Company Quick10K Filing
Aehr Test Systems
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 0 $0
10-Q 2020-01-14 Quarter: 2019-11-30
10-Q 2019-10-15 Quarter: 2019-08-31
10-K 2019-08-28 Annual: 2019-05-31
10-Q 2019-04-12 Quarter: 2019-02-28
10-Q 2019-01-14 Quarter: 2018-11-30
10-Q 2018-10-12 Quarter: 2018-08-31
10-K 2018-08-28 Annual: 2018-05-31
10-Q 2018-04-12 Quarter: 2018-02-28
10-Q 2018-01-12 Quarter: 2017-11-30
10-Q 2017-10-13 Quarter: 2017-08-31
10-K 2017-08-29 Annual: 2017-05-31
10-Q 2017-04-06 Quarter: 2017-02-28
10-Q 2017-01-13 Quarter: 2016-11-30
10-Q 2016-10-14 Quarter: 2016-08-31
10-K 2016-08-29 Annual: 2016-05-30
10-Q 2016-04-13 Quarter: 2016-02-29
10-Q 2016-01-13 Quarter: 2015-11-30
10-Q 2015-10-14 Quarter: 2015-08-31
10-K 2015-08-31 Annual: 2015-05-31
10-Q 2015-04-14 Quarter: 2015-02-28
10-Q 2015-01-13 Quarter: 2014-11-30
10-Q 2014-10-14 Quarter: 2014-08-31
10-K 2014-08-28 Annual: 2014-05-31
10-Q 2014-04-11 Quarter: 2014-02-28
10-Q 2014-01-13 Quarter: 2013-11-30
10-Q 2013-10-15 Quarter: 2013-08-31
10-K 2013-08-28 Annual: 2013-05-31
10-Q 2013-04-12 Quarter: 2013-02-28
10-Q 2013-01-11 Quarter: 2012-11-30
10-Q 2012-10-12 Quarter: 2012-08-31
10-K 2012-08-28 Annual: 2012-05-31
10-Q 2012-04-13 Quarter: 2012-02-29
10-Q 2012-01-17 Quarter: 2011-11-30
10-Q 2011-10-14 Quarter: 2011-08-31
10-K 2011-08-26 Annual: 2011-05-31
10-Q 2011-04-13 Quarter: 2011-02-28
10-Q 2011-01-13 Quarter: 2010-11-30
10-Q 2010-10-14 Quarter: 2010-08-31
10-K 2010-08-27 Annual: 2010-05-31
10-Q 2010-04-13 Quarter: 2010-02-28
10-Q 2010-01-13 Quarter: 2009-11-30
8-K 2020-01-16 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-01-09 Earnings, Exhibits
8-K 2019-10-22 Shareholder Vote
8-K 2019-10-03 Earnings, Exhibits
8-K 2019-09-09 Amend Bylaw, Exhibits
8-K 2019-09-09 Other Events
8-K 2019-08-21
8-K 2019-07-18 Earnings, Exhibits
8-K 2019-07-17 Officers, Regulation FD, Exhibits
8-K 2019-04-04 Earnings, Exhibits
8-K 2019-02-12 Exit Costs, Officers
8-K 2019-01-10 Earnings, Exhibits
8-K 2018-10-23 Shareholder Vote
8-K 2018-09-27 Earnings, Exhibits
8-K 2018-07-19 Earnings, Exhibits
8-K 2018-04-03 Earnings, Exhibits
8-K 2018-02-27 Enter Agreement, Exhibits
8-K 2017-11-30
AEHR 2019-11-30
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Item 4. Controls and Procedures
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 aehr_ex311.htm
EX-31.2 aehr_ex312.htm
EX-32.1 aehr_ex321.htm

Aehr Test Systems Earnings 2019-11-30

AEHR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
DAIO 36 30 7 26 16 1 3 21 61% 8.0 4%
WTT 33 46 14 53 24 -0 3 32 45% 11.8 -1%
SGMA 17 156 97 293 28 0 7 57 9% 8.3 0%
TIK 13 9 9 14 7 1 1 12 48% 8.6 14%
MICT 9 2 3 4 -0 -7 -6 9 -3% -1.5 -364%
ELTK 5 18 17 0 0 0 0 5 0%
AEHR 0 21 6 21 8 -5 -5 -5 36% 1.2 -25%
EXFO 285 107 0 0 0 0 -0 0%
CLS 3,738 2,405 0 0 0 0 -409 0%
BELFA 450 269 542 103 19 46 60 19% 1.3 4%

