Aehr Test Systems (AEHR) 10-Q 13 Apr 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Feb. 29, 2016	Mar. 31, 2016
Document And Entity Information
Entity Registrant Name	AEHR TEST SYSTEMS
Entity Central Index Key	1,040,470
Document Type	10-Q
Document Period End Date	Feb. 29, 2016
Amendment Flag	false
Current Fiscal Year End Date	--05-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		13,164,396
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015	[1]
ASSETS
Cash and cash equivalents	$ 2,472	$ 5,527
Accounts receivable, net	1,947	1,383
Inventories	7,378	7,123
Prepaid expenses and other	297	262
Total current assets	12,094	14,295
Property and equipment, net	1,251	478
Other assets	94	95
Total assets	13,439	14,868
LIABILITIES AND SHAREHOLDERS' EQUITY
Line of credit	2,000	0
Accounts payable	1,883	724
Accrued expenses	1,458	1,045
Customer deposits and deferred revenue, short-term	2,026	4,750
Total current liabilities	7,367	6,519
Long-term debt, net of debt issuance costs	3,917	3,791
Income taxes payable	0	8
Deferred revenue, long-term	127	0
Total liabilities	11,411	10,318
Aehr Test Systems shareholders' equity:
Common stock, $0.01 par value: Authorized: 75,000 shares: Issued and outstanding: 13,164 shares and 12,857 shares at February 29, 2016 and May 31, 2015, respectively	132	129
Additional paid-in capital	57,770	56,547
Accumulated other comprehensive income	2,213	2,231
Accumulated deficit	(58,068)	(54,339)
Total Aehr Test Systems shareholders' equity	2,047	4,568
Noncontrolling interest	(19)	(18)
Total shareholders' equity	2,028	4,550
Total liabilities and shareholders' equity	$ 13,439	$ 14,868
[1]	The condensed consolidated balance sheet at May 31, 2015 has been derived from the audited consolidated financial statements at that date.

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Feb. 29, 2016	May. 31, 2015
Condensed Consolidated Balance Sheets Parenthetical
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	13,164,000	12,857,000
Common stock, shares outstanding	13,164,000	12,857,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Income Statement [Abstract]
Net sales	$ 1,677	$ 2,027	$ 12,930	$ 8,200
Cost of sales	1,508	1,175	7,687	5,044
Gross profit	169	852	5,243	3,156
Operating expenses:
Selling, general and administrative	1,695	1,584	5,253	4,944
Research and development	1,293	1,031	3,278	3,095
Total operating expenses	2,988	2,615	8,531	8,039
Loss from operations	(2,819)	(1,763)	(3,288)	(4,883)
Interest expense	(165)	(7)	(437)	(29)
Other (expense) income, net	(24)	110	7	201
Loss before income tax benefit (expense)	(3,008)	(1,660)	(3,718)	(4,711)
Income tax benefit (expense)	33	(66)	(11)	(36)
Net Loss	(2,975)	(1,726)	(3,729)	(4,747)
Less: Net income attributable to the noncontrolling interest	0	0	0	0
Net loss attributable to Aehr Test Systems common shareholders	$ (2,975)	$ (1,726)	$ (3,729)	$ (4,747)
Net loss per share - basic and diluted	$ (0.23)	$ (0.14)	$ (0.29)	$ (0.40)
Shares used in per share calculations - Basic and Diluted (in thousands)	13,164	12,677	13,058	11,931

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (2,975)	$ (1,726)	$ (3,729)	$ (4,747)
Other comprehensive income (loss), net of tax: Net change in cumulative translation adjustment	23	(111)	(19)	(223)
Total comprehensive loss	(2,952)	(1,837)	(3,748)	(4,970)
Less: Comprehensive (loss) income attributable to the noncontrolling interest	(1)	0	(1)	3
Comprehensive loss, attributable to Aehr Test Systems	$ (2,951)	$ (1,837)	$ (3,747)	$ (4,973)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Feb. 29, 2016		Feb. 28, 2015
Cash flows from operating activities:
Net loss	$ (3,729)		$ (4,747)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	786		693
Provision for (recovery of) doubtful accounts	8		(44)
Amortization of debt issuance costs	126		0
Depreciation and amortization	123		98
Changes in operating assets and liabilities:
Accounts receivable	(592)		2,584
Inventories	(275)		(706)
Prepaid expenses and other	(34)		(129)
Accounts payable	1,068		6
Accrued expenses	434		(71)
Customer deposits and deferred revenue	(2,597)		663
Income taxes payable	(25)		21
Deferred rent	0		(8)
Net cash used in operating activities	(4,707)		(1,640)
Cash flows from investing activities:
Purchases of property and equipment	(890)		(106)
Net cash used in investing activities	(890)		(106)
Cash flows from financing activities:
Line of credit borrowings (repayments), net	2,000		(662)
Proceeds from issuance of common stock under private placement, net of issuance costs	0		2,574
Proceeds from issuance of common stock under employee plans	460		553
Net cash provided by financing activities	2,460		2,465
Effect of exchange rates on cash	82		(254)
Net (decrease) increase in cash and cash equivalents	(3,055)		465
Cash and cash equivalents, beginning of period	5,527	[1]	1,809
Cash and cash equivalents, end of period	2,472		2,274
Supplemental disclosure of non-cash flow information
Net change in capitalized share-based compensation	$ (20)		$ 29
[1]	The condensed consolidated balance sheet at May 31, 2015 has been derived from the audited consolidated financial statements at that date.

1. BASIS OF PRESENTATION

1. BASIS OF PRESENTATION	9 Months Ended
	Feb. 29, 2016
Disclosure Text Block [Abstract]
1. BASIS OF PRESENTATION	1. BASIS OF PRESENTATION 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, 2015 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, 2015. 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," "we," "us," and "our"). All significant intercompany balances have been eliminated in consolidation. For our majority owned subsidiary, Aehr Test Systems Japan K.K., we reflected the noncontrolling interest of the portion we do not own on our Consolidated Balance Sheets in Shareholders’ Equity and in the 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 revenue adjustments, the allowance for doubtful accounts, inventory reserves, income taxes, stock-based compensation expenses, and product warranties, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates. 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, 2015. There have been no changes in our significant accounting policies during the nine months ended February 29, 2016.

