Aehr Test Systems (AEHR) 10-Q 14 Oct 21 2021 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Aug. 31, 2021	Sep. 30, 2021
Cover [Abstract]
Entity Registrant Name	AEHR TEST SYSTEMS
Entity Central Index Key	0001040470
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--05-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Aug. 31, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021
Entity Common Stock Shares Outstanding		26,557,065
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-22893
Entity Incorporation State Country Code	CA
Entity Tax Identification Number	94-2424084
Entity Address Address Line 1	400 Kato Terrace
Entity Address State Or Province	CA
Entity Address Postal Zip Code	94539
City Area Code	510
Local Phone Number	623-9400
Trading Symbol	AEHR
Entity Interactive Data Current	Yes
Entity Address City Or Town	Fremont
Security 12b Title	Common Stock Par value $0.01 per share
Security Exchange Name	NASDAQ

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Aug. 31, 2021	May 31, 2021
Current assets:
Cash and cash equivalents	$ 6,530,000	$ 4,582,000
Accounts receivable, net	4,264,000	5,202,000
Inventories	10,146,000	8,849,000
Prepaid expenses and other current assets	759,000	551,000
Total current assets	21,699,000	19,184,000
Property and equipment, net	676,000	677,000
Operating lease right-of-use assets	1,437,000	1,606,000
Other assets	189,000	198,000
Total assets	24,001,000	21,665,000
Current liabilities:
Accounts payable	2,753,000	2,893,000
Accrued expenses	1,978,000	2,163,000
Operating lease liabilities, short-term	750,000	737,000
Customer deposits and deferred revenue, short-term	3,279,000	189,000
Line of credit	0	1,400,000
Current portion of long-term debt	0	1,679,000
Total current liabilities	8,760,000	9,061,000
Operating lease liabilities, long-term	813,000	1,007,000
Deferred revenue, long-term	150,000	99,000
Other long-term liabilities	46,000	49,000
Total liabilities	9,769,000	10,216,000
Aehr Test Systems shareholders' equity:
Common stock, $0.01 par value: Authorized: 75,000; Issued and outstanding: 24,483 shares and 23,725 shares at August 31, 2021 and May 31, 2021, respectively	245,000	237,000
Additional paid-in capital	89,668,000	87,553,000
Accumulated other comprehensive income (loss)	(64,000)	(28,000)
Accumulated deficit	(75,617,000)	(76,313,000)
Total shareholders' equity	14,232,000	11,449,000
Total liabilities and shareholders' equity	$ 24,001,000	$ 21,665,000

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Aug. 31, 2021	May 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized (in thousands)	75,000,000	75,000,000
Common stock, shares issued (in thousands)	24,483,000	24,483,000
Common stock, shares outstanding (in thousands)	23,725,000	23,725,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 5,646,000	$ 2,012,000
Cost of sales	3,365,000	1,785,000
Gross profit	2,281,000	227,000
Operating expenses:
Selling, general and administrative	1,953,000	1,514,000
Research and development	1,321,000	900,000
Total operating expenses	3,274,000	2,414,000
Loss from operations	(993,000)	(2,187,000)
Interest expense, net	(9,000)	(13,000)
Net gain from dissolution of Aehr Test Systems Japan	0	2,186,000
Gain from forgiveness of PPP loan	1,698,000	0
Other income (expense), net	23,000	(94,000)
Income (loss) before income tax (expense) benefit	719,000	(108,000)
Income tax (expense) benefit	(23,000)	215,000
Net income	$ 696,000	$ 107,000
Net income per share:
Basic and Diluted	$ 0.03	$ 0
Shares used in per share calculations:
Basic	23,999	23,248
Diluted	25,356	23,455