10-Q 1 aehr_10q.htm QUARTERLY REPORT Blueprint
 

 
  UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2019
 
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: 000-22893
 
AEHR TEST SYSTEMS
(Exact name of Registrant as specified in its charter)
 
California
 
94-2424084
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
400 Kato Terrace
Fremont, CA
 
94539
(Address of principal executive offices)
 
(Zip Code)
 
(510) 623-9400
(Registrant's telephone number, including area code)
 
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 Exchange 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. Yes ☒ No ☐
 
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).  Yes ☒ No ☐
 
 
 
 
 
 
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 ☐
Non-accelerated filer ☒
Smaller reporting company ☒

Emerging growth company ☐ 
 
If an emerging growth company, indicate 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 ☐ No ☒
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock
AEHR
The NASDAQ Capital Market
 
Number of shares of the registrant’s common stock, $0.01 par value, outstanding as of December 31, 2019 was 22,915,648.
 
 
2
 
AEHR TEST SYSTEMS
 
FORM 10-Q
 
FOR THE QUARTER ENDED NOVEMBER 30, 2019
 
INDEX
 
 
 
 
 
 
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
 
8
 
 
 
 
9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
3
 
PART I. FINANCIAL INFORMATION
 
Item 1. FINANCIAL STATEMENTS (Unaudited)
 
AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
 
 
November 30,
 
 
May 31,
 
 
 
2019
 
 
2019
 
 
  (1)
ASSETS
 
 
 
    
Current assets:
 
 
 
    
  Cash and cash equivalents
 $5,302 
 $5,428 
  Accounts receivable, net
  5,231 
  4,859 
  Inventories
  9,800 
  9,061 
  Prepaid expenses and other current assets
  534 
  686 
 
    
    
    Total current assets
  20,867 
  20,034 
 
    
    
Property and equipment, net
  860 
  1,045 
Operating lease right-of-use assets
  2,387 
  -- 
Other assets
  186 
  228 
 
    
    
    Total assets
 $24,300 
 $21,307 
 
    
    
LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
Current liabilities:
    
    
  Accounts payable
 $2,320 
 $1,933 
  Accrued expenses
  1,596 
  2,034 
  Operating lease liabilities, short-term
  619 
  -- 
  Customer deposits and deferred revenue, short-term
  1,809 
  1,545 
 
    
    
  Total current liabilities
  6,344 
  5,512 
 
    
    
Operating lease liabilities, long-term
  1,924 
  -- 
Deferred rent
  -- 
  153 
Deferred revenue, long-term
  64 
  189 
 
    
    
    Total liabilities
  8,332 
  5,854 
 
    
    
Aehr Test Systems shareholders' equity:
    
    
  Common stock, $0.01 par value:
    Authorized: 75,000 shares;
    
    
    Issued and outstanding: 22,914 shares and 22,669 shares at November 30, 2019 and May 31, 2019, respectively
  229 
  227 
  Additional paid-in capital
  85,194 
  84,499 
  Accumulated other comprehensive income
  2,211 
  2,230 
  Accumulated deficit
  (71,646)
  (71,484)
 
    
    
    Total Aehr Test Systems shareholders' equity
  15,988 
  15,472 
Noncontrolling interest
  (20)
  (19)
 
    
    
    Total shareholders' equity
  15,968 
  15,453 
 
    
    
    Total liabilities and shareholders' equity
 $24,300 
 $21,307 
 
(1) The condensed consolidated balance sheet at May 31, 2019 has been derived
from the audited consolidated financial statements at that date.
 
The accompanying notes are an integral part of these
condensed consolidated financial statements.
 
 
4
 
 
AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 $6,874 
 $5,911 
 $12,407 
 $10,651 
Cost of sales
  3,672 
  3,513 
  6,934 
  6,700 
Gross profit
  3,202 
  2,398 
  5,473 
  3,951 
 
    
    
    
    
Operating expenses:
    
    
    
    
 Selling, general and administrative
  2,157 
  1,977 
  3,965 
  3,856 
 Research and development
  795 
  986 
  1,687 
  2,102 
   Total operating expenses
  2,952 
  2,963 
  5,652 
  5,958 
 
    
    
    
    
Income (loss) from operations
  250 
  (565)
  (179)
  (2,007)
 
    
    
    
    
