UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
| For the quarterly period ended |
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
| For the transition period from _______________ to ______________ |
Commission File Number
(Exact name of Registrant as Specified in its Charter) |
| ||
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
|
| |
| ||
(Address of Principal Executive Offices) |
| (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
There were
TABLE OF CONTENTS
2 |
Table of Contents |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
AEHR TEST SYSTEMS | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
| ||||||||
|
| November 30, |
|
| May 31, |
| ||
(In thousands, except par value) |
| 2023 |
|
| 2023 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Short-term investments |
|
|
|
|
|
| ||
Accounts receivable, net |
|
|
|
|
|
| ||
Inventories |
|
|
|
|
|
| ||
Prepaid expenses and other current assets |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
Property and equipment, net |
|
|
|
|
|
| ||
Operating lease right-of-use assets, net |
|
|
|
|
|
| ||
Other non-current assets |
|
|
|
|
|
| ||
Total assets |
| $ |
|
| $ |
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
Accrued expenses |
|
|
|
|
|
| ||
Operating lease liabilities, short-term |
|
|
|
|
|
| ||
Deferred revenue, short-term |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
Operating lease liabilities, long-term |
|
|
|
|
|
| ||
Deferred revenue, long-term |
|
|
|
|
|
| ||
Other long-term liabilities |
|
|
|
|
|
| ||
Total liabilities |
|
|
|
|
|
| ||
Commitments and contingencies (Note 6) |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $ |
|
|
|
|
|
|
|
|
Issued and outstanding: none |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
|
|
|
Issued and outstanding: |
|
|
|
|
|
| ||
Additional paid-in-capital |
|
|
|
|
|
| ||
Accumulated other comprehensive loss |
|
| ( | ) |
|
| ( | ) |
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total shareholders' equity |
|
|
|
|
|
| ||
Total liabilities and shareholders’ equity |
| $ |
|
| $ |
|
The Condensed Consolidated Balance Sheet as of May 31, 2023 has been derived from the audited consolidated financial statements at that date.
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
3 |
Table of Contents |
AEHR TEST SYSTEMS | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Product |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income from operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense), net |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Income before provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Diluted |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Shares used in per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
4 |
Table of Contents |
AEHR TEST SYSTEMS | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cumulative translation adjustment |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Net change in unrealized gain (loss) on investments |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Comprehensive income |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
5 |
Table of Contents |
AEHR TEST SYSTEMS | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| |||||||||||
|
|
|
|
|
| Additional |
|
| Other |
|
|
|
| Total |
| |||||||||
|
| Common Stock |
|
| Paid-in |
|
| Comprehensive |
|
| Accumulated |
|
| Shareholders' |
| |||||||||
(In thousands) |
| Shares |
|
| Amount |
|
| Capital |
|
| Income (loss) |
|
| Deficit |
|
| Equity |
| ||||||
Three Months Ended November 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balances, August 31, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Issuance cost of common stock offering |
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||
Shares repurchased for tax withholdings on vesting of restricted stock units |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balances, November 30, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| |||||||||||
|
|
|
|
|
| Additional |
|
| Other |
|
|
|
|
| ||||||||||
|
| Common Stock |
|
| Paid-in |
|
| Comprehensive |
|
| Accumulated |
|
| Shareholders' |
|
| Total |
| ||||||
(In thousands) |
| Shares |
|
| Amount |
|
| Capital |
|
| Income (loss) |
|
| Deficit |
|
| Equity |
| ||||||
Six Months Ended November 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balances, May 31, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Issuance cost of common stock offering |
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||
Shares repurchased for tax withholdings on vesting of restricted stock units |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net unrealized gains on investments |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balances, November 30, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
6 |
Table of Contents |
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
| Additional |
|
| Other |
|
|
|
|
|
|
| ||||||
|
| Common Stock |
|
| Paid-in |
|
| Comprehensive |
|
| Accumulated |
|
| Shareholders' |
|
| Total |
| ||||||
(In thousands) |
| Shares |
|
| Amount |
|
| Capital |
|
| Income (loss) |
|
| Deficit |
|
| Equity |
| ||||||
Three Months Ended November 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balances, August 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Shares repurchased for tax withholdings on vesting of restricted stock units |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net unrealized loss on investments |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Balances, November 30, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| |||||||||||
|
|
|
|
|
| Additional |
|
| Other |
|
|
|
|
| ||||||||||
|
| Common Stock |
|
| Paid-in |
|
| Comprehensive |
|
| Accumulated |
|
| Shareholders' |
|
| Total |
| ||||||
(In thousands) |
| Shares |
|
| Amount |
|
| Capital |
|
| Income (loss) |
|
| Deficit |
|
| Equity |
| ||||||
Six Months Ended November 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balances, May 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Shares repurchased for tax withholdings on vesting of restricted stock units |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Net unrealized loss on investments |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Balances, November 30, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
7 |
Table of Contents |
AEHR TEST SYSTEMS | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
|
| Six Months Ended November 30, |
| |||||
(In thousands) |
| 2023 |
|
| 2022 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net income |
| $ |
|
| $ |
| ||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
| ||
Accretion of investment discount |
|
| ( | ) |
|
| ( | ) |
Amortization of operating lease right-of-use assets |
|
|
|
|
|
| ||
Provision for doubtful accounts |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
| ||
Inventories |
|
| ( | ) |
|
| ( | ) |
Prepaid expenses and other current assets |
|
| ( | ) |
|
| ( | ) |
Accounts payable |
|
| ( | ) |
|
| ( | ) |
Accrued expenses |
|
| ( | ) |
|
| ( | ) |
Deferred revenue |
|
| ( | ) |
|
|
| |
Operating lease liabilities |
|
| ( | ) |
|
| ( | ) |
Income taxes payable |
|
|
|
|
|
| ||
Net cash provided by operating activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| ( | ) |
|
| ( | ) |
Proceeds from maturities of investments |
|
|
|
|
|
| ||
Purchases of investments |
|
|
|
|
| ( | ) | |
Net cash provided by (used in) investing activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock under employee plans |
|
|
|
|
|
| ||
Shares repurchased for tax withholdings on vesting of restricted stock units |
|
| ( | ) |
|
| ( | ) |
Issuance cost of common stock offering |
|
| ( | ) |
|
| - |
|
Net cash used in financing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period (1) |
|
|
|
|
|
| ||
Cash, cash equivalents and restricted cash, end of period (1) |
| $ |
|
| $ |
|
(1) Includes restricted cash in other assets.
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)
8 |
Table of Contents |
AEHR TEST SYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization – Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and develops and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the FOX-XP, FOX-NP, and FOX-CP wafer contact and singulated die/module parallel test and burn-in systems, the WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures.
Basis of Presentation – The unaudited Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include certain information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2023 audited Consolidated Financial Statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended May 31, 2023.
Principles of Consolidation – The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated upon consolidation.
Critical Accounting Policies and use of Estimates – The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2023. There have been no significant changes in the Company’s significant accounting policies during the three and six months ended November 30, 2023. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Significant estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value and warranty reserves. Actual results could differ from those estimates.
Reclassifications - Certain reclassifications have been made to the prior period Condensed Consolidated Financial Statements to conform to the current period presentation. The reclassifications had no impact on net income, total assets, total liabilities, or shareholders’ equity.
Concentration of Credit Risk – Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. The Company had revenues from individual customers in excess of 10% of total revenues as follows:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Customer A |
|
| % |
|
| % |
|
| % |
|
| % | ||||
Customer B |
|
| % |
| * |
|
|
| % |
| * |
| ||||
Customer C |
| * |
|
|
| % |
| * |
|
|
| % |
* Amount was less than 10% of total revenue
The Company had gross accounts receivable from individual customers in excess of
9 |
Table of Contents |
|
| November 30, |
|
| May 31, |
| ||
|
| 2023 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Customer A |
|
| % |
|
| % | ||
Customer B |
|
| % |
|
| % | ||
Customer D |
|
| % |
| * |
| ||
Customer E |
|
| % |
| * |
|
* Amount was less than 10% of total gross accounts receivable
Recent Accounting Pronouncements —The Company's accounts receivable are recorded at invoiced amounts less allowance for any credit losses. According to the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13 that the Company adopted on June 1, 2023, the Company recognizes credit losses based on forward-looking current expected credit losses ("CECL"). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses is recognized in the condensed consolidated statements of operations. The uncollectible accounts receivable are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The total allowance for credit losses was $
Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a significant impact on its Condensed Consolidated Financial Statements.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value of Measurements — The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3 — Unobservable inputs that are supported by little or no market activities.
