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company," "we," "us," and "our"). All significant intercompany balances have been eliminated in consolidation. For our majority owned subsidiary, Aehr Test Systems Japan K.K., we reflected the noncontrolling interest of the portion we do not own on our Condensed Consolidated Balance Sheets in Shareholders Deficit and in the Condensed Consolidated Statements of Operations. |
ACCOUNTING ESTIMATES | ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates. |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES. The Companys significant accounting policies are disclosed in the Companys Annual Report on Form 10-K for the year ended May 31, 2016. There have been no changes in our significant accounting policies during the three months ended August 31, 2016. |
2. STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation costs related to the Company's stock-based compensation | The following table summarizes the stock-based compensation expense related to the Companys stock-based incentive plans for the three months ended August 31, 2016 and 2015 (in thousands):
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Assumptions for Options Valuation Model | Fair Value. The fair value of the Companys stock options granted to employees for the three months ended August 31, 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:
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Stock option and RSU transactions | The following tables summarize the Companys stock option and RSU transactions during three months ended August 31, 2016 (in thousands):
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Stock option transactions | The following table summarizes the stock option transactions during the three months ended August 31, 2016 (in thousands, except per share data):
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Options Outstanding |
The options outstanding and exercisable at August 31, 2016 were in the following exercise price ranges (in thousands, except per share data):
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3. EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | The following table presents the computation of basic and diluted net loss per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data):
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4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value by Hierarchy | The following table summarizes the Companys financial assets measured at fair value on a recurring basis as of August 31, 2016 (in thousands):
The following table summarizes the Companys financial assets measured at fair value on a recurring basis as of May 31, 2016 (in thousands):
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6. INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories are comprised of the following (in thousands):
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7. SEGMENT INFORMATION (Tables) |
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Company's operations in different geographic areas | The following presents information about the Companys operations in different geographic areas. Net sales are based upon ship-to location (in thousands).
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8. PRODUCT WARRANTIES (Tables) |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for product warranties | The following is a summary of changes in the Company's liability for product warranties during the three months ended August 31, 2016 and 2015 (in thousands):
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10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables) |
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Customer Deposits And Deferred Revenue Short-term Tables | ||||||||||||||||||||||||||||||||||||||||||||||
Customer deposits and deferred revenue | Customer deposits and deferred revenue, short-term (in thousands):
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11. LONG-TERM DEBT (Tables) |
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Long-term Debt, Unclassified [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt, net of debt issuance costs | Long-term debt, net of debt issuance costs (in thousands):
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2. STOCK-BASED COMPENSATION - Compensation costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||
