Aehr Test Systems (AEHR) 10-Q 15 Oct 19 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Aug. 31, 2019	Sep. 30, 2019
Document And Entity Information
Entity Registrant Name	AEHR TEST SYSTEMS
Entity Central Index Key	0001040470
Document Type	10-Q
Document Period End Date	Aug. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--05-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		22,740,986
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
ASSETS
Cash and cash equivalents	$ 5,266	$ 5,428	[1]
Accounts receivable, net	3,287	4,859	[1]
Inventories	9,217	9,061	[1]
Prepaid expenses and other current assets	523	686	[1]
Total current assets	18,293	20,034	[1]
Property and equipment, net	1,000	1,045	[1]
Operating lease right-of-use assets	2,533	0	[1]
Other assets	199	228	[1]
Total assets	22,025	21,307	[1]
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	1,742	1,933	[1]
Accrued expenses	1,577	2,034	[1]
Operating lease liabilities, short-term	606	0	[1]
Customer deposits and deferred revenue, short-term	615	1,545
Total current liabilities	4,540	5,512	[1]
Operating lease liabilities, long-term	2,086	0	[1]
Deferred rent	0	153	[1]
Deferred revenue, long -term	113	189	[1]
Total liabilities	6,739	5,854	[1]
Aehr Test Systems shareholders' equity:
Common stock, $0.01 par value: Authorized: 75,000 shares; Issued and outstanding: 22,721 shares and 22,669 shares at August 31, 2019 and May 31, 2019, respectively	227	227	[1]
Additional paid-in capital	84,760	84,499	[1]
Accumulated other comprehensive income	2,216	2,230	[1]
Accumulated deficit	(71,897)	(71,484)	[1]
Total Aehr Test Systems shareholders' equity	15,306	15,472	[1]
Noncontrolling interest	(20)	(19)	[1]
Total shareholders' equity	15,286	15,453	[1]
Total liabilities and shareholders' equity	$ 22,025	$ 21,307	[1]
[1]	The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date.

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Aug. 31, 2019	May 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in thousands)	75,000	75,000
Common stock, shares issued (in thousands)	22,721	22,669
Common stock, shares outstanding (in thousands)	22,721	22,669

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Income Statement [Abstract]
Net sales	$ 5,533	$ 4,740
Cost of sales	3,262	3,187
Gross profit	2,271	1,553
Operating expenses:
Selling, general and administrative	1,808	1,879
Research and development	892	1,116
Total operating expenses	2,700	2,995
Loss from operations	(429)	(1,442)
Interest income (expense), net	12	(78)
Other income, net	10	9
Loss before income tax expense	(407)	(1,511)
Income tax expense	(6)	(4)
Net loss	(413)	(1,515)
Less: Net income attributable to the noncontrolling interest	0	0
Net loss attributable to Aehr Test Systems common shareholders	$ (413)	$ (1,515)
Net loss per share: Basic and Diluted	$ (0.02)	$ (0.07)
Shares used in per share calculations: Basic and Diluted	22,708	22,190

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (413)	$ (1,515)
Other comprehensive loss, net of tax:
Net change in cumulative translation adjustments	(15)	(15)
Total comprehensive loss	(428)	(1,530)
Less: Comprehensive (loss) income attributable to the noncontrolling interest	(1)	1
Comprehensive loss, attributable to Aehr Test Systems common shareholders	$ (427)	$ (1,531)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total Aehr Test Shareholders' Equity	Noncontrolling Interest	Total
Beginning balance, shares at May. 31, 2018	22,143
Beginning balance, amount at May. 31, 2018	$ 221	$ 83,041	$ 2,292	$ (66,249)	$ 19,305	$ (20)	$ 19,285
Issuance of common stock under employee plans, shares	102
Issuance of common stock under employee plans, amount	$ 1	108			109		109
Stock-based compensation		256			256		256
Net loss				(1,515)	(1,515)		(1,515)
Foreign currency translation adjustment			(16)		(16)	1	(15)
Ending balance, shares at Aug. 31, 2018	22,245
Ending balance, amount at Aug. 31, 2018	$ 222	83,405	2,276	(67,764)	18,139	(19)	18,120
Beginning balance, shares at May. 31, 2019	22,669
Beginning balance, amount at May. 31, 2019	$ 227	84,499	2,230	(71,484)	15,472	(19)	15,453	[1]
Issuance of common stock under employee plans, shares	52
Issuance of common stock under employee plans, amount		62			62		62
Stock-based compensation		199			199		199
Net loss				(413)	(413)		(413)
Foreign currency translation adjustment			(14)		(14)	(1)	(15)
Ending balance, shares at Aug. 31, 2019	22,721
Ending balance, amount at Aug. 31, 2019	$ 227	$ 84,760	$ 2,216	$ (71,897)	$ 15,306	$ (20)	$ 15,286
[1]	The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date.