The following table represents the Company’s assets measured at fair value on a recurring basis as of November 30, 2023, and the basis for that measurement:
|
| Balance as of |
|
|
|
|
|
|
| |||||||
(In thousands) |
| November 30, 2023 |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Money market funds |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
10 |
Table of Contents |
The following table represents the Company’s assets measured at fair value on a recurring basis as of May 31, 2023, and the basis for that measurement:
|
| Balance as of |
|
|
|
|
|
|
| |||||||
(In thousands) |
| May 31, 2023 |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Money market funds |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
U. S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in money market funds as of November 30, 2023 and May 31, 2023 is $
The following table summarizes the Company’s cash, cash equivalents and investments by security type as of November 30, 2023 and May 31, 2023, respectively:
|
|
|
| Gross |
|
|
| |||||
Balances as of November 30, 2023 |
|
|
| Unrealized |
|
| Estimated |
| ||||
(In thousands) |
| Cost |
|
| Loss |
|
| Fair Value |
| |||
Cash |
| $ |
|
| $ |
|
| $ |
| |||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
| $ |
|
| $ |
|
| $ |
| |||
Total cash and cash equivalents |
| $ |
|
| $ |
|
| $ |
| |||
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
| $ |
|
| $ |
|
| $ |
| |||
Total cash, cash equivalents and investments |
| $ |
|
| $ |
|
| $ |
|
|
|
|
| Gross |
|
|
| |||||
Balances as of May 31, 2023 |
|
|
| Unrealized |
|
| Estimated |
| ||||
(In thousands) |
| Cost |
|
| Loss |
|
| Fair Value |
| |||
Cash |
| $ |
|
| $ |
|
| $ |
| |||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
| $ |
|
| $ |
|
| $ |
| |||
Total cash and cash equivalents |
| $ |
|
| $ |
|
| $ |
| |||
Short term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U. S. treasury securities |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
| $ |
|
| $ |
|
| $ |
| |||
Total cash, cash equivalents and investments |
| $ |
|
| $ | ( | ) |
| $ |
|
Long-term investments are included in other assets on the accompanying Condensed Consolidated Balance Sheets. Unrealized gains and temporary losses on investments classified as available-for-sale debt securities are included within accumulated other comprehensive loss, net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to results of operations.
3. BALANCE SHEET INFORMATION
Inventories
11 |
Table of Contents |
Inventories consisted of the following:
|
| November 30, |
|
| May 31, |
| ||
(In thousands) |
| 2023 |
|
| 2023 |
| ||
Raw materials and sub-assemblies |
| $ |
|
| $ |
| ||
Work in process |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
|
Property and equipment
Property and equipment, net consisted of the following:
|
| Useful life |
| November 30, |
|
| May 31, |
| ||
(In thousands) |
| (in years) |
| 2023 |
|
| 2023 |
| ||
Leasehold improvements |
| * |
| $ |
|
| $ |
| ||
Machinery and equipment |
| 3 - 6 |
|
|
|
|
|
| ||
Test equipment |
| 4 - 6 |
|
|
|
|
|
| ||
Furniture and fixtures |
| 2 - 6 |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
| ||
Less: accumulated depreciation and amortization |
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
| $ |
|
| $ |
|
* Lesser of estimated useful life or lease term.
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.
The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 30, 2023 and 2022:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Balance at the beginning of the period |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Accruals for warranties issued during the period |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjustments to previously existing warranty accruals |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Consumption of reserves |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Balance at the end of the period |
| $ | 221 |
|
| $ | 311 |
|
| $ |
|
| $ |
|
Deferred revenue
Deferred revenue, short-term consisted of the following:
|
| November 30, |
|
| May 31, |
| ||
(In thousands) |
| 2023 |
|
| 2023 |
| ||
Customer deposits |
| $ |
|
| $ |
| ||
Deferred revenue |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
|
12 |
Table of Contents |
4. INCOME TAX
The Company is subject to U.S federal and state and foreign income taxes as a corporation. The Company’s tax provision and the resulting effective tax rate for the interim period is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded a provision for income taxes of $
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse, or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
Since fiscal 2009, a full valuation allowance was established against all deferred tax assets, as management determined that it was more likely than not that certain deferred tax assets would not be realized. The Company continues to reassess the need for a valuation allowance on a quarterly basis.
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 recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
5. BORROWING ARRANGEMENTS
On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). Pursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $
On January 14, 2021, the Company entered into the First Amendment to Loan and Security Agreement (the “Amendment”) with SVB. The Amendment, among other things, extended the Revolving Line Maturity Date to July 14, 2021; provided, however, that if the Company achieved specified operating metrics on a consolidated basis on or prior to May 31, 2021 the Amended Revolving Line Maturity Date would be extended to
On January 11, 2022, the Company entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) with SVB. The Second Amendment, among other things, (A) increased the available amount of the line up to the lesser of (i) $
On January 10, 2023, the Company entered into the Third Amendment to the Loan and Security Agreement (the “Third Amendment”) with SVB. The Third Amendment, among other things, extends the Revolving Line Maturity Date to January 13, 2024, provided, however, that (i) if the Company submits a fiscal year 2024 plan of record that is generally acceptable to SVB, and (ii) the minimum net liquidity at the end of November 30, 2023 is at least $
As of November 30, 2023, the Company had not drawn against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under the line as of November 30, 2023 was $
13 |
Table of Contents |
6. COMMITMENTS AND CONTINGENCIES
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.
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 flow.
7. SHAREHOLDERS’ EQUITY
On August 25, 2021, the Board of Directors authorized management to take actions necessary for the execution of a $
8. ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in the components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):
|
| Cumulative |
|
| Unrealized loss |
|
|
| ||||
(In thousands) |
| translation adjustment |
|
| on investments, net |
|
| Total |
| |||
Balance as of May 31, 2023 |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
| |||
Balance as of November 30, 2023 |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
9. 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.
14 |
Table of Contents |
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 is recognized at a point in time, which is generally upon shipment or delivery and evidenced by transfer of title and risk of loss to the customer. Revenue from services is recognized over time as the customer receives the benefit 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. The Company sells its products primarily through a direct sales force. In certain international markets, the Company sells its products through independent distributors.
Disaggregation of revenue
The following presents information about the Company’s net revenues in different geographic areas, which are based upon ship-to locations, and by product category:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Asia |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
| ||||
United States |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Systems |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Contactors |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
With the exception of the amount of service contracts and extended warranties, the Company’s product net revenues are recognized at a point in time when control transfers to the customer. The following presents net revenues based on timing of recognition:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Products and services transferred at a point in time |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Services transferred over time |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
Contract balances
Accounts receivable are recognized in the period the Company delivers goods or provides services and when the Company’s right to consideration is unconditional. Contract assets include unbilled receivables which represent revenues that are earned in advance of scheduled billings to customers. These amounts are primarily related to product sales where transfer of control has occurred but the Company has not yet invoiced. As of November 30, 2023, unbilled receivables were $
15 |
Table of Contents |
Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities as of November 30, 2023 and May 31, 2023 were $
Remaining performance obligations
On November 30, 2023, the Company had $
Costs to obtain or fulfill a contract
The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expenses 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.
