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REVENUE | 9 Months Ended
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Feb. 28, 2022
REVENUE |
REVENUE | 3. REVENUE Revenue recognition The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. Performance obligations include sales of systems, contactors, spare parts, and services, as well as installation and training services included in customer contracts. A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less. The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. The Company sells its products primarily through a direct sales force. In certain international markets, the Company sells its products through independent distributors. The Company considers revenue to be earned when all of the following criteria are met:
| · | The Company has a contract with a customer that creates enforceable rights and obligations,
| · | Promised performance obligations are identified,
| · | The transaction price, or the amount we expect to receive, is determinable and
| · | The Company has satisfied the performance obligations to the customer.
Transfer of control is evidenced upon passage of title and risk of loss to the customer unless we are required to provide additional services. Disaggregation of revenue The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar. The Company’s revenues by product category are as follows (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | February 28, |  |  | February 28, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Type of good / service: |  |  |  |  |  |  |  |  |  |  |  |
Systems |  | $ | 7,172 |  |  | $ | 2,435 |  |  | $ | 14,805 |  |  | $ | 3,407 |
Contactors |  |  | 7,426 |  |  |  | 1,930 |  |  |  | 13,468 |  |  |  | 3,330 |
Services |  |  | 685 |  |  |  | 902 |  |  |  | 2,267 |  |  |  | 2,225 |
|  | $ | 15,283 |  |  | $ | 5,267 |  |  | $ | 30,540 |  |  | $ | 8,962 |
Product lines: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wafer-level |  | $ | 14,879 |  |  | $ | 4,993 |  |  | $ | 29,130 |  |  | $ | 7,804 |
Test During Burn-In |  |  | 404 |  |  |  | 274 |  |  |  | 1,410 |  |  |  | 1,158 |
|  | $ | 15,283 |  |  | $ | 5,267 |  |  | $ | 30,540 |  |  | $ | 8,962 |
The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | February 28, |  |  | February 28, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Geographic region: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 1,057 |  |  | $ | 1,113 |  |  | $ | 2,458 |  |  | $ | 3,124 |
Asia |  |  | 14,213 |  |  |  | 4,122 |  |  |  | 28,066 |  |  |  | 5,723 |
Europe |  |  | 13 |  |  |  | 32 |  |  |  | 16 |  |  |  | 115 |
|  | $ | 15,283 |  |  | $ | 5,267 |  |  | $ | 30,540 |  |  | $ | 8,962 |
With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | February 28, |  |  | February 28, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Timing of revenue recognition: |  |  |  |  |  |  |  |  |  |  |  |
Products and services transferred at a point in time |  | $ | 14,932 |  |  | $ | 4,944 |  |  | $ | 29,492 |  |  | $ | 7,728 |
Services transferred over time |  |  | 351 |  |  |  | 323 |  |  |  | 1,048 |  |  |  | 1,234 |
|  | $ | 15,283 |  |  | $ | 5,267 |  |  | $ | 30,540 |  |  | $ | 8,962 |
Contract balances A receivable is recognized in the period the Company delivers goods or provides services or when the Company’s right to consideration is unconditional. The Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities are reported on the Condensed Consolidated Balance Sheets at the end of each reporting period as a component of deferred revenue. Contract liabilities as of February 28, 2022 and May 31, 2021 were $6,287,000 and $288,000, respectively. During the three and nine months ended February 28, 2022, the Company recognized $22,000 and $163,000 respectively, of revenues that were included in contract liabilities as of May 31, 2021. Remaining performance obligations On February 28, 2022, the Company had $225,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 14% of its remaining performance obligations as revenue in fiscal 2022, and an additional 86% in fiscal 2023 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.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 + Details
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