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Cash flows from operating activities:
Net loss	$ (413)	$ (1,515)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	199	256
Depreciation and amortization	95	111
Changes in operating assets and liabilities:
Accounts receivable	1,584	563
Inventories	(156)	(536)
Prepaid expenses and other assets	194	4
Accounts payable	(235)	(398)
Accrued expenses	(455)	(151)
Customer deposits and deferred revenue	(1,006)	609
Deferred rent	0	82
Income taxes payable	3	4
Net cash used in operating activities	(190)	(971)
Cash flows from investing activities:
Purchases of property and equipment	(50)	(84)
Net cash used in investing activities	(50)	(84)
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	62	109
Net cash provided by financing activities	62	109
Effect of exchange rates on cash and cash equivalents	16	(38)
Net decrease in cash, cash equivalents and restricted cash	(162)	(984)
Cash, cash equivalents and restricted cash, beginning of period	5,508	16,848
Cash, cash equivalents and restricted cash, end of period	$ 5,346	$ 15,864

1. BASIS OF PRESENTATION AND SU

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Aug. 31, 2019
Accounting Policies [Abstract]
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES	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 months ended August 31, 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.

2. RECENT ACCOUNTING PRONOUNCEM

2. RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Aug. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
2. RECENT ACCOUNTING PRONOUNCEMENTS	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 August 31, 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 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. The accounting standard will be effective for the Company beginning in the first quarter of fiscal 2021 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.

3. REVENUE

3. REVENUE	3 Months Ended
	Aug. 31, 2019
Revenue from Contract with Customer [Abstract]
3. REVENUE	3. REVENUE Revenue recognition The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process, (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below. Performance obligations include sales of systems, contactors, spare parts, and services, as well as, installation and training services included in customer contracts. A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies. Revenue for systems and spares is recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less. The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year. Disaggregation of revenue The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar. The Company’s revenues by product category are as follows (in thousands): Three Months Ended August 31, 2019 2018 Type of good / service: Systems $ 2,934 $ 1,806 Contactors 1,650 1,153 Services 949 1,781 $ 5,533 $ 4,740 Product lines: Wafer-level $ 4,826 $ 1,969 Test During Burn-In 707 2,771 $ 5,533 $ 4,740 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 August 31, 2019 2018 Geographic region: United States $ 5,057 $ 2,695 Asia 338 1,734 Europe 138 311 $ 5,533 $ 4,740 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenue is recognized at the point in time when control transfers to the customer. Three Months Ended August 31, 2019 2018 Timing of revenue recognition: Products and services transferred at a point in time $ 4,859 $ 4,118 Services transferred over time 674 622 $ 5,533 $ 4,740 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 August 31, 2019 and May 31, 2019 were $728,000 and $1,734,000, respectively. During the three months ended August 31, 2019, the Company recognized $1,049,000 of revenues that were included in contract liabilities as of May 31, 2019. Remaining performance obligations On August 31, 2019, the Company had $546,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 65% of its remaining performance obligations as revenue in fiscal 2020, and an additional 35% 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

4. EARNINGS PER SHARE	3 Months Ended
	Aug. 31, 2019
Earnings Per Share [Abstract]
4. EARNINGS PER SHARE	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 per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended August 31, 2019 2018 Numerator: Net loss $ (413 $ (1,515 Denominator for basic net loss per share: Weighted average shares outstanding 22,708 22,190 Shares used in basic net loss per share calculation 22,708 22,190 Effect of dilutive securities -- -- Denominator for diluted net loss per share 22,708 22,190 Basic net loss per share $ (0.02) $ (0.07) Diluted net loss per share $ (0.02) $ (0.07) 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 anti-dilutive. In the three months ended August 31, 2019 and 2018 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 3,434,000 shares of common stock, RSUs for 20,000 shares and ESPP rights to purchase 297,000 ESPP shares were outstanding as of August 31, 2019, 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 3,189,000 shares of common stock, RSUs for 43,000 shares and ESPP rights to purchase 359,000 ESPP shares were outstanding as of August 31, 2018, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive. The 2,657,000 shares convertible under the 9.0% Convertible Secured Notes (the “Convertible Notes”) outstanding on August 31, 2018 were not included in the computation of diluted net loss per share because the inclusion of such shares would be anti-dilutive.