10. STOCK-BASED COMPENSATION
Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), performance RSUs (“PRSUs”), restricted shares, performance restricted shares and employee stock purchase plan (“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, PRSUs, restricted shares and performance restricted shares, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as equity instruments. See Note 13 in the Company’s Annual Report on Form 10-K for fiscal 2023 filed on August 28, 2023 for further information regarding the 2016 Equity Incentive Plan and the ESPP. On October 23, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan and on October 27, 2023, the Company filed the Form S-8 to issue awards during this quarter onwards from a pool of
The following table summarizes the stock-based compensation expense for the three and six months ended November 30, 2023 and 2022:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Cost of sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
There was $
16 |
Table of Contents |
The Company’s nonvested RSU, PRSU and restricted shares activities during the three and six months ended November 30, 2023, were as follows:
|
|
|
|
| Weighted |
| ||
|
|
|
| Average Grant |
| |||
|
|
|
| Date Fair |
| |||
|
| Shares |
|
| Value |
| ||
|
| (in thousands) |
|
| Per Share |
| ||
Unvested, May 31, 2023 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
|
|
|
|
Vested |
|
| ( | ) |
|
|
| |
Forfeited |
|
| ( | ) |
|
|
| |
Unvested, August 31, 2023 |
|
|
|
| $ |
| ||
Granted |
|
|
|
|
|
| ||
Vested |
|
| ( | ) |
|
|
| |
Forfeited |
|
| ( | ) |
|
|
| |
Unvested, November 30, 2023 |
|
|
|
| $ |
|
Under the ESPP, the Company issued
11. NET INCOME PER SHARE
Basic net income per share is determined using the weighted average number of common shares outstanding during the period. Diluted net income per share is determined using the weighted average number of common shares and potential common shares (representing the hypothetical number of incremental shares issuable under the assumed exercise of outstanding stock options, and vesting of outstanding RSUs and ESPP shares) during the period using the treasury stock method. The calculation of dilutive shares outstanding excludes securities that would have an antidilutive effect on net income per share.
The following table presents the computation of basic and diluted net income per share:
|
| Three Months Ended November 30, |
|
| Six Months Ended November 30, |
| ||||||||||
(In thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Dilutive effect of common equivalent shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share - Basic |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net income per share - Diluted |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive employee share-based award shares, excluded |
|
|
|
|
|
|
|
|
|
|
|
|
17 |
Table of Contents |
12. SEGMENT AND CONCENTRATION INFORMATION
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.
The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in one operating segment.
Long-lived assets, net by geographic area are as follows:
|
| November 30, |
|
| May 31, |
| ||
(In thousands) |
| 2023 |
|
| 2023 |
| ||
United States |
| $ |
|
| $ |
| ||
International |
|
|
|
|
|
| ||
Total long-lived assets, net |
| $ |
|
| $ |
|
18 |
Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential”, “target” or “continue,” the negative effect of terms like these or other similar expressions. Any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries, which may be provided by us are also forward-looking statements. These forward-looking statements are only predictions. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those anticipated or projected. All forward-looking statements included in this document are based on information available to us on the date of filing and we further caution investors that our business and financial performance are subject to substantial risks and uncertainties. We assume no obligation to update any such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including the risk factors set forth in Item 1. “Business” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended May 31, 2023, filed with the Securities and Exchange Commission on August 28, 2023. All references to “we”, “us”, “our”, “Aehr Test”, “Aehr Test Systems” or the “Company” refer to Aehr Test Systems.
Overview
We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and have installed thousands of systems worldwide. Increasing quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, data and telecommunications infrastructure, and solid-state memory and storage, are driving additional test requirements, incremental capacity needs, and new opportunities for our test products and solutions.
We have developed and introduced several innovative products including the FOX-P family of test and burn-in systems and FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables Integrated Circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1,024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time.
Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, test fixtures, upgrades and spare parts, service contracts revenues, and non-recurring engineering charges. Our selling arrangements may include contractual customer acceptance provisions, which are mostly deemed perfunctory or inconsequential, and installation of the product occurs after shipment, transfer of title and risk of loss.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to customer programs and incentives, product returns, credit losses, inventories, income taxes, warranty obligations, and long-term service contracts. Our estimates are derived from historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Those results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of the critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.
There have been no material changes to our critical accounting policies and estimates during the three and six months ended November 30, 2023 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.
19 |
Table of Contents |
Results of Operations
Discussion of Results of Operations for the Three and Six Months Ended November 30, 2023 compared to the Three and Six Months Ended November 30, 2022
Revenues
Revenue by Category |
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Products |
| $ | 19,837 |
|
| $ | 14,007 |
|
|
| 42 | % |
| $ | 39,194 |
|
| $ | 23,595 |
|
|
| 66 | % |
Services |
|
| 1,594 |
|
|
| 808 |
|
|
| 97 | % |
|
| 2,861 |
|
|
| 1,891 |
|
|
| 51 | % |
Total revenues |
| $ | 21,431 |
|
| $ | 14,815 |
|
|
| 45 | % |
| $ | 42,055 |
|
| $ | 25,486 |
|
|
| 65 | % |
Products as a percentage of total revenues |
|
| 92.6 | % |
|
| 94.5 | % |
|
|
|
|
|
| 93.2 | % |
|
| 92.6 | % |
|
|
|
|
Services as a percentage of total revenues |
|
| 7.4 | % |
|
| 5.5 | % |
|
|
|
|
|
| 6.8 | % |
|
| 7.4 | % |
|
|
|
|
Revenue increased to $21.4 million for the three months ended November 30, 2023 from $14.8 million for the three months ended November 30, 2022, driven by growth in all our revenue streams. Our systems revenue increased by $3.3 million, our contactors revenue increased by $2.5 million, and our services revenue increased by $0.8 million.
Revenue increased to $42.1 million for the six months ended November 30, 2023 from $25.5 million for the six months ended November 30, 2022, also driven by growth in all our revenue streams. Our contactors revenue increased by $13.3 million, our systems revenue increased by $2.3 million, and our services revenue increased by $1.0 million.
Revenue by Geography |
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Asia |
| $ | 18,922 |
|
| $ | 12,216 |
|
|
| 55 | % |
| $ | 38,153 |
|
| $ | 20,024 |
|
|
| 91 | % |
Europe |
|
| 1,833 |
|
|
| 44 |
|
| N.M. |
|
|
| 2,437 |
|
|
| 44 |
|
| N.M |
| ||
United States |
| $ | 676 |
|
| $ | 2,555 |
|
| (74 | %) |
| $ | 1,465 |
|
| $ | 5,418 |
|
| (73 | %) | ||
Total revenues |
| $ | 21,431 |
|
| $ | 14,815 |
|
|
| 45 | % |
| $ | 42,055 |
|
| $ | 25,486 |
|
|
| 65 | % |
Asia as a percentage of total revenues |
|
| 88.3 | % |
|
| 82.5 | % |
|
|
|
|
|
| 90.7 | % |
|
| 78.6 | % |
|
|
|
|
Europe as a percentage of total revenues |
|
| 8.6 | % |
|
| 0.3 | % |
|
|
|
|
|
| 5.8 | % |
|
| 0.2 | % |
|
|
|
|
United States as a percentage of total revenues |
|
| 3.1 | % |
|
| 17.2 | % |
|
|
|
|
|
| 3.5 | % |
|
| 21.2 | % |
|
|
|
|
N.M.-Not meaningful
On a geographic basis, revenues represent products that were shipped to or services that were performed at our customer locations. For the three and six months ended November 30, 2023, international revenues significantly increased, compared to the same periods in the prior year, primarily as a result of the shipments to our customers in Asia and Europe, partially offset by the decline in net revenue from a customer in the United States.
Gross Margin
Gross Profit by Category |
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Products |
| $ | 10,130 |
|
| $ | 7,510 |
|
|
| 35 | % |
| $ | 19,568 |
|
| $ | 11,584 |
|
|
| 69 | % |
Services |
|
| 828 |
|
|
| 401 |
|
|
| 106 | % |
|
| 1,371 |
|
|
| 808 |
|
|
| 70 | % |
Gross profit |
| $ | 10,958 |
|
| $ | 7,911 |
|
|
| 39 | % |
| $ | 20,939 |
|
| $ | 12,392 |
|
|
| 69 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin by Category |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
| 51.1 | % |
|
| 53.6 | % |
|
|
|
|
|
| 49.9 | % |
|
| 49.1 | % |
|
|
|
|
Services |
|
| 51.9 | % |
|
| 49.6 | % |
|
|
|
|
|
| 47.9 | % |
|
| 42.7 | % |
|
|
|
|
Gross margin |
|
| 51.1 | % |
|
| 53.4 | % |
|
|
|
|
|
| 49.8 | % |
|
| 48.6 | % |
|
|
|
|
Gross profit increased to $11.0 million for the three months ended November 30, 2023 from $7.9 million for the three months ended November 30, 2022. Gross margin decreased to 51.1% for the three months ended November 30, 2023 from 53.4% for the three months ended November 30, 2022. The decrease in gross margin of 2.3 percentage points was primarily due to an increase in inventory reserve, and higher warranty expenses and logistics costs.