2. STOCK-BASED COMPENSATION

2. STOCK-BASED COMPENSATION	9 Months Ended
	Feb. 29, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
2. STOCK-BASED COMPENSATION	2. STOCK-BASED COMPENSATION Stock-based compensation expense consists of expenses for stock options and employee stock purchase plan, or ESPP, shares. Stock-based compensation cost 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. All of the Company’s stock-based compensation is accounted for as an equity instrument. See Notes 12 and 13 in the Company’s Annual Report on Form 10-K for fiscal 2015 filed on August 28, 2015 for further information regarding the stock option plan and the ESPP. The following table summarizes compensation costs related to the Company’s stock-based compensation for the three and nine months ended February 29, 2016 and February 28, 2015 (in thousands): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Stock-based compensation in the form of employee stock options and ESPP shares, included in: Cost of sales $ 20 $ 17 $ 62 $ 47 Selling, general and administrative 145 148 569 508 Research and development 48 54 155 138 Total stock-based compensation $ 213 $ 219 $ 786 $ 693 As of February 29, 2016, there were no stock-based compensation costs capitalized as part of inventory. As of February 28, 2015, stock-based compensation costs of $53,000 were capitalized as part of inventory. During the three months ended February 29, 2016 and February 28, 2015, the Company recorded stock-based compensation related to stock options of $190,000 and $182,000, respectively. During the nine months ended February 29, 2016 and February 28, 2015, the Company recorded stock-based compensation related to stock options of $708,000 and $589,000, respectively. As of February 29, 2016, the total compensation cost related to unvested stock-based awards under the Company’s 1996 Stock Option Plan and 2006 Equity Incentive Plan, but not yet recognized, was approximately $1,270,000, which is net of estimated forfeitures of $3,000. This cost will be amortized on a straight-line basis over a weighted average period of approximately 2.2 years. During the three months ended February 29, 2016 and February 28, 2015, the Company recorded stock-based compensation related to the ESPP of $23,000 and $37,000, respectively. During the nine months ended February 29, 2016 and February 28, 2015, the Company recorded stock-based compensation related to the ESPP of $78,000 and $104,000, respectively. As of February 29, 2016, the total compensation cost related to purchase rights under the ESPP but not yet recognized was approximately $51,000. This cost 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. Expected 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 cost recorded. Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes option valuation model. 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. Estimated Forfeitures. When estimating forfeitures, the Company considers voluntary termination behavior as well as analysis of actual option forfeitures. Fair Value. The fair value of the Company’s stock options granted to employees for the three and nine months ended February 29, 2016 and February 28, 2015 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Option plan shares Expected term (in years) 4 4 4 4 Volatility 0.80 0.90 0.86 0.91 Expected dividend $ 0.00 $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 1.23 % 1.16 % 1.21 % 1.25 % Estimated forfeiture rate 0.25 % 0.25 % 0.25 % 0.25 % Weighted average grant date fair value $ 0.80 $ 1.62 $ 1.31 $ 1.64 There were no Restricted Stock Units (RSUs) granted to employees for the three months ended February 29, 2016. During the nine months ended February 29, 2016, RSUs were granted for 35,000 shares. The market value on the date of the grant was $2.16 per share. The RSUs are performance based and immediately vest upon attainment of goals established. The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2015 were estimated using the following weighted-average assumptions: Nine Months Ended February 28, 2015 Expected term (in years) 0.5-2.0 Volatility 0.55-0.83 Expected dividend $ 0.00 Risk-free interest rates 0.04%-0.53 % Estimated forfeiture rate 0 % Weighted average grant date fair value $ 1.47 There were no ESPP purchase rights granted during the three and nine months ended February 29, 2016, and three months ended February 28, 2015. During the nine months ended February 28, 2015, ESPP purchase rights of 170,000 were granted. Total ESPP shares issued during the nine months ended February 29, 2016 and February 28, 2015 were 36,000 and 43,000 shares, respectively. As of February 29, 2016, there were 232,000 ESPP shares available for issuance. The following table summarizes the stock option transactions during the three and nine months ended February 29, 2016 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate Available of Exercise Intrinsic Shares Shares Price Value Balances, May 31, 2015 845 3,686 $ 1.66 $ 2,946 Options granted -- -- -- Options terminated 122 (122 ) $ 2.04 Options exercised -- (130 ) $ 1.72 Balances, August 31, 2015 967 3,434 $ 1.63 $ 2,587 Additional shares reserved 800 -- Options granted (82 ) 82 $ 2.22 Options terminated 15 (15 ) $ 1.61 Options exercised -- (116 ) $ 0.91 Balances, November 30, 2015 1,700 3,385 $ 1.67 $ 1,643 Options granted (11 ) 11 $ 1.36 Options terminated 110 (110 ) $ 2.19 Options exercised -- -- -- Balances, February 29, 2016 1,799 3,286 $ 1.66 $ 294 Options fully vested and expected to vest at February 29, 2016 3,220 $ 1.66 $ 288 Options exercisable at February 29, 2016 2,339 $ 1.47 $ 293 The options outstanding and exercisable at February 29, 2016 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at February 29, 2016 at February 29, 2016 Range of Exercise Prices Number Outstanding Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.59-$0.97 578 3.07 $ 0.68 577 3.07 $ 0.68 $ 1.09-$1.40 1,214 3.37 $ 1.28 1,001 3.18 $ 1.28 $ 1.73-$2.06 248 4.95 $ 1.88 216 5.02 $ 1.90 $ 2.10-$2.71 1,246 5.70 $ 2.43 545 5.55 $ 2.47 $ 0.59-$2.71 3,286 4.32 $ 1.66 2,339 3.87 $ 1.47 $ 293 The total intrinsic value of options exercised during the nine months ended February 29, 2016 was $185,000. There were no options exercised in the three months ended February 29, 2016. The total intrinsic value of options exercised during the three and nine months ended February 28, 2015 was $30,000 and $466,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at February 29, 2016 was 4.32 years.

