3. REVENUE

9 Months Ended

Feb. 28, 2021

Revenue from Contract with Customer [Abstract]

3. REVENUE

3. REVENUE

Revenue recognition

    The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.

    Performance obligations include sales of systems, contactors, spare parts, and services, as well as installation and training services included in customer contracts.

    A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period.

    For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to, historical discounting trends for products and services and pricing practices in different geographies.

    Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

    The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year.

Disaggregation of revenue

    The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar.

    The Company’s revenues by product category are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,		February 29,		February 28,		February 29,
	2021		2020		2021		2020
Type of good / service:
Systems	$	2,435	$	2,138	$	3,407	$	8,099
Contactors		1,930		3,094		3,330		7,790
Services		902		879		2,225		2,629
	$	5,267	$	6,111	$	8,962	$	18,518
Product lines:
Wafer-level	$	4,993	$	5,408	$	7,804	$	16,570
Test During Burn-In		274		703		1,158		1,948
	$	5,267	$	6,111	$	8,962	$	18,518

    The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,		February 29,		February 28,		February 29,
	2021		2020		2021		2020
Geographic region:
United States	$	1,113	$	5,014	$	3,124	$	12,698
Asia		4,122		891		5,723		4,758
Europe		32		206		115		1,062
	$	5,267	$	6,111	$	8,962	$	18,518

    With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,		February 29,		February 28,		February 29,
	2021		2020		2021		2020
Timing of revenue recognition:
Products and services transferred at a point in time	$	4,944	$	5,485	$	7,728	$	16,666
Services transferred over time		323		626		1,234		1,852
	$	5,267	$	6,111	$	8,962	$	18,518

Contract balances

    A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset.

    Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of deferred revenue. Contract liabilities as of February 28, 2021 and May 31, 2020 were $667,000 and $192,000, respectively. During the three and nine months ended February 28, 2021, the Company recognized $29,000 and $154,000 respectively, of revenues that were included in contract liabilities as of May 31, 2020.

Remaining performance obligations

    On February 28, 2021, the Company had $129,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately $49,000 within one year from the balance sheet date and $80,000 thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation.

Costs to obtain or fulfill a contract

    The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expense as the amortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing process.