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$ 696,000	$ 107,000
Other comprehensive income (loss), net of tax:
Net change in cumulative translation adjustment	(36,000)	(99,000)
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	0	(2,401,000)
Total comprehensive income (loss)	660,000	(2,195,000)
Less: Comprehensive income attributable to the noncontrolling interest	0	21,000
Comprehensive income (loss), attributable to Aehr Test Systems common shareholders	$ 660,000	$ (2,216,000)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY - USD ($)	Total	Common Stock	Total Aehr Test Systems Shareholders Equity	Additional Paid-In Capital	Accumulated Other Comprehensive Income (loss)	Accumulated Deficit	Noncontrolling Interest
Balance, shares at May. 31, 2020		23,107
Balance, amount at May. 31, 2020	$ 14,056,000	$ 231,000	$ 14,077,000	$ 85,898,000	$ 2,234,000	$ (74,286,000)	$ (21,000)
Issuance of common stock under employee plans, shares		184
Issuance of common stock under employee plans, amount	190,000	$ 2,000	190,000	188,000	0	0	0
Stock-based compensation	270,000	0	270,000	270,000	0	0	0
Net income	107,000	0	107,000	0	0	107,000	0
Foreign currency translation adjustment	99,000	0	100,000	0	100,000	0	(1,000)
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	2,401,000	$ 0	(2,423,000)	0	(2,401,000)	(22,000)	22,000
Balance, shares at Aug. 31, 2020		23,291
Balance, amount at Aug. 31, 2020	12,321,000	$ 233,000	12,321,000	86,356,000	(67,000)	(74,201,000)	0
Balance, shares at May. 31, 2021		23,725
Balance, amount at May. 31, 2021	11,449,000	$ 237,000	11,449,000	87,553,000	(28,000)	(76,313,000)	0
Issuance of common stock under employee plans, shares		758
Issuance of common stock under employee plans, amount	1,535,000	$ 8,000	1,535,000	1,527,000	0	0	0
Stock-based compensation	588,000	0	588,000	588,000	0	0	0
Net income	696,000	0	696,000	0	0	696,000	0
Foreign currency translation adjustment	(36,000)	$ 0	(36,000)	0	(36,000)	0	0
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	0
Balance, shares at Aug. 31, 2021		24,483
Balance, amount at Aug. 31, 2021	$ 14,232,000	$ 245,000	$ 14,232,000	$ 89,668,000	$ (64,000)	$ (75,617,000)	$ 0

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Cash flows from operating activities:
Net income	$ 696,000	$ 107,000
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	588,000	270,000
Depreciation and amortization	73,000	82,000
Net gain from dissolution of Aehr Test Systems Japan	0	(2,186,000)
Income tax benefit related to dissolution of Aehr Test Systems Japan	0	(215,000)
Gain from forgiveness of PPP loan	(1,698,000)	0
Changes in operating assets and liabilities:
Accounts receivable	895,000	2,642,000
Inventories	(1,324,000)	(112,000)
Prepaid expenses and other current assets	(201,000)	80,000
Accounts payable	(130,000)	(173,000)
Accrued expenses	(169,000)	(67,000)
Customer deposits and deferred revenue	3,141,000	214,000
Income taxes payable	3,000	1,000
Net cash provided by operating activities	1,874,000	643,000
Cash flows from investing activities:
Purchases of property and equipment	(59,000)	(47,000)
Net cash used in investing activities	(59,000)	(47,000)
Cash flows from financing activities:
Line of credit repayments, net	(1,400,000)	0
Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards	1,535,000	190,000
Net cash provided by financing activities	135,000	190,000
Effect of exchange rates on cash, cash equivalents and restricted cash	(2,000)	94,000
Net increase in cash, cash equivalents and restricted cash	1,948,000	880,000
Cash, cash equivalents and restricted cash, beginning of period	4,662,000	5,513,000
Cash, cash equivalents and restricted cash, end of period	$ 6,610,000	$ 6,393,000