5. FAIR VALUE OF FINANCIAL INST

5. FAIR VALUE OF FINANCIAL INSTRUMENTS	3 Months Ended
	Aug. 31, 2019
Fair Value Disclosures [Abstract]
5. FAIR VALUE OF FINANCIAL INSTRUMENTS	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. 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 August 31, 2019 (in thousands): Balance as of August 31, 2019 Level 1 Level 2 Level 3 Money market funds $ 2,029 $ 2,029 $ -- $ -- Assets $ 2,029 $ 2,029 $ -- $ -- 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 August 31, 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 August 31, 2019 and May 31, 2019. There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended August 31, 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

6. ACCOUNTS RECEIVABLE, NET	3 Months Ended
	Aug. 31, 2019
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract]
6. ACCOUNTS RECEIVABLE, NET	6. ACCOUNTS RECEIVABLE, NET Accounts receivable represent customer trade receivables. As of August 31, 2019 and May 31, 2019, there was no allowance 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

7. INVENTORIES	3 Months Ended
	Aug. 31, 2019
Inventory Disclosure [Abstract]
7. INVENTORIES	7. INVENTORIES Inventories are comprised of the following (in thousands): August 31, May 31, 2019 2019 Raw materials and sub-assemblies $ 6,499 $ 5,471 Work in process 2,667 3,580 Finished goods 51 10 $ 9,217 $ 9,061

8. PRODUCT WARRANTIES

8. PRODUCT WARRANTIES	3 Months Ended
	Aug. 31, 2019
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 months ended August 31, 2019 and 2018 (in thousands): Three Months Ended August 31, 2019 2018 Balance at the beginning of the period $ 154 $ 135 Accruals for warranties issued during the period 62 75 Consumption of reserves (24) (50) Balance at the end of the period $ 192 $ 160 The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets.

9. CUSTOMER DEPOSITS AND DEFERR

9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	3 Months Ended
	Aug. 31, 2019
Customer Deposits And Deferred Revenue Short-term
9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM Customer deposits and deferred revenue, short-term (in thousands): August 31, May 31, 2019 2019 Customer deposits $ 182 $ 1,003 Deferred revenue 433 542 $ 615 $ 1,545

10. INCOME TAXES

10. INCOME TAXES	3 Months Ended
	Aug. 31, 2019
Income Tax Disclosure [Abstract]
10. INCOME TAXES	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. 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

11. LEASES	3 Months Ended
	Aug. 31, 2019
Leases [Abstract]
11. LEASES	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 3.9 years at August 31, 2019 and the weighted-average discount rate was 5.5%. The Company’s operating lease cost was $183,000 for the three months ended August 31, 2019. The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Three Months Ended August 31, 2019 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 182 The following table presents the maturities of the Company’s operating lease liabilities as of August 31, 2019 (in thousands): Fiscal year Operating Leases 2020 (excluding the first three months of 2020) $ 551 2021 754 2022 772 2023 795 2024 132 Thereafter -- Total future minimum operating lease payments $ 3,004 Less: imputed interest 312 Present value of operating lease liabilities $ 2,692