Interest income (expense), net
  2 
  (74)
  14 
  (152)
Other income, net
  5 
  29 
  15 
  38 
 
    
    
    
    
Income (loss) before income tax expense
  257 
  (610)
  (150)
  (2,121)
 
    
    
    
    
Income tax expense
  (6)
  (19)
  (12)
  (23)
Net income (loss)
  251 
  (629)
  (162)
  (2,144)
  Less: Net income attributable to the noncontrolling interest
  -- 
  -- 
  -- 
  -- 
 
    
    
    
    
Net income (loss) attributable to Aehr Test Systems common shareholders
 $251 
 $(629)
 $(162)
 $(2,144)
 
    
    
    
    
 
    
    
    
    
Net income (loss) per share
    
    
    
    
  Basic
 $0.01 
 $(0.03)
 $(0.01)
 $(0.10)
  Diluted
 $0.01 
 $(0.03)
 $(0.01)
 $(0.10)
 
    
    
    
    
Shares used in per share calculations:
    
    
    
    
  Basic
  22,823 
  22,294 
  22,765 
  22,242 
  Diluted
  22,912 
  22,294 
  22,765 
  22,242 
 
The accompanying notes are an integral part of these
condensed consolidated financial statements.
 
 
5
 
AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 $251 
 $(629)
 $(162)
 $(2,144)
 
    
    
    
    
Other comprehensive income (loss), net of tax:
    
    
    
    
    Net change in cumulative translation, adjustments
  (5)
  (34)
  (20)
  (49)
 
    
    
    
    
Total comprehensive income (loss)
  246 
  (663)
  (182))
  (2,193)
Less: Comprehensive income attributable to the noncontrolling interest
  -- 
  1 
  (1)
  2 
 
    
    
    
    
Comprehensive income (loss), attributable to Aehr Test Systems common shareholders
 $246 
 $(664)
 $(181)
 $(2,195)
 
The accompanying notes are an integral part of these
condensed consolidated financial statements.
 
 
6
 
 
AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Aehr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
Test
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Other
 
 
 
 
 
Systems
 
 
 
 
 
Total
 

 
Common Stock
 
 
Paid-in
 
 
Comprehensive
 
 
Accumulated
 
 
 Shareholders’
 
 
Noncontrolling
 
 
Shareholders'
 
Three Months Ended November 30, 2019
 
Shares
 
 
Amount
 
 
Capital
 
 
 Income
 
 
Deficit
 
 
Equity
 
 
Interest
 
 
Equity
 
Balances, August 31, 2019
  22,721 
 $227 
 $84,760 
 $2,216 
 $(71,897)
 $15,306 
 $(20)
 $15,286 
 
    
    
    
    
    
    
    
    
Issuance of common stock under employee plans
  193 
  2 
  229 
  -- 
  -- 
  231 
  -- 
  231 
Stock-based compensation
  --
 
  --
 
  205
 
  --
 
  --
 
  205
 
  --
 
  205
 
Net loss
  -- 
  -- 
  -- 
  -- 
  251 
  251 
  -- 
  251 
Foreign currency translation adjustment
  -- 
  -- 
  -- 
  (5)
  -- 
  (5)
  -- 
  (5)
 
    
    
    
    
    
    
    
    
Balances, November 30, 2019
  22,914 
 $229 
 $85,194 
 $2,211 
 $(71,646)
 $15,988 
 $(20)
 $15,968 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Aehr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
Test
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Other
 
 
 
 
 
Systems
 
 
 
 
 
Total
 
 
 
Common Stock
 
 
Paid-in
 
 
Comprehensive
 
 
Accumulated
 
 
 Shareholders’
 
 
Noncontrolling
 
 
Shareholders'
 
Six Months Ended November 30, 2019
 
Shares
 
 
Amount
 
 
Capital
 
 
 Income
 
 
Deficit
 
 
Equity
 
 
Interest
 
 
Equity
 
Balances, May 31, 2019
  22,669 
 $227 
 $84,499 
 $2,230 
 $(71,484)
 $15,472 
 $(19)
 $15,453 
 
    
    
    
    
    
    
    
    
Issuance of common stock under employee plans
  245 
  2 
  291 
  -- 
  -- 
  293 
  -- 
  293 
Stock-based compensation
  --
 