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES	3 Months Ended
	Aug. 31, 2021
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
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 (the “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, 2021 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, 2021. 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. The Company (as defined below) has been impacted by the outbreak of the novel coronavirus, known as COVID-19, which has spread throughout the world. Due to the impact of the COVID-19 pandemic on customers and customers’ customers, the Company experienced a drop in customer orders and revenues during the fiscal year ended May 31, 2021 and in the last quarter of fiscal year ended May 31, 2020. In response, the Company implemented cost reduction initiatives to mitigate operating losses, including mandatory vacation days, shutdown days, and executive staff pay reductions. The Company eliminated all cost reduction initiatives in the last quarter of the fiscal year ended May 31, 2021. The Company will continue to monitor the situation. As of the date of this report, the Company cannot predict with certainty the potential effects the COVID-19 pandemic may have on the Company’s business and its operating results. While the overall environment remains uncertain, the Company continues to invest in priority areas with the objective of driving profitable growth over the long term. PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). On November 18, 2020, the Company established a wholly owned new subsidiary, Aehr Test Systems Philippines, which is in full operation as of March 31, 2021. All significant intercompany balances have been eliminated in consolidation. The liquidation of Aehr Test Systems Japan K.K. (“ATS-Japan”), the Company’s majority owned subsidiary, was completed on July 31, 2020 and noncontrolling interest was eliminated. See Note 16. 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, 2021. There have been no significant changes in the Company’s significant accounting policies during the three months ended August 31, 2021.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Aug. 31, 2021
RECENT ACCOUNTING PRONOUNCEMENTS
2. RECENT ACCOUNTING PRONOUNCEMENTS	2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards Adopted Income Taxes On December 18, 2019, the FASB issued Accounting Standards Update ASU 2019-12 on Simplifying the Accounting for Income Taxes. The board decided to remove the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example discontinued operations or other comprehensive income). There are also provisions related to state taxes and calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2020. The Company has adopted ASU 2019-12 in the quarter ended August 31, 2021 with no material impact. Accounting Standards Not Yet Adopted Financial Instruments In June 2016, the FASB issued an accounting standard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning in the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2021 is permitted. The Company does not expect a material impact of this accounting standard on its consolidated financial statements.

REVENUE

REVENUE	3 Months Ended
	Aug. 31, 2021
REVENUE
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. The Company sells its products primarily through a direct sales force. In certain international markets, the Company sells its products through independent distributors. The Company considers revenue to be earned when all of the following criteria are met: · The Company has a contract with a customer that creates enforceable rights and obligations, · Promised performance obligations are identified, · The transaction price, or the amount we expect to receive, is determinable and · The Company has satisfied the performance obligations to the customer. Transfer of control is evidenced upon passage of title and risk of loss to the customer unless we are required to provide additional services. Disaggregation of revenue The following tables show revenues by major product categories. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flow are substantially similar. The Company’s revenues by product category are as follows (in thousands): Three Months Ended August 31, 2021 2020 Type of good / service: Systems $ 3,879 $ 801 Contactors 952 627 Services 815 584 $ 5,646 $ 2,012 Product lines: Wafer-level $ 5,143 $ 1,559 Test During Burn-In 503 453 $ 5,646 $ 2,012 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, 2021 2020 Geographic region: United States $ 506 $ 1,041 Asia 5,137 969 Europe 3 2 $ 5,646 $ 2,012 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to the customers. The following presents revenue based on timing of recognition (in thousands): Three Months Ended August 31, 2021 2020 Timing of revenue recognition: Products and services transferred at a point in time $ 5,290 $ 1,570 Services transferred over time 356 442 $ 5,646 $ 2,012 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, 2021 and May 31, 2021 were $3,429,000 and $288,000, respectively. During the three months ended August 31, 2021, the Company recognized $109,000 of revenues that were included in contract liabilities as of May 31, 2021. Remaining performance obligations On August 31, 2021, the Company had $258,000 of remaining performance obligations, which were comprised of deferred service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 29% of its remaining performance obligations as revenue in fiscal 2022, and an additional 71% in fiscal 2023 and thereafter. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less, and also excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation. Costs to obtain or fulfill a contract The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expense as the amortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing process.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Aug. 31, 2021
Net income per share:
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, restricted stock units (“RSUs”), and Amended and Restated 2006 Employee Stock Purchase Plan (“ESPP”) shares) outstanding during the period using the treasury stock method. The following table presents the computation of basic and diluted net income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended August 31, 2021 2020 Numerator: Net income $ 696 $ 107 Denominator for basic net income per share: Weighted average shares outstanding 23,999 23,248 Shares used in basic net income per share calculation 23,999 23,248 Effect of dilutive securities 1,357 207 Denominator for diluted net income per share 25,356 23,455 Basic net income per share $ 0.03 $ 0.00 Diluted net income per share $ 0.03 $ 0.00 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. Stock options to purchase 112,000 shares of common stock were outstanding for the three months ending August 31, 2021, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. Stock options to purchase 2,594,000 shares of common stock were outstanding for the three months ending August 31, 2020, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	3 Months Ended
	Aug. 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
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, 2021 (in thousands): Balance as of August 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 580 $ 580 $ - $ - Assets $ 580 $ 580 $ - $ - The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2021 (in thousands): Balance as of May 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 580 $ 580 $ - $ - Assets $ 580 $ 580 $ - $ - Included in money market funds as of August 31, 2021 and May 31, 2021 is $80,000 restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease which is included in other assets in the consolidated balance sheets. There were no financial liabilities measured at fair value as of August 31, 2021 and May 31, 2021. There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended August 31, 2021. 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.

ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET	3 Months Ended
	Aug. 31, 2021
ACCOUNTS RECEIVABLE, NET
6. ACCOUNTS RECEIVABLE, NET	6. ACCOUNTS RECEIVABLE, NET Accounts receivable represent customer trade receivables. As of August 31, 2021 and May 31, 2021, 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.

INVENTORIES

INVENTORIES	3 Months Ended
	Aug. 31, 2021
INVENTORIES
7. INVENTORIES	7. INVENTORIES Inventories are comprised of the following (in thousands): August 31, May 31, 2021 2021 Raw materials and sub-assemblies $ 7,162 $ 5,859 Work in process 2,946 2,988 Finished goods 38 2 $ 10,146 $ 8,849

PRODUCT WARRANTIES

PRODUCT WARRANTIES	3 Months Ended
	Aug. 31, 2021
PRODUCT WARRANTIES
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, 2021 and 2020 (in thousands): Three Months Ended August 31, 2021 2020 Balance at the beginning of the period $ 494 $ 246 Accruals for warranties issued during the period 162 79 Adjustments to previously existing warranty accruals - 76 Consumption of reserves (151 ) (71 ) Balance at the end of the period $ 505 $ 330 The accrued warranty balance is included in accrued expenses on the accompanying condensed consolidated balance sheets.

CUSTOMER DEPOSITS AND DEFERRED

CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	3 Months Ended
	Aug. 31, 2021
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, 2021 2021 Customer deposits $ 3,124 $ 27 Deferred revenue 155 162 $ 3,279 $ 189

INCOME TAXES

INCOME TAXES	3 Months Ended
	Aug. 31, 2021
INCOME TAXES
10. INCOME TAXES	10. INCOME TAXES The Company is subject to U.S federal and state and foreign income taxes as a corporation. The Company’s tax provision and the resulting effective tax rate for the interim period is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded a provision for income tax of $23,000 for the three months ended August 31, 2021 which consisted primarily of foreign withholding taxes and foreign income taxes. For the three months ended August 31, 2020 the Company recorded a $215,000 tax benefit related to the dissolution of its Japan subsidiary. See Note 16. 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.

LEASES

LEASES	3 Months Ended
	Aug. 31, 2021
LEASES
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 6 months 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 2.1 years at August 31, 2021 and the weighted-average discount rate was 5.43%. The Company’s operating lease cost was $192,000 and $186,000 for the three months ended August 31, 2021 and 2020, respectively. The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Three Months Ended August 31, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 203 $ 190 Right-of-use assets obtained in exchange for operating lease liabilities - - The following table presents the maturities of the Company’s operating lease liabilities as of August 31, 2021 (in thousands): Fiscal year Operating Leases 2022 (excluding the first three months of 2022) $ 611 2023 829 2024 168 2025 31 2026 18 Thereafter - Total future minimum operating lease payments 1,657 Less: imputed interest 94 Present value of operating lease liabilities $ 1,563

