CALIFORNIA
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94-2424084
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(State
or other jurisdiction of
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(IRS
Employer Identification Number)
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incorporation
or organization)
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400 KATO TERRACE, FREMONT, CA
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94539
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(Address
of principal executive offices)
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(Zip
Code)
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Large accelerated
filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
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Smaller
reporting company [X]
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(Do not check if a
smaller reporting company)
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Emerging growth
company [ ]
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Item
1. Business
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4
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Item
1A. Risk Factors
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9
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Item
1B. Unresolved Staff Comments
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16
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Item 2.
Properties
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16
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Item
3. Legal Proceedings
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16
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Item
4. Mine Safety Disclosures
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16
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PART II
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Item 5.
Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
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17
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Item
6. Selected Consolidated Financial
Data
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18
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Item
7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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20
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Item
7A. Quantitative and Qualitative Disclosures about Market
Risk
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26
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Item
8. Financial Statements and Supplementary
Data
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27
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Item
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
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54
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Item
9A. Controls and Procedures
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54
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Item
9B. Other Information
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54
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PART III
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Item
10. Directors, Executive Officers and Corporate
Governance
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55
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Item
11. Executive Compensation
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55
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Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
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55
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Item
13. Certain Relationships and Related Transactions
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55
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Item
14. Principal Accountant Fees and Services
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55
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PART IV
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Item
15. Exhibits, Financial Statement Schedules
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56
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Signatures
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60
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High
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Low
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Fiscal
2018:
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|
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First
quarter ended August 31, 2017
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$4.60
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$2.62
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Second
quarter ended November 30, 2017
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4.10
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2.50
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Third
quarter ended February 28, 2018
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3.37
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2.16
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Fourth
quarter ended May 31, 2018
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2.80
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2.12
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Fiscal
2017:
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First
quarter ended August 31, 2016
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$3.42
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$0.96
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Second
quarter ended November 30, 2016
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3.58
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2.05
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Third
quarter ended February 28, 2017
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5.28
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2.15
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Fourth
quarter ended May 31, 2017
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6.10
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3.37
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Fiscal Year
Ended May 31,
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||||
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2018
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2017
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2016
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2015
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2014
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(In thousands,
except per share data)
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||||
CONSOLIDATED
STATEMENTS OF OPERATIONS:
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Net
sales
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$29,555
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$18,898
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$14,501
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$10,018
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$19,684
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Cost
of sales
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17,169
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12,118
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9,356
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6,180
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9,462
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Gross
profit
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12,386
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6,780
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5,145
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3,838
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10,222
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Operating
expenses:
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|
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Selling,
general and administrative
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7,290
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7,052
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6,975
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6,470
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6,323
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Research
and development
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4,181
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4,657
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4,324
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4,062
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3,402
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Total
operating expenses
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11,471
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11,709
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11,299
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10,532
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9,725
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Income
(loss) from operations
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915
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(4,929)
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(6,154)
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(6,694)
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497
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Interest
expense
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(399)
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(678)
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(605)
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(130)
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(26)
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Other
(expense) income, net
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(61)
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(21)
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(16)
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211
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(64)
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Income
(loss) before income tax benefit (expense)
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455
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(5,628)
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(6,775)
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(6,613)
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407
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|
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Income
tax benefit (expense)
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73
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(25)
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(10)
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(34)
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15
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Net
income (loss)
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528
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(5,653)
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(6,785)
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(6,647)
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422
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Less:
Net income attributable to the noncontrolling
interest
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--
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--
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--
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--
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--
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|
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Net
income (loss) attributable to Aehr Test Systems common
shareholders
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$528
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$(5,653)
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$(6,785)
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$(6,647)
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$422
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Net
income (loss) per share:
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Basic
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$0.02
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$(0.35)
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$(0.52)
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$(0.55)
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$0.04
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Diluted
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$0.02
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$(0.35)
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$(0.52)
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$(0.55)
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$0.04
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Shares
used in per share calculations
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Basic
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21,732
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16,267
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13,091
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12,047
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10,877
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Diluted
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22,782
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16,267
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13,091
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12,047
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11,889
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May 31,
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||||
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2018
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2017
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2016
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2015
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2014
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CONSOLIDATED
BALANCE SHEETS:
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Cash
and cash equivalents
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$16,848
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$17,803
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$939
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$5,527
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$1,809
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Working
capital
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18,308
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21,494
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4,068
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7,776
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6,556
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Total
assets
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30,955
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30,892
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10,046
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14,868
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12,225
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Long-term
obligations, less current portion
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522
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6,214
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6,089
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3,799
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79
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Total shareholders' equity (deficit)
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19,285
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16,794
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(723)
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4,550
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7,029
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Year Ended May 31,
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||
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2018
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2017
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2016
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Net sales
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100.0%
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100.0%
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100.0%
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Cost of sales
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58.1
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64.1
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64.5
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Gross profit
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41.9
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35.9
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35.5
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Operating
expenses:
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Selling, general and
administrative
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24.7
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37.3
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48.1
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Research and
development
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14.1
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24.7
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29.8
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Total operating
expenses
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38.8
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62.0
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77.9
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Income (loss) from operations
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3.1
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(26.1)
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(42.4)
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Interest expense
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(1.4)
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(3.6)
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(4.2)
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Other expense, net
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(0.2)
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(0.1)
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(0.1)
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Income (loss) before income tax benefit
(expense)
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1.5
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(29.8)
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(46.7)
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Income tax benefit (expense)
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0.3
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(0.1)
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(0.1)
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Net income (loss)
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1.8
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(29.9)
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(46.8)
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Less:
Net income attributable to the noncontrolling
interest
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--
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--
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--
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Net
income (loss) attributable to Aehr Test Systems common
shareholders
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1.8%
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(29.9)%
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(46.8)%