12. STOCK-BASED COMPENSATION

12. STOCK-BASED COMPENSATION	3 Months Ended
	Aug. 31, 2019
Share-based Payment Arrangement [Abstract]
12. STOCK-BASED COMPENSATION	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 months ended August 31, 2019 and 2018 (in thousands): Three Months Ended August 31, 2019 2018 Stock-based compensation in the form of employee stock options, RSUs, and ESPP purchase rights, included in: Cost of sales $ 19 $ 36 Selling, general and administrative 130 148 Research and development 50 72 Net effect on net loss $ 199 $ 256 As of August 31, 2019 and 2018, there were no stock-based compensation expenses capitalized as part of inventory. During the three months ended August 31, 2019 and 2018, the Company recorded stock-based compensation expenses related to stock options and RSUs of $150,000 and $173,000, respectively. As of August 31, 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 $1,508,000, 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 3.2 years. During the three months ended August 31, 2019 and 2018, the Company recorded stock-based compensation expense related to the ESPP of $49,000 and $83,000, respectively. As of August 31, 2019, the total compensation expense related to purchase rights under the ESPP but not yet recognized was approximately $131,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 1.1 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 months ended August 31, 2019 and 2018 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended August 31, 2019 2018 Expected term (in years) 5 5 Volatility 0.71 0.74 Risk-free interest rate 1.88 % 2.75 % Weighted average grant date fair value $ 0.97 $ 1.48 There were no ESPP purchase rights granted to employees for the three months ended August 31, 2019 and 2018. There were no ESPP shares issued during the three months ended August 31, 2019 and 2018. As of August 31, 2019, there were 369,000 ESPP shares available for issuance. The following tables summarize the Company’s stock option and RSU transactions during three months ended August 31, 2019 (in thousands): Available Shares Balance, May 31, 2019 1,147 Options granted (527 ) Shares cancelled 151 Shares expired (119 ) Balance, August 31, 2019 652 The following table summarizes the stock option transactions during the three months ended August 31, 2019 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2019 3,107 $ 2.20 $ 282 Options granted 527 $ 1.64 Options cancelled (151 ) $ 1.50 Options exercised (49 ) $ 1.27 Balances, August 31, 2019 3,434 $ 2.16 $ 41 Options fully vested and expected to vest at August 31, 2019 3,397 $ 2.16 $ 41 The options outstanding and exercisable at August 31, 2019 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at August 31, 2019 at August 31, 2019 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 $ 0.80-$0.97 47 0.26 $ 0.85 47 0.26 $ 0.85 $ 1.09-$1.28 301 0.82 $ 1.28 301 0.82 $ 1.28 $ 1.64-$2.06 1,261 5.34 $ 1.76 483 3.54 $ 1.80 $ 2.10-$2.81 1,584 3.30 $ 2.43 1,263 2.63 $ 2.44 $ 3.46-$3.93 241 4.91 $ 3.85 151 4.94 $ 3.80 $ 0.80-$3.93 3,434 3.90 $ 2.16 2,245 2.69 $ 2.20 $ 41 The total intrinsic value of options exercised during the three months ended August 31, 2019 and 2018 was $17,000 and $139,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at August 31, 2019 was 3.88 years. During the three months ended August 31, 2019 and 2018, there were no RSUs granted to employees. During the three months ended August 31, 2019, 3,000 RSUs became fully vested. As of August 31, 2019, 20,000 RSUs were unvested which had an intrinsic value of $26,000. During the three months ended August 31, 2018, 4,000 RSUs became fully vested. As of August 31, 2018, 43,000 RSUs were unvested which had an intrinsic value of $108,000.

13. SEGMENT INFORMATION

13. SEGMENT INFORMATION	3 Months Ended
	Aug. 31, 2019
Segment Reporting [Abstract]
13. SEGMENT INFORMATION	13. SEGMENT INFORMATION The Company has only one reportable segment. The information for revenue category by type, product line, geography and timing of revenue recognition, is summarized in Note 3. REVENUE. Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in thousands): August 31, May 31, 2019 2019 United States $ 961 $ 1,005 Asia 39 40 Europe -- -- $ 1,000 $ 1,045 As of August 31, 2019, operating lease right-of-use assets of $2,533,000 are allocated in the United States. There were no revenues through distributors for the three months ended August 31, 2019 and 2018. 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 78% of its net sales for the three months ended August 31, 2019 and 2018, respectively. Two customers accounted for approximately 54% and 22% of the Company’s net sales in the three months ended August 31, 2019. Four customers accounted for approximately 21%, 18%, 17% and 14% of the Company’s net sales in the three months ended August 31, 2018. No other customers represented more than 10% of the Company's net sales for either of the three months ended August 31, 2019 and 2018.

1. BASIS OF PRESENTATION AND _2

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Aug. 31, 2019
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES	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	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	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	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 months ended August 31, 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.

2. RECENT ACCOUNTING PRONOUNC_2

2. RECENT ACCOUNTING PRONOUNCEMENTS (Policies)	3 Months Ended
	Aug. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	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 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 August 31, 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 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. The accounting standard will be effective for the Company beginning in the first quarter of fiscal 2021 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.