BORROWING AND FINANCING ARRANGE

BORROWING AND FINANCING ARRANGEMENTS	3 Months Ended
	Aug. 31, 2021
BORROWING AND FINANCING ARRANGEMENTS
12. BORROWING AND FINANCING ARRANGEMENTS:	12. BORROWING AND FINANCING ARRANGEMENTS: On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). Pursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $4.0 million or (ii) the amount available under the borrowing base minus (b) the outstanding principal balance of any advances, under a revolving line of credit which is collateralized by all the Company’s assets except intellectual property. The borrowing base is 80% of eligible accounts, as determined by SVB from the Company’s most recent borrowing base statement; provided, however, SVB has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of certain events or conditions, which may adversely affect the collateral or its value. Subject to an event of default, the principal amount outstanding under the revolving line of credit will accrue interest at a floating per annum rate equal to the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%.Interest is payable monthly on the last calendar day of each month and the outstanding principal amount, the unpaid interest and all other obligations are due on the maturity date, which is 364 days from the effective date of January 13, 2020. On January 14, 2021, the Company entered into the First Amendment to Loan and Security Agreement (the “Amendment”) with Silicon Valley Bank. The Amendment, among other things, extends the Revolving Line Maturity Date to July 14, 2021; provided, however, that if the Company achieves specified operating metrics on a consolidated basis on or prior to May 31, 2021 the Amended Revolving Line Maturity Date is extended to January 13, 2022. As of August 31, 2021, the Revolving Line Maturity Date has been extended to January 13, 2022. At August 31, 2021, the Company had no balance outstanding against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under the line at August 31, 2021 was $1,707,000. There are no financial covenants in the agreement.

LONG-TERM DEBT

LONG-TERM DEBT	3 Months Ended
	Aug. 31, 2021
LONG-TERM DEBT
13. LONG-TERM DEBT:	13. LONG-TERM DEBT: On April 23, 2020, the Company obtained the Paycheck Protection Program Loan (the “PPP Loan”) in the aggregate amount of $1,678,789 from SVB. The PPP Loan was evidenced by a promissory note dated April 23, 2020 (the “Note”) that matures on April 23, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 23, 2020. The PPP Loan proceeds were used for payroll, health care benefits, rent and utilities. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company. On June 12, 2021, the Company received confirmation from SVB that on June 4, 2021, the Small Business Administration approved the Company’s PPP Loan forgiveness application for the entire PPP Loan balance of $1,678,789 and interest totaling $18,933, and the Company recognized a gain on loan forgiveness of $1,697,722.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Aug. 31, 2021
STOCK-BASED COMPENSATION
14. STOCK-BASED COMPENSATION	14. STOCK-BASED COMPENSATION Stock-based compensation expense consists of expenses for stock options, RSUs and 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 and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as an equity instrument. See Note 11 in the Company’s Annual Report on Form 10-K for fiscal 2021 filed on August 27, 2021 for further information regarding the 2016 Equity Incentive Plan (the “2016 Plan”) and the ESPP. The following table summarizes the stock-based compensation expense for the three months ended August 31, 2021 and 2020 (in thousands): Three Months Ended August 31, 2021 2020 Stock-based compensation in the form of stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 82 $ 16 Selling, general and administrative 395 205 Research and development 111 49 Total stock-based compensation $ 588 $ 270 As of August 31, 2021, and August 31, 2020, there were no stock-based compensation expenses capitalized as part of inventory. During the three months ended August 31, 2021 and 2020, the Company recorded stock-based compensation expenses related to stock options and RSUs under the 2016 Plan of $484,000 and $245,000, respectively. As of August 31, 2021, the total compensation expense related to unvested stock-based awards under the 2016 Plan, but not yet recognized, was approximately $1,586,000, 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 2.0 years. During the three months ended August 31, 2021 and 2020, the Company recorded stock-based compensation expense related to the ESPP of $104,000 and $25,000, respectively. As of August 31, 2021, the total compensation expense related to purchase rights under the ESPP but not yet recognized was approximately $355,