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Payments Due by Period (in thousands)
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||||
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Less than
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1-3
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3-5
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More than
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Total
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1 year
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years
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years
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5 years
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Operating Leases
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$3,868
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$664
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$1,504
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$1,567
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$133
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Convertible Notes
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6,110
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6,110
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--
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--
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--
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Interest on Convertible Notes
(1)
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610
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610
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--
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--
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--
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Purchases (2)
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2,488
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2,488
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--
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--
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--
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Total
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$13,076
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$9,872
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$1,504
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$1,567
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$133
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Consolidated
Financial Statements of Aehr Test Systems
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|
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Report
of Independent Registered Public Accounting Firm
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28
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Consolidated
Balance Sheets at May 31, 2018 and 2017
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29
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Consolidated
Statements of Operations for the years ended May 31, 2018, 2017 and
2016
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30
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Consolidated
Statements of Comprehensive Income (Loss) for the years ended May
31, 2018, 2017 and 2016
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31
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Consolidated
Statements of Shareholders' Equity (Deficit) for the years ended
May 31, 2018, 2017 and 2016
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32
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Consolidated
Statements of Cash Flows for the years ended May 31, 2018, 2017 and
2016
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33
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Notes to Consolidated Financial Statements
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34
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May
31,
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|
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2018
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2017
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ASSETS
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|
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Current
assets:
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Cash and cash
equivalents
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$16,848
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$17,803
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Accounts receivable,
net
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2,856
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4,010
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Inventories
|
9,049
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6,604
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Prepaid expenses and
other
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703
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961
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Total current
assets
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29,456
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29,378
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Property and equipment, net
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1,203
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1,419
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Other assets
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296
|
95
|
|
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Total
assets
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$30,955
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$30,892
|
|
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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|
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Current
liabilities:
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Accounts payable
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$1,762
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$2,808
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Accrued expenses
|
1,646
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1,609
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Customer deposits and deferred
revenue, short-term
|
1,630
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3,467
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Current portion of long-term
debt
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6,110
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--
|
|
|
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Total current
liabilities
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11,148
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7,884
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|
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Convertible notes
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--
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6,110
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Deferred rent
|
63
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--
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Deferred revenue, long-term
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459
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104
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|
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Total
liabilities
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11,670
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14,098
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Commitments
and contingencies (Note 16)
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|
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|
|
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Aehr
Test Systems shareholders' equity:
|
|
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Preferred stock, $0.01 par value:
Authorized: 10,000 shares; Issued and outstanding: none
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--
|
--
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Common stock, $0.01 par value:
Authorized: 75,000 shares; Issued and outstanding: 22,143 shares
and 21,340 shares at May 31, 2018 and 2017,
respectively
|
221
|
213
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Additional paid-in capital
|
83,041
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81,128
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Accumulated other comprehensive
income
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2,292
|
2,249
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Accumulated deficit
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(66,249)
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(66,777)
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Total Aehr Test Systems
shareholders' equity
|
19,305
|
16,813
|
Noncontrolling interest
|
(20)
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(19)
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Total shareholders'
equity
|
19,285
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16,794
|
|
|
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Total liabilities
and shareholders' equity
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$30,955
|
$30,892
|
|
Year Ended May 31,
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||
|
2018
|
2017
|
2016
|
|
|
|
|
Net sales
|
$29,555
|
$18,898
|
$14,501
|
Cost of sales
|
17,169
|
12,118
|
9,356
|
Gross profit
|
12,386
|
6,780
|
5,145
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling, general and
administrative
|
7,290
|
7,052
|
6,975
|
Research and development
|
4,181
|
4,657
|
4,324
|
|
|
|
|
Total operating
expenses
|
11,471
|
11,709
|
11,299
|
|
|
|
|
Income (loss) from
operations
|
915
|
(4,929)
|
(6,154)
|
|
|
|
|
Interest expense
|
(399)
|
(678)
|
(605)
|
Other expense, net
|
(61)
|
(21)
|
(16)
|
|
|
|
|
Income (loss) before income tax benefit
(expense)
|
455
|
(5,628)
|
(6,775)
|
|
|
|
|
Income tax benefit (expense)
|
73
|
(25)
|
(10)
|
Net income (loss)
|
528
|
(5,653)
|
(6,785)
|
Less:
Net income attributable to the noncontrolling interest
|
--
|
--
|
--
|
|
|
|
|
Net
income (loss) attributable to Aehr Test Systems common
shareholders
|
$528
|
$(5,653)
|
$(6,785)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – basic and
diluted
|
$0.02
|
$(0.35)
|
$(0.52)
|
Shares used in per share calculation –
basic
|
21,732
|
16,267
|
13,091
|
Shares used in per share calculation –
diluted
|
22,782
|
16,267
|
13,091
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
|
|
|
|
Net income
(loss)
|
$528
|
$(5,653)
|
$(6,785)
|
|
|
|
|
Other comprehensive
income, net of tax: Foreign currency translation
income
|
42
|
13
|
4
|
|
|
|
|
Total comprehensive
income (loss)
|
570
|
(5,640)
|
(6,781)
|
Less: Comprehensive
(loss) income attributable to noncontrolling interest
|
(1)
|
1
|
(2)
|
|
|
|
|
Comprehensive
income (loss), attributable to Aehr
Test Systems
|
$571
|
$(5,641)
|
$(6,779)
|
|
|
Additional
|
Accumulated
Other
|
|
Total Aehr
Test
Systems Shareholders'
|
|
Total Shareholders'
|
|
|
Common Stock
|
Paid-in
|
Comprehensive
|
Accumulated
|
Equity
|
Noncontrolling
|
Equity
|
|
|
Shares
|
Amount
|
Capital
|
Income
|
Deficit
|
(Deficit)
|
Interest
|
(Deficit)
|
Balances, May
31, 2015
|
12,857
|
$129
|
$56,547
|
$2,231
|
$(54,339)
|
$4,568
|
$(18)
|
$4,550
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock under employee plans
|
359
|
3
|
509
|
--
|
--
|
512
|
--
|
512
|
Stock-based
compensation
|
--
|
--
|
996
|
--
|
--
|
996
|
--
|
996
|
Net
loss
|
--
|
--
|
--
|
--
|
(6,785)
|
(6,785)
|
--
|
(6,785)
|
Foreign
currency translation adjustment
|
--
|
--
|
--
|
6
|
--
|
6
|
(2)
|
4
|
|
|
|
|
|
|
|
|
|
Balances, May
31, 2016
|
13,216
|
132
|
58,052
|
2,237
|
(61,124)
|
(703)
|
(20)
|
(723)
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock under employee plans
|
779
|
8
|
696
|
--
|
--
|
704
|
--
|
704
|
Issuance
of common stock under public offering
|
4,423
|
44
|
15,788
|
--
|
--
|
15,832
|
--
|
15,832
|
Issuance
of common stock under private offering
|
2,722
|
27
|
5,272
|
--
|
--
|
5,299
|
--
|
5,299
|
Issuance
of common stock in consideration for cancellation of outstanding
vendor invoice
|
200
|
2
|
321
|
--
|
--
|
323
|
--
|
323
|
Stock-based
compensation
|
--
|
--
|
999
|
--
|
--
|
999
|
--
|
999
|
Net
loss
|
--
|
--
|
--
|
--
|
(5,653)
|
(5,653)
|
--
|
(5,653)
|
Foreign
currency translation adjustment
|
--
|
--
|
--
|
12
|
--
|
12
|
1
|
13
|
|
|
|
|
|
|
|
|
|
Balances, May
31, 2017
|
21,340
|
213
|
81,128
|
2,249
|
(66,777)
|
16,813
|
(19)
|
16,794
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock under employee plans
|
803
|
8
|
917
|
--
|
--
|
925
|
--
|
925
|
Stock-based compensation
|
--
|
--
|
996
|
--
|
--
|
996
|
--
|
996
|
Net income
|
--
|
--
|
--
|
--
|
528
|
528
|
--
|
528
|
Foreign
currency translation adjustment
|
--
|
--
|
--
|
43
|
--
|
43
|
(1)
|
42
|
|
|
|
|
|
|
|
|
|
Balances, May
31, 2018
|
22,143
|
$221
|
$83,041
|
$2,292
|
$(66,249)
|
$19,305
|
$(20)
|
$19,285
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Cash
flows from operating activities:
|
|
|
|
Net income (loss)
|
$528
|
$(5,653)
|
$(6,785)
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
Stock-based compensation
expense
|
996
|
999
|
1,016
|
(Recovery of) provision
for doubtful accounts
|
(58)
|
53
|
(13)
|
Loss on disposal of
asset
|
--
|
--
|
2
|
Amortization of debt
issuance costs
|
--
|
148
|
177
|
Depreciation and
amortization
|
417
|
271
|
203
|
Changes
in operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
1,260
|
(3,507)
|
887
|
Inventories
|
(2,073)
|
430
|
70
|
Prepaid
expenses and other
|
59
|
(707)
|
9
|
Accounts
payable
|
(1,095)
|
1,686
|
564
|
Accrued
expenses
|
62
|
53
|
539
|
Customer
deposits and deferred revenue
|
(1,482)
|
1,730
|
(2,909)
|
Deferred
rent
|
63
|
--
|
--
|
Income taxes
payable
|
(28)
|
2
|
(41)
|
Net
cash used in operating activities
|
(1,351)
|
(4,495)
|
(6,281)
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Purchases of property and
equipment
|
(572)
|
(477)
|
(919)
|
Net
cash used in investing activities
|
(572)
|
(477)
|
(919)
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Line of credit borrowings
(repayments), net
|
--
|
--
|
2,000
|
Proceeds from issuance of
convertible notes, net
|
--
|
--
|
(6)
|
Proceeds
from issuance of common stock under public offering, net of
issuance costs
|
--
|
15,832
|
--
|
Proceeds
from issuance of common stock under private placement, net of
issuance costs
|
--
|
5,299
|
--
|
Proceeds from issuance of
common stock under employee plans
|
925
|
704
|
512
|
Net
cash provided by financing activities
|
925
|
21,835
|
2,506
|
|
|
|
|
Effect
of exchange rates on cash and cash equivalents
|
43
|
1
|
106
|
|
|
|
|
Net
(decrease) increase in cash and cash
equivalents
|
(955)
|
16,864
|
(4,588)
|
|
|
|
|
Cash and cash equivalents, beginning of
year
|
17,803
|
939
|
5,527
|
Cash and cash equivalents, end of
year
|
$16,848
|
$17,803
|
$939
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
Cash
paid during the year for:
|
|
|
|
Income
taxes
|
$37
|
$18
|
$47
|
Interest
|
$550
|
$516
|
$302
|
|
|
|
|
Supplemental
disclosure of non-cash flow information:
|
|
|
|
Net
change in capitalized stock-based compensation
|
$--
|
$--
|
$(20)
|
Line
of credit converted to convertible notes
|
$--
|
$--
|
$2,000
|
Fair
value of common stock issued to settle accounts
payable
|
$--
|
$323
|
$--
|
Furniture
and fixtures
|
2 to 6
years
|
Machinery
and equipment
|
3 to 6
years
|
Test
equipment
|
4 to 6
years
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Numerator: Net income (loss)
|
$528
|
$(5,653)
|
$(6,785)
|
|
|
|
|
Denominator
for basic net income (loss) per share:
|
|
|
|
Weighted-average shares
outstanding
|
21,732
|
16,267
|
13,091
|
|
|
|
|
Shares used in basic net income (loss) per share
calculation
|
21,732
|
16,267
|
13,091
|
|
|
|
|
Effect of dilutive securities
|
1,050
|
--
|
--
|
|
|
|
|
|
|
|
|
Denominator for diluted net income (loss) per
share
|
22,782
|
16,267
|
13,091
|
|
|
|
|
Basic net income (loss) per
share
|
$0.02
|
$(0.35)
|
$(0.52)
|
|
|
|
|
Diluted net income (loss) per
share
|
$0.02
|
$(0.35)
|
$(0.52)
|
|
Cost
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|
|
|
|
Cash
|
$3,132
|
$--
|
$3,132
|
Cash
equivalents:
|
|
|
|
Money
market funds
|
7,733
|
--
|
7,733
|
U.S.
Treasury securities
|
5,983
|
--
|
5,983
|
Total
Cash equivalents
|
13,716
|
--
|
13,716
|
Total
Cash and Cash equivalents
|
$16,848
|
$--
|
$16,848
|
Long-term
investments:
|
|
|
|
Certificate
of deposit
|
$80
|
$--
|
$80
|
Total
Cash, Cash equivalents and Investments
|
$16,928
|
$--
|
$16,928
|
|
Cost
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|
|
|
|
Cash
|
$2,287
|
$--
|
$2,287
|
Cash
equivalents:
|
|
|
|
Money
market funds
|
15,516
|
--
|
15,516
|
Total
Cash equivalents
|
15,516
|
--
|
15,516
|
Total
Cash and Cash equivalents
|
$17,803
|
$--
|
$17,803
|
Long-term
investments:
|
|
|
|
Certificate
of deposit
|
$50
|
$--
|
$50
|
Total
Cash, Cash equivalents and Investments
|
$17,853
|
$--
|
$17,853
|
|
Balance as of
|
|
|
|
|
May 31, 2018
|
Level 1
|
Level 2
|
Level 3
|
Money market funds
|
$7,733
|
$7,733
|
$--
|
$--
|
U.S. Treasury securities
|
5,983
|
5,983
|
--
|
--
|
Certificate of deposit
|
80
|
--
|
80
|
--
|
Assets
|
$13,796
|
$13,716
|
$80
|
$--
|
|
Balance as of
|
|
|
|
|
May 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
Money market funds
|
$15,516
|
$15,516
|
$--
|
$--
|
Certificate of deposit
|
50
|
--
|
50
|
--
|
Assets
|
$15,566
|
$15,516
|
$50
|
$--
|
|
May 31,
|
|
|
2018
|
2017
|
Accounts receivable
|
$2,860
|
$4,071
|
Less: Allowance for doubtful accounts
|
(4)
|
(61)
|
|
$2,856
|
$4,010
|
|
|
Additions
|
|
|
|
Balance at
|
charged to
|
|
Balance
|
|
beginning
|
costs and
|
|
at end
|
|
of year
|
expenses
|
Deductions*
|
of year
|
Allowance
for doubtful accounts receivable:
|
|
|
|
|
May
31, 2018
|
$61
|
$4
|
$(61)
|
$4
|
|
|
|
|
|
May
31, 2017
|
$8
|
$53
|
$--
|
$61
|
|
May 31,
|
|
(In
Thousands)
|
2018
|
2017
|
Raw materials and
sub-assemblies
|
$5,747
|
$4,268
|
Work in process
|
3,068
|
2,059
|
Finished goods
|
234
|
277
|
|
$9,049
|
$6,604
|
|
May 31,
|
|
(In
Thousands)
|
2018
|
2017
|
Leasehold improvements
|
$1,154
|
$1,145
|
Furniture and fixtures
|
984
|
974
|
Machinery and equipment
|
2,865
|
3,035
|
Test equipment
|
2,595
|
2,268
|
|
|
|
|
7,598
|
7,422
|
Less:
Accumulated depreciation and amortization
|
(6,395)
|
(6,003)
|
|
$1,203
|
$1,419
|
|
May 31,
|
|
(In
Thousands)
|
2018
|
2017
|
Payroll related
|
$1,014
|
$934
|
Professional services
|
163
|
161
|
Accrued interest
|
139
|
139
|
Warranty
|
135
|
113
|
Commissions and bonuses
|
101
|
125
|
Taxes payable
|
34
|
69
|
Investor relations
|
19
|
25
|
Other
|
41
|
43
|
|
$1,646
|
$1,609
|
|
May 31,
|
|
(In
Thousands)
|
2018
|
2017
|
Customer deposits
|
$1,340
|
$3,264
|
Deferred revenue
|
290
|
203
|
|
$1,630
|
$3,467
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Domestic
|
$433
|
$(5,663)
|
$(6,794)
|
Foreign
|
22
|
35
|
19
|
|
$455
|
$(5,628)
|
$(6,775)
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Federal
income taxes:
|
|
|
|
Current
|
$99
|
$--
|
$--
|
Deferred
|
--
|
--
|
--
|
State
income taxes:
|
|
|
|
Current
|
(22)
|
(8)
|
3
|
Deferred
|
--
|
--
|
--
|
Foreign
income taxes:
|
|
|
|
Current
|
(4)
|
(17)
|
(13)
|
Deferre
|
--
|
--
|
--
|
|
$73
|
$(25)
|
$(10)
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
U.S. federal statutory tax rate
|
28.6%
|
34.0%
|
34.0%
|
State taxes, net of federal tax
effect
|
(16.7)
|
(0.1)
|
--
|
Foreign rate differential
|
39.4
|
0.1
|
0.2
|
Stock-based compensation
|
39.9
|
(2.8)
|
(3.8)
|
Research and development credit
|
5.9
|
3.1
|
2.1
|
Change in valuation allowance
|
(1,349.2)
|
(33.8)
|
(32.5)
|
Federal rate change impact
|
1,419.7
|
--
|
--
|
Federal AMT refund
|
(20.0)
|
--
|
--
|
ASU 2016-09 adoption
|
(169.1)
|
--
|
--
|
Other
|
5.4
|
(0.9)
|
(0.2)
|
Effective tax rate
|
(16.1)%
|
(0.4)%
|
(0.2)%
|
|
Year Ended May 31,
|
|
|
2018
|
2017
|
|
|
|
Net operating losses
|
$12,918
|
$18,719
|
Credit carryforwards
|
4,952
|
4,715
|
Inventory reserves
|
588
|
870
|
Reserves and accruals
|
1,419
|
1,566
|
Other
|
247
|
393
|
|
|
|
|
20,124
|
26,263
|
|
|
|
Less: Valuation allowance
|
(20,124)
|
(26,263)
|
Net deferred tax assets.