  --
 
  404
 
  --
 
  --
 
  404
 
  --
 
  404
 
Net loss
  -- 
  -- 
  -- 
  -- 
  (162)
  (162)
  -- 
  (162)
Foreign currency translation adjustment
  -- 
  -- 
  -- 
  (19)
  -- 
  (19)
  (1)
  (20)
 
    
    
    
    
    
    
    
    
Balances, November 30, 2019
  22,914 
 $229 
 $85,194 
 $2,211 
 $(71,646)
 $15,988 
 $(20)
 $15,968 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Aehr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
Test
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Other
 
 
 
 
 
Systems
 
 
 
 
 
Total
 

 
Common Stock
 
 
Paid-in
 
 
Comprehensive
 
 
Accumulated
 
 
 Shareholders’
 
 
Noncontrolling
 
 
Shareholders'
 
Three Months Ended November 30, 2018
 
Shares
 
 
Amount
 
 
Capital
 
 
 Income
 
 
Deficit
 
 
Equity
 
 
Interest
 
 
Equity
 
Balances, August 31, 2018
  22,245 
 $222 
 $83,405 
 $2,276 
 $(67,764)
 $18,139 
 $(19)
 $18,120 
 
    
    
    
    
    
    
    
    
Issuance of common stock under employee plans
  111 
  2 
  201 
  -- 
  -- 
  203 
  -- 
  203 
Stock-based compensation
  -- 
  -- 
  224 
  -- 
  -- 
  224 
  -- 
  224 
Net income
  -- 
  -- 
  -- 
  -- 
  (629)
  (629)
  -- 
  (629)
Foreign currency translation adjustment
  -- 
  -- 
  -- 
  (35)
  -- 
  (35)
  1 
  (34)
 
    
    
    
    
    
    
    
    
Balances, November 30, 2018
  22,356 
 $224 
 $83,830 
 $2,241 
 $(68,393)
 $17,902 
 $(18)
 $17,884 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Aehr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
Test
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Other
 
 
 
 
 
Systems
 
 
 
 
 
Total
 
 
 
Common Stock
 
 
Paid-in
 
 
Comprehensive
 
 
Accumulated
 
 
 Shareholders’
 
 
Noncontrolling
 
 
Shareholders'
 
Six Months Ended November 30, 2018
 
Shares
 
 
Amount
 
 
Capital
 
 
  Income
 
 
Deficit
 
 
Equity
 
 
Interest
 
 
Equity
 
Balances, May 31, 2018
  22,143 
 $221 
 $83,041 
 $2,292 
 $(66,249)
 $19,305 
 $(20)
 $19,285 
 
    
    
    
    
    
    
    
    
Issuance of common stock under employee plans
  213 
  3 
  309 
  -- 
  -- 
  312 
  -- 
  312 
Stock-based compensation
  --
 
  --
 
  480
 
  --
 
  --
 
  480
 
  --
 
  480
 
Net income
  -- 
  -- 
  -- 
  -- 
  (2,144)
  (2,144)
  -- 
  (2,144)
Foreign currency translation adjustment
  -- 
  -- 
  -- 
  (51)
  -- 
  (51)
  2 
  (49)
 
    
    
    
    
    
    
    
    
Balances, November 30, 2018
  22,356 
 $224 
 $83,830 
 $2,241 
 $(68,393)
 $17,902 
 $(18)
 $17,884 
 
The accompanying notes are an integral part of these
condensed consolidated financial statements.
 
 
7
 
 
AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
 
Six Months Ended
 
 
 
November 30,
 
 
 
2019
 
 
2018
 
Cash flows from operating activities:
 
 
 
 
 
 
  Net loss
 $(162)
 $(2,144)
  Adjustments to reconcile net loss to net cash used in operating activities:
    
    
   Stock-based compensation expense
  404 
  480 
   Recovery of doubtful accounts
  -- 
  (3)
   Depreciation and amortization
  193 
  230 
   Changes in operating assets and liabilities:
    
    
     Accounts receivable
  (372)
  (1,068)
     Inventories
  (627)
  (935)
     Prepaid expenses and other assets
  194 
  23 
     Accounts payable
  389 
  302 
     Accrued expenses
  (438)
  (175)
     Customer deposits and deferred revenue
  139 
  231 
     Deferred rent
  -- 
  84 
     Income taxes payable
  4 
  18 
       Net cash used in operating activities
  (276)
  (2,957)
 
    
    
Cash flows from investing activities:
    
    
     Purchases of property and equipment
  (123)
  (103)
       Net cash used in investing activities
  (123)
  (103)
 