20 |
Table of Contents |
Gross profit increased to $20.9 million for the six months ended November 30, 2023 from $12.4 million for the six months ended November 30, 2022. Gross margin increased to 49.8% for the six months ended November 30, 2023 from 48.6% for the six months ended November 30, 2022. The increase in gross margin of 1.2 percentage points was primarily due to the increased sales of higher margin contactor products, as well as manufacturing efficiencies due to higher production rates.
Research and Development
|
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Research and development |
| $ | 1,972 |
|
| $ | 1,551 |
|
|
| 27 | % |
| $ | 4,429 |
|
| $ | 3,049 |
|
|
| 45 | % |
As a percentage of total revenues |
|
| 9.2 | % |
|
| 10.5 | % |
|
|
|
|
|
| 10.5 | % |
|
| 12.0 | % |
|
|
|
|
Research and development expenses consist primarily of compensation and benefits for product development personnel, outside development service costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Research and development expenses increased to $2.0 million for the three months ended November 30, 2023, compared to $1.6 million for the three months ended November 30, 2022. The increase of $0.4 million was primarily driven by higher employment costs due to an increase in headcount. We anticipate our expenses in research and development will fluctuate in absolute dollars from period to period as a result of the timing of product development projects and revenue generating activity requirements.
Research and development expenses increased to $4.4 million for the six months ended November 30, 2023, compared to $3.0 million for the six months ended November 30, 2022. The increase of $1.4 million was primarily due to non-recurring engineering services charges of $0.6 million and higher employment related costs of $0.5 million.
Selling, General and Administrative
|
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Selling, general and administrative |
| $ | 3,518 |
|
| $ | 2,875 |
|
|
| 22 | % |
| $ | 6,927 |
|
| $ | 5,400 |
|
|
| 28 | % |
As a percentage of total revenues |
|
| 16.4 | % |
|
| 19.4 | % |
|
|
|
|
|
| 16.5 | % |
|
| 21.2 | % |
|
|
|
|
Selling, general and administrative expenses consist primarily of compensation and benefits for sales, marketing and general and administrative personnel, legal and accounting service costs, marketing communications costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Selling, general and administrative expenses increased to $3.5 million for the three months ended November 30, 2023, compared to $2.9 million for the three months ended November 30, 2022. The increase of $0.6 million was primarily driven by higher employment cost due to an increase in headcount.
Selling, general and administrative expenses increased to $6.9 million for the six months ended November 30, 2023, compared to $5.4 million for the six months ended November 30, 2022. The increase of $1.5 million was primarily due to an increase in employment cost of $1.3 million and an increase in audit and legal service fees of $0.3 million.
Interest and Other Income (Expense), Net
|
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Interest income |
| $ | 631 |
|
| $ | 263 |
|
|
| 140 | % |
| $ | 1,212 |
|
| $ | 384 |
|
|
| 216 | % |
Other income (expense), net |
|
| 10 |
|
|
| (5 | ) |
|
| 300 | % |
|
| 4 |
|
|
| 19 |
|
| (79 | %) | |
Interest and other income (expense), net |
| $ | 641 |
|
| $ | 258 |
|
|
| 148 | % |
| $ | 1,216 |
|
| $ | 403 |
|
|
| 202 | % |
Interest and other income (expense), net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest and other income (expense), net, increased for the three and six months ended November 30, 2023, compared to the same periods in the prior year, primarily driven by higher interest income earned due to higher yields from our investments in money market funds.
21 |
Table of Contents |
Provision for Income Taxes
|
| Three Months Ended November 30, |
|
| Percent |
|
| Six Months Ended November 30, |
|
| Percent |
| ||||||||||||
(Dollars in thousands) |
| 2023 |
|
| 2022 |
|
| Change |
|
| 2023 |
|
| 2022 |
|
| Change |
| ||||||
Provision for income taxes |
| $ | 20 |
|
| $ | 18 |
|
|
| 11 | % |
| $ | 36 |
|
| $ | 32 |
|
|
| 13 | % |
Income tax expense was not significant due to the available net operating losses and research and development credits carryforwards.
Liquidity and Capital Resources
Cash, cash equivalents, and restricted cash were $50.7 million as of November 30, 2023, compared to $19.0 million as of November 30, 2022. We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures and other obligations for the next twelve months.
|
| Six Months Ended November 30, |
|
|
| |||||||
(In thousands) |
| 2023 |
|
| 2022 |
|
| Change |
| |||
Operating activities |
| $ | 3,356 |
|
| $ | 5,266 |
|
| $ | (1,910 | ) |
Investing activities |
|
| 17,560 |
|
|
| (17,751 | ) |
|
| 35,311 |
|
Financing activities |
|
| (440 | ) |
|
| (104 | ) |
|
| (336 | ) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
| (16 | ) |
|
| (21 | ) |
|
| 5 |
|
Net increase in cash, cash equivalents and restricted cash |
| $ | 20,460 |
|
| $ | (12,610 | ) |
| $ | 33,070 |
|
Net Cash Flows Provided by Operating Activities
Cash flow from operating activities during the six months ended November 30, 2023 mostly consisted of net income, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, share-based compensation expense and amortization of operating lease right-of-use assets. The $1.9 million decrease in cash flows from operating activities for the six months ended November 30, 2023, compared to the six months ended November 30, 2022, was driven primarily by an increase in cash used in inventory production and vendor payments due to anticipated customer demand, and a decrease in cash provided by deferred revenue due to timing of customer deposits and revenue recognition, partially offset by an increase in cash provided by collection of accounts receivable and a higher net income.
Net Cash Flows Provided by (Used in) Investing Activities
Net cash provided by investing activities increased by $35.3 million for the six months ended November 30, 2023 compared to the six months ended November 30, 2022. The increase was primarily due to the maturity of our short-term investments, which were purchased in the six months ended November 30, 2022.
Net Cash Flows Used in Financing Activities
Net cash used in financing activities increased by $0.3 million for the six months ended November 30, 2023, compared to the six months ended November 30, 2022. For the six months ended November 30, 2023, net cash used in financing activities primarily consisted of cash used to repurchase shares of our common stock on vesting of RSUs, partially offset by the proceeds from issuance of common stock under our employee plans.
Off-Balance Sheet Agreements
We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. There have been no material changes in the composition, magnitude or other key characteristics of our contractual obligations or other commitments as disclosed in the Company's Annual Report on Form 10-K for the year ended May 31, 2023.
22 |
Table of Contents |
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer, or CEO, and chief financial officer, or CFO, evaluated the effectiveness of our "disclosure controls and procedures" as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of November 30, 2023, in connection with the filing of this Quarterly Report on Form 10-Q. Based on that evaluation as of November 30, 2023, our CEO and CFO concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting during the three and six months ended November 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
23 |
Table of Contents |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are subject to various claims and legal proceedings that arise in the ordinary course of business. We accrue for losses related to litigation when a potential loss is probable and the loss can be reasonably estimated in accordance with FASB requirements. During the reported period, we were not a party to any material legal proceedings, thus no loss was probable and no amount was accrued as of November 30, 2023.