|
$--
|
$--
|
Beginning balance as of May 31,
2015
|
$919
|
Decreases related to prior year tax
positions
|
(124)
|
Decreases related to lapse of statute of
limitations
|
(6)
|
|
|
Balance at May 31, 2016
|
$789
|
|
|
Decreases related to prior year tax
positions
|
--
|
Decreases related to lapse of statute of
limitations
|
--
|
|
|
Balance at May 31, 2017
|
$789
|
|
|
Increases related to prior year tax
positions
|
889
|
Increases related to current year tax
positions
|
107
|
|
|
Balance at May 31, 2018
|
$1,785
|
|
Cumulative Translation Adjustments
|
Unrealized Loss on Investments, Net
|
Total
|
|
|
|
|
Balance
at May 31, 2016
|
$2,237
|
$--
|
$2,237
|
Other comprehensive income (loss) before
reclassification
|
12
|
--
|
12
|
Amounts reclassified out of AOCI
|
--
|
--
|
--
|
Other comprehensive income (loss), net of tax
|
12
|
--
|
12
|
Balance
at May 31, 2017
|
$2,249
|
$--
|
$2,249
|
Other comprehensive income (loss) before
reclassifications
|
43
|
--
|
43
|
Amounts reclassified out of AOCI
|
--
|
--
|
--
|
Other comprehensive income (loss), net of tax
|
43
|
--
|
43
|
Balance
at May 31, 2018
|
$2,292
|
$--
|
$2,292
|
|
Year Ended May
31,
|
||
|
2018
|
2017
|
2016
|
Stock-based compensation in the form of stock options, RSUs,
and ESPP purchase rights, included in:
|
|
|
|
|
|
|
|
Cost of sales
|
$148
|
$91
|
$87
|
Selling, general and
administrative
|
592
|
714
|
723
|
Research and development
|
256
|
194
|
206
|
|
|
|
|
Net effect on net income
(loss)
|
$996
|
$999
|
$1,016
|
|
|
|
|
Effect
on net income (loss) per share:
|
|
|
|
Basic
|
$0.05
|
$0.06
|
$0.08
|
Diluted
|
$0.04
|
$0.06
|
$0.08
|
|
Year
Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Option
plan shares
|
|
|
|
Expected term (in years)
|
4
|
4
|
4
|
Volatility
|
0.77
|
0.81
|
0.86
|
Risk-free interest rates
|
1.95%
|
1.02%
|
1.21%
|
Weighted-average grant date fair
value
|
$2.07
|
$1.09
|
$1.31
|
|
Year End May 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Employee stock purchase plan shares
|
|
|
|
|
|
Expected term (in years)
|
0.5 – 2.0
|
|
0.5 – 2.0
|
|
0.5 – 2.0
|
Volatility
|
0.56 – 0.81
|
|
0.79 – 1.08
|
|
0.64 – 0.74
|
Risk-free interest rates
|
1.92%–2.25%
|
|
0.48%–0.80%
|
|
0.40%–0.76%
|
Weighted-average grant date fair value
|
$1.01
|
|
$1.65
|
|
$0.80
|
|
Available
|
|
Shares
|
Balances, May 31, 2015
|
845
|
|
|
Additional shares reserved
|
800
|
Options granted
|
(92)
|
RSUs granted
|
(35)
|
Options terminated
|
329
|
|
|
Balances, May 31, 2016
|
1,847
|
|
|
Additional shares reserved
|
2,238
|
Options granted
|
(368)
|
RSUs granted
|
(157)
|
Options terminated
|
55
|
Plan shares expired
|
(1,446)
|
|
|
Balances, May 31, 2017
|
2,169
|
|
|
Options granted
|
(338)
|
RSUs granted
|
(64)
|
RSUs cancelled
|
33
|
Options terminated
|
16
|
Plan shares expired
|
(4)
|
|
|
Balances, May 31, 2018
|
1,812
|
|
Outstanding Options
|
||
|
|
Weighted
|
|
|
Number
|
Average
|
Aggregate
|
|
of
|
Exercise
|
Intrinsic
|
|
Shares
|
Price
|
Value
|
Balances, May 31, 2015
|
3,686
|
$1.66
|
$2,946
|
|
|
|
|
Options granted
|
92
|
$2.12
|
|
Options terminated
|
(329)
|
$1.93
|
|
Options exercised
|
(248)
|
$1.34
|
|
|
|
|
|
Balances, May 31, 2016
|
3,201
|
$1.66
|
$189
|
|
|
|
|
Options granted
|
368
|
$1.83
|
|
Options terminated
|
(55)
|
$1.42
|
|
Options exercised
|
(440)
|
$1.35
|
|
|
|
|
|
Balances, May 31, 2017
|
3,074
|
$1.73
|
$8,763
|
|
|
|
|
Options granted
|
338
|
$3.56
|
|
Options terminated
|
(16)
|
$2.72
|
|
Options exercised
|
(537)
|
$1.17
|
|
|
|
|
|
Balances, May 31, 2018
|
2,859
|
$2.04
|
$1,987
|
|
|
|
|
Options fully vested and expected to vest at May 31,
2018
|
2,825
|
$2.04
|
$1,976
|
|
Options
Outstanding
|
Options
Exercisable
|
|||||
|
at May 31,
2018
|
at May 31,
2018
|
|||||
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
|
299
|
0.77
|
$0.67
|
299
|
0.77
|
$0.67
|
|
$1.09-$1.36
|
557
|
1.64
|
$1.28
|
556
|
1.64
|
$1.28
|
|
$1.68-$2.06
|
483
|
4.23
|
$1.74
|
314
|
3.73
|
$1.78
|
|
$2.10-$2.81
|
1,257
|
3.68
|
$2.45
|
1,073
|
3.49
|
$2.47
|
|
$3.46-$3.93
|
263
|
6.16
|
$3.86
|
70
|
6.21
|
$3.77
|
|
|
|
|
|
|
|
|
|
$0.59-$3.93
|
2,859
|
3.30
|
$2.04
|
2,312
|
2.81
|
$1.89
|
$1,778
|
|
Year Ended May 31,
|
||
|
2018
|
2017
|
2016
|
Foreign exchange (loss) gain
|
$(63)
|
$(21)
|
$(19)
|
Other income, net
|
2
|
--
|
3
|
|
$(61)
|
$(21)
|
$(16)
|
|
May
31,
|
|
|
2018
|
2017
|
|
|
|
Balance at the beginning of the
year
|
$113
|
$155
|
Accruals for warranties issued during the
year
|
329
|
123
|
Accruals
and adjustments (change in estimates) related to
pre-existing warranties during the year
|
--
|
(54)
|
Consumption of reserves
|
(307)
|
(111)
|
|
|
|
Balance at the end of the year
|
$135
|
$113
|
|
United
|
|
|
|
|
States
|
Asia
|
Europe
|
Total
|
2018:
|
|
|
|
|
Net sales
|
$8,446
|
$19,973
|
$1,136
|
$29,555
|
Property and equipment,
net
|
1,156
|
40
|
7
|
1,203
|
|
|
|
|
|
2017:
|
|
|
|
|
Net sales
|
$7,762
|
$10,439
|
$697
|
$18,898
|
Property and equipment,
net
|
1,364
|
40
|
15
|
1,419
|
|
|
|
|
|
2016:
|
|
|
|
|
Net sales
|
$2,957
|
$10,228
|
$1,316
|
$14,501
|
Property and equipment, net
|
1,151
|
39
|
14
|
1,204
|
Years
Ending May 31,
|
|
2019
|
$664
|
2020
|
754
|
2021
|
750
|
2022
|
772
|
2023
|
795
|
Thereafter
|
133
|
Total
|
$3,868
|
|
Three Months Ended
|
|||
|
Aug. 31,
|
Nov. 30,
|
Feb. 28,
|
May 31,
|
|
2017
|
2017
|
2018
|
2018
|
Net sales
|
$6,970
|
$7,923
|
$7,393
|
$7,269
|
Gross profit
|
$2,918
|
$3,131
|
$3,176
|
$3,161
|
Net income
|
$10
|
$60
|
$267
|
$191
|
Net income per share basic and diluted
|
$0.00
|
$0.00
|
$0.01
|
$0.01
|
|
Three Months Ended
|
|||
|
Aug. 31,
|
Nov. 30,
|
Feb. 28,
|
May 31,
|
|
2016
|
2016
|
2017
|
2017
|
Net sales
|
$5,318
|
$4,216
|
$2,681
|
$6,683
|
Gross profit
|
$2,206
|
$1,463
|
$503
|
$2,608
|
Net loss
|
$(755)
|
$(1,452)
|
$(2,651)
|
$(795)
|
Net loss per share basic and diluted
|
$(0.06)
|
$(0.09)
|
$(0.16)
|
$(0.04)
|
Exhibit No.
|
|
Description
|
3.1(1)
|
|
Restated Articles of Incorporation of Registrant.
|
3.2(2)
|
|
Amended and Restated Bylaws of Registrant.
|
4.1(3)
|
|
Form of Common Stock certificate.
|
4.2(4)
|
|
Convertible Note Purchase and Credit Facility Agreement, dated
April 10, 2015, by and among Aehr Test Systems, QVT Fund LP and
Quintessence Fund L.P.
|
4.3(5)
|
|
Amendment to Convertible Note Purchase and Credit Facility
Agreement and 9.0% Notes, dated August 22, 2016, by and among Aehr
Test Systems, QVT Fund LP and Quintessence Fund L.P.
|
|
Form of 9.0% Convertible Secured Note due 2017 (included in Exhibit
4.2)
|
|
|
Form of 5.0% Secured Revolving Credit Note (included in Exhibit
4.2)
|
|
4.6(6)
|
|
Registration Rights Agreement, dated April 10, 2015, by and among
Aehr Test Systems, QVT Fund LP and Quintessence Fund
L.P.
|
4.7(7)
|
|
Registration Rights Agreement by and among the Company and the
Investors (as defined therein), dated as of September 22,
2016.
|
10.1(8)
|
|
2006 Equity Incentive Plan.*
|
10.2(9)
|
|
Amended and Restated 2006 Employee Stock Purchase
Plan.*
|
10.3(10)
|
|
2016 Equity Incentive Plan.*
|
10.4(11)
|
|
Form of Indemnification Agreement entered into between Registrant
and its directors and executive officers.*
|
10.5(12)
|
|
Form of Change of Control Agreement.*
|
10.6(13)
|
|
Lease dated August 3, 1999 for facilities located at Building C,
400 Kato Terrace, Fremont, California.
|
10.6.1(14)
|
|
First Amendment dated May 06, 2008 for facilities located at 400
Kato Terrace, Fremont, California.
|
10.6.2(15)
|
|
Second Amendment dated November 7, 2014 for facilities located at
400 Kato Terrace, Fremont, California.
|
10.6.3(16)
|
|
Third Amendment dated February 27, 2018 for facilities located at
400 Kato Terrace, Fremont, California.
|
10.10(17)
|
|
Offer Letter dated January 3, 2012, between the Company and Gayn
Erickson.*
|
10.11(18)
|
|
Offer Letter dated March 5, 2013, between the Company and Rhea
Posedel.*
|
10.12(19)
|
|
Change of Control Severance Agreement dated January 3, 2012,
between the Company and Gayn Erickson.*
|
10.13(20)
|
|
Amended and Restated Change of Control Severance Agreement dated
March 5, 2013, between the Company and Rhea J.
Posedel.*
|
10.14(21)
|
|
Security Agreement, dated April 10, 2015, by and among Aehr Test
Systems, QVT Fund LP and Quintessence Fund L.P.
|
10.15(22)
|
|
Form of 2006 Equity Incentive Plan Stock Option Award
Agreement.*
|
10.16(23)
|
|
Form of 2006 Equity Incentive Plan Restricted Stock Unit
Award.*
|
10.17(24)
|
|
Form of 2016 Equity Incentive Plan Stock Option Award
Agreement.*
|
10.18(25)
|
|
Form of 2016 Equity Incentive Plan Restricted Stock Unit
Award.*
|
10.19(26)
|
|
Purchase Agreement by and among the Company and the Investors (as
defined therein), dated as of September 22, 2016.
|
10.20(27)
|
|
Underwriting Agreement dated April 13, 2017, between the Company
and Craig-Hallum Capital Group LLLC
|
|
Subsidiaries of the Company.
|
|
|
Consent of BPM LLP - Independent Registered Public Accounting Firm
(filed herewith).
|
|
|
Power of Attorney (incorporated by reference to the signature page
of this Annual Report on Form 10-K).
|
|
|
Certification Statement of Chief Executive Officer pursuant to
Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
|
Certification Statement of Chief Financial Officer pursuant to
Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
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 (furnished
herewith).
|
|
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
|
|
AEHR TEST
SYSTEMS
|
|
|
|
|
|
|
Dated: August 28,
2018
|
By:
|
/s/ GAYN
ERICKSON
|
|
|
|
Gayn
Erickson
|
|
|
|
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
President, Chief
Executive Officer, and Director
|
|
|
/s/
GAYN ERICKSON
|
|
(Principal
Executive Officer)
|
|
August 28,
2018
|
Gayn Erickson
|
|
|
|
|
|
|
Vice President of
Finance and Chief Financial
Officer
|
|
|
/s/ KENNETH
B. SPINK
|
|
(Principal
Financial and Accounting Officer)
|
|
August 28,
2018
|
Kenneth B. Spink
|
|
|
|
|
|
|
|
|
|
/s/ RHEA J.
POSEDEL
|
|
Chairman
|
|
August 28,
2018
|
Rhea J. Posedel
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM
W. R. ELDER
|
|
Director
|
|
August 28,
2018
|
William W. R. Elder
|
|
|
|
|
|
|
|
|
|
/s/ MARIO M.
ROSATI
|
|
Director
|
|
August 28,
2018
|
Mario M. Rosati
|
|
|
|
|
|
|
|
|
|
/s/ JOHN M.
SCHNEIDER
|
|
Director
|
|
August 28,
2018
|
John M. Schneider
|
|
|
|
|
|
|
|
|
|
/s/ HOWARD T.