    
    
Cash flows from financing activities:
    
    
     Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards
  293 
  312 
       Net cash provided by financing activities
  293 
  312 
 
    
    
Effect of exchange rates on cash and cash equivalents
  (20)
  (98)
 
    
    
       Net decrease in cash, cash equivalents and restricted cash
  (126)
  (2,846)
 
    
    
Cash, cash equivalents and restricted cash, beginning of period
  5,508 
  16,848 
 
    
    
Cash, cash equivalents and restricted cash, end of period
 $5,382 
 $14,002 
 
    
    
Supplemental disclosure of non-cash flow information:
    
    
  Transfers of property and equipment to inventories
 $112 
 $-- 

The accompanying notes are an integral part of these
condensed consolidated financial statements.
 
 
8
 
 
AEHR TEST SYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
 
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
 
    The accompanying financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations.
 
    In the opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented have been prepared on a basis consistent with the May 31, 2019 audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2019. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.
 
    PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). All significant intercompany balances have been eliminated in consolidation. For the Company’s majority owned subsidiary, Aehr Test Systems Japan K.K., the noncontrolling interest of the portion the Company does not own was reflected on the Condensed Consolidated Balance Sheets in Shareholders’ Equity and in the Condensed Consolidated Statements of Operations.
 
    ACCOUNTING ESTIMATES. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for sales and revenue allowances, the allowance for doubtful accounts, inventory valuations, income taxes, stock-based compensation expenses, and product warranties, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates.
 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2019. There have been no significant changes in the Company’s significant accounting policies during the three and six months ended November 30, 2019, except for the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Update No. 2016-02, Leases, as discussed in Note “2. RECENT ACCOUNTING PRONOUNCEMENTS.”
 
 
 
 
9
 
 
2. RECENT ACCOUNTING PRONOUNCEMENTS
 
Accounting Standards Adopted
 
    Financial Instruments
    In January 2016, the FASB issued an accounting standard update related to the recognition and measurement of financial assets and financial liabilities. This standard changes accounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this standard clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company adopted this new standard in fiscal year 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.
 
    Leases
    In February 2016, the FASB issued ASC Update No. 2016-02, Leases (FASB ASC Topic 842, Leases). The Company adopted the standard as of June 1, 2019, using the modified retrospective approach and the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leasing rules on the date of adoption and recognized the cumulative effect of initially applying the standard as an adjustment to its opening balance sheet, rather than at the earliest comparative period presented in the financial statements. Prior periods presented are in accordance with the previous lease guidance under FASB ASC Topic 840, Leases.
 
    In addition, the Company applied the package of practical expedients permitted under FASB ASC Topic 842 transition guidance to its entire lease portfolio at June 1, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases and (iii) the treatment of initial direct costs for any existing leases. Furthermore, the Company elected not to separate lease and non-lease components for the majority of its leases. Instead, for all applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component.
 
    As a result of adopting FASB ASC Topic 842, Leases on June 1, 2019, the Company recognized right-of-use assets of $2.7 million and corresponding liabilities of $2.8 million for its existing operating lease portfolio on its unaudited condensed consolidated balance sheet. Operating lease right-of-use assets are presented within Operating lease right-of-use assets and corresponding liabilities are presented within Operating lease liabilities, short-term and Operating lease liabilities, long-term on the Company’s unaudited condensed consolidated balance sheet. There was no material impact to the Company’s unaudited condensed consolidated statements of operations or unaudited condensed consolidated statements of cash flows. Please refer to Note “11. LEASES” for information regarding the Company’s lease portfolio as of November 30, 2019 as accounted for under FASB ASC Topic 842, Leases.
 
Accounting Standards Not Yet Adopted
 
    Financial Instruments
    In June 2016, the FASB issued an accounting standard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning in the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. The Company does not expect a material impact of this accounting standard on its consolidated financial statements.
 
 
10
 

 
3. REVENUE
 
Revenue recognition
 
    The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.
 
    Performance obligations include sales of systems, contactors, spare parts, and services, as well as installation and training services included in customer contracts.
 
    A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period.
 
    For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.
 
    Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.
 
    The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year.
 
Disaggregation of revenue
 
    The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar.
 