3. REVENUE (Tables)

3. REVENUE (Tables)	3 Months Ended
	Aug. 31, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of revenue	The Company’s revenues by product category are as follows (in thousands): Three Months Ended August 31, 2019 2018 Type of good / service: Systems $ 2,934 $ 1,806 Contactors 1,650 1,153 Services 949 1,781 $ 5,533 $ 4,740 Product lines: Wafer-level $ 4,826 $ 1,969 Test During Burn-In 707 2,771 $ 5,533 $ 4,740 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 August 31, 2019 2018 Geographic region: United States $ 5,057 $ 2,695 Asia 338 1,734 Europe 138 311 $ 5,533 $ 4,740 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenue is recognized at the point in time when control transfers to the customer. Three Months Ended August 31, 2019 2018 Timing of revenue recognition: Products and services transferred at a point in time a point in time $ 4,859 $ 4,118 Services transferred over time 674 622 $ 5,533 $ 4,740

4. EARNINGS PER SHARE (Tables)

4. EARNINGS PER SHARE (Tables)	3 Months Ended
	Aug. 31, 2019
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 August 31, 2019 2018 Numerator: Net loss $ (413) $ (1,515) Denominator for basic net loss per share: Weighted average shares outstanding 22,708 22,190 Shares used in basic net loss per share calculation 22,708 22,190 Effect of dilutive securities -- -- Denominator for diluted net loss per share 22,708 22,190 Basic net loss per share $ (0.02) $ (0.07) Diluted net loss per share $ (0.02) $ (0.07)

5. FAIR VALUE OF FINANCIAL IN_2

5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Aug. 31, 2019
Fair Value Disclosures [Abstract]
Fair value by hierarchy	The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of August 31, 2019 (in thousands): Balance as of August 31, 2019 Level 1 Level 2 Level 3 Money market funds $ 2,029 $ 2,029 $ -- $ -- Assets $ 2,029 $ 2,029 $ -- $ -- 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 $ -- $ --

7. INVENTORIES (Tables)

7. INVENTORIES (Tables)	3 Months Ended
	Aug. 31, 2019
Inventory Disclosure [Abstract]
Inventories	Inventories are comprised of the following (in thousands): August 31, May 31, 2019 2019 Raw materials and sub-assemblies $ 6,499 $ 5,471 Work in process 2,667 3,580 Finished goods 51 10 $ 9,217 $ 9,061

8. PRODUCT WARRANTIES (Tables)

8. PRODUCT WARRANTIES (Tables)	3 Months Ended
	Aug. 31, 2019
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 months ended August 31, 2019 and 2018 (in thousands): Three Months Ended August 31, 2019 2018 Balance at the beginning of the period $ 154 $ 135 Accruals for warranties issued during the period 62 75 Consumption of reserves (24) (50) Balance at the end of the period $ 192 $ 160

9. CUSTOMER DEPOSITS AND DEFE_2

9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables)	3 Months Ended
	Aug. 31, 2019
Customer Deposits And Deferred Revenue Short-term
Customer deposits and deferred revenue	Customer deposits and deferred revenue, short-term (in thousands): August 31, May 31, 2019 2019 Customer deposits $ 182 $ 1,003 Deferred revenue 433 542 $ 615 $ 1,545

11. LEASES (Tables)

11. LEASES (Tables)	3 Months Ended
	Aug. 31, 2019
Leases [Abstract]
Supplemental cash flow information related to leases	The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Three Months Ended August 31, 2019 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 182
Future minimum lease payments under operating leases	The following table presents the maturities of the Company’s operating lease liabilities as of August 31, 2019 (in thousands): Fiscal year Operating Leases 2020 (excluding the first three months of 2020) $ 551 2021 754 2022 772 2023 795 2024 132 Thereafter -- Total future minimum operating lease payments $ 3,004 Less: imputed interest 312 Present value of operating lease liabilities $ 2,692

12. STOCK-BASED COMPENSATION (T

12. STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Aug. 31, 2019
Share-based Payment Arrangement [Abstract]
Compensation costs related to the Company's stock-based compensation	The following table summarizes the stock-based compensation expense for the three months ended August 31, 2019 and 2018 (in thousands): Three Months Ended August 31, 2019 2018 Stock-based compensation in the form of employee stock options, RSUs, and ESPP purchase rights, included in: Cost of sales $ 19 $ 36 Selling, general and administrative 130 148 Research and development 50 72 Net effect on net loss $ 199 $ 256
Fair value assumptions for option valuation model	Fair Value. The fair value of the Company’s stock options granted to employees for the three months ended August 31, 2019 and 2018 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended August 31, 2019 2018 Expected term (in years) 5 5 Volatility 0.71 0.74 Risk-free interest rate 1.88 % 2.75 % Weighted average grant date fair value $ 0.97 $ 1.48
Stock option and RSU transactions	The following tables summarize the Company’s stock option and RSU transactions during three months ended August 31, 2019 (in thousands): Available Shares Balance, May 31, 2019 1,147 Options granted (527 ) Shares cancelled 151 Shares expired (119 ) Balance, August 31, 2019 652
Stock option transactions	The following table summarizes the stock option transactions during the three months ended August 31, 2019 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price Value Balances, May 31, 2019 3,107 $ 2.20 $ 282 Options granted 527 $ 1.64 Options cancelled (151 ) $ 1.50 Options exercised (49 ) $ 1.27 Balances, August 31, 2019 3,434 $ 2.16 $ 41 Options fully vested and expected to vest at August 31, 2019 3,397 $ 2.16 $ 41
Options outstanding	The options outstanding and exercisable at August 31, 2019 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding Options Exercisable at August 31, 2019 at August 31, 2019 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 $ 0.80-$0.97 47 0.26 $ 0.85 47 0.26 $ 0.85 $ 1.09-$1.28 301 0.82 $ 1.28 301 0.82 $ 1.28 $ 1.64-$2.06 1,261 5.34 $ 1.76 483 3.54 $ 1.80 $ 2.10-$2.81 1,584 3.30 $ 2.43 1,263 2.63 $ 2.44 $ 3.46-$3.93 241 4.91 $ 3.85 151 4.94 $ 3.80 $ 0.80-$3.93 3,434 3.90 $ 2.16 2,245 2.69 $ 2.20 $ 41