3. EARNINGS PER SHARE

3. EARNINGS PER SHARE	9 Months Ended
	Feb. 29, 2016
Earnings Per Share [Abstract]
3. EARNINGS PER SHARE	3. 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, and employee stock purchase plan shares) outstanding during the period using the treasury stock method. The following table presents the computation of basic and diluted net loss per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Numerator: Net loss $ (2,975 ) $ (1,726 ) $ (3,729 ) $ (4,747 ) Denominator for basic net loss per share: Weighted-average shares outstanding 13,164 12,677 13,058 11,931 Shares used in basic net loss per share calculation 13,164 12,677 13,058 11,931 Effect of dilutive securities -- -- -- -- Denominator for diluted net loss per share 13,164 12,677 13,058 11,931 Basic net loss per share $ (0.23 ) $ (0.14 ) $ (0.29 ) $ (0.40 ) Diluted net loss per share $ (0.23 ) $ (0.14 ) $ (0.29 ) $ (0.40 ) For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. In the three and nine months ended February 29, 2016 and February 28, 2015, potential common shares have not been included in the calculation of diluted net loss per share as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for these periods are the same. Stock options to purchase 3,286,000 shares of common stock and ESPP rights to purchase 131,000 ESPP shares were outstanding as of February 29, 2016 but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. Stock options to purchase 3,402,000 shares of common stock and ESPP rights to purchase 175,000 ESPP shares were outstanding as of February 28, 2015, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.

4. FAIR VALUE OF FINANCIAL INST

4. FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Feb. 29, 2016
Fair Value Disclosures [Abstract]
4. FAIR VALUE OF FINANCIAL INSTRUMENTS	4. 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. 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 and liabilities measured at fair value on a recurring basis as of February 29, 2016 (in thousands): Balance as of February 29, 2016 Level 1 Level 2 Level 3 Money market funds $ 451 $ 451 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 501 $ 451 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 (in thousands): Balance as of May 31, 2015 Level 1 Level 2 Level 3 Money market funds $ 4,650 $ 4,650 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 4,700 $ 4,650 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- There were no transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended February 29, 2016 and February 28, 2015. 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. The carrying value of the debt approximates the fair value.

5. ACCOUNTS RECEIVABLE, NET

5. ACCOUNTS RECEIVABLE, NET	9 Months Ended
	Feb. 29, 2016
Accounts Receivable, Net, Current [Abstract]
5. ACCOUNTS RECEIVABLE	5. ACCOUNTS RECEIVABLE, NET Accounts receivable represents customer trade receivables and is presented net of allowances for doubtful accounts of $29,000 at February 29, 2016 and $21,000 at May 31, 2015. 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.

6. INVENTORIES

6. INVENTORIES	9 Months Ended
	Feb. 29, 2016
Inventory Disclosure [Abstract]
6. INVENTORIES	6. INVENTORIES Inventories are comprised of the following (in thousands): February 29, 2016 May 31, 2015 Raw materials and sub-assemblies $ 3,047 $ 4,018 Work in process 4,331 2,584 Finished goods -- 521 $ 7,378 $ 7,123

7. SEGMENT INFORMATION

7. SEGMENT INFORMATION	9 Months Ended
	Feb. 29, 2016
Segment Reporting [Abstract]
7. SEGMENT INFORMATION	7. SEGMENT INFORMATION The Company operates in one reportable segment: the design, manufacture and marketing of advanced test and burn-in products to the semiconductor manufacturing industry. The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands). United States Asia Europe Total Three months ended February 29, 2016: Net sales $ 1,235 $ 380 $ 62 $ 1,677 Property and equipment, net 1,200 38 13 1,251 Nine months ended February 29, 2016: Net sales $ 2,460 $ 9,529 $ 941 $ 12,930 Property and equipment, net 1,200 38 13 1,251 Three months ended February 28, 2015: Net sales $ 684 $ 979 $ 364 $ 2,027 Property and equipment, net 455 35 12 502 Nine months ended February 28, 2015: Net sales $ 3,054 $ 3,845 $ 1,301 $ 8,200 Property and equipment, net 455 35 12 502 The Company’s Japanese and German subsidiaries primarily comprise the foreign operations. Substantially all of the sales of the subsidiaries are made to unaffiliated Japanese or European customers. Net sales from outside the United States include those of Aehr Test Systems Japan K.K. and Aehr Test Systems GmbH. Sales to the Company’s five largest customers accounted for approximately 93% and 94% of its net sales in the three and nine months ended February 29, 2016, respectively. Two customers accounted for approximately 45% and 37% of the Company’s net sales in the three months ended February 29, 2016. Two customers accounted for approximately 48% and 29% of the Company’s net sales in the nine months ended February 29, 2016. Sales to the Company’s five largest customers accounted for approximately 82% and 87% of its net sales in the three and nine months ended February 28, 2015, respectively. One customer accounted for approximately 60% of the Company’s net sales in the three months ended February 28, 2015. Three customers accounted for approximately 47%, 12% and 10% of the Company’s net sales in the nine months ended February 28, 2015. No other customers represented more than 10% of the Company’s net sales for either fiscal 2016 or fiscal 2015.

8. PRODUCT WARRANTIES

8. PRODUCT WARRANTIES	9 Months Ended
	Feb. 29, 2016
Product Warranties Disclosures [Abstract]
8. PRODUCT WARRANTIES	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 nine months ended February 29, 2016 and February 28, 2015 (in thousands): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Balance at the beginning of the period $ 305 $ 149 $ 137 $ 223 Accruals for warranties issued during the period 2 47 239 145 Settlement made during the period (in cash or in kind) (154 ) (34 ) (223 ) (206 ) Balance at the end of the period $ 153 $ 162 $ 153 $ 162 The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets.