 

 
 
11
 
 
    The Company’s revenues by product category are as follows (in thousands):
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Type of good / service:
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 $3,027 
 $3,712 
 $5,961 
 $5,518 
Contactors
  3,046 
  943 
  4,696 
  2,096 
Services
  801 
  1,256 
  1,750 
  3,037 
 
 $6,874 
 $5,911 
 $12,407 
 $10,651 
 
    
    
    
    
Product lines:
    
    
    
    
Wafer-level
 $6,335 
 $4,226 
 $11,161 
 $6,195 
Test During Burn-In
  539 
  1,685 
  1,246 
  4,456 
 
 $6,874 
 $5,911 
 $12,407 
 $10,651 
 
    The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Geographic region:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 $2,627 
 $4,509 
 $7,684 
 $7,204 
Asia
  3,529 
  1,334 
  3,867 
  3,068 
Europe
  718 
  68 
  856 
  379 
 
 $6,874 
 $5,911 
 $12,407 
 $10,651 
 
    
    
    
    
    With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at the point in time when control transfers to customers.
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Timing of revenue recognition:
 
 
 
 
 
 
 
 
 
 
 
 
Products and services transferred at a point in time
 $6,322 
 $5,272 
 $11,181 
 $9,390 
Services transferred over time
  552 
  639 
  1,226 
  1,261 
 
 $6,874 
 $5,911 
 $12,407 
 $10,651 
 
Contract balances
 
    A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset.
 
12
 
 
    Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of deferred revenue. Contract liabilities as of November 30, 2019 and May 31, 2019 were $1,873,000 and $1,734,000, respectively. During the three and six months ended November 30, 2019, the Company recognized $132,000 and $1,181,000, respectively, of revenues that were included in contract liabilities as of May 31, 2019.
 
Remaining performance obligations
 
    On November 30, 2019, the Company had $415,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 50% of its remaining performance obligations as revenue in fiscal 2020, and an additional 50% in fiscal 2021 and thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation.
 
Costs to obtain or fulfill a contract
 
    The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expense as the amortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing process.
 
4. EARNINGS PER SHARE
 
    Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, RSUs and ESPP shares) outstanding during the period using the treasury stock method.
 
    The following table presents the computation of basic and diluted net (loss) income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data):
 

 
 
 
13
 
 
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator: Net income (loss)
 $251 
 $(629)
 $(162)
 $(2,144)
 
    
    
    
    
Denominator for basic net income (loss) per share:
    
    
    
    
Weighted average shares outstanding
  22,823 
  22,294 
  22,765 
  22,242 
 
    
    
    
    
Shares used in basic net income (loss) per share calculation
  22,823 
  22,294 
  22,765 
  22,242 
Effect of dilutive securities
  89 
  -- 
  -- 
  -- 
 
    
    
    
    
Denominator for diluted net income (loss) per share
  22,912 
  22,294 
  22,765 
  22,242 
 
    
    
    
    
Basic net income (loss) per share
 $0.01 
 $(0.03)
 $(0.01)
 $(0.10)
Diluted net income (loss) per share
 $0.01 
 $(0.03)
 $(0.01)
 $(0.10)
 
    For the purpose of computing diluted earnings per share, the weighted average number of potential common shares does not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be antidilutive. Stock options to purchase 2,919,000 shares of common stock were outstanding as of November 30, 2019, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be antidilutive. In the three months ended November 30, 2018 and six months ended November 30, 2019 and 2018, potential common shares were not included in the calculation of diluted net loss per share as the effect would be antidilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for these periods are the same. Stock options to purchase 3,373,000 shares of common stock, RSUs for 38,000 shares and ESPP rights to purchase 327,000 ESPP shares were outstanding as of November 30, 2018, but were not included in the computation of diluted net loss per share because the inclusion of such shares would be antidilutive. The 2,657,000 shares convertible under the 9% Convertible Secured Notes (the “Convertible Notes”) outstanding at November 30, 2018 were not included in the computation of diluted net loss per share because the inclusion of such shares would be antidilutive.
 
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The Company’s financial instruments are measured at fair value consistent with authoritative guidance. This authoritative guidance defines fair value, establishes a framework for using fair value to measure assets and liabilities, and disclosures required related to fair value measurements.
 
    The guidance establishes a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:
 
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
 
 
14
 
Level 2 - instrument valuations are obtained from readily-available pricing sources for comparable instruments.
 
Level 3 - instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value.
 