SLAYEN
|
|
Director
|
|
August 28,
2018
|
Howard T. Slayen
|
|
|
1
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
Jul. 31, 2018 |
Nov. 30, 2017 |
|
Document And Entity Information | |||
Entity Registrant Name | AEHR TEST SYSTEMS | ||
Entity Central Index Key | 0001040470 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2018 | ||
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 Public Float | $ 48,946,434 | ||
Entity Common Stock, Shares Outstanding | 22,220,019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
May 31, 2018 |
May 31, 2017 |
---|---|---|
Consolidated Balance Sheets Parenthetical Abstract | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 22,143,000 | 21,340,000 |
Common stock, shares outstanding | 22,143,000 | 21,340,000 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 528 | $ (5,653) | $ (6,785) |
Other comprehensive income, net of tax: Foreign currency translation income | 42 | 13 | 4 |
Total comprehensive income (loss) | 570 | (5,640) | (6,781) |
Less: Comprehensive (loss) income attributable to noncontrolling interest | (1) | 1 | (2) |
Comprehensive income (loss), attributable to Aehr Test Systems | $ 571 | $ (5,641) | $ (6,779) |
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 31, 2018 | |||||||
Accounting Policies [Abstract] | |||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS:
Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full wafer contact parallel test and burn-in systems, the MAX burn-in system, WaferPak full wafer contactor, the DiePak carrier and test fixtures.
LIQUIDITY:
Since inception, the Company has incurred substantial cumulative losses and negative cash flows from operations. In response, the Company took steps to minimize expense levels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood that it will have sufficient cash to support operations.
In April 2017, the Company completed a public offering of its common stock raising net proceeds to the Company of $15.8 million. At May 31, 2018 the Company had $16.8 million in cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections of existing accounts receivable, revenue from our existing backlog of products, the sale of inventory on hand, and deposits and down payments against significant orders will be adequate to meet its working capital and capital equipment requirements.
CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions have been eliminated.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS:
Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity (deficit).
Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented.
USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and warranty reserves.
CASH EQUIVALENTS:
Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. No significant adjustments to the allowance for doubtful accounts were recorded during the years ended May 31, 2018, 2017 or 2016.
CONCENTRATION OF CREDIT RISK:
The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2018, approximately 45%, 0% and 55% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. As of May 31, 2017, approximately 55%, 0% and 45% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. Three customers accounted for 38%, 32% and 11% of gross accounts receivable as of May 31, 2018. Three customers accounted for 47%, 40% and 11% of gross accounts receivable as of May 31, 2017. Three customers accounted for 34%, 26% and 13% of net sales in fiscal 2018. Four customers accounted for 45%, 19%, 17% and 10% of net sales in fiscal 2017. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers.
The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits.
CONCENTRATION OF SUPPLY RISK:
The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products.
INVENTORIES:
Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or net realizable value. If actual future demand or market conditions become less favorable than those projected by management, additional inventory write-downs may be required, and would be reflected in cost of product revenue in the period the revision is made.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease. Furniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated useful lives. The ranges of estimated useful lives are generally as follows:
REVENUE RECOGNITION:
The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) goods or services have been delivered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition.
Revenue related to the multiple elements is allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used.
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system, and the Company shipped the first system in July 2016. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer.
The Company recognizes revenue in certain circumstances before physical delivery has occurred. In these arrangements, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the products, the customer has requested the products be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the products are segregated from inventory and normal billing and credit terms granted.
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped.
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee.
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration.
PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE:
Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2018, 2017 and 2016.
IMPAIRMENT OF LONG-LIVED ASSETS:
In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required.
ADVERTISING COSTS:
The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented.
SHIPPING AND HANDLING OF PRODUCTS:
Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales.
INCOME TAXES:
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2018 and 2017.
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2017 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years.
COMPREHENSIVE INCOME (LOSS):
Comprehensive income (loss) generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive income (loss), which are excluded from net income (loss). Comprehensive income (loss) is included in the statements of comprehensive income (loss).
RECENT ACCOUNTING PRONOUNCEMENTS:
Accounting Standards Adopted
Inventory Measurement In July 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update that requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Balance Sheet Classification of Deferred Taxes In November 2015, the FASB issued an accounting standard update related to deferred tax assets and liabilities. This standard simplifies the presentation of deferred income taxes to be classified as noncurrent in the consolidated balance sheet. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Share-Based Compensation In March 2016, the FASB released an accounting standard update that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Income Taxes On December 22, 2017, the US government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the US tax code including but not limited to (1) reducing the US federal corporate tax rate from 34% to 21%; (2) requiring companies to pay a one-time transition tax on certain repatriated earnings of foreign subsidiaries; (3) generally eliminating US federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in US federal income of certain earnings of controlled foreign corporations; (5) creating a new limitation on deductible interest expense; (6) changing rules related to the uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; and (7) repeals the corporate alternative minimum tax, or AMT, effective December 31, 2017 and repeals the corporate alternative minimum tax regime and permits existing minimum tax credits to offset the regular tax liability for any tax year. Consequently, we have accounted for the reduction of $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance for the fiscal year ended 2018,.and recorded a benefit of $90,000 for our Federal refundable AMT credit.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record and provisional estimate in the financial statements. There are also certain transitional impacts of the Tax Act. As part of the transition to the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. These transitional impacts has no impact to the company for the year fiscal year ended 2018. The one-time transition tax is based on post-1986 earnings and profits that were previously deferred from US income tax. While we have not yet finalized our calculation of the total post-1986 Earnings and profits, for our foreign corporations or the impact of foreign tax credits, we have prepared a reasonable estimate and calculated the provision amount. The Company is evaluating the calculation of the transition tax. The accounting for this item is incomplete and may change as our interpretation of the provisions of the Act evolve, additional information becomes available or interpretive guidance is issued by the U.S. Treasury. The final determination will be completed no later than one year from the enactment date. Based on the current year and carryover losses and the valuation allowance the Company would not expect an impact to the financial statements as a result of the completion of the analysis.
Accounting Standards Not Yet Adopted
Revenue Recognition In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently updated. The new standard will supersede nearly all U.S. GAAP on revenue recognition and eliminate industry-specific guidance. The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The new standard defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each distinct performance obligation. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The new guidance will become effective for the Company in the first quarter of fiscal 2019, which is the Company’s planned adoption date.
The standard allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method").
The Company plans to adopt Topic 606 using the modified retrospective method through a cumulative effect adjustment being recognized in accumulated deficit as of the adoption date. Under that method, the Company will not restate the prior financial statements but apply the rules to contracts that are complete or incomplete as of June 1, 2018 and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulative deficit.
The Company has reached conclusions on its accounting assessments related to the standard and does not expect to record an adjustment to the opening cumulative deficits as the impact deems insignificant.
The adoption of the new standard will not significantly impact the Company’s process, procedure and control. The Company is currently in the process of developing, implementing and testing its internal systems, processes and controls necessary to adopt Topic 606, and is in process of making the necessary changes to its accounting policies. In addition, the Company is currently evaluating the impact of the expanded disclosures to its consolidated financial statements.
Financial Instruments In January 2016, the FASB issued an accounting standard update related to recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This standard is effective for us in fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
Leases In February 2016, the FASB issued authoritative guidance related to leases. This guidance requires management to present all leases greater than one year on the balance sheet as a liability to make payments and an asset as the right to use the underlying asset for the lease term. This new standard will be effective for us in fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued authoritative guidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated statements of cash flows.
Intra-Entity Asset Transfers In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a modified retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
Restricted Cash In November 2016, the FASB issued authoritative guidance related to statements of cash flows. This guidance clarifies that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
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2. EARNINGS PER SHARE (EPS) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE (EPS) | 2. EARNINGS PER SHARE (EPS):
Basic EPS is determined using the weighted average number of common shares outstanding during the period. Diluted EPS is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, RSUs and ESPP shares) outstanding during the period using the treasury stock method.
The following table presents the computation of basic and diluted net income (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 Company’s common stock for the period, as the effect would be anti-dilutive. Stock options to purchase 1,313,000 shares of common stock were outstanding as of May 31, 2018 but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. In the fiscal year ended May 31, 2017 and 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 these periods are the same. Stock options to purchase 3,074,000 and 3,201,000 shares of common stock were outstanding on May 31, 2017 and 2016, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. ESPP rights to purchase 169,000 and 304,000 ESPP shares were outstanding on May 31, 2017 and 2016, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. RSUs for 32,000 shares and 0 shares were outstanding on May 31, 2017 and 2016, respectively, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. The 2,657,000 shares convertible under the convertible notes outstanding on May 31, 2018, 2017 and 2016 were not included in the computation of diluted net income (loss) per share, because the inclusion of such shares would be anti-dilutive.
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3. CASH, CASH EQUIVALENTS AND INVESTMENTS |
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CASH, CASH EQUIVALENTS AND INVESTMENTS | 3. CASH, CASH EQUIVALENTS AND INVESTMENTS:
The following table summarizes the Company’s cash, cash equivalents and investments by security type at May 31, 2018 (in thousands):
Long-term investments are included in other assets on the accompanying consolidated balance sheet at May 31. 2018.
Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (“AOCI”), net of any related tax effect. Upon realization, those amounts are reclassified from AOCI to results of operations.
The following table summarizes the Company’s cash, cash equivalents and investments by security type at May 31, 2017 (in thousands):
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4. FAIR VALUE MEASUREMENT |
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FAIR VALUE MEASUREMENT | 4. FAIR VALUE MEASUREMENT:
The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements.
The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments.
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value.
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2018 (in thousands):
The U.S. Treasury Securities have maturities of three months.
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2017 (in thousands):
There were no financial liabilities measured at fair value as of May 31, 2018 and 2017.
There were no transfers between Level 1 and Level 2 fair value measurements during the fiscal year ended May 31, 2018 and 2017.
The carrying amounts of financial instruments including cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the carrying value of the debt approximates the fair value.
The Company has at times invested in debt and equity of private companies, and may do so again in the future, as part of its business strategy.
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5. ACCOUNTS RECEIVABLE |
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ACCOUNTS RECEIVABLE | 5. ACCOUNTS RECEIVABLE:
Accounts receivable comprise (in thousands):
* Deductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense.
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6. BALANCE SHEET DETAIL |
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BALANCE SHEET DETAIL | 6. BALANCE SHEET DETAIL
INVENTORIES:
PROPERTY AND EQUIPMENT, NET:
Depreciation expense was $417,000, $271,000 and $203,000 for fiscal 2018, 2017, and 2016, respectively.
ACCRUED EXPENSES:
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
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7. INCOME TAXES |
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INCOME TAXES | 7. INCOME TAXES:
Domestic and foreign components of income (loss) before income tax benefit (expense) are as follows (in thousands):
The income tax benefit (expense) consists of the following (in thousands):
The Company’s effective tax rate differs from the U.S. federal statutory tax rate, as follows:
The components of the net deferred tax assets are as follows (in thousands):
The valuation allowance decreased by $6,139,000 during fiscal 2018, increased by $1,635,000 during fiscal 2017, and increased by $421,000 during fiscal 2016. As of May 31, 2018 and 2017, the Company concluded that it is more likely than not that the deferred tax assets will not be realized and therefore provided a full valuation allowance against the deferred tax assets. The Company will continue to evaluate the need for a valuation allowance against its deferred tax assets on a quarterly basis.
At May 31, 2018, the Company had federal and state net operating loss carryforwards of $50,356,000 and $31,340,000 respectively. The federal and state net operating loss carryforwards will begin to expire in 2024. At May 31, 2018, the Company also had federal and state research and development tax credit carryforwards of $2,157,000 and $5,428,000, respectively. The federal credit carryforward will begin to expire in 2019, and the California credit will carryforward indefinitely. These carryforwards may be subject to certain limitations on annual utilization in case of a change in ownership, as defined by tax law. The Company also has alternative minimum tax credit carryforwards of $34,000 for state purposes. The credits may be used to offset regular tax and do not expire.
The Company has made no provision for U.S. income taxes on undistributed earnings of certain foreign subsidiaries because it is the Company’s intention to permanently reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, the Company would be subject to additional U.S. income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.
Foreign net operating loss carryforwards of $457,000 are available to reduce future foreign taxable income. The foreign net operating losses will expire starting fiscal year 2019.
The Company maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available. The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):
The ending balance of $1,785,000 of unrecognized tax benefits as of May 31, 2018, if recognized, would not impact the effective tax rate.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.