13. SEGMENT INFORMATION (Tables

13. SEGMENT INFORMATION (Tables)	3 Months Ended
	Aug. 31, 2019
Segment Reporting [Abstract]
Company's operations in different geographic areas	Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in thousands): August 31, May 31, 2019 2019 United States $ 961 $ 1,005 Asia 39 40 Europe -- -- $ 1,000 $ 1,045

3. REVENUE (Details)

3. REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Net sales	$ 5,533	$ 4,740
Systems
Net sales	2,934	1,806
Contactors
Net sales	1,650	1,153
Services
Net sales	949	1,781
Wafer-level
Net sales	4,826	1,969
Test During Burn-In
Net sales	$ 707	$ 2,771

3. REVENUE (Details 1)

3. REVENUE (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Net sales	$ 5,533	$ 4,740
US
Net sales	5,057	2,695
Asia
Net sales	338	1,734
Europe
Net sales	$ 138	$ 311

3. REVENUE (Details 2)

3. REVENUE (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Net sales	$ 5,533	$ 4,740
Products and services transferred at a point in time
Net sales	4,859	4,118
Services transferred over time
Net sales	$ 674	$ 622

3. REVENUE (Details Narrative)

3. REVENUE (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	May 31, 2021	May 31, 2020	May 31, 2019
Revenue from Contract with Customer [Abstract]
Contract liabilities	$ 728			$ 1,734
Recognition of contract liabilities	1,049
Remaining performance obligations	$ 546
Remaining performance obligation revenue recognition		35.00%	65.00%

4. EARNINGS PER SHARE (Details)

4. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Earnings Per Share [Abstract]
Net loss	$ (413)	$ (1,515)
Denominator for basic net loss per share: Weighted average shares outstanding (in thousands)	22,708	22,190
Shares used in basic net loss per share calculation (in thousands)	22,708	22,190
Effect of dilutive securities (in thousands)	0	0
Denominator for diluted net loss per share (in thousands)	22,708	22,190
Basic net loss per share	$ (0.02)	$ (0.07)
Diluted net loss per share	$ (0.02)	$ (0.07)

4. EARNINGS PER SHARE (Details

4. EARNINGS PER SHARE (Details Narrative) - shares	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Employee Stock Purchase Plan
Options not included in the computation of diluted net loss per share (in thousands)	297	359
Convertible Notes
Options not included in the computation of diluted net loss per share (in thousands)	0	2,657
Stock Options
Options not included in the computation of diluted net loss per share (in thousands)	3,434	3,189
Restricted Stock Units
Options not included in the computation of diluted net loss per share (in thousands)	20	43

5. FAIR VALUE OF FINANCIAL IN_3

5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Money Market Funds - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Assets
Investment securities	$ 2,029	$ 3,017
Level 1
Assets
Investment securities	2,029	$ 3,017
Level 2
Assets
Investment securities	0
Level 3
Assets
Investment securities	$ 0

5. FAIR VALUE OF FINANCIAL IN_4

5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Fair Value Disclosures [Abstract]
Restricted cash representing a security deposit	$ 80	$ 80
Financial liabilities at fair value	0	0
Transfers between Level 1 and Level 2 fair value measurements	$ 0	$ 0

6. ACCOUNTS RECEIVABLE, NET (De

6. ACCOUNTS RECEIVABLE, NET (Details Narrative) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract]
Allowance for doubtful accounts customer trade receivables	$ 0	$ 0

7. INVENTORIES (Details)

7. INVENTORIES (Details) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Inventory, Net [Abstract]
Raw materials and sub-assemblies	$ 6,499	$ 5,471
Work in process	2,667	3,580
Finished goods	51	10
Inventory	$ 9,217	$ 9,061	[1]
[1]	The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date.