    The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of November 30, 2019 (in thousands):
 
 
 
Balance as of
 
 
 
 
 
 
 
 
 
 
 
 
November 30, 2019
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
Money market funds
 $1,838 
 $1,838 
 $-- 
 $-- 
Assets
 $1,838 
 $1,838 
 $-- 
 $-- 
 
    The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2019 (in thousands):
 
 
 
Balance as of
May 31, 2019
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
Money market funds
 $3,017 
 $3,017 
 $-- 
 $-- 
Assets
 $3,017 
 $3,017 
 $-- 
 $-- 
 
    Included in Money market funds as of November 30, 2019 and May 31, 2019 is $80,000 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, 2019 and May 31, 2019.
 
    There were no transfers between Level 1 and Level 2 fair value measurements during the three and six months ended November 30, 2019.
 
    The carrying amounts of financial instruments including cash, cash equivalents, receivables, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities.
 
6. ACCOUNTS RECEIVABLE, NET
 
    Accounts receivable represent customer trade receivables. As of November 30, 2019 and May 31, 2019, there were no allowances for doubtful accounts. Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. The Company’s allowance for doubtful accounts is based upon historical experience and review of trade receivables by aging category to identify specific customers with known disputes or collection issues. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.
 
7. INVENTORIES
 
    Inventories are comprised of the following (in thousands):
 
 
 
15
 
 
 
 
 
November 30,
 
 
May 31,
 
 
 
2019
 
 
2019
 
Raw materials and sub-assemblies
 $6,562 
 $5,471 
Work in process
  3,053 
  3,580 
Finished goods
  185 
  10 
 
 $9,800 
 $9,061 
 
8. PRODUCT WARRANTIES
 
    The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the 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, 2019 and 2018 (in thousands):
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 $192 
 $160 
 $154 
 $135 
 
    
    
    
    
Accruals for warranties issued during the period
  79 
  71 
  141 
  146 
Consumption of reserves
  (81)
  (68)
  (105)
  (118)
 
    
    
    
    
Balance at the end of the period
 $190 
 $163 
 $190 
 $163 
 
    The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets.
 
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM
 
    Customer deposits and deferred revenue, short-term (in thousands):
 
 
 
November 30,
 
 
 May 31,
 
 
 
2019
 
 
2019
 
Customer deposits
 $1,458 
 $1,003 
Deferred revenue
  351 
  542 
 
 $1,809 
 $1,545 
 
10. 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.
 
16
 
 
    Since fiscal 2009, a full valuation allowance was established against all deferred tax assets as management determined that it is more likely than not that certain deferred tax assets will not be realized.
 
    The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not expect any material change in its unrecognized tax benefits over the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.
 
11. LEASES
 
    The Company has only operating leases for real estate including corporate offices, warehouse space and certain equipment. A lease with an initial term of 12 months or less is generally not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or renew the arrangement that the Company is reasonably certain to exercise (short-term leases). The Company recognizes lease expense on a straight-line basis over the lease term for short-term leases that the Company does not record on its balance sheet. The Company’s operating leases have remaining lease terms of 1 to 4 years.
 
    The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of the arrangement. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable.
 
    As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.
 
    The weighted-average remaining lease term for the Company’s operating leases was 3.7 years at November 30, 2019 and the weighted-average discount rate was 5.5%.
 
    The Company’s operating lease cost was $183,000 and $366,000 for the three and six months ended November 30, 2019, respectively.
 
    The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands):
 
 
 
Three Months Ended
November 30, 2019
 
 
Six Months Ended
November 30, 2019
 
Cash paid for amounts included in the measurement of operating lease liabilities
 
 
 
 
 
 
Operating cash flows from operating leases
 $184 
 $366 
 
 
17
 
 
    The following table presents the maturities of the Company’s operating lease liabilities as of November 30, 2019 (in thousands):
 
Fiscal year
 
Operating Leases
 
2020 (excluding the first six months of 2020)
 $366 
2021
  754 
2022
  772 
2023
  795 
2024
  132 
Thereafter
  -- 
Total future minimum operating lease payments
 $2,819 
Less: imputed interest
  276 
Present value of operating lease liabilities
 $2,543 
 
12. STOCK-BASED COMPENSATION
 
    Stock-based compensation expense consists of expenses for stock options, restricted stock units, or RSUs, and employee stock purchase plan, or ESPP, purchase rights. Stock-based compensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, stock-based compensation cost is based on the fair value of the Company’s common stock at the grant date. All of the Company’s stock-based compensation is accounted for as an equity instrument. See Note 10 in the Company’s Annual Report on Form 10-K for fiscal 2019 filed on August 28, 2019 for further information regarding the 2016 Equity Incentive Plan and the Amended and Restated 2006 ESPP.
 