9. INCOME TAXES

9. INCOME TAXES	9 Months Ended
	Feb. 29, 2016
Income Tax Disclosure [Abstract]
9. INCOME TAXES	9. 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 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. Although the Company files U.S. federal, various state, and foreign tax returns, the Company’s only major tax jurisdictions are the United States, California, Germany and Japan. Tax years 1996 - 2015 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years.

10. CUSTOMER DEPOSITS AND DEFER

10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	9 Months Ended
	Feb. 29, 2016
Customer Deposits And Deferred Revenue Short-term
10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM Customer deposits and deferred revenue, short-term (in thousands): February 29, May 31, 2016 2015 Customer deposits $ 540 $ 3,685 Deferred revenue 1,486 1,065 $ 2,026 $ 4,750

11. LONG-TERM DEBT AND LINE OF

11. LONG-TERM DEBT AND LINE OF CREDIT	9 Months Ended
	Feb. 29, 2016
Long-term Debt And Line Of Credit
11. LONG-TERM DEBT AND LINE OF CREDIT	11. LONG-TERM DEBT AND LINE OF CREDIT On April 10, 2015, the Company entered into a Convertible Note Purchase and Credit Facility Agreement (the “Purchase Agreement”) with QVT Fund LP and Quintessence Fund L.P. (the “Purchasers”) providing for (a) the Company’s sale to the Purchasers of $4,110,000 in aggregate principal amount of 9.0% Convertible Secured Notes due 2017 (the “Convertible Notes”) and (b) a secured revolving loan facility (the “Credit Facility”) in an aggregate principal amount of up to $2,000,000. The Convertible Notes bear interest at an annual rate of 9.0% and will mature on April 10, 2017 unless repurchased or converted prior to that date. Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year. Debt issuance costs of $356,000, which represent an effective interest rate of 4.3%, were offset against the loan balance and are amortized over the life of loan. During the three and nine months ended February 29, 2016, $44,000 and $126,000, respectively, of amortization costs were recognized as interest expense. Long-term debt, net of debt issuance costs (in thousands): February 29, May 31, 2016 2015 Principal $ 4,110 $ 4,110 Unamortized debt issuance costs (193 ) (319 ) $ 3,917 $ 3,791 The initial conversion price for the Convertible Notes is $2.65 per share of the Company’s common stock and is subject to adjustment upon the occurrence of certain specified events (as adjusted, the “Conversion Price”). Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity. Advances under the Credit Facility must be supported by outstanding valid purchase orders at least equal to the amount of the requested drawdown plus the principal amount of all outstanding 5.0% Notes. Advances will bear interest at an annual rate of 5%. Each advance under the Credit Facility and any accrued and unpaid interest thereon must be repaid within 90 days from the date on which such advance is made. Unless paid in full at maturity, amounts owing under the credit facility may be converted by the holder into Convertible Notes. Advances under the Credit Facility may be prepaid without any prepayment premium or penalty and may be reborrowed (unless converted into Convertible Notes). As of February 29, 2016 and May 31, 2015, the Company has drawn $2,000,000 and zero against the Credit Facility, respectively. The balance available to borrow under the Credit Facility as of February 29, 2016 was zero. The Company’s obligations under the Purchase Agreement, Convertible Notes and the Credit Facility are secured by substantially all of the assets of the Company.

12. RECENT ACCOUNTING PRONOUNCE

12. RECENT ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Feb. 29, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
12. RECENT ACCOUNTING PRONOUNCEMENTS	12. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, a new standard on revenue recognition. The new standard will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers. The guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, and property and equipment. The new standard will become effective for us beginning with the first quarter of fiscal 2019 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Going Concern. This standard requires management to evaluate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard will apply to all entities and will be effective for us in the fiscal year 2017, with early adoption permitted. The adoption of this update is not expected to have a material effect on the Company’s consolidated financial statements or disclosures. In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest. This standard requires management to simplify the presentation of debt issuance costs by presenting the costs related to obtaining a debt liability as a direct deduction from that debt liability. The debt issuance costs, or discount, is amortized over the life of the debt liability. The new standard is effective for us in fiscal 2017, with early adoption permitted. The Company has adopted this update for the fiscal year ended May 31, 2015. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements, “LONG-TERM DEBT AND LINE OF CREDIT” for further discussion of the new credit facility with QVT Fund LP and Quintessence Fund L.P. In July 2015, the FASB issued ASU No. 2015-11, Inventory. This standard requires management to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This new standard will be effective for us in the fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In August 2015, the FASB issued ASU No. 2015-15, Imputation of Interest. This standard clarifies ASU 2015-03, Debt Issuance Costs discussed above, in which an entity may defer and present debt issuance costs for line of credit arrangements as an asset and subsequently amortize the costs over the term of the line of credit agreement regardless of whether any amounts are outstanding. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In November 2015, FASB issued ASU No. 2015-17, Income Taxes. This standard simplifies the presentation of deferred income taxes to be classified as noncurrent in the consolidated balance sheet. This new standard will be effective for us in the fiscal year 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases. This standard requires management to present all leases greater than one year on the balance sheet as a liability to make payments and an asset as the right to use the underlying asset for the lease term. This new standard will be effective for us in the fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements.

1. BASIS OF PRESENTATION (Polic

1. BASIS OF PRESENTATION (Policies)	9 Months Ended
	Feb. 29, 2016
Accounting Policies [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION. 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, 2015 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, 2015. 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	PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company," "we," "us," and "our"). All significant intercompany balances have been eliminated in consolidation. For our majority owned subsidiary, Aehr Test Systems Japan K.K., we reflected the noncontrolling interest of the portion we do not own on our Consolidated Balance Sheets in Shareholders’ Equity and in the Consolidated Statements of Operations.
ACCOUNTING ESTIMATES	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 revenue adjustments, the allowance for doubtful accounts, inventory reserves, income taxes, stock-based compensation expenses, and product warranties, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.
SIGNIFICANT ACCOUNTING POLICIES	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, 2015. There have been no changes in our significant accounting policies during the nine months ended February 29, 2016.