As part of the transition to the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. The company is not subject to the transition tax. The one-time transition tax is based on post-1986 earnings and profits that were previously deferred from U.S. income tax. While the Company has not yet finalized its calculation of the total post-1986 earnings and profits for its foreign corporations or the impact of foreign tax credits, it has prepared a reasonable estimate and calculation of nil transition tax. The Company is continuing to evaluate the calculation and accounting of the transition tax, which may change as the Company's interpretation of the provisions of the Tax Act evolve, additional information becomes available or interpretive guidance is issued by the U.S. Treasury. The final determination will be completed no later than one year from the enactment date. Based on current year and carryover losses and valuation allowance, the Company does not expect an impact to its consolidated financial statements upon completion of the analysis.
The new law also repeals the corporate alternative minimum tax, or AMT, effective December 31, 2017. The law repeals the corporate alternative minimum tax regime and permits existing minimum tax credits to offset the regular tax liability for any tax year. Further, the credit is refundable for any tax year beginning after December 31, 2017 and before December 31, 2020 in an amount equal to 50% of the excess of the minimum tax credit over the allowable credit for the year against the regular tax liability. Any unused minimum tax credit carryforward is refundable in the following year. As result, the company recorded a benefit of $90,000 for its Federal refundable AMT credit.
In addition, the reduction of U.S. federal corporate tax rate reduces the corporate tax rate to 21%, effective January 1, 2018. Consequently, the Company has accounted for the reduction of $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance.
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2017 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years.
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8. LONG-TERM DEBT |
12 Months Ended |
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May 31, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | 8. LONG-TERM DEBT:
On April 10, 2015, the Company entered into a Convertible Note Purchase and Credit Facility Agreement (the “Purchase Agreement”) with QVT Fund LP and Quintessence Fund L.P. (the “Purchasers”) providing for (a) the Company’s sale to the Purchasers of $4,110,000 in aggregate principal amount of 9.0% Convertible Secured Notes due 2017 (the “Convertible Notes”) and (b) a secured revolving loan facility (the “Credit Facility”) in an aggregate principal amount of up to $2,000,000. On August 22, 2016 the Purchase Agreement was amended to extend the maturity date of the Convertible Notes to April 10, 2019, decrease the conversion price from $2.65 per share to $2.30 per share, decrease the forced conversion price from $7.50 per share to $6.51 per share, and allow for additional equity awards.
The Convertible Notes bear interest at an annual rate of 9.0% and will mature on April 10, 2019 unless repurchased or converted prior to that date. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. Debt issuance costs of $356,000, which were accreted over the term of the original loan using the effective interest rate method, were offset against the loan balance.
The conversion price for the Convertible Notes is $2.30 per share and is subject to adjustment upon the occurrence of certain specified events. Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
The maximum amount of $2,000,000 drawn against the Credit Facility has been converted to Convertible Notes, and at May 31, 2018 there was no remaining balance available to be drawn on the Credit Facility.
The Company’s obligations under the Purchase Agreement are secured by substantially all of the assets of the Company.
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9. EQUITY |
12 Months Ended |
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May 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | 9. 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.
On September 28, 2016, the Company sold 2,722,000 shares of its common stock in a private placement transaction to 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 $5,299,000.
On April 19 2017, the Company completed a public offering of 4,423,000 shares of its common stock at a price to the public of $3.90 per share, including the underwriter’s exercise of its option to purchase 577,000 additional shares to cover over-allotments. The gross proceeds to the Company were $17,250,000, before underwriting discounts and offering expenses. The net proceeds after underwriting discounts and offering expenses were $15,832,000.
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10. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION |
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STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION | 10. STOCKHOLDERS’ EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Changes in the components of AOCI, net of tax, were as follows (in thousands):
STOCK-BASED COMPENSATION:
Stock-based compensation expense consists of expenses for stock options, restricted stock units, or RSUs, and employee stock purchase plan, or ESPP, purchase rights. Stock-based compensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date. All of the Company’s stock-based compensation is accounted for as equity instruments.
The following table summarizes the stock-based compensation expense for the years ended May 31, 2018, 2017 and 2016 (in thousands, except per share data):
As of May 31, 2018, 2017 and 2016, there were no stock-based compensation expenses capitalized as part of inventory.
During fiscal 2018, 2017 and fiscal 2016, the Company recorded stock-based compensation related to stock options and restricted stock units of $706,000, $884,000 and $894,000, respectively.
As of May 31, 2018, the total compensation expense related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plan, but not yet recognized, was $976,000 which is net of estimated forfeitures of $2,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 2.5 years.
During fiscal 2018, 2017 and fiscal 2016, the Company recorded stock-based compensation related to its ESPP of $290,000, $115,000 and $122,000, respectively. The increase in fiscal 2018 is primarily due to employees increasing their ESPP elections during the fiscal year.
As of May 31, 2018, the total compensation expense related to purchase rights under the ESPP but not yet recognized was $306,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 1.3 years.
Valuation Assumptions
Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation method and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards.
Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation expense recorded.
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation method on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP.
Fair Value. The fair values of the Company’s stock options granted to employees in fiscal 2018, 2017 and 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method:
The fair value of our ESPP purchase rights for the fiscal 2018, 2017 and 2016 was estimated using the following weighted-average assumptions:
EQUITY INCENTIVE PLAN:
In October 2006, the Company’s 2006 Equity Incentive Plan was approved by the shareholders, which provides for granting of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares and other stock or cash awards as the Company’s Board of Directors may determine.
In October 2016, the Company’s 2016 Equity Incentive Plan was approved by the Company’s shareholders. The 2016 Equity Incentive Plan replaced our 2006 Equity Incentive Plan, which was scheduled to expire in October 2016, and will continue in effect until 2026. A total of 2,238,000 shares of common stock have been reserved for issuance under the Company’s 2016 Equity Incentive Plan, which includes 1,438,000 shares that remained available for issuance under the 2006 Equity Incentive Plan. See the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 for further information regarding the 2016 Equity Incentive Plan.
As of May 31, 2018, out of the 4,718,000 shares authorized for grant under the 2016 Equity Incentive Plan, 2,906,000 stock options and RSUs were outstanding. As of May 31, 2017, out of the 5,275,000 shares authorized for grant under the 2006 Equity Incentive Plan and 2016 Equity Incentive Plan, 3,105,000 stock options and RSUs were outstanding.
The following tables summarize the Company’s stock option and RSU transactions during fiscal 2018, 2017 and 2016 (in thousands):
The following table summarized the stock option transactions during fiscal 2018, 2017 and 2016 (in thousands, except per share data):
The options outstanding and exercisable at May 31, 2018 were in the following exercise price ranges (in thousands, except per share data):
The total intrinsic values of options exercised were $1,058,000, $810,000 and $185,000 during fiscal 2018, 2017 and 2016, respectively. The weighted average contractual life of the options exercisable and expected to be exercisable at May 31, 2018 was 3.29 years.
Options to purchase 2,312,000, 2,422,000 and 2,390,000 shares were exercisable at May 31, 2018, 2017 and 2016, respectively. These exercisable options had weighted average exercise prices of $1.89, $1.63 and $1.49 as of May 31, 2018, 2017 and 2016, respectively.
During the fiscal year ended May 31, 2018, RSUs for 64,000 shares were granted to employees. The market value on the date of the grant of these RSUs was $3.93 per share. During the year ended May 31, 2018, 16,000 RSUs became fully vested and 33,000 RSUs were cancelled. 47,000 RSUs were unvested at May 31, 2018. The intrinsic value of the unvested RSUs at May 31, 2018 was $122,000. During the fiscal year ended May 31, 2017, RSUs for 74,000 shares were granted to employees. The market value on the date of the grant of these RSUs was $1.68 per share. 42,000 RSUs became fully vested during the year ended May 31, 2017, and 32,000 RSUs were unvested at May 31, 2017. The intrinsic value of the unvested RSUs at May 31, 2017 was $145,000. During the fiscal year ended May 31, 2016, RSUs were granted to an employee for 35,000 shares. The market value on the date of the grant of these RSUs was $2.16 per share. The RSUs were performance-based, immediately vested upon attainment of goals established, and had a term of one year. The 35,000 RSUs were outstanding and fully vested at May 31, 2016. The intrinsic value of the outstanding RSUs at May 31, 2016 was $35,000.
There were no RSUs granted to members of the Board of Directors during fiscal 2018. During the fiscal year ended May 31, 2017, RSUs for 83,000 shares were granted to members of the Company’s Board of Directors. The weighted average market value on the date of the grant of these RSUs was $1.86 per share. All of these RSUs were fully vested at May 31, 2017. There were no RSUs granted to members of the Board of Directors during fiscal 2016.
EMPLOYEE STOCK PURCHASE PLAN:
In October 2006, the Company’s shareholders approved the 2006 Employee Stock Purchase Plan. In October 2016, the Company’s Amended and Restated 2006 Employee Stock Purchase Plan, or Purchase Plan, was approved by the Company’s shareholders. The Purchase Plan extended the term of the 2006 Employee Stock Purchase Plan indefinitely. A total of 532,000 shares of the Company’s common stock were reserved for issuance under the Purchase Plan. See the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 14, 2016 for further information regarding the Purchase Plan. The Purchase Plan has consecutive, overlapping, twenty-four month offering periods. Each twenty-four month offering period includes four six month purchase periods. The offering periods generally begin on the first trading day on or after April 1 and October 1 each year. All employees who work a minimum of 20 hours per week and are customarily employed by the Company (or an affiliate thereof) for at least five months per calendar year are eligible to participate. Under the Purchase Plan, shares are purchased through employee payroll deductions at exercise prices equal to 85% of the lesser of the fair market value of the Company’s common stock at either the first day of an offering period or the last day of the purchase period. If a participant’s rights to purchase stock under all employee stock purchase plans of the Company accrue at a rate which exceeds $25,000 worth of stock for a calendar year, such participant may not be granted an option to purchase stock under the Purchase Plan. The maximum number of shares a participant may purchase during a single purchase period is 3,000 shares. During the fiscal years ended May 31, 2018, 2017 and 2016, ESPP purchase rights of 359,000, 1,000, and 304,000 shares, respectively, were granted. For the years ended May 31, 2018, 2017 and 2016, approximately 237,000, 151,000 and 86,000 shares of common stock, respectively, were issued under the plans. As of May 31, 2018, 1,355,000 shares have been issued under the ESPP, and there were 145,000 ESPP shares available for issuance.
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11. EMPLOYEE BENEFIT PLANS |
12 Months Ended |
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May 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | 11. EMPLOYEE BENEFIT PLANS:
EMPLOYEE STOCK OWNERSHIP PLAN:
The Company has a non-contributory, trusteed employee stock ownership plan for full-time employees who have completed three consecutive months of service and for part-time employees who have completed one year of service and have attained an age of 21. The Company can contribute either shares of the Company’s stock or cash to the plan. The contribution is determined annually by the Company and cannot exceed 15% of the annual aggregate salaries of those employees eligible for participation in the plan. On May 31, 2007, the Company converted the Aehr Test Systems Employee Stock Bonus Plan into the Aehr Test Systems Employee Stock Ownership Plan (the “Plan”). The stock bonus plan was converted to an employee stock ownership plan (“ESOP”) to enable the Plan to better comply with changes in the law regarding Company stock. Individuals’ account balances vest at a rate of 20% per year commencing upon completion of two years of service. Non-vested balances, which are forfeited following termination of employment, are allocated to the remaining employees in the Plan. Under the Plan provisions, each employee who reaches age fifty-five (55) and has been a participant in the Plan for ten years will be offered an election each year to direct the transfer of up to 25% of his/her ESOP account to the employee self-directed account in the Savings and Retirement Plan. For anyone who met the above prerequisites, the first election to diversify holdings was offered after May 31, 2008. In the sixth year, employees will be able to diversify up to 50% of their ESOP accounts. Contributions of $60,000 per year were authorized for the plan during fiscal 2018, 2017 and 2016. The contribution amounts are recorded as compensation expense, in the period authorized and included in accrued expenses, in the period authorized. Contributions of 13,000 shares were made to the ESOP during fiscal 2018 for fiscal 2017. Contributions of 59,000 shares were made to the ESOP during fiscal 2017 for fiscal 2016. Contributions of 25,000 shares were made to the ESOP during fiscal 2016 for fiscal 2015. The contribution for fiscal 2018 will be made in fiscal 2019. Shares held in the ESOP are included in the EPS calculation.