8. PRODUCT WARRANTIES (Details)

8. PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at the beginning of the period	$ 154	$ 135
Accruals for warranties issued during the period	62	75
Consumption of reserves	(24)	(50)
Balance at the end of the period	$ 192	$ 160

8. PRODUCT WARRANTIES (Details

8. PRODUCT WARRANTIES (Details Narrative)	3 Months Ended
	Aug. 31, 2019
Product Warranties Disclosures [Abstract]
Product Warranties Disclosures	The standard warranty period is one year for systems and ninety days for parts and services

9. CUSTOMER DEPOSITS AND DEFE_3

9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Details) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Customer Deposits And Deferred Revenue Short-term
Customer deposits	$ 182	$ 1,003
Deferred revenue	433	542
Total	$ 615	$ 1,545

11. LEASES (Details)

11. LEASES (Details) $ in Thousands	3 Months Ended
	Aug. 31, 2019USD ($)
Cash paid for amounts included in measurement of operating lease liabilities:
Operating cash flows from operating leases	$ 182

11. LEASES (Details 1)

11. LEASES (Details 1) $ in Thousands	Aug. 31, 2019USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2020 (excluding the first three months of 2020)	$ 551
2021	754
2022	772
2023	795
2024	132
Thereafter	0
Total	3,004
Less: imputed interest	312
Present value of operating lease liabilities	$ 2,692

11. LEASES (Details Narrative)

11. LEASES (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2019	May 31, 2019
Operating lease, weighted-average remaining lease term	3 years 10 months 24 days
Operating lease, weighted-average discount rate	5.50%
Operating lease, cost	$ 183
Minimum
Operating lease term		1 year
Maximum
Operating lease term		4 years

12. STOCK-BASED COMPENSATION (D

12. STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in:
Total stock-based compensation	$ 199	$ 256
Cost of Sales
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in:
Total stock-based compensation	19	36
Selling, General and Administrative
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in:
Total stock-based compensation	130	148
Research and Development
Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in:
Total stock-based compensation	$ 50	$ 72

12. STOCK-BASED COMPENSATION _2

12. STOCK-BASED COMPENSATION (Details 1) - Stock Options - $ / shares	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Expected term (in years)	5 years	5 years
Volatility	71.00%	74.00%
Risk-free interest rate	1.88%	2.75%
Weighted average grant date fair value	$ .9700	$ 1.48

12. STOCK-BASED COMPENSATION _3

12. STOCK-BASED COMPENSATION (Details 2) - Stock Option and RSU Transactions	3 Months Ended
	Aug. 31, 2019shares
Available shares, beginning (in thousands)	1,147
Options granted (in thousands)	(527)
Shares cancelled (in thousands)	151
Shares expired (in thousands)	(119)
Available shares, ending (in thousands)	652

12. STOCK-BASED COMPENSATION _4

12. STOCK-BASED COMPENSATION (Details 3) - Outstanding Options Stock Option Transactions $ / shares in Units, $ in Thousands	3 Months Ended
	Aug. 31, 2019USD ($)$ / sharesshares
Options outstanding, beginning (in thousands) | shares	3,107
Options granted (in thousands) | shares	527
Options cancelled (in thousands) | shares	(151)
Options exercised (in thousand) | shares	(49)
Options outstanding, ending (in thousands) | shares	3,434
Weighted average exercise price outstanding, beginning | $ / shares	$ 2.20
Weighted average exercise price granted | $ / shares	1.64
Weighted average exercise price cancelled | $ / shares	1.50
Weighted average exercise price exercised | $ / shares	1.27
Weighted average exercise price outstanding, ending | $ / shares	$ 2.16
Aggregate intrinsic value, beginning balance | $	$ 282
Aggregate intrinsic value, ending balance | $	$ 41
Options fully vested and expected to vest, ending (in thousands) | shares	3,397
Weighted average exercise price for options fully vested and expected to vest, ending | $ / shares	$ 2.16
Aggregate intrinsic value for options fully vested and expected to vest, ending | $	$ 41