2. STOCK-BASED COMPENSATION (Ta

2. STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Feb. 29, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Compensation costs related to the Company's stock-based compensation	The following table summarizes compensation costs related to the Company’s stock-based compensation for the three and nine months ended February 29, 2016 and February 28, 2015 (in thousands): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Stock-based compensation in the form of employee stock options and ESPP shares, included in: Cost of sales $ 20 $ 17 $ 62 $ 47 Selling, general and administrative 145 148 569 508 Research and development 48 54 155 138 Total stock-based compensation $ 213 $ 219 $ 786 $ 693
Assumptions for Options Valuation Model	Fair Value. The fair value of the Company’s stock options granted to employees for the three and nine months ended February 29, 2016 and February 28, 2015 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Option plan shares Expected term (in years) 4 4 4 4 Volatility 0.80 0.90 0.86 0.91 Expected dividend $ 0.00 $ 0.00 $ 0.00 $ 0.00 Risk-free interest rates 1.23 % 1.16 % 1.21 % 1.25 % Estimated forfeiture rate 0.25 % 0.25 % 0.25 % 0.25 % Weighted average grant date fair value $ 0.80 $ 1.62 $ 1.31 $ 1.64
Fair values of the ESPP shares	The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2015 were estimated using the following weighted-average assumptions: Nine Months Ended February 28, 2015 Expected term (in years) 0.5-2.0 Volatility 0.55-0.83 Expected dividend $ 0.00 Risk-free interest rates 0.04%-0.53 % Estimated forfeiture rate 0 % Weighted average grant date fair value $ 1.47
Stock option transactions	The following table summarizes the stock option transactions during the three and nine months ended February 29, 2016 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate Available of Exercise Intrinsic Shares Shares Price Value Balances, May 31, 2015 845 3,686 $ 1.66 $ 2,946 Options granted -- -- -- Options terminated 122 (122 ) $ 2.04 Options exercised -- (130 ) $ 1.72 Balances, August 31, 2015 967 3,434 $ 1.63 $ 2,587 Additional shares reserved 800 -- Options granted (82 ) 82 $ 2.22 Options terminated 15 (15 ) $ 1.61 Options exercised -- (116 ) $ 0.91 Balances, November 30, 2015 1,700 3,385 $ 1.67 $ 1,643 Options granted (11 ) 11 $ 1.36 Options terminated 110 (110 ) $ 2.19 Options exercised -- -- -- Balances, February 29, 2016 1,799 3,286 $ 1.66 $ 294 Options fully vested and expected to vest at February 29, 2016 3,220 $ 1.66 $ 288 Options exercisable at February 29, 2016 2,339 $ 1.47 $ 293
Options Outstanding	The options outstanding and exercisable at February 29, 2016 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at February 29, 2016 at February 29, 2016 Range of Exercise Prices Number Outstanding Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Shares Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.59-$0.97 578 3.07 $ 0.68 577 3.07 $ 0.68 $ 1.09-$1.40 1,214 3.37 $ 1.28 1,001 3.18 $ 1.28 $ 1.73-$2.06 248 4.95 $ 1.88 216 5.02 $ 1.90 $ 2.10-$2.71 1,246 5.70 $ 2.43 545 5.55 $ 2.47 $ 0.59-$2.71 3,286 4.32 $ 1.66 2,339 3.87 $ 1.47 $ 293

3. EARNINGS PER SHARE (Tables)

3. EARNINGS PER SHARE (Tables)	9 Months Ended
	Feb. 29, 2016
Earnings Per Share [Abstract]
EARNINGS PER SHARE	The following table presents the computation of basic and diluted net loss per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Numerator: Net loss $ (2,975 ) $ (1,726 ) $ (3,729 ) $ (4,747 ) Denominator for basic net loss per share: Weighted-average shares outstanding 13,164 12,677 13,058 11,931 Shares used in basic net loss per share calculation 13,164 12,677 13,058 11,931 Effect of dilutive securities -- -- -- -- Denominator for diluted net loss per share 13,164 12,677 13,058 11,931 Basic net loss per share $ (0.23 ) $ (0.14 ) $ (0.29 ) $ (0.40 ) Diluted net loss per share $ (0.23 ) $ (0.14 ) $ (0.29 ) $ (0.40 )

4. FAIR VALUE OF FINANCIAL IN22

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Feb. 29, 2016
Fair Value Disclosures [Abstract]
Fair Value by Hierarchy	The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of February 29, 2016 (in thousands): Balance as of February 29, 2016 Level 1 Level 2 Level 3 Money market funds $ 451 $ 451 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 501 $ 451 $ 50 $ -- Liabilities $ -- $ -- $ -- $ -- The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 (in thousands): Balance as of May 31, 2015 Level 1 Level 2 Level 3 Money market funds $ 4,650 $ 4,650 $ -- $ -- Certificate of deposit 50 -- 50 -- Assets $ 4,700 $ 4,650 $ 50 $ -- Liabilities $ -- $ -- $ -- $ --

6. INVENTORIES (Tables)

6. INVENTORIES (Tables)	9 Months Ended
	Feb. 29, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories are comprised of the following (in thousands): February 29, 2016 May 31, 2015 Raw materials and sub-assemblies $ 3,047 $ 4,018 Work in process 4,331 2,584 Finished goods -- 521 $ 7,378 $ 7,123

7. SEGMENT INFORMATION (Tables)

7. SEGMENT INFORMATION (Tables)	9 Months Ended
	Feb. 29, 2016
Segment Reporting [Abstract]
Company's operations in different geographic areas	The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands). United States Asia Europe Total Three months ended February 29, 2016: Net sales $ 1,235 $ 380 $ 62 $ 1,677 Property and equipment, net 1,200 38 13 1,251 Nine months ended February 29, 2016: Net sales $ 2,460 $ 9,529 $ 941 $ 12,930 Property and equipment, net 1,200 38 13 1,251 Three months ended February 28, 2015: Net sales $ 684 $ 979 $ 364 $ 2,027 Property and equipment, net 455 35 12 502 Nine months ended February 28, 2015: Net sales $ 3,054 $ 3,845 $ 1,301 $ 8,200 Property and equipment, net 455 35 12 502