401(K) PLAN:
The Company maintains a defined contribution savings plan (the “401(k) Plan”) to provide retirement income to all qualified employees of the Company. The 401(k) Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan is funded by voluntary pre-tax contributions from employees. Contributions are invested, as directed by the participant, in investment funds available under the 401(k) Plan. The Company is not required to make, and did not make, any contributions to the 401(k) Plan during fiscal 2018, 2017 and 2016.
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12. OTHER EXPENSE, NET |
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OTHER EXPENSE, NET | 12. OTHER EXPENSE, NET:
Other expense, net comprises the following (in thousands):
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13. PRODUCT WARRANTIES |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PRODUCT WARRANTIES | 13. PRODUCT WARRANTIES:
The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required.
The standard warranty period is one year for systems and ninety days for parts and service.
Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2018 and 2017 (in thousands):
The accrued warranty balance is included in accrued expenses on the consolidated balance sheets.
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14. SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | 14. SEGMENT INFORMATION:
The Company operates in one reportable segment: the design, manufacture and marketing of advanced test and burn-in products to the semiconductor manufacturing industry.
The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
The Company’s Japanese and German subsidiaries primarily comprise the foreign operations. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese or European customers. Net sales from outside the United States include those of Aehr Test Systems Japan K.K. and Aehr Test Systems GmbH.
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15. RELATED PARTY TRANSACTIONS |
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May 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS:
Mario M. Rosati, one of the Company’s directors, is also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which has served as the Company’s outside corporate counsel and has received compensation at normal commercial rates for these services. The amounts of transactions during fiscal years ended May 31, 2018, 2017 and 2016 were $64,000, $440,000, and $90,000, respectively. At May 31, 2018 and 2017, the Company had $5,000 and $188,000, respectively, payable to Wilson Sonsini Goodrich & Rosati.
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16. COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES:
COMMITMENTS
The Company leases most of its manufacturing and office space under operating leases. The Company entered into non-cancelable operating lease agreements for its United States manufacturing and office facilities and maintains equipment under non-cancelable operating leases in Germany. The Company’s principal administrative and production facilities are located in Fremont, California, in a 51,289 square foot building. The Company’s lease was renewed in February 2018 and expires in July 2023. The Company’s facility in Japan is located in a 418 square foot office in Tokyo under a cancellable lease which expires in June 2019. The Company also maintains a 1,585 square foot warehouse in Yamanashi under a lease which expires in November 2019. The Company leases a 492 square foot sales and support office in Utting, Germany. The lease, which began February 1, 1992 and expires on January 31, 2020, contains an automatic twelve months renewal, at rates to be determined, if no notice is given prior to six months from expiry. Under the lease agreements, the Company is responsible for payments of utilities, taxes and insurance.
Minimum annual rentals payments under non-cancellable operating leases in each of the next five fiscal years and thereafter are as follows (in thousands):
Rental expense for the years ended May 31, 2018, 2017 and 2016 was $587,000, $509,000 and $499,000, respectively.
At May 31, 2018 and 2017, the Company had a $80,000 and $50,000, respectively, certificate of deposit held by a financial institution representing a security deposit for its United States manufacturing and office space lease. This amount is included in other assets on the consolidated balance sheets.
PURCHASE OBLIGATIONS
The Company has purchase obligations to certain suppliers. In some cases the products the Company purchases are unique and have provisions against cancellation of the order. At May 31, 2018, the Company had $2,488,000 of purchase obligations which are due within the following 12 months. This amount does not include contractual obligations recorded on the consolidated balance sheets as liabilities.
CONTINGENCIES
The Company may, from time to time, be involved in legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, with respect to certain matters, for example, including against losses arising from a breach of representations or covenants, or from intellectual property infringement or other claims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have not had a material impact on the Company’s operating results, financial position or cash flows.
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17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) |
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SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
The following tables (presented in thousands, except per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four quarters of the fiscal years ended May 31, 2018 and 2017. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein.
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1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||
BUSINESS: | BUSINESS:
Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and primarily designs, engineers and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the Advanced Burn-In and Test System, or ABTS, the FOX full wafer contact parallel test and burn-in systems, the MAX burn-in system, WaferPak full wafer contactor, the DiePak carrier and test fixtures. |
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LIQUIDITY: | LIQUIDITY:
Since inception, the Company has incurred substantial cumulative losses and negative cash flows from operations. In response, the Company took steps to minimize expense levels, entered into credit arrangements, and raised capital through public and private equity offerings, to increase the likelihood that it will have sufficient cash to support operations.
In April 2017, the Company completed a public offering of its common stock raising net proceeds to the Company of $15.8 million. At May 31, 2018 the Company had $16.8 million in cash and cash equivalents. The Company anticipates that the existing cash balance together with income from operations, collections of existing accounts receivable, revenue from our existing backlog of products, the sale of inventory on hand, and deposits and down payments against significant orders will be adequate to meet its working capital and capital equipment requirements. |
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CONSOLIDATION: | CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and both its wholly-owned and majority-owned foreign subsidiaries. Intercompany accounts and transactions have been eliminated. |
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FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS: | FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS:
Assets and liabilities of the Company’s foreign subsidiaries and a branch office are translated into U.S. Dollars from their functional currencies of Japanese Yen, Euros and New Taiwan Dollars using the exchange rate in effect at the balance sheet date. Additionally, their net sales and expenses are translated using exchange rates approximating average rates prevailing during the fiscal year. Translation adjustments that arise from translating their financial statements from their local currencies to U.S. Dollars are accumulated and reflected as a separate component of shareholders’ equity (deficit).
Transaction gains and losses that arise from exchange rate changes denominated in currencies other than the local currency are included in the Consolidated Statements of Operations as incurred. See Note 12 for the detail of foreign exchange transaction gains and losses for all periods presented. |
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USE OF ESTIMATES: | USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the Company’s consolidated financial statements include allowance for doubtful accounts, valuation of inventory at the lower of cost or market, and warranty reserves. |
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CASH EQUIVALENTS: | CASH EQUIVALENTS:
Cash equivalents consist of money market instruments purchased with an original maturity of three months or less. These investments are reported at fair value. |
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ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as the Company evaluates historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. No significant adjustments to the allowance for doubtful accounts were recorded during the years ended May 31, 2018, 2017 or 2016. |
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CONCENTRATION OF CREDIT RISK: | CONCENTRATION OF CREDIT RISK:
The Company sells its products primarily to semiconductor manufacturers in North America, Asia, and Europe. As of May 31, 2018, approximately 45%, 0% and 55% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. As of May 31, 2017, approximately 55%, 0% and 45% of gross accounts receivable were from customers located in Asia, Europe and North America, respectively. Three customers accounted for 38%, 32% and 11% of gross accounts receivable as of May 31, 2018. Three customers accounted for 47%, 40% and 11% of gross accounts receivable as of May 31, 2017. Three customers accounted for 34%, 26% and 13% of net sales in fiscal 2018. Four customers accounted for 45%, 19%, 17% and 10% of net sales in fiscal 2017. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company uses letter of credit terms for some of its international customers.
The Company’s cash and cash equivalents are generally deposited with major financial institutions in the United States, Japan, Germany and Taiwan. The Company invests its excess cash in money market funds and U.S. Treasury securities. The money market funds bear the risk associated with each fund. The money market funds have variable interest rates. The Company has not experienced any material losses on its money market funds or short-term cash deposits. |
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CONCENTRATION OF SUPPLY RISK: | CONCENTRATION OF SUPPLY RISK:
The Company relies on subcontractors to manufacture many of the components and subassemblies used in its products. Quality or performance failures of the Company’s products or changes in its manufacturers’ financial or business condition could disrupt the Company’s ability to supply quality products to its customers and thereby have a material and adverse effect on its business and operating results. Some of the components and technologies used in the Company’s products are purchased and licensed from a single source or a limited number of sources. The loss of any of these suppliers may cause the Company to incur additional transition costs, result in delays in the manufacturing and delivery of its products, or cause it to carry excess or obsolete inventory and could cause it to redesign its products. |
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INVENTORIES: | INVENTORIES:
Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less costs of completion, disposal and transportation. Provisions for excess, obsolete and unusable inventories are made after management’s evaluation of future demand and market conditions. The Company adjusts inventory balances to approximate the lower of its manufacturing costs or net realizable value. If actual future demand or market conditions become less favorable than those projected by management, additional inventory write-downs may be required, and would be reflected in cost of product revenue in the period the revision is made. |
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PROPERTY AND EQUIPMENT: | Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the related lease. Furniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated useful lives. The ranges of estimated useful lives are generally as follows:
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REVENUE RECOGNITION: | REVENUE RECOGNITION:
The Company recognizes revenue upon the shipment of products or the performance of services when: (1) persuasive evidence of the arrangement exists; (2) goods or services have been delivered; (3) the price is fixed or determinable; and (4) collectibility is reasonably assured. When a sales agreement involves multiple deliverables, such as extended support provisions, training to be supplied after delivery of the systems, and test programs specific to customers’ routine applications, the multiple deliverables are evaluated to determine the unit of accounting. Judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units. Judgments made, or changes to judgments made, may significantly affect the timing or amount of revenue recognition.
Revenue related to the multiple elements is allocated to each unit of accounting using the relative selling price hierarchy. Consistent with accounting guidance, the selling price is based upon vendor specific objective evidence (VSOE). If VSOE is not available, third party evidence (TPE) is used to establish the selling price. In the absence of VSOE or TPE, estimated selling price is used.
During the first quarter of fiscal 2013, the Company entered into an agreement with a customer to develop a next generation system, and the Company shipped the first system in July 2016. The project identifies multiple milestones with values assigned to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition: (i) the value is commensurate with the vendor’s performance to meet the milestone, (ii) it relates solely to past performance, (iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement. Revenue is recognized for the milestone upon acceptance by the customer.
The Company recognizes revenue in certain circumstances before physical delivery has occurred. In these arrangements, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the products, the customer has requested the products be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the products are segregated from inventory and normal billing and credit terms granted.
Sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities. Provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped.
Royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the Company of the licensee’s report related to its usage of the licensed intellectual property or upon payment by the licensee.
The Company’s terms of sales with distributors are generally FOB shipping point with payment due within 60 days. All products go through in-house testing and verification of specifications before shipment. Apart from warranty reserves, credits issued have not been material as a percentage of net sales. The Company’s distributors do not generally carry inventories of the Company’s products. Instead, the distributors place orders with the Company at or about the time they receive orders from their customers. The Company’s shipment terms to our distributors do not provide for credits or rights of return. Because the Company’s distributors do not generally carry inventories of our products, they do not have rights to price protection or to return products. At the time the Company ships products to the distributors, the price is fixed. Subsequent to the issuance of the invoice, there are no discounts or special terms. The Company does not give the buyer the right to return the product or to receive future price concessions. The Company’s arrangements do not include vendor consideration. |
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PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE: | PRODUCT DEVELOPMENT COSTS AND CAPITALIZED SOFTWARE:
Costs incurred in the research and development of new products or systems are charged to operations as incurred. Costs incurred in the development of software programs for the Company’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use. Capitalized costs are amortized over the estimated life of the related software product using the greater of the units of sales or straight-line methods over ten years. No system software development costs were capitalized or amortized in fiscal 2018, 2017 and 2016. |
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IMPAIRMENT OF LONG-LIVED ASSETS: | IMPAIRMENT OF LONG-LIVED ASSETS:
In the event that facts and circumstances indicate that the carrying value of assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying value to determine if a write-down is required. |
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ADVERTISING COSTS: | ADVERTISING COSTS:
The Company expenses all advertising costs as incurred and the amounts were not material for all periods presented. |
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SHIPPING AND HANDLING OF PRODUCTS: | SHIPPING AND HANDLING OF PRODUCTS:
Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products are included in cost of sales.
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INCOME TAXES: | INCOME TAXES:
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
A full valuation allowance was established against all deferred tax assets, as management determined that it is more likely than not that deferred tax assets will not be realized, as of May 31, 2018 and 2017.
The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 – 2017 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers, research and development tax credits, or other tax attributes from those years. |
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COMPREHENSIVE INCOME (LOSS): | COMPREHENSIVE INCOME (LOSS):
Comprehensive income (loss) generally represents all changes in shareholders’ equity except those resulting from investments or contributions by shareholders. Unrealized gains and losses on foreign currency translation adjustments are included in the Company’s components of comprehensive income (loss), which are excluded from net income (loss). Comprehensive income (loss) is included in the statements of comprehensive income (loss). |
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RECENT ACCOUNTING PRONOUNCEMENTS: | RECENT ACCOUNTING PRONOUNCEMENTS:
Accounting Standards Adopted
Inventory Measurement In July 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update that requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Balance Sheet Classification of Deferred Taxes In November 2015, the FASB issued an accounting standard update related to deferred tax assets and liabilities. This standard simplifies the presentation of deferred income taxes to be classified as noncurrent in the consolidated balance sheet. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Share-Based Compensation In March 2016, the FASB released an accounting standard update that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted this new standard in fiscal year 2018. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.