Total stock-based compensation | $ 319 | $ 319 |
Cost of Sales | ||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||
Total stock-based compensation | 24 | 22 |
Selling, General and Administrative | ||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||
Total stock-based compensation | 247 | 238 |
Research and Development | ||
Stock-based compensation in the form of employee stock options, RSUs and ESPP shares included in: | ||
Total stock-based compensation | $ 48 | $ 59 |
2. STOCK-BASED COMPENSATION - Options (Details 1) - Stock Options $ / shares in Units, $ in Thousands |
3 Months Ended |
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Aug. 31, 2016
USD ($)
$ / shares
| |
Expected term (in years) | 4 years |
Volatility | 82.00% |
Expected dividend | $ | $ 0 |
Risk-free interest rate | 1.01% |
Weighted average grant date fair value | $ / shares | $ 1.00 |
2. STOCK-BASED COMPENSATION - Options and RSU transactions (Details 2) - Stock Option and RSU Transactions |
3 Months Ended |
---|---|
Aug. 31, 2016
shares
| |
Available Shares, Beginning (in thousands) | 1,847 |
Options granted (in thousands) | (318) |
RSUs granted (in thousands) | (138) |
Shares cancelled (in thousands) | 46 |
Available Shares, Ending (in thousands) | 1,437 |
2. STOCK-BASED COMPENSATION - Option Activity (Details 3) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Aug. 31, 2016
USD ($)
$ / shares
shares
| |
Options Outstanding, Ending (in thousands) | shares | 3,382 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.67 |
Options exercisable shares, ending (in thousands) | shares | 2,379 |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 1.52 |
Aggregate Intrinsic Value for Options exercisable, ending | $ | $ 2,235 |
Outstanding Options Stock Option Transactions | |
Options Outstanding, Beginning (in thousands) | shares | 3,201 |
Options granted (in thousands) | shares | 318 |
Options cancelled (in thousands) | shares | (46) |
Options exercised (in thousand) | shares | (91) |
Options Outstanding, Ending (in thousands) | shares | 3,382 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 1.66 |
Weighted Average Exercise Price Granted | $ / shares | 1.68 |
Weighted Average Exercise Price Cancelled | $ / shares | 1.40 |
Weighted Average Exercise Price Exercised | $ / shares | 1.32 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.67 |
Aggregate Intrinsic Value, beginning balance | $ | $ 189 |
Aggregate Intrinsic Value, ending balance | $ | $ 2,694 |
Options fully vested and expected to vest, ending (in thousands) | shares | 3,314 |
Options exercisable shares, ending (in thousands) | shares | 2,379 |
Weighted Average Exercise Price for Options fully vested and expected to vest, ending | $ / shares | $ 1.67 |
Weighted Average Exercise Price for Options exercisable, ending | $ / shares | $ 1.52 |
Aggregate Intrinsic Value for Options fully vested and expected to vest, ending | $ | $ 2,640 |
Aggregate Intrinsic Value for Options exercisable, ending | $ | $ 2,235 |
2. STOCK-BASED COMPENSATION - Options outstanding and exercisable (Details 4) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Aug. 31, 2016
USD ($)
$ / shares
shares
| |
Range Exercise Prices Options Outstanding Minimum | $ .59 |
Range Exercise Prices Options Outstanding Maximum | $ 2.71 |
Options Outstanding, Ending (in thousands) | shares | 3,382 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 4 years 2 months 16 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.67 |
Options exercisable shares, ending (in thousands) | shares | 2,379 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 3 years 7 months 10 days |
Weighted Average Exercise Price for Options exercisable, ending | $ 1.52 |
Aggregate Intrinsic Value for Options exercisable, ending | $ | $ 2,235 |
Options Price Range A | |
Range Exercise Prices Options Outstanding Minimum | $ .59 |
Range Exercise Prices Options Outstanding Maximum | $ .97 |
Options Outstanding, Ending (in thousands) | shares | 565 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 2 years 6 months 25 days |
Weighted Average Exercise Price Outstanding, Ending | $ .68 |
Options exercisable shares, ending (in thousands) | shares | 565 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 2 years 6 months 25 days |