8. PRODUCT WARRANTIES (Tables)

8. PRODUCT WARRANTIES (Tables)	9 Months Ended
	Feb. 29, 2016
Product Warranties Disclosures [Abstract]
Liability for product warranties	The following is a summary of changes in the Company's liability for product warranties during the three and nine months ended February 29, 2016 and February 28, 2015 (in thousands): Three Months Ended Nine Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2016 2015 2016 2015 Balance at the beginning of the period $ 305 $ 149 $ 137 $ 223 Accruals for warranties issued during the period 2 47 239 145 Settlement made during the period (in cash or in kind) (154 ) (34 ) (223 ) (206 ) Balance at the end of the period $ 153 $ 162 $ 153 $ 162

10. CUSTOMER DEPOSITS AND DEF26

10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables)	9 Months Ended
	Feb. 29, 2016
Customer Deposits And Deferred Revenue Short-term Tables
Customer deposits and deferred revenue	Customer deposits and deferred revenue, short-term (in thousands): February 29, May 31, 2016 2015 Customer deposits $ 540 $ 3,685 Deferred revenue 1,486 1,065 $ 2,026 $ 4,750

11. LONG-TERM DEBT AND LINE O27

11. LONG-TERM DEBT AND LINE OF CREDIT (Tables)	9 Months Ended
	Feb. 29, 2016
Long-term Debt And Line Of Credit Tables
Long-term debt, net of debt issuance costs	Long-term debt, net of debt issuance costs (in thousands): February 29, May 31, 2016 2015 Principal $ 4,110 $ 4,110 Unamortized debt issuance costs (193 ) (319 ) $ 3,917 $ 3,791

2. STOCK-BASED COMPENSATION -

2. STOCK-BASED COMPENSATION - Compensation costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Stock-based compensation in the form of employee stock options and ESPP shares included in:
Total stock-based compensation	$ 213	$ 219	$ 786	$ 693
Cost of Sales
Stock-based compensation in the form of employee stock options and ESPP shares included in:
Total stock-based compensation	20	17	62	47
Selling, General and Administrative
Stock-based compensation in the form of employee stock options and ESPP shares included in:
Total stock-based compensation	145	148	569	508
Research and Development
Stock-based compensation in the form of employee stock options and ESPP shares included in:
Total stock-based compensation	$ 48	$ 54	$ 155	$ 138

2. STOCK-BASED COMPENSATION -

2. STOCK-BASED COMPENSATION - Options (Details 1) - Stock Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Expected term (in years)	4 years	4 years	4 years	4 years
Volatility	80.00%	90.00%	86.00%	91.00%
Expected dividend	$ 0	$ 0	$ 0	$ 0
Risk-free interest rates	1.23%	1.16%	1.21%	1.25%
Estimated forfeiture rate	0.25%	0.25%	0.25%	0.25%
Weighted average grant date fair value	$ 0.80	$ 1.62	$ 1.31	$ 1.64

2. STOCK-BASED COMPENSATION - F

2. STOCK-BASED COMPENSATION - Fair values of the ESPP shares (Details 2) - Employee Stock Purchase Plan $ / shares in Units, $ in Thousands	9 Months Ended
	Feb. 28, 2015USD ($)$ / shares
Volatility, Minimum	55.00%
Volatility, Maximum	83.00%
Expected dividend | $	$ 0
Risk-free interest rates, Minimum	0.04%
Risk-free interest rates, Maximum	0.53%
Estimated forfeiture rate	0.00%
Weighted average grant date fair value | $ / shares	$ 1.47
Minimum
Expected term (in years)	6 months
Maximum
Expected term (in years)	2 years

2. STOCK-BASED COMPENSATION - O

2. STOCK-BASED COMPENSATION - Option Activity (Details 3) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended
	Feb. 29, 2016	Nov. 30, 2015	Aug. 31, 2015	Feb. 29, 2016
Number of Options Outstanding, Ending (in thousands)	3,286			3,286
Weighted Average Exercise Price Outstanding, Ending	$ 1.66			$ 1.66
Options exercisable shares, ending (in thousands)	2,339			2,339
Weighted Average Exercise Price for Options exercisable, ending	$ 1.47			$ 1.47
Aggregate Intrinsic Value for Options exercisable, ending	$ 293			$ 293
Stock Options
Available Shares, Beginning (in thousands)	1,700	967	845	845
Options granted (in thousands)	(11)	(82)	0
Options terminated (in thousands)	110	15	122
Additional shares reserved (in thousands)		800
Available Shares, Ending (in thousands)	1,799	1,700	967	1,799
Options Outstanding, Beginning (in thousands)	3,385	3,434	3,686	3,686
Options Granted (in thousands)	11	82	0
Options terminated (in thousands)	(110)	(15)	(122)
Options exercised (in thousands)	0	(116)	(130)
Number of Options Outstanding, Ending (in thousands)	3,286	3,385	3,434	3,286
Weighted Average Exercise Price Outstanding, Beginning	$ 1.67	$ 1.63	$ 1.66	$ 1.66
Weighted Average Exercise Price Granted	1.36	2.22	0
Weighted Average Exercise Price Terminated	2.19	1.61	2.04
Weighted Average Exercise Price Exercised	0	0.91	1.72
Weighted Average Exercise Price Outstanding, Ending	$ 1.66	$ 1.67	$ 1.63	$ 1.66
Aggregate Intrinsic Value, beginning balance	$ 1,643	$ 2,587	$ 2,946	$ 2,946
Aggregate Intrinsic Value, ending balance	$ 294	$ 1,643	$ 2,587	$ 294
Options fully vested and expected to vest, ending (in thousands)	3,220			3,220
Options exercisable shares, ending (in thousands)	2,339			2,339
Weighted Average Exercise Price for Options fully vested and expected to vest, ending	$ 1.66			$ 1.66
Weighted Average Exercise Price for Options exercisable, ending	$ 1.47			$ 1.47
Aggregate Intrinsic Value for Options fully vested and expected to vest, ending	$ 288			$ 288
Aggregate Intrinsic Value for Options exercisable, ending	$ 293			$ 293