12. STOCK-BASED COMPENSATION _5

12. STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, $ in Thousands	3 Months Ended
	Aug. 31, 2019USD ($)$ / sharesshares
$0.80-$0.97
Options outstanding, ending (in thousands) | shares	47
Weighted average remaining contractual life (years) options outstanding	3 months 4 days
Weighted average exercise price outstanding, ending | $ / shares	$ .85
Options exercisable shares, ending (in thousands) | shares	47
Weighted average remaining contractual life (years) options exercisable	3 months 4 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ .85
$1.09-$1.28
Options outstanding, ending (in thousands) | shares	301
Weighted average remaining contractual life (years) options outstanding	9 months 25 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.28
Options exercisable shares, ending (in thousands) | shares	301
Weighted average remaining contractual life (years) options exercisable	9 months 25 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ 1.28
$1.64-$2.06
Options outstanding, ending (in thousands) | shares	1,261
Weighted average remaining contractual life (years) options outstanding	5 years 4 months 2 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.76
Options exercisable shares, ending (in thousands) | shares	483
Weighted average remaining contractual life (years) options exercisable	3 years 6 months 14 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ 1.80
$2.10-$2.81
Options outstanding, ending (in thousands) | shares	1,584
Weighted average remaining contractual life (years) options outstanding	3 years 3 months 18 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.43
Options exercisable shares, ending (in thousands) | shares	1,263
Weighted average remaining contractual life (years) options exercisable	2 years 7 months 17 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ 2.44
$3.46-$3.93
Options outstanding, ending (in thousands) | shares	241
Weighted average remaining contractual life (years) options outstanding	4 years 10 months 28 days
Weighted average exercise price outstanding, ending | $ / shares	$ 3.85
Options exercisable shares, ending (in thousands) | shares	151
Weighted average remaining contractual life (years) options exercisable	4 years 11 months 8 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ 3.80
$.80-$3.93
Options outstanding, ending (in thousands) | shares	3,434
Weighted average remaining contractual life (years) options outstanding	3 years 10 months 24 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.16
Options exercisable shares, ending (in thousands) | shares	2,245
Weighted average remaining contractual life (years) options exercisable	2 years 8 months 8 days
Weighted average exercise price for options exercisable, ending | $ / shares	$ 2.20
Aggregate intrinsic value for options exercisable | $	$ 41

12. STOCK-BASED COMPENSATION _6

12. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018
Stock-based compensation costs capitalized as part of inventory	$ 0	$ 0
Intrinsic value of options exercised	$ 17	139
Weighted average remaining contractual life of the options exercisable and expected to be exercisable	3 years 10 months 17 days
Stock Option and RSU Transactions
Stock-based compensation expense related to stock options and RSUs	$ 150	$ 173
Restricted Stock Units granted (in thousands)	0	0
Restricted Stock Units vested (in thousands)	3	4
Restricted Stock Units unvested (in thousands)	20	43
Restricted Stock Units unvested intrinsic value	$ 26	$ 108
2016 Equity Incentive Plan
Unrecognized stock-based compensation	1,508
Estimated forfeitures of unvested stock based awards, amount	$ 4
Weighted average period for recognition of costs	3 years 2 months 12 days
Employee Stock Purchase Plan
Weighted average period for recognition of costs	1 year 1 month 6 days
Stock-based compensation related to the ESPP	$ 49	$ 83
Compensation cost related to purchase rights under the ESPP but not yet recognized	$ 131
ESPP purchase right granted (in thousands)	0	0
ESPP shares issued (in thousands)	0	0
ESPP shares available for issuance (in thousands)	369

13. SEGMENT INFORMATION (Detail

13. SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	Aug. 31, 2019	May 31, 2019
Property and equipment, net	$ 1,000	$ 1,045	[1]
US
Property and equipment, net	961	1,005
Asia
Property and equipment, net	39	40
Europe
Property and equipment, net	$ 0	$ 0
[1]	The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date.

13. SEGMENT INFORMATION (Deta_2

13. SEGMENT INFORMATION (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2019	Aug. 31, 2018	May 31, 2019	[1]
Operating lease right-of-use assets	$ 2,533		$ 0
Five Largest Customers
Customers accounted for 10% or more of total revenues	93.00%	78.00%
Customer A
Customers accounted for 10% or more of total revenues	54.00%	21.00%
Customer B
Customers accounted for 10% or more of total revenues	22.00%	18.00%
Customer C
Customers accounted for 10% or more of total revenues		17.00%
Customer D
Customers accounted for 10% or more of total revenues		14.00%
[1]	The condensed consolidated balance sheet at May 31, 2019 has been derived from the audited consolidated financial statements at that date.