Item 1A. Risk Factors
Item 1A, “Risk Factors,” on pages 10 through 16 of the Company’s Annual Report on Form 10-K for the year ended May 31, 2023, provides information on the significant risks associated with our business. There have been no subsequent material changes to these risks.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
24 |
Table of Contents |
Item 6. Exhibits
Exhibit Number |
| Description | ||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
| ||||
|
|
| ||
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.† |
1 | Incorporated by reference to the same-numbered exhibit previously filed with the Company’s Registration Statement on Form S-1 filed June 11, 1997 (File No. 333-28987). |
2 | Incorporated by reference to Exhibit 3.1 previously filed with the Company’s Current Report on Form 8-K filed September 9, 2020 (File No. 000-22893). |
3 | Incorporated by reference to the same-numbered exhibit previously filed with Amendment No.1 to the Company’s Registration Statement on Form S-1 filed July 17, 1997 (File No. 333-28987). |
† | Filed herewith. |
** | Furnished, and not filed. |
25 |
Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AEHR TEST SYSTEMS |
| |
|
|
|
|
Date: January 12, 2024 | By: | /s/ GAYN ERICKSON |
|
|
| Gayn Erickson |
|
|
| President and Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
Date: January 12, 2024 | By: | /s/ CHRIS P. SIU |
|
|
| Chris P. Siu |
|
|
| Executive Vice President of Finance, Chief Financial Officer and Secretary |
|
|
| (Principal Financial and Accounting Officer) |
|
26 |
EXHIBIT 31.01
CERTIFICATIONS
I, Gayn Erickson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Aehr Test Systems;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ GAYN ERICKSON |
|
|
| Gayn Erickson |
|
|
| President and Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
Date: January12, 2024
CERTIFICATIONS
I, Chris P. Siu, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Aehr Test Systems;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
By: | /s/ CHRIS P. SIU | ||
Chris P. Siu | |||
Executive Vice President of Finance, Chief Financial Officer and Secretary | |||
(Principal Financial and Accounting Officer) |
Date: January12, 2024
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aehr Test Systems (the “Company”) on Form 10-Q for the quarter ended November 30, 2023, as filed with the Securities and Exchange Commission on January 12, 2024 (the “Report”), I, Gayn Erickson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| By: | /s/ GAYN ERICKSON |
|
|
| Gayn Erickson |
|
|
| President and Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
Date: January12, 2024
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aehr Test Systems (the “Company”) on Form 10-Q for the quarter ended November 30, 2023 as filed with the Securities and Exchange Commission on January 12, 2024 (the “Report”), I, Chris P. Siu, Executive Vice President of Finance, Chief Financial Officer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| By: | /s/ CHRIS P. SIU |
|
|
| Chris P. Siu |
|
|
| Executive Vice President of Finance, Chief Financial Officer and Secretary |
|
|
| (Principal Financial and Accounting Officer) |
|
Date: January 12, 2024
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 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 | 75,000 |
Common stock, shares issued | 28,826 | 28,539 |
Common stock, shares outstanding | 28,826 | 28,539 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Revenue: | ||||
Total revenue | $ 21,431 | $ 14,815 | $ 42,055 | $ 25,486 |
Cost of revenue: | ||||
Total cost of revenue | 10,473 | 6,904 | 21,116 | 13,094 |
Gross profit | 10,958 | 7,911 | 20,939 | 12,392 |
Operating expenses: | ||||
Research and development | 1,972 | 1,551 | 4,429 | 3,049 |
Selling, general and administrative | 3,518 | 2,875 | 6,927 | 5,400 |
Total operating expenses | 5,490 | 4,426 | 11,356 | 8,449 |
Income from operations | 5,468 | 3,485 | 9,583 | 3,943 |
Interest income, net | 631 | 263 | 1,212 | 384 |
Other income (expense), net | 10 | (5) | 4 | 19 |
Income before provision for income taxes | 6,109 | 3,743 | 10,799 | 4,346 |
Provision for income taxes | 20 | 18 | 36 | 32 |
Net income | $ 6,089 | $ 3,725 | $ 10,763 | $ 4,314 |
Net income per share: | ||||
Basic | $ 0.21 | $ 0.14 | $ 0.37 | $ 0.16 |
Diluted | $ 0.20 | $ 0.13 | $ 0.36 | $ 0.15 |
Shares used in per share calculations: | ||||
Basic | 28,801 | 27,579 | 28,725 | 27,410 |
Diluted | 29,769 | 29,080 | 29,700 | 28,934 |
Product [Member] | ||||
Revenue: | ||||
Total revenue | $ 19,837 | $ 14,007 | $ 39,194 | $ 23,595 |
Cost of revenue: | ||||
Total cost of revenue | 9,707 | 6,497 | 19,626 | 12,011 |
Services [Member] | ||||
Revenue: | ||||
Total revenue | 1,594 | 808 | 2,861 | 1,891 |
Cost of revenue: | ||||
Total cost of revenue | $ 766 | $ 407 | $ 1,490 | $ 1,083 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||
Net income | $ 6,089 | $ 3,725 | $ 10,763 | $ 4,314 |
Net change in cumulative translation adjustment | 7 | 1 | 4 | (44) |
Net change in unrealized gain (loss) on investments | 0 | (6) | 17 | (6) |
Comprehensive income | $ 6,096 | $ 3,720 | $ 10,784 | $ 4,264 |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization – Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and develops and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the FOX-XP, FOX-NP, and FOX-CP wafer contact and singulated die/module parallel test and burn-in systems, the WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures.
Basis of Presentation – The unaudited Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include certain information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2023 audited Consolidated Financial Statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended May 31, 2023.
Principles of Consolidation – The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated upon consolidation.
Critical Accounting Policies and use of Estimates – The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2023. There have been no significant changes in the Company’s significant accounting policies during the three and six months ended November 30, 2023. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Significant estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value and warranty reserves. Actual results could differ from those estimates.
Reclassifications - Certain reclassifications have been made to the prior period Condensed Consolidated Financial Statements to conform to the current period presentation. The reclassifications had no impact on net income, total assets, total liabilities, or shareholders’ equity.
Concentration of Credit Risk – Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. The Company had revenues from individual customers in excess of 10% of total revenues as follows:
* Amount was less than 10% of total revenue
The Company had gross accounts receivable from individual customers in excess of 10% of gross accounts receivable as follows:
* Amount was less than 10% of total gross accounts receivable
Recent Accounting Pronouncements —The Company's accounts receivable are recorded at invoiced amounts less allowance for any credit losses. According to the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13 that the Company adopted on June 1, 2023, the Company recognizes credit losses based on forward-looking current expected credit losses ("CECL"). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses is recognized in the condensed consolidated statements of operations. The uncollectible accounts receivable are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The total allowance for credit losses was $0 at both November 30, 2023 and May 31, 2023, and there was no write-off of accounts receivable for the periods presented. The adoption of ASU 2016-13 did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a significant impact on its Condensed Consolidated Financial Statements. |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 2. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value of Measurements — The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3 — Unobservable inputs that are supported by little or no market activities.
The following table represents the Company’s assets measured at fair value on a recurring basis as of November 30, 2023, and the basis for that measurement:
The following table represents the Company’s assets measured at fair value on a recurring basis as of May 31, 2023, and the basis for that measurement:
Included in money market funds as of November 30, 2023 and May 31, 2023 is $150,000 restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease. There were no financial liabilities measured at fair value as of November 30, 2023 and May 31, 2023. There were no transfers between Level 1 and Level 2 fair value measurements during the three and six months ended November 30, 2023. The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities.
The following table summarizes the Company’s cash, cash equivalents and investments by security type as of November 30, 2023 and May 31, 2023, respectively:
Long-term investments are included in other assets on the accompanying Condensed Consolidated Balance Sheets. Unrealized gains and temporary losses on investments classified as available-for-sale debt securities are included within accumulated other comprehensive loss, net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to results of operations. |
BALANCE SHEET INFORMATION |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET INFORMATION | 3. BALANCE SHEET INFORMATION
Inventories Inventories consisted of the following:
Property and equipment
Property and equipment, net consisted of the following:
* Lesser of estimated useful life or lease term.
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.
The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 30, 2023 and 2022:
Deferred revenue
Deferred revenue, short-term consisted of the following:
|
INCOME TAX |
6 Months Ended |
---|---|
Nov. 30, 2023 | |
INCOME TAX | |
INCOME TAXES | 4. INCOME TAX
The Company is subject to U.S federal and state and foreign income taxes as a corporation. The Company’s tax provision and the resulting effective tax rate for the interim period is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded a provision for income taxes of $20,000 and $36,000 for the three and six months ended November 30, 2023, respectively, which consisted primarily of foreign withholding taxes and foreign income taxes. The Company recorded a provision for income taxes of $18,000 and $32,000 for the three and six months ended November 30, 2022, respectively, which consisted primarily of foreign withholding taxes and foreign income taxes.
Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse, or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.
Since fiscal 2009, a full valuation allowance was established against all deferred tax assets, as management determined that it was more likely than not that certain deferred tax assets would not be realized. The Company continues to reassess the need for a valuation allowance on a quarterly basis.
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 recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes. |
BORROWING ARRANGEMENTS |
6 Months Ended |
---|---|
Nov. 30, 2023 | |
BORROWING ARRANGEMENTS | |
BORROWING ARRANGEMENTS | 5. BORROWING ARRANGEMENTS
On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). Pursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $4.0 million or (ii) the amount available under the borrowing base under a revolving line of credit which is collateralized by all the Company’s assets except intellectual property. The borrowing base is 80% of eligible accounts, as determined by SVB from the Company’s most recent borrowing base statement; provided, however, SVB has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of certain events or conditions, which may adversely affect the collateral or its value. Subject to an event of default, the principal amount outstanding under the revolving line of credit will accrue interest at a floating per annum rate equal to the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%. Interest is payable monthly on the last calendar day of each month and the outstanding principal amount, the unpaid interest and all other obligations are due on the maturity date, which is 364 days from the effective date of January 13, 2020.
On January 14, 2021, the Company entered into the First Amendment to Loan and Security Agreement (the “Amendment”) with SVB. The Amendment, among other things, extended the Revolving Line Maturity Date to July 14, 2021; provided, however, that if the Company achieved specified operating metrics on a consolidated basis on or prior to May 31, 2021 the Amended Revolving Line Maturity Date would be extended to January 13, 2022.
On January 11, 2022, the Company entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) with SVB. The Second Amendment, among other things, (A) increased the available amount of the line up to the lesser of (i) $10 million or (ii) the available amount under the borrowing base, under a revolving line of credit, (B) allowed for borrowing up to $3 million of the available balance based upon eligible customer purchase orders, (C) reduced the interest rate for account advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.0%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.25%, reduces the interest rate for purchase order advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.5%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.75%, and (D) extended the maturity date to January 13, 2023.
On January 10, 2023, the Company entered into the Third Amendment to the Loan and Security Agreement (the “Third Amendment”) with SVB. The Third Amendment, among other things, extends the Revolving Line Maturity Date to January 13, 2024, provided, however, that (i) if the Company submits a fiscal year 2024 plan of record that is generally acceptable to SVB, and (ii) the minimum net liquidity at the end of November 30, 2023 is at least $20.0 million, the Amended Revolving Line Maturity Date would be extended to January 13, 2025. The Company terminated the revolving line on January 4, 2024.
As of November 30, 2023, the Company had not drawn against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under the line as of November 30, 2023 was $4,212,000. There are no financial covenants in the agreement. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
---|---|
Nov. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES
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.
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 flow. |
SHAREHOLDERS EQUITY |
6 Months Ended |
---|---|
Nov. 30, 2023 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS EQUITY | 7. SHAREHOLDERS’ EQUITY
On August 25, 2021, the Board of Directors authorized management to take actions necessary for the execution of a $75 million shelf registration. A Registration Statement on Form S-3 was filed with the SEC on September 3, 2021. A Prospectus Supplement for an "At the Market" ("ATM") sale of $25 million of common stock was subsequently filed on September 17, 2021. On October 8, 2021, the Company executed the ATM offering by selling 1,696,729 shares of common stock at an average selling price of $14.73 per share. The gross proceeds to the Company were $25.0 million, before commission fees of $0.7 million and offering expenses of $0.3 million. Another Prospectus Supplement for an ATM sale of $25 million of common stock was subsequently filed on February 8, 2023. The Company partially executed the ATM offering by selling 208,917 shares of common stock at an average selling price of $34.78 per share. The gross proceeds to the Company were $7.3 million, before commissions of $0.2 million and offering expenses of $0.2 million. As of November 30, 2023, the remaining amount of the ATM offering was $17.7 million. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | 8. ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in the components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):
|
REVENUE |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | 9. 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 is recognized at a point in time, which is generally upon shipment or delivery and evidenced by transfer of title and risk of loss to the customer. Revenue from services is recognized over time as the customer receives the benefit 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. The Company sells its products primarily through a direct sales force. In certain international markets, the Company sells its products through independent distributors.
Disaggregation of revenue
The following presents information about the Company’s net revenues in different geographic areas, which are based upon ship-to locations, and by product category:
With the exception of the amount of service contracts and extended warranties, the Company’s product net revenues are recognized at a point in time when control transfers to the customer. The following presents net revenues based on timing of recognition:
Contract balances
Accounts receivable are recognized in the period the Company delivers goods or provides services and when the Company’s right to consideration is unconditional. Contract assets include unbilled receivables which represent revenues that are earned in advance of scheduled billings to customers. These amounts are primarily related to product sales where transfer of control has occurred but the Company has not yet invoiced. As of November 30, 2023, unbilled receivables were $2,051,000 and were included in prepaid expenses and other current assets on the accompanying Condensed Consolidated Balance Sheets. Contract assets were not significant as of May 31, 2023. Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities as of November 30, 2023 and May 31, 2023 were $151,000 and $2,853,000, respectively, and were included in deferred revenue, short-term and deferred revenue, long-term on the accompanying Condensed Consolidated Balance Sheets. During the three and six months ended November 30, 2023, the Company recognized $2,101,000 and $2,771,000 in revenue, respectively, which were included in contract liabilities as of May 31, 2023.
Remaining performance obligations
On November 30, 2023, the Company had $83,000 of remaining performance obligations, which were comprised of service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 63.5% of its remaining performance obligations as revenue in the remainder of fiscal 2024, and an additional 36.5% in fiscal 2025 and thereafter. The foregoing excludes the value of other remaining performance obligations, as they have original durations of one year or less and 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 expenses 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. |
STOCK-BASED COMPENSATION |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | 10. STOCK-BASED COMPENSATION
Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), performance RSUs (“PRSUs”), restricted shares, performance restricted shares and employee stock purchase plan (“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, PRSUs, restricted shares and performance restricted shares, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as equity instruments. See Note 13 in the Company’s Annual Report on Form 10-K for fiscal 2023 filed on August 28, 2023 for further information regarding the 2016 Equity Incentive Plan and the ESPP. On October 23, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan and on October 27, 2023, the Company filed the Form S-8 to issue awards during this quarter onwards from a pool of 1,500,000 shares. Full value awards, which are equity awards other than options, stock appreciation rights or other awards that are based solely on an increase in value of the shares following the grant date, when granted or forfeited will be counted as the same number of common stock shares added or deducted to the remaining available shares for issuance under the 2023 Equity Incentive Plan.
The following table summarizes the stock-based compensation expense for the three and six months ended November 30, 2023 and 2022:
There was $170,000 and $120,000 in stock-based compensation expense capitalized as part of inventory as of November 30, 2023 and as of May 31, 2023, respectively.
The Company’s nonvested RSU, PRSU and restricted shares activities during the three and six months ended November 30, 2023, were as follows:
Under the ESPP, the Company issued 24,000 and 109,000 shares, respectively, during the six months ended November 30, 2023 and 2022. As of November 30, 2023 and 2022, there were 373,000 and 499,000 ESPP shares available for issuance, respectively. |
NET INCOME PER SHARE |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | 11. NET INCOME PER SHARE
Basic net income per share is determined using the weighted average number of common shares outstanding during the period. Diluted net income per share is determined using the weighted average number of common shares and potential common shares (representing the hypothetical number of incremental shares issuable under the assumed exercise of outstanding stock options, and vesting of outstanding RSUs and ESPP shares) during the period using the treasury stock method. The calculation of dilutive shares outstanding excludes securities that would have an antidilutive effect on net income per share.
The following table presents the computation of basic and diluted net income per share:
|
SEGMENT AND CONCENTRATION INFORMATION |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND CONCENTRATION INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND CONCENTRATION INFORMATION | 12. SEGMENT AND CONCENTRATION INFORMATION
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.