2. STOCK-BASED COMPENSATION -32

2. STOCK-BASED COMPENSATION - Options outstanding and exercisable (Details 4) $ / shares in Units, $ in Thousands	9 Months Ended
	Feb. 29, 2016USD ($)$ / sharesshares
Range Exercise Prices Options Outstanding Minimum	$ 0.59
Range Exercise Prices Options Outstanding Maximum	$ 2.71
Number of Options Outstanding, Ending (in thousands) | shares	3,286
Weighted Average Remaining Contractual Life (Years) Options Outstanding	4 years 3 months 25 days
Weighted Average Exercise Price Outstanding, Ending	$ 1.66
Options exercisable shares, ending (in thousands) | shares	2,339
Weighted Average Remaining Contractual Life (Years) Options Exercisable	3 years 10 months 13 days
Weighted Average Exercise Price for Options exercisable, ending	$ 1.47
Aggregate Intrinsic Value for Options exercisable, ending | $	$ 293
Options Price Range A
Range Exercise Prices Options Outstanding Minimum	$ 0.59
Range Exercise Prices Options Outstanding Maximum	$ 0.97
Number of Options Outstanding, Ending (in thousands) | shares	578
Weighted Average Remaining Contractual Life (Years) Options Outstanding	3 years 25 days
Weighted Average Exercise Price Outstanding, Ending	$ 0.68
Options exercisable shares, ending (in thousands) | shares	577
Weighted Average Remaining Contractual Life (Years) Options Exercisable	3 years 25 days
Weighted Average Exercise Price for Options exercisable, ending	$ 0.68
Options Price Range B
Range Exercise Prices Options Outstanding Minimum	1.09
Range Exercise Prices Options Outstanding Maximum	$ 1.40
Number of Options Outstanding, Ending (in thousands) | shares	1,214
Weighted Average Remaining Contractual Life (Years) Options Outstanding	3 years 4 months 13 days
Weighted Average Exercise Price Outstanding, Ending	$ 1.28
Options exercisable shares, ending (in thousands) | shares	1,001
Weighted Average Remaining Contractual Life (Years) Options Exercisable	3 years 2 months 5 days
Weighted Average Exercise Price for Options exercisable, ending	$ 1.28
Options Price Range C
Range Exercise Prices Options Outstanding Minimum	1.73
Range Exercise Prices Options Outstanding Maximum	$ 2.06
Number of Options Outstanding, Ending (in thousands) | shares	248
Weighted Average Remaining Contractual Life (Years) Options Outstanding	4 years 11 months 12 days
Weighted Average Exercise Price Outstanding, Ending	$ 1.88
Options exercisable shares, ending (in thousands) | shares	216
Weighted Average Remaining Contractual Life (Years) Options Exercisable	5 years 7 days
Weighted Average Exercise Price for Options exercisable, ending	$ 1.90
Options Price Range D
Range Exercise Prices Options Outstanding Minimum	2.10
Range Exercise Prices Options Outstanding Maximum	$ 2.71
Number of Options Outstanding, Ending (in thousands) | shares	1,246
Weighted Average Remaining Contractual Life (Years) Options Outstanding	5 years 8 months 12 days
Weighted Average Exercise Price Outstanding, Ending	$ 2.43
Options exercisable shares, ending (in thousands) | shares	545
Weighted Average Remaining Contractual Life (Years) Options Exercisable	5 years 6 months 18 days
Weighted Average Exercise Price for Options exercisable, ending	$ 2.47

2. STOCK-BASED COMPENSATION (De

2. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Stock-based compensation costs capitalized as part of inventory	$ 0	$ 53	$ 0	$ 53
Stock-based compensation expense related to stock options	190	182	708	589
Intrinsic value of options exercised	0	30	$ 185	466
Weighted average remaining contractual life of the options exercisable and expected to be exercisable			4 years 3 months 25 days
Employee Stock Purchase Plan
Stock-based compensation related to the ESPP	23	$ 37	$ 78	$ 104
Compensation cost related to purchase rights under the ESPP but not yet recognized	$ 51		$ 51
Weighted average period for recognition of costs			10 months 24 days
ESPP purchase rights granted	0	0	0	170,000
ESPP shares issued			36,000	43,000
ESPP shares available for issuance	232,000		232,000
1996 Stock Option Plan and 2006 Equity Incentive Plan
Unrecognized stock-based compensation	$ 1,270		$ 1,270
Estimated forfeitures of unvested stock based awards, amount	$ 3		$ 3
Weighted average period for recognition of costs			2 years 2 months 12 days
Restricted Stock Units
Restricted Stock Units granted			35,000
Market value on the date of the grant			$ 2.16

3. EARNINGS PER SHARE (Details)

3. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Earnings Per Share [Abstract]
Numerator: Net loss	$ (2,975)	$ (1,726)	$ (3,729)	$ (4,747)
Denominator for basic net loss per share: Weighted average shares outstanding (in thousands)	13,164	12,677	13,058	11,931
Shares used in basic net loss per share calculation (in thousands)	13,164	12,677	13,058	11,931
Effect of dilutive securities (in thousands)	0	0	0	0
Denominator for diluted net loss per share (in thousands)	13,164	12,677	13,058	11,931
Basic net loss per share	$ (0.23)	$ (0.14)	$ (0.29)	$ (0.40)
Diluted net loss per share	$ (0.23)	$ (0.14)	$ (0.29)	$ (0.40)