Income Taxes On December 22, 2017, the US government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the US tax code including but not limited to (1) reducing the US federal corporate tax rate from 34% to 21%; (2) requiring companies to pay a one-time transition tax on certain repatriated earnings of foreign subsidiaries; (3) generally eliminating US federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in US federal income of certain earnings of controlled foreign corporations; (5) creating a new limitation on deductible interest expense; (6) changing rules related to the uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; and (7) repeals the corporate alternative minimum tax, or AMT, effective December 31, 2017 and repeals the corporate alternative minimum tax regime and permits existing minimum tax credits to offset the regular tax liability for any tax year. Consequently, we have accounted for the reduction of $6.4 million of deferred tax assets with an offsetting adjustment to the valuation allowance for the fiscal year ended 2018,.and recorded a benefit of $90,000 for our Federal refundable AMT credit.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record and provisional estimate in the financial statements. There are also certain transitional impacts of the Tax Act. As part of the transition to the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. These transitional impacts has no impact to the company for the year fiscal year ended 2018. The one-time transition tax is based on post-1986 earnings and profits that were previously deferred from US income tax. While we have not yet finalized our calculation of the total post-1986 Earnings and profits, for our foreign corporations or the impact of foreign tax credits, we have prepared a reasonable estimate and calculated the provision amount. The Company is evaluating the calculation of the transition tax. The accounting for this item is incomplete and may change as our interpretation of the provisions of the Act evolve, additional information becomes available or interpretive guidance is issued by the U.S. Treasury. The final determination will be completed no later than one year from the enactment date. Based on the current year and carryover losses and the valuation allowance the Company would not expect an impact to the financial statements as a result of the completion of the analysis.
Accounting Standards Not Yet Adopted
Revenue Recognition In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently updated. The new standard will supersede nearly all U.S. GAAP on revenue recognition and eliminate industry-specific guidance. The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The new standard defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each distinct performance obligation. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The new guidance will become effective for the Company in the first quarter of fiscal 2019, which is the Company’s planned adoption date.
The standard allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method").
The Company plans to adopt Topic 606 using the modified retrospective method through a cumulative effect adjustment being recognized in accumulated deficit as of the adoption date. Under that method, the Company will not restate the prior financial statements but apply the rules to contracts that are complete or incomplete as of June 1, 2018 and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulative deficit.
The Company has reached conclusions on its accounting assessments related to the standard and does not expect to record an adjustment to the opening cumulative deficits as the impact deems insignificant.
The adoption of the new standard will not significantly impact the Company’s process, procedure and control. The Company is currently in the process of developing, implementing and testing its internal systems, processes and controls necessary to adopt Topic 606, and is in process of making the necessary changes to its accounting policies. In addition, the Company is currently evaluating the impact of the expanded disclosures to its consolidated financial statements.
Financial Instruments In January 2016, the FASB issued an accounting standard update related to recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This standard is effective for us in fiscal year 2020. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
Leases In February 2016, the FASB issued authoritative guidance related to leases. This guidance requires management to present all leases greater than one year on the balance sheet as a liability to make payments and an asset as the right to use the underlying asset for the lease term. This new standard will be effective for us in fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued authoritative guidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated statements of cash flows.
Intra-Entity Asset Transfers In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a modified retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
Restricted Cash In November 2016, the FASB issued authoritative guidance related to statements of cash flows. This guidance clarifies that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. |
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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May 31, 2018 | |||||||
Accounting Policies [Abstract] | |||||||
Useful life for property and equipment | The ranges of estimated useful lives are generally as follows:
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2. EARNINGS PER SHARE (EPS) (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | The following table presents the computation of basic and diluted net income (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data):
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3. CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables) |
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Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, cash equivalents and investments by security type | The following table summarizes the Company’s cash, cash equivalents and investments by security type at May 31, 2018 (in thousands):
The following table summarizes the Company’s cash, cash equivalents and investments by security type at May 31, 2017 (in thousands):
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4. FAIR VALUE MEASUREMENT (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value by hierarchy | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2018 (in thousands):
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2017 (in thousands):
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5. ACCOUNTS RECEIVABLE (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable | Accounts receivable comprise (in thousands):
* Deductions include write-offs of uncollectible accounts, collections of amounts previously reserved, and releases of allowance for doubtful accounts credited to expense. |
6. BALANCE SHEET DETAIL (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES:
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Property and equipment, net | PROPERTY AND EQUIPMENT, NET:
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Accrued expenses | ACCRUED EXPENSES:
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Customer deposits and deferred revenue, short-term | CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM:
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7. INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic and foreign components of income (loss) before income tax benefit (expense) | Domestic and foreign components of income (loss) before income tax benefit (expense) are as follows (in thousands):
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Income tax benefit (expense) | The income tax benefit (expense) consists of the following (in thousands):
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Income tax reconciliation | The Company’s effective tax rate differs from the U.S. federal statutory tax rate, as follows:
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Net deferred tax assets | The components of the net deferred tax assets are as follows (in thousands):
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Unrecognized tax benefits | The aggregate changes in the balance of gross unrecognized tax benefits are as follows (in thousands):
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10. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the components of AOCI | Changes in the components of AOCI, net of tax, were as follows (in thousands):
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Compensation costs related to the Company's stock-based compensation | The following table summarizes the stock-based compensation expense for the years ended May 31, 2018, 2017 and 2016 (in thousands, except per share data):
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Fair value assumptions for Option Valuation Model | The fair values of the Company’s stock options granted to employees in fiscal 2018, 2017 and 2016 were estimated using the following weighted average assumptions in the Black-Scholes option valuation method:
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Fair value assumption of the ESPP Purchase Rights | The fair value of our ESPP purchase rights for the fiscal 2018, 2017 and 2016 was estimated using the following weighted-average assumptions:
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Stock option and RSU transactions | The following tables summarize the Company’s stock option and RSU transactions during fiscal 2018, 2017 and 2016 (in thousands):
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Stock option transactions | The following table summarized the stock option transactions during fiscal 2018, 2017 and 2016 (in thousands, except per share data):
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Options outstanding | The options outstanding and exercisable at May 31, 2018 were in the following exercise price ranges (in thousands, except per share data):
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12. OTHER EXPENSE, NET (Tables) |
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May 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense, net | Other expense, net comprises the following (in thousands):
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13. PRODUCT WARRANTIES (Tables) |
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May 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for product warranties | Following is a summary of changes in the Company’s liability for product warranties during the fiscal years ended May 31, 2018 and 2017 (in thousands):
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14. SEGMENT INFORMATION (Tables) |
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May 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's operations in different geographic areas | The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
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16. COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Minimum annual rentals payments under non-cancellable operating leases | Minimum annual rentals payments under non-cancellable operating leases in each of the next five fiscal years and thereafter are as follows (in thousands):
|
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Consolidated Financial Data (unaudited) | The following tables (presented in thousands, except per share data) sets forth selected unaudited condensed consolidated statements of operations data for each of the four quarters of the fiscal years ended May 31, 2018 and 2017. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein.
|
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
12 Months Ended |
---|---|
May 31, 2018 | |
Furniture and fixtures | Minimum | |
Useful life | 2 years |
Furniture and fixtures | Maximum | |
Useful life | 6 years |
Machinery and equipment | Minimum | |
Useful life | 3 years |
Machinery and equipment | Maximum | |
Useful life | 6 years |
Test equipment | Minimum | |
Useful life | 4 years |
Test equipment | Maximum | |
Useful life | 6 years |
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
System software development costs were capitalized or amortized | $ 0 | $ 0 | $ 0 |
Asia | Accounts Receivable | |||
Concentration risk | 45.00% | 55.00% | |
Europe | Accounts Receivable | |||
Concentration risk | 0.00% | 0.00% | |
North America | Accounts Receivable | |||
Concentration risk | 55.00% | 45.00% | |
Customer One | Accounts Receivable | |||
Concentration risk | 38.00% | 47.00% | |
Customer One | Net Sales | |||
Concentration risk | 34.00% | 45.00% | |
Customer Two | Accounts Receivable | |||
Concentration risk | 32.00% | 40.00% | |
Customer Two | Net Sales | |||
Concentration risk | 26.00% | 19.00% | |
Customer Three | Accounts Receivable | |||
Concentration risk | 11.00% | 11.00% | |
Customer Three | Net Sales | |||
Concentration risk | 13.00% | 17.00% | |
Customer Four | Net Sales | |||
Concentration risk | 10.00% |
2. EARNINGS PER SHARE (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2018 |
Feb. 28, 2018 |
Nov. 30, 2017 |
Aug. 31, 2017 |
May 31, 2017 |
Feb. 28, 2017 |
Nov. 30, 2016 |
Aug. 31, 2016 |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Earnings Per Share [Abstract] | |||||||||||
Numerator: Net income (loss) | $ 191 | $ 267 | $ 60 | $ 10 | $ (795) | $ (2,651) | $ (1,452) | $ (755) | $ 528 | $ (5,653) | $ (6,785) |
Denominator for basic net income (loss) per share: Weighted average shares outstanding | 21,732,000 | 16,267,000 | 13,091,000 | ||||||||
Shares used in basic net income (loss) per share calculation | 21,732,000 | 16,267,000 | 13,091,000 | ||||||||