Weighted Average Exercise Price for Options exercisable, ending | $ .68 |
Options Price Range B | |
Range Exercise Prices Options Outstanding Minimum | 1.09 |
Range Exercise Prices Options Outstanding Maximum | $ 1.40 |
Options Outstanding, Ending (in thousands) | shares | 1,039 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 3 years 11 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.28 |
Options exercisable shares, ending (in thousands) | shares | 923 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 2 years 10 months 28 days |
Weighted Average Exercise Price for Options exercisable, ending | $ 1.28 |
Options Price Range C | |
Range Exercise Prices Options Outstanding Minimum | 1.68 |
Range Exercise Prices Options Outstanding Maximum | $ 2.06 |
Options Outstanding, Ending (in thousands) | shares | 548 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 5 years 10 months 17 days |
Weighted Average Exercise Price Outstanding, Ending | $ 1.77 |
Options exercisable shares, ending (in thousands) | shares | 215 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 4 years 7 months 6 days |
Weighted Average Exercise Price for Options exercisable, ending | $ 1.90 |
Options Price Range D | |
Range Exercise Prices Options Outstanding Minimum | 2.10 |
Range Exercise Prices Options Outstanding Maximum | $ 2.71 |
Options Outstanding, Ending (in thousands) | shares | 1,230 |
Weighted Average Remaining Contractual Life (Years) Options Outstanding | 5 years 2 months 12 days |
Weighted Average Exercise Price Outstanding, Ending | $ 2.43 |
Options exercisable shares, ending (in thousands) | shares | 676 |
Weighted Average Remaining Contractual Life (Years) Options Exercisable | 5 years 1 month 13 days |
Weighted Average Exercise Price for Options exercisable, ending | $ 2.45 |
2. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Stock-based compensation costs capitalized as part of inventory | $ 0 | $ 0 |
Intrinsic value of options exercised | $ 52 | 60 |
Weighted average remaining contractual life of the options exercisable and expected to be exercisable | 4 years 2 months 16 days | |
Restricted Stock Units | ||
Stock-based compensation expense related to stock options and RSUs | $ 279 | 286 |
Restricted Stock Units granted | 138,000 | |
Market value on the date of the grant | $ 1.68 | |
1996 Stock Option Plan and 2006 Equity Incentive Plan | ||
Unrecognized stock-based compensation | $ 1,258 | |
Estimated forfeitures of unvested stock based awards, amount | $ 3 | |
Weighted average period for recognition of costs | 2 years 6 months | |
Employee Stock Purchase Plan | ||
Stock-based compensation related to the ESPP | $ 40 | $ 33 |
Compensation cost related to purchase rights under the ESPP but not yet recognized | $ 98 | |
Weighted average period for recognition of costs | 1 year 1 month 6 days |
3. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Earnings Per Share [Abstract] | ||
Numerator: Net (loss) income | $ (755) | $ 294 |
Denominator for basic net (loss) income per share: Weighted average shares outstanding (in thousands) | 13,317 | 12,963 |
Shares used in basic net (loss) income per share calculation (in thousands) | 13,317 | 12,963 |
Effect of dilutive securities (in thousands) | 0 | 851 |
Denominator for diluted net (loss) income per share (in thousands) | 13,317 | 13,814 |
Basic net (loss) income per share | $ (0.06) | $ 0.02 |
Diluted net (loss) income per share | $ (0.06) | $ 0.02 |
3. EARNINGS PER SHARE (Details Narrative) - shares |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Employee Stock Purchase Plan | ||
Options not included in the computation of diluted net loss per share (in thousands) | 304 | 175 |
Stock Options | ||
Options not included in the computation of diluted net loss per share (in thousands) | 3,382 | 1,371 |
Restricted Stock Units | ||
Options not included in the computation of diluted net loss per share (in thousands) | 74 |
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Aug. 31, 2016 |
May 31, 2016 |
---|---|---|
Money market funds | $ 1 | $ 1 |
Certificate of deposit | 50 | 50 |
Assets | 51 | 51 |
Level 1 | ||
Money market funds | 1 | 1 |
Certificate of deposit | 0 | 0 |
Assets | 1 | 1 |
Level 2 | ||
Money market funds | 0 | 0 |
Certificate of deposit | 50 | 50 |
Assets | 50 | 50 |
Level 3 | ||
Money market funds | 0 | 0 |
Certificate of deposit | 0 | 0 |