3. EARNINGS PER SHARE (Details

3. EARNINGS PER SHARE (Details Narrative) - shares	9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Employee Stock Purchase Plan
Options not included in the computation of diluted net loss per share (in thousands)	131	175
Stock Options
Options not included in the computation of diluted net loss per share (in thousands)	3,286	3,402

4. FAIR VALUE OF FINANCIAL IN36

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015
Money market funds	$ 451	$ 4,650
Certificate of deposit	50	50
Assets	501	4,700
Liabilities	0	0
Level 1
Money market funds	451	4,650
Certificate of deposit	0	0
Assets	451	4,650
Liabilities	0	0
Level 2
Money market funds	0	0
Certificate of deposit	50	50
Assets	50	50
Liabilities	0	0
Level 3
Money market funds	0	0
Certificate of deposit	0	0
Assets	0	0
Liabilities	$ 0	$ 0

4. FAIR VALUE OF FINANCIAL IN37

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Fair Value Of Financial Instruments Details Narrative
Transfers between Level 1 and Level 2 fair value measurements	$ 0	$ 0	$ 0	$ 0

5. ACCOUNTS RECEIVABLE NET (Det

5. ACCOUNTS RECEIVABLE NET (Details Narrative) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015
Accounts Receivable, Net, Current [Abstract]
Allowance for doubtful accounts customer trade receivables	$ 29	$ 21

6. INVENTORIES (Details)

6. INVENTORIES (Details) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015
Inventory, Net [Abstract]
Raw materials and sub-assemblies	$ 3,047	$ 4,018
Work-in-process	4,331	2,584
Finished goods	0	521
Inventory	$ 7,378	$ 7,123	[1]
[1]	The condensed consolidated balance sheet at May 31, 2015 has been derived from the audited consolidated financial statements at that date.

7. SEGMENT INFORMATION (Details

7. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Net sales	$ 1,677	$ 2,027	$ 12,930	$ 8,200
Property and equipment, net	1,251	502	1,251	502
US
Net sales	1,235	684	2,460	3,054
Property and equipment, net	1,200	455	1,200	455
Asia
Net sales	380	979	9,529	3,845
Property and equipment, net	38	35	38	35
Europe
Net sales	62	364	941	1,301
Property and equipment, net	$ 13	$ 12	$ 13	$ 12

7, SEGMENT INFORMATION (Details

7, SEGMENT INFORMATION (Details Narrative)	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Sales to the Company's five largest customers percentage of net sales	93.00%	82.00%	94.00%	87.00%
Customer A
Customers accounted for 10% or more of total revenues	45.00%	60.00%	48.00%	47.00%
Customer B
Customers accounted for 10% or more of total revenues	37.00%		29.00%	12.00%
Customer C
Customers accounted for 10% or more of total revenues				10.00%

8. PRODUCT WARRANTIES (Details)

8. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at the beginning of the period	$ 305	$ 149	$ 137	$ 223
Accruals for warranties issued during the period	2	47	239	145
Settlement made during the period (in cash or in kind)	(154)	(34)	(223)	(206)
Balance at the end of the period	$ 153	$ 162	$ 153	$ 162

8. PRODUCT WARRANTIES (Details

8. PRODUCT WARRANTIES (Details Narrative)	9 Months Ended
	Feb. 29, 2016
Product Warranties Details Narrative
Standard warranty period	The standard warranty period is one year for systems and ninety days for parts and service.

10. CUSTOMER DEPOSITS AND DEF44

10. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015
Customer Deposits And Deferred Revenue Short-term Details
Customer deposits	$ 540	$ 3,685
Deferred revenue	1,486	1,065
Total	$ 2,026	$ 4,750

11. LONG-TERM DEBT AND LINE O45

11. LONG-TERM DEBT AND LINE OF CREDIT (Details) - USD ($) $ in Thousands	Feb. 29, 2016	May. 31, 2015
Long-term Debt And Line Of Credit Tables
Principal	$ 4,110	$ 4,110
Unamortized debt issuance costs	(193)	(319)
Long-term debt	$ 3,917	$ 3,791	[1]
[1]	The condensed consolidated balance sheet at May 31, 2015 has been derived from the audited consolidated financial statements at that date.

11. LONG-TERM DEBT AND LINE O46

11. LONG-TERM DEBT AND LINE OF CREDIT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Feb. 29, 2016	Feb. 29, 2016	Feb. 28, 2015	May. 31, 2015
Long-term Debt And Line Of Credit Details Narrative
Convertible debt, principal amount	$ 4,110	$ 4,110		$ 4,110
Convertible note, interest rate		9.00%
Convertible note, maturity		Apr. 10, 2017
Convertible note, interest payment		Interest is payable quarterly on March 1, June 1, September 1 and December 1 of each year.
Debt issuance costs		$ 356
Debt issuance costs, effective interest rate	4.30%	4.30%
Amortization of debt issuance costs	$ 44	$ 126	$ 0
Unamortized debt issuance costs	$ (193)	$ (193)		(319)
Initial conversion price for the Convertible Notes	$ 2.65	$ 2.65
Convertible Notes, Terms of Conversion Feature		The initial conversion price for the Convertible Notes is $2.65 per share of the Company’s common stock and is subject to adjustment upon the occurrence of certain specified events (as adjusted, the “Conversion Price”). Holders may convert all or any part of the principal amount of their Convertible Notes in integrals of $10,000 at any time prior to the maturity date. Upon conversion, the Company will deliver shares of its common stock to the holder of Convertible Notes electing such conversion. The Company may not redeem the Convertible Notes prior to maturity.
Line of credit, maximum borrowing capacity	$ 2,000	$ 2,000
Line of credit facility, amount borrowed	$ 2,000	$ 2,000		$ 0
Weighted average interest rate	5.00%	5.00%
Line of Credit Facility, Frequency of Payments		Each advance under the Credit Facility and any accrued and unpaid interest thereon must be repaid within 90 days from the date on which such advance is made.
Balance available to borrow under the line of credit	$ 0	$ 0