Effect of dilutive securities | 1,050,000 | 0 | 0 | ||||||||
Denominator for diluted net income (loss) per share | 22,782,000 | 16,267,000 | 13,091,000 | ||||||||
Basic net income (loss) per share | $ .02 | $ (0.35) | $ (0.52) | ||||||||
Diluted net income (loss) per share | $ .02 | $ (0.35) | $ (0.52) |
2. EARNINGS PER SHARE (EPS) (Details Narrative) - shares |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Employee Stock Purchase Plan | |||
Options not included in the computation of diluted net income (loss) per share | 169,000 | 304,000 | |
Convertible Notes | |||
Options not included in the computation of diluted net income (loss) per share | 2,657,000 | 2,657,000 | 2,657,000 |
Stock Option | |||
Options not included in the computation of diluted net income (loss) per share | 1,313,000 | 3,074,000 | 3,201,000 |
Restricted Stock Units | |||
Options not included in the computation of diluted net income (loss) per share | 32,000 | 0 |
3. CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
---|---|---|---|---|
Cash, cost | $ 3,132 | $ 2,287 | ||
Cash, estimated fair value | 3,132 | 2,287 | ||
Cash equivalents, cost | 13,716 | 15,516 | ||
Cash equivalents, estimated fair value | 13,716 | 15,516 | ||
Cash and cash equivalents, cost | 16,848 | 17,803 | $ 939 | $ 5,527 |
Cash and cash equivalents, estimated fair value | 16,848 | 17,803 | $ 939 | $ 5,527 |
Long-term investments, certificate of deposit, cost | 80 | 50 | ||
Long-term investments, certificate of deposit, estimed fair value | 80 | 50 | ||
Cash, cash equivalents, and investments, cost | 16,928 | 17,853 | ||
Cash, cash equivalents, and investments, estimated fair value | 16,928 | 17,853 | ||
Money Market Funds | ||||
Cash equivalents, cost | 7,733 | 15,516 | ||
Cash equivalents, estimated fair value | 7,733 | $ 15,516 | ||
U.S. Treasury securities | ||||
Cash equivalents, cost | 5,983 | |||
Cash equivalents, estimated fair value | $ 5,983 |
4. FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
---|---|---|
Money market funds | $ 7,733 | $ 15,516 |
U.S. Treasury securities | 5,983 | 0 |
Certificate of deposit | 80 | 50 |
Assets | 13,796 | 15,566 |
Level 1 | ||
Money market funds | 7,733 | 15,516 |
U.S. Treasury securities | 5,983 | 0 |
Certificate of deposit | 0 | 0 |
Assets | 13,716 | 15,516 |
Level 2 | ||
Money market funds | 0 | 0 |
U.S. Treasury securities | 0 | 0 |
Certificate of deposit | 80 | 50 |
Assets | 80 | 50 |
Level 3 | ||
Money market funds | 0 | 0 |
U.S. Treasury securities | 0 | 0 |
Certificate of deposit | 0 | 0 |
Assets | $ 0 | $ 0 |
5. ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2018 |
May 31, 2017 |
||||
Receivables [Abstract] | |||||||
Accounts receivable, gross | $ 2,860 | $ 4,071 | |||||
Less: Allowance for doubtful accounts | $ (61) | $ (61) | (4) | (61) | |||
Accounts receivable, net | $ 2,856 | $ 4,010 | |||||
Allowance for doubtful accounts, Beginning | 61 | 8 | |||||
Allowance for doubtful accounts, Additions charged to costs and expenses | 4 | 53 | |||||
Allowance for doubtful accounts, Deductions | (61) | [1] | 0 | ||||
Allowance for doubtful accounts, Ending | $ 4 | $ 61 | |||||
|
6. BALANCE SHEET DETAIL (Details) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials and sub-assemblies | $ 5,747 | $ 4,268 |
Work in process | 3,068 | 2,059 |
Finished goods | 234 | 277 |
Inventory | $ 9,049 | $ 6,604 |
6. BALANCE SHEET DETAIL (Details 1) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
---|---|---|---|
Property, Plant and Equipment, Net [Abstract] | |||
Leasehold improvements | $ 1,154 | $ 1,145 | |
Furniture and fixtures | 984 | 974 | |
Machinery and equipment | 2,865 | 3,035 | |
Test equipment | 2,595 | 2,268 | |
Property and equipment, gross | 7,598 | 7,422 | |
Less: Accumulated depreciation and amortization | (6,395) | (6,003) | |
Property and equipment, net | $ 1,203 | $ 1,419 | $ 1,204 |
6. BALANCE SHEET DETAIL (Details 2) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
---|---|---|---|
Accrued Liabilities [Abstract] | |||
Payroll related | $ 1,014 | $ 934 | |
Professional services | 163 | 161 | |
Accrued interest | 139 | 139 | |
Warranty | 135 | 113 | $ 155 |
Commissions and bonuses | 101 | 125 | |
Taxes payable | 34 | 69 | |
Investor relations | 19 | 25 | |
Other | 41 | 43 | |
Accrued expenses | $ 1,646 | $ 1,609 |
6. BALANCE SHEET DETAIL (Details 3) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
---|---|---|
Customer Deposits And Deferred Revenue Details [Abstract] | ||
Customer deposits | $ 1,340 | $ 3,264 |
Deferred revenue | 290 | 203 |
Customer deposits and deferred revenue | $ 1,630 | $ 3,467 |
6. BALANCE SHEET DETAIL (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Property And Equipment Net Details Narrative [Abstract] | |||
Depreciation expense | $ 417 | $ 271 | $ 203 |
7. INCOME TAXES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 433 | $ (5,663) | $ (6,794) |
Foreign | 22 | 35 | 19 |
Income (loss) before income tax benefit (expense) | $ 455 | $ (5,628) | $ (6,775) |
7. INCOME TAXES (Details 1) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Federal income taxes: | |||
Current | $ 99 | $ 0 | $ 0 |
Deferred | 0 | 0 | 0 |
State income taxes: | |||
Current | (22) | (8) | 3 |
Deferred | 0 | 0 | 0 |
Foreign income taxes: | |||
Current | (4) | (17) | (13) |
Deferred | 0 | 0 | 0 |
Income tax benefit (expense) | $ 73 | $ (25) | $ (10) |
7. INCOME TAXES (Details 2) |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
U.S. federal statutory tax rate | 28.60% | 34.00% | 34.00% |
State taxes, net of federal tax effect | (16.70%) | (0.10%) | 0.00% |
Foreign rate differential | 39.40% | 0.10% | 0.20% |
Stock-based compensation | 39.90% | (2.80%) | (3.80%) |
Research and development credit | 5.90% | 3.10% | 2.10% |
Change in valuation allowance | (1349.20%) | (33.80%) | (32.50%) |
Federal rate change impact | 1419.70% | 0.00% | 0.00% |
Federal AMT refund | (20.00%) | (0.00%) | (0.00%) |
ASU 2016-09 adoption | (169.10%) | 0.00% | 0.00% |
Other | 5.40% | (0.90%) | (0.20%) |
Effective tax rate | (16.10%) | (0.40%) | (0.20%) |
7. INCOME TAXES (Details 3) - USD ($) $ in Thousands |
May 31, 2018 |
May 31, 2017 |
---|---|---|
Components of Deferred Tax Assets [Abstract] | ||
Net operating losses | $ 12,918 | $ 18,719 |
Credit carryforwards | 4,952 | 4,715 |
Inventory reserves | 588 | 870 |
Reserves and accruals | 1,419 | 1,566 |
Other | 247 | 393 |
Gross deferred tax assets | 20,124 | 26,263 |
Less: Valuation allowance | (20,124) | (26,263) |
Net deferred tax assets | $ 0 | $ 0 |
7. INCOME TAXES (Details 4) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefit, Beginning | $ 789 | $ 789 | $ 919 |
Decreases related to prior year tax positions | 0 | (124) | |
Decreases related to lapse of statute of limitations | 0 | (6) | |
Increases related to prior year tax positions | 889 | ||
Increases related to current year tax positions | 107 | ||
Unrecognized tax benefit, Ending | $ 1,785 | $ 789 | $ 789 |
7. INCOME TAXES (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Valuation allowance | $ (6,139) | $ 1,635 | $ 421 | |
Foreign net operating loss carryforwards | 457 | |||
Unrecognized tax benefits | 1,785 | $ 789 | $ 789 | $ 919 |
Federal refundable AMT credit | 90 | |||
Reduction in deferred tax assets | (6,400) | |||
Federal | ||||
Net operating loss carryforward | 50,356 | |||
Research and development tax credit carryforwards | 2,157 | |||
State | ||||
Net operating loss carryforward | 31,340 | |||
Research and development tax credit carryforwards | 5,248 | |||
Alternative minimum tax credit carryforwards | $ 34 |
8. LONG-TERM DEBT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2018 |
Apr. 10, 2015 |
|
Long-term Debt, Unclassified [Abstract] | ||
Convertible debt, principal amount | $ 6,110 | $ 4,110 |
Convertible note, interest rate | 9.00% | |
Convertible note, maturity | Apr. 10, 2019 | |
Convertible note, interest payment | Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. | |
Debt issuance costs | $ 356 | |
Conversion price for the Convertible Notes | $ 2.30 | |
Convertible Notes, Terms of Conversion Feature | The conversion price for the Convertible Notes is $2.30 per share and is subject to adjustment upon the occurrence of certain specified events. Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
|
|
Line of credit, maximum borrowing capacity | $ 2,000 | |
Balance available to borrow under the line of credit | $ 0 |
9. EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 28, 2016 |
Aug. 08, 2016 |
Apr. 19, 2017 |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Cancellation of invoice | $ 0 | $ 323 | $ 0 | |||
Number of shares sold | 2,722,000 | 4,423,000 | ||||
Purchase price per share of the common stock | $ 2.15 | $ 3.90 | ||||
Gross proceeds from sale of common stock | $ 5,851 | |||||
Net proceeds from sale of common stock | $ 5,299 | 0 | 5,299 | 0 | ||
Gross proceeds from issuance of follow on public offering | $ 17,250 | |||||
Proceeds from issuance of common stock under public offering, net of issuance costs | $ 15,832 | $ 0 | $ 15,832 | $ 0 | ||
Semics Inc, | ||||||
Issuance of common stock | 200,000 | |||||
Cancellation of invoice | $ 323 |
10. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 2) - Stock Option - $ / shares |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Expected term (in years) | 4 years | 4 years | 4 years |
Volatility | 77.00% | 81.00% | 86.00% |
Risk-free interest rates | 1.95% | 1.02% | 1.21% |
Weighted-average grant date fair value | $ 2.07 | $ 1.09 | $ 1.31 |
10. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 3) - Employee Stock Purchase Plan - $ / shares |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Weighted-average grant date fair value | $ 1.01 | $ 1.65 | $ .80 |
Minimum | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Volatility | 56.00% | 79.00% | 64.00% |
Risk-free interest rates | 1.92% | 0.48% | 0.40% |
Maximum | |||
Expected term (in years) | 2 years | 2 years | 2 years |
Volatility | 81.00% | 108.00% | 74.00% |
Risk-free interest rates | 2.25% | 0.80% | 0.76% |
10. STOCKHOLDERS' EQUITY, COMPREHENSIVE INCOME AND STOCK-BASED COMPENSATION (Details 4) - shares |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
RSUs granted | 64,000 | 74,000 | 35,000 |
RSUs cancelled | 33,000 | ||
Stock Option | |||
Available Shares, Beginning | 2,169,000 | 1,847,000 | 845,000 |
Additional shares reserved | 2,238,000 | 800,000 | |
Options granted | (338,000) | (368,000) | (92,000) |
RSUs granted | (64,000) | (157,000) | (35,000) |
Options terminated | 16,000 | 55,000 | 329,000 |
Plan shares expired | (4,000) | (1,446,000) | |
Available Shares, Ending | 1,812,000 | 2,169,000 | 1,847,000 |
11. EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Employee Benefits and Share-based Compensation, Noncash [Abstract] | |||
Contributions to ESOP | $ 60 | $ 60 | $ 60 |
Shares contributed to the ESOP for fiscal year | 13,000 | 59,000 | 25,000 |
12. OTHER EXPENSE, NET (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Other Income and Expenses [Abstract] | |||
Foreign exchange (loss) gain | $ (63) | $ (21) | $ (19) |
Other income, net | 2 | 0 | 3 |
Other expense, net | $ (61) | $ (21) | $ (16) |
13. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the year | $ 113 | $ 155 |
Accruals for warranties issued during the year | 329 | 123 |
Accruals and adjustments (change in estimates) related to pre-existing warranties during the year | 0 | (54) |
Consumption of reserves | (307) | (111) |
Balance at the end of the year | $ 135 | $ 113 |
14. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2018 |
Feb. 28, 2018 |
Nov. 30, 2017 |
Aug. 31, 2017 |
May 31, 2017 |
Feb. 28, 2017 |
Nov. 30, 2016 |
Aug. 31, 2016 |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Net Sales | $ 7,269 | $ 7,393 | $ 7,923 | $ 6,970 | $ 6,683 | $ 2,681 | $ 4,216 | $ 5,318 | $ 29,555 | $ 18,898 | $ 14,501 |
Property and equipment, net | 1,203 | 1,419 | 1,203 | 1,419 | 1,204 | ||||||
US | |||||||||||
Net Sales | 8,446 | 7,762 | 2,957 | ||||||||
Property and equipment, net | 1,156 | 1,364 | 1,156 | 1,364 | 1,151 | ||||||
Asia | |||||||||||
Net Sales | 19,973 | 10,439 | 10,228 | ||||||||
Property and equipment, net | 40 | 40 | 40 | 40 | 39 | ||||||
Europe | |||||||||||
Net Sales | 1,136 | 697 | 1,316 | ||||||||
Property and equipment, net | $ 7 | $ 15 | $ 7 | $ 15 | $ 14 |
15. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Related Party Transactions [Abstract] | |||
Transactions with Wilson Sonsini Goodrich & Rosati | $ 64 | $ 440 | $ 90 |
Payable to Wilson Sonsini Goodrich & Rosati | $ 5 | $ 188 |
16. COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands |
May 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 664 |
2020 | 754 |
2021 | 750 |
2022 | 772 |
2023 | 795 |
Thereafter | 133 |
Total | $ 3,868 |
16. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense | $ 587 | $ 509 | $ 499 |
Certificate of deposit | 80 | $ 50 | |
Purchase obligation | $ 2,488 |
17. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2018 |
Feb. 28, 2018 |
Nov. 30, 2017 |
Aug. 31, 2017 |
May 31, 2017 |
Feb. 28, 2017 |
Nov. 30, 2016 |
Aug. 31, 2016 |
May 31, 2018 |
May 31, 2017 |
May 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 7,269 | $ 7,393 | $ 7,923 | $ 6,970 | $ 6,683 | $ 2,681 | $ 4,216 | $ 5,318 | $ 29,555 | $ 18,898 | $ 14,501 |
Gross profit | 3,161 | 3,176 | 3,131 | 2,918 | 2,608 | 503 | 1,463 | 2,206 | 12,386 | 6,780 | 5,145 |
Net income (loss) | $ 191 | $ 267 | $ 60 | $ 10 | $ (795) | $ (2,651) | $ (1,452) | $ (755) | $ 528 | $ (5,653) | $ (6,785) |
Net income (loss) per share basic and diluted | $ 0.01 | $ 0.01 | $ .00 | $ .00 | $ (0.04) | $ (0.16) | $ (0.09) | $ (0.06) | $ 0.02 | $ (0.35) | $ (0.52) |
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