    The following table summarizes the stock-based compensation expense for the three and six months ended November 30, 2019 and 2018 (in thousands):
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
 November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
 $19 
 $23 
 $39 
 $59 
Selling, general and administrative
  135 
  136 
  264 
  284 
Research and development
  51 
  65 
  101 
  137 
Total stock-based compensation
 $205 
 $224 
 $404 
 $480 
 
    As of November 30, 2019 and 2018, there were no stock-based compensation expenses capitalized as part of inventory.
 
    During the three months ended November 30, 2019 and 2018, the Company recorded stock-based compensation expense related to stock options and RSUs of $163,000 and $166,000, respectively. During the six months ended November 30, 2019 and 2018, the Company recorded stock-based compensation expense related to stock options and RSUs of $313,000 and $339,000, respectively.
 
18
 
 
    As of November 30, 2019, the total compensation expense related to unvested stock-based awards under the Company’s 2016 Equity Incentive Plan, but not yet recognized, was approximately $1,405,000, which is net of estimated forfeitures of $4,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 3.0 years.
 
    During the three months ended November 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $42,000 and $58,000, respectively. During the six months ended November 30, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $91,000 and $141,000, respectively.
 
    As of November 30, 2019, the total compensation expense related to purchase rights under the ESPP but not yet recognized was approximately $117,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 0.9 years.
 
Valuation Assumptions
 
    Valuation and Amortization Method. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model and a single option award approach. The fair value under the single option approach is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
 
    Expected Term. The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as evidenced by changes to the terms of its stock-based awards.
 
    Volatility. Volatility is a measure of the amounts by which a financial variable such as stock price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility for the past four or five years, which matches the expected term of most of the option grants, to estimate expected volatility. Volatility for each of the ESPP’s four time periods of six months, twelve months, eighteen months, and twenty-four months is calculated separately and included in the overall stock-based compensation expense recorded.
 
    Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock awards including the ESPP.
 
    Fair Value. The fair value of the Company’s stock options granted to employees for the three and six months ended November 30, 2019 and 2018 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model:
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
November 30,
 
 
November 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected term (in years)
  5 
  5 
  5 
  5 
Volatility
  0.72 
  0.70 
  0.71 
  0.72 
Risk-free interest rate
  1.60%
  3.01%
  1.85%
  2.84%
Weighted average grant date fair value
 $1.05 
 $1.21 
 $0.98 
 $1.38 
 
 
 
19
 
 
   The fair values of the ESPP purchase rights granted for the three and six months ended November 30, 2019 were estimated using the following weighted-average assumptions:
 
 
 
Three and Six Months Ended
 
 
 
November 30, 2019
 
 
 
 
 
Expected term (in years)
  0.5-2.0 
Volatility
  0.62-0.71 
Expected dividend
 $0.00 
Risk-free interest rates
  1.56% - 1.81%
Estimated forfeiture rate
  0%
Weighted average grant date fair value
 $0.80 
 
    During the three and six months ended November 30, 2019, ESPP purchase rights of 38,000 were granted. During the three and six months ended November 30, 2018, ESPP purchase rights of 327,000 were granted. Total ESPP shares issued during the three and six months ended November 30, 2019 and 2018 were 71,000 and 64,000 shares, respectively. As of November 30, 2019, there were 299,000 ESPP shares available for issuance.
 
    The following tables summarize the Company’s stock option and RSU transactions during three and six months ended November 30, 2019 (in thousands):
 
 
 
Available
 
 
 
Shares
 
Balance, May 31, 2019
  1,147 
 
    
  Options granted
  (527)
  Options cancelled
  151 
  Options expired
  (119)
 
    
Balance, August 31, 2019
  652 
  Options reserved
  1,196 
  Options granted
  (58)
  Options cancelled
  280 
  Options expired
  (256)
 
    
Balance, November 30, 2019
  1,814 
 
 
 
 
20
 
 
    The following table summarizes the stock option transactions during the three and six months ended November 30, 2019 (in thousands, except per share data):
 
 
 
Outstanding Options
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
Number
 
 
Average
 
 
Aggregate
 
 
 
of
 
 
Exercise
 
 
Intrinsic