The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in one operating segment.
Long-lived assets, net by geographic area are as follows:
|
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization | Organization – Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and develops and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the FOX-XP, FOX-NP, and FOX-CP wafer contact and singulated die/module parallel test and burn-in systems, the WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation – The unaudited Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include certain information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2023 audited Consolidated Financial Statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended May 31, 2023. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation – The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated upon consolidation. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Critical Accounting Policies and use of Estimates | Critical Accounting Policies and use of Estimates – The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2023. There have been no significant changes in the Company’s significant accounting policies during the three and six months ended November 30, 2023. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Significant estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value and warranty reserves. Actual results could differ from those estimates. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications | Reclassifications - Certain reclassifications have been made to the prior period Condensed Consolidated Financial Statements to conform to the current period presentation. The reclassifications had no impact on net income, total assets, total liabilities, or shareholders’ equity. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk | Concentration of Credit Risk – Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. The Company had revenues from individual customers in excess of 10% of total revenues as follows:
* Amount was less than 10% of total revenue
The Company had gross accounts receivable from individual customers in excess of 10% of gross accounts receivable as follows:
* Amount was less than 10% of total gross accounts receivable |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements —The Company's accounts receivable are recorded at invoiced amounts less allowance for any credit losses. According to the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13 that the Company adopted on June 1, 2023, the Company recognizes credit losses based on forward-looking current expected credit losses ("CECL"). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses is recognized in the condensed consolidated statements of operations. The uncollectible accounts receivable are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The total allowance for credit losses was $0 at both November 30, 2023 and May 31, 2023, and there was no write-off of accounts receivable for the periods presented. The adoption of ASU 2016-13 did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a significant impact on its Condensed Consolidated Financial Statements. |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial instruments |
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value by hierarchy |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, cash equivalents and investments by security type |
|
BALANCE SHEET INFORMATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for product warranties |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer deposits and deferred revenue, short-term |
|
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the components of accumulated other comprehensive loss, net of tax |
|
REVENUE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenue |
|
STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation costs related to the Company's stock-based compensation |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonvested RSU activity |
|
NET INCOME PER SHARE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income earnings per share |
|
SEGMENT AND CONCENTRATION INFORMATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND CONCENTRATION INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment by geographic region |
|
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
|
Revenue | Customer A | |||||
Concentration Risk, Percentage | 46.90% | 79.00% | 66.90% | 74.00% | |
Revenue | Customer B | |||||
Concentration Risk, Percentage | 34.60% | 0.00% | 20.00% | 0.00% | |
Revenue | Customer C | |||||
Concentration Risk, Percentage | 0.00% | 15.00% | 0.00% | 18.00% | |
Accounts Receivable | Customer A | |||||
Concentration Risk, Percentage | 29.20% | 81.60% | |||
Accounts Receivable | Customer B | |||||
Concentration Risk, Percentage | 22.80% | 16.50% | |||
Accounts Receivable | Customer D | |||||
Concentration Risk, Percentage | 22.60% | 0.00% | |||
Accounts Receivable | Customer E | |||||
Concentration Risk, Percentage | 14.70% | 0.00% |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
6 Months Ended | |
---|---|---|
Nov. 30, 2023 |
May 31, 2023 |
|
Allowance for credit losses | $ 0 | $ 0 |
Revenue [Member] | ||
Concentration risk | 10.00% |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
Assets [Member] | ||
Investment securities | $ 46,606 | $ 44,875 |
U.S. treasury securities | ||
Investment securities | 17,853 | |
Level 1 [Member] | Assets [Member] | ||
Investment securities | 46,606 | 44,875 |
Level 2 [Member] | Assets [Member] | ||
Investment securities | 0 | 0 |
Level 3 [Member] | Assets [Member] | ||
Investment securities | 0 | 0 |
Money Market Funds | ||
Investment securities | 46,606 | 27,022 |
Money Market Funds | Level 1 [Member] | ||
Investment securities | 46,606 | 27,022 |
Money Market Funds | Level 2 [Member] | ||
Investment securities | 0 | 0 |
Money Market Funds | Level 3 [Member] | ||
Investment securities | $ 0 | 0 |
US Treasury Securities | Level 1 [Member] | ||
Investment securities | $ 17,853 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Aug. 31, 2023 |
Nov. 30, 2023 |
May 31, 2023 |
|
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||
Transfer between Level 1 and Level 2 fair value measurements | $ 0 | ||
Restricted cash | $ 150,000 | $ 150,000 | |
Financial liabilities at fair value | $ 0 | $ 0 |
BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
BALANCE SHEET INFORMATION | ||
Raw materials and sub-assemblies | $ 20,717 | $ 15,953 |
Work in process | 11,926 | 5,764 |
Finished goods | 1,174 | 2,191 |
Inventories | $ 33,817 | $ 23,908 |
BALANCE SHEET INFORMATION (Details 1) - USD ($) $ in Thousands |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
BALANCE SHEET INFORMATION | ||
Leasehold improvements | $ 1,553 | $ 1,310 |
Furniture and fixtures | 702 | 706 |
Machinery and equipment | 5,782 | 5,445 |
Test equipment | 3,121 | 2,998 |
Property and equipment, gross | 11,158 | 10,459 |
Less: Accumulated depreciation and amortization | (7,973) | (7,700) |
Property and equipment, net | $ 3,185 | $ 2,759 |
BALANCE SHEET INFORMATION (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
BALANCE SHEET INFORMATION | ||||
Balance at the beginning of the period | $ 232 | $ 424 | $ 267 | $ 410 |
Accruals for warranties issued during the period | 162 | 5 | 227 | 123 |
Adjustments to previously existing warranty accruals | 0 | 0 | 0 | 61 |
Consumption of reserves | (173) | (118) | (273) | (283) |
Balance at the End of the period | $ 221 | $ 311 | $ 221 | $ 311 |
BALANCE SHEET INFORMATION (Details 3) - USD ($) $ in Thousands |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