Assets | $ 0 | $ 0 |
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Fair Value Of Financial Instruments Details Narrative | ||
Transfers between Level 1 and Level 2 fair value measurements | $ 0 | $ 0 |
5. ACCOUNTS RECEIVABLE NET (Details Narrative) - USD ($) $ in Thousands |
Aug. 31, 2016 |
May 31, 2016 |
---|---|---|
Accounts Receivable, Net, Current [Abstract] | ||
Allowance for doubtful accounts customer trade receivables | $ 28 | $ 8 |
6. INVENTORIES (Details) - USD ($) $ in Thousands |
Aug. 31, 2016 |
May 31, 2016 |
|||
---|---|---|---|---|---|
Inventory, Net [Abstract] | |||||
Raw materials and sub-assemblies | $ 2,802 | $ 2,839 | |||
Work-in-process | 2,970 | 4,151 | |||
Finished goods | 259 | 43 | |||
Inventory | $ 6,031 | $ 7,033 | [1] | ||
|
7. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Net sales | $ 5,318 | $ 6,633 |
Property and equipment, net | 789 | 465 |
US | ||
Net sales | 3,164 | 718 |
Property and equipment, net | 733 | 418 |
Asia | ||
Net sales | 1,910 | 5,381 |
Property and equipment, net | 42 | 34 |
Europe | ||
Net sales | 244 | 534 |
Property and equipment, net | $ 14 | $ 13 |
7. SEGMENT INFORMATION (Details Narrative) |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Sales to the Company's five largest customers percentage of net sales | 93.00% | 96.00% |
Customer A | ||
Customers accounted for 10% or more of total revenues | 42.00% | 67.00% |
Customer B | ||
Customers accounted for 10% or more of total revenues | 27.00% | 11.00% |
Customer C | ||
Customers accounted for 10% or more of total revenues | 17.00% |
8. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the period | $ 155 | $ 137 |
Accruals for warranties issued during the period | 0 | 109 |
Accruals and adjustments (change in estimates) related to pre-existing warranties during the period | (54) | 0 |
Settlement made during the period (in cash or in kind) | (11) | (27) |
Balance at the end of the period | $ 90 | $ 219 |
8. PRODUCT WARRANTIES (Details Narrative) |
3 Months Ended |
---|---|
Aug. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Standard warranty period | The standard warranty period is one year for systems and ninety days for parts and service. |
10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) - USD ($) $ in Thousands |
Aug. 31, 2016 |
May 31, 2016 |
---|---|---|
Customer Deposits And Deferred Revenue Short-term Details | ||
Customer deposits | $ 2,034 | $ 540 |
Deferred revenue | 690 | 1,174 |
Total | $ 2,724 | $ 1,714 |
11. LONG-TERM DEBT (Details) - USD ($) $ in Thousands |
Aug. 31, 2016 |
May 31, 2016 |
|||
---|---|---|---|---|---|
Debt Disclosure [Abstract] | |||||
Principal | $ 6,110 | $ 6,110 | |||
Unamortized debt issuance costs | (104) | (148) | |||
Long-term debt | $ 6,006 | $ 5,962 | [1] | ||
|
11. LONG-TERM DEBT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Aug. 31, 2016 |
Aug. 31, 2015 |
Jul. 17, 2016 |
May 31, 2016 |
Apr. 14, 2016 |
Apr. 10, 2015 |
|
Debt Disclosure [Abstract] | ||||||
Convertible debt, principal amount | $ 6,110 | $ 6,110 | ||||
Convertible note, interest rate | 9.00% | |||||
Convertible note, maturity | Apr. 10, 2019 | |||||
Convertible note, interest payment | Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. | |||||
Debt issuance costs | $ 356 | |||||
Amortization of debt issuance costs | 44 | $ 37 | ||||
Unamortized debt issuance costs | $ (104) | $ (148) | ||||
Initial conversion price for the Convertible Notes | $ 2.30 | |||||
Convertible Notes, Terms of Conversion Feature | The conversion price for the Convertible Notes is $2.30 per share of the Companys common stock and is subject to adjustment upon the occurrence of certain specified events (as adjusted, the Conversion Price). Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity. | |||||
Line of credit, maximum borrowing capacity | $ 2,000 | |||||
Balance available to borrow under the line of credit | $ 0 | |||||
Convertible Debt Principal amount | $ 4,110 | |||||
Conversion from the Credit Facility to Convertible Note | $ 1,100 | $ 900 |
12. EQUITY (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Aug. 08, 2016 |
Aug. 31, 2016 |
Aug. 31, 2015 |
|
Cancellation of invoice | $ 323 | $ 0 | |
Semics Inc, | |||
Issuance of common stock | 200,000 | ||
Cancellation of invoice | $ 323 |
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