BALANCE SHEET INFORMATION | ||
Customer deposits | $ 68 | $ 2,690 |
Deferred revenue | 79 | 132 |
Deferred revenue, short-term | $ 147 | $ 2,822 |
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
INCOME TAX | ||||
Provision for income taxes | $ 20 | $ 18 | $ 36 | $ 32 |
BORROWING ARRANGEMENTS (Details Narrative) |
6 Months Ended |
---|---|
Nov. 30, 2023
USD ($)
| |
Original Loan and Security Agreement | |
Balance available to borrow under the line of credit | $ 4,212,000 |
Line of Credit, maximum borrowing | $ 4,000,000.0 |
Variable interest rate | the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75% |
Second Amendment To Loan And Security Agreement | |
Line of Credit, maximum borrowing | $ 10,000,000 |
Variable interest rate | the greater of (a) prime rate plus an additional percentage up to 1.0%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.25%, reduces the interest rate for purchase order advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.5%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.75% |
Revolving line maturity date | Jan. 13, 2023 |
First Amendment to Loan and Security Agreement | |
Revolving line maturity date | Jan. 13, 2022 |
Third Amendment to Loan and Security Agreement | |
Revolving line maturity date | Jan. 13, 2025 |
Revolving line termination date | January 4, 2024 |
Minimum liquidity net | $ 20,000,000.0 |
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Millions |
6 Months Ended | |||
---|---|---|---|---|
Feb. 08, 2023 |
Oct. 08, 2021 |
Nov. 30, 2023 |
Aug. 25, 2021 |
|
SHAREHOLDERS EQUITY | ||||
Sale of common stock price per share | $ 34.78 | $ 14.73 | ||
Sale of common stock shares | 208,917 | 1,696,729 | 72,000 | |
Gross proceeds | $ 7.3 | $ 25.0 | ||
Commission fees | 0.2 | 0.7 | ||
Offering expenses | $ 0.2 | $ 0.3 | ||
Remaining amount of the ATM offering | $ 17.7 | |||
Shelf registration amount | $ 75.0 |
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands |
6 Months Ended |
---|---|
Nov. 30, 2023
USD ($)
| |
Balance at the beginning of the year | $ (155) |
Other comprehensive loss before reclassifications | 21 |
Balance at the ending of the year | (134) |
Unrealized Loss on Investments Net [Member] | |
Balance at the beginning of the year | (17) |
Other comprehensive loss before reclassifications | 17 |
Balance at the ending of the year | 0 |
Cumulative Translation Adjustments [Member] | |
Balance at the beginning of the year | (138) |
Other comprehensive loss before reclassifications | 4 |
Balance at the ending of the year | $ (134) |
REVENUE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Net sales | $ 21,431 | $ 14,815 | $ 42,055 | $ 25,486 |
Europe | ||||
Net sales | 1,833 | 44 | 2,437 | 44 |
Asia | ||||
Net sales | 18,922 | 12,216 | 38,153 | 20,024 |
US [Member] | ||||
Net sales | $ 676 | $ 2,555 | $ 1,465 | $ 5,418 |
REVENUE (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Net sales | $ 21,431 | $ 14,815 | $ 42,055 | $ 25,486 |
Systems [Member] | ||||
Net sales | 10,685 | 7,400 | 18,779 | 16,494 |
Services [Member] | ||||
Net sales | 1,594 | 808 | 2,861 | 1,891 |
Contactors [Member] | ||||
Net sales | $ 9,152 | $ 6,607 | $ 20,415 | $ 7,101 |
REVENUE (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Net sales | $ 21,431 | $ 14,815 | $ 42,055 | $ 25,486 |
Products And Services Transferred At A Point In Time [Member] | ||||
Net sales | 20,974 | 14,427 | 40,985 | 24,681 |
Services Transferred over Time [Member] | ||||
Net sales | $ 457 | $ 388 | $ 1,070 | $ 805 |
REVENUE (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2023 |
Nov. 30, 2025 |
Nov. 30, 2024 |
May 31, 2023 |
|
Contract liabilities | $ 151,000 | $ 151,000 | $ 2,853,000 | ||
Contract assets | 2,051,000 | 2,051,000 | |||
Recognition of contract liabilities | 2,101,000 | 2,771,000 | |||
Remaining performance obligations | $ 83,000 | $ 83,000 | |||
Scenario Forecast [Member] | Subsequent Event | |||||
Remaining performance obligation revenue recognition | 36.50% | 63.50% |
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Total stock-based compensation | $ 638 | $ 793 | $ 1,160 | $ 1,503 |
Cost of Sales | ||||
Total stock-based compensation | 101 | 85 | 164 | 177 |
Selling, General and Administrative | ||||
Total stock-based compensation | 398 | 507 | 704 | 971 |
Research and Development | ||||
Total stock-based compensation | $ 139 | $ 201 | $ 292 | $ 355 |
STOCK-BASED COMPENSATION (Details 1) - Nonvested RSU Activty - $ / shares shares in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2023 |
Aug. 31, 2023 |
|
Unvested May 31, 2023, beginning (in thousands) | 216 | 345 |
Shares, Granted (in thousands) | 203 | |
Shares, Vested (in thousands) | (28) | (77) |
Shares, Forfeited (in thousands) | (1) | (52) |
Unvested August 31, 2023, ending (in thousands) | 390 | 216 |
Weighted Average Grant Date Fair Value Per Share, beginning | $ 6.27 | $ 6.40 |
Granted | 31.51 | |
Vested | 8.02 | 7.16 |
Forfeited | 29.79 | 5.79 |
Weighted Average Grant Date Fair Value Per Share, Ending | $ 19.28 | $ 6.27 |
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
May 31, 2023 |
|
STOCK-BASED COMPENSATION | |||
Awards shares issued | 1,500,000 | ||
Stock-based compensation expense capitalized | $ 170,000 | $ 120,000 | |
Employee stock purchase plan shares available for issuance | 373,000 | 499,000 | |
Employee stock purchase plan shares issued | 24,000 | 109,000 |
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2023 |
Nov. 30, 2022 |
Nov. 30, 2023 |
Nov. 30, 2022 |
|
Net income per share: | ||||
Net income | $ 6,089 | $ 3,725 | $ 10,763 | $ 4,314 |
Denominator: Weighted average shares outstanding | 28,801 | 27,579 | 28,725 | 27,410 |
Dilutive effect of common equivalent shares outstanding | 968 | 1,501 | 975 | 1,524 |
Denominator: Diluted weighted average shares outstanding | 29,769 | 29,080 | 29,700 | 28,934 |
Basic net income (loss) per share | $ 0.21 | $ 0.14 | $ 0.37 | $ 0.16 |
Diluted net income (loss) per share | $ 0.20 | $ 0.13 | $ 0.36 | $ 0.15 |
Antidilutive employee share-based award shares, excluded | 9,000 | 14,000 | 4,000 | 14,000 |
SEGMENT AND CONCENTRATION INFORMATION (Details) - USD ($) $ in Thousands |
Nov. 30, 2023 |
May 31, 2023 |
---|---|---|
Property and equipment, net | $ 3,185 | $ 2,759 |
US [Member] | ||
Property and equipment, net | 3,121 | 2,713 |
International | ||
Property and equipment, net | $ 64 | $ 46 |
_#6?QVV<@3UK(D^>\_U?(
MSSL=]=D+_+(++@S[S&4%3&?L&KBM#&!G.LM>_78P&H[>LBNX!\F&[?S]@@C@
M"PE,J++"E2[GCMJ8^I%]K[2#E)5&) ZTKQ]"MN=DC?,!0:)E)T+A(N&;<6
MT!B?2<$70@HGT$ T[8RM8+[A@GX-8-0"N.Q$Y09\ZZ:L*E$)'@>G>%840G*,
MJZPS5 [\,D_ATN
MXUE"PN2&+.+[)+Z+HS!9DC"*9D_),D[NR7SV(X[BVP7YO*2K$L27L26QO"*Q
MTK;4M"GEOE/*)P^LEKD@MW4&V3'>0MF==O>@?>J>)4S8LTD&]E?BVN[@#-^@
MNXN!YAO\I[LX=05-!>]T!35AUV)+4Y@8.$("^#,8P:5HP6>8 =*N9CFK_KZ5S/<-9U^U>"%
M_(,9=@/9TI5EJ7P_P[(S;+\*LE16$64"WJ?X^FF[T0>MIY)]Z_3@KIR0)^]_
MJY;7-^V>UR"@)OS>Q:-M-6[A%-E>OS4XA#3/1'$AU[/U+-8W[PH[>QTTQ-#1#>5 G#[:M#Z20D.JW)B&+PK8&-!BD-5NBL>=;KQC/
M[TK8A%BN0K:H*:=PN'!W7K>JY&@]\'8D^! MG,HY$P0?)EEZ=FB%XJOY66Q7
M:Q,CQJ[CN2O$5!YR/BZ]# &8[>B,N:_ >-I%JS'6[PA&'F]0?.E[;Z_R>R([/GC=GS
M3K,14T=!I?YN=1,BXK'-;LUQ>5CC7O_5.73F^5<7]L']+8&O3%L3*&5K*NNK
MW*PVG3,T#^&UZWW3'F*T(%*F"IH$[O0@GE=2NK)Y)5IALLF%2]Q0QSU?V!
MZP"UOV1,[B>W1]IP)LFH;;*&5*1?& 5MR#AG.[_:UBC#2]@@Y
M(TUA'K#9/9Q*H];/V[^DRKJM>@E;:.4N%&X"6[(3^-0"5*IU&F92J[ *V.P5
M#&H1LUI6_8(MM'(7"L> +5D&?.H&3K8[4TBYOL(M8+-=,*CDFU6R:AELH96[
M4)@&;,DU9#B!2:6+?0,I? ,Q^X;Y##V\OC7-\@(OW/W,V+5?\/^T *^T L
MV0 -IYPR?A)Y?
M))017V/ZPK>V43&5!\:>BYW+Z6G'+49$$SH1A40D_RWI.4V20DF.X]M:M+.I
M621N;_]0OR@G+R?S$'%ZSI*_XJF8G78&'32EC]$B$;?LY0^ZGE YP E+>/D7
MO:QB^UX'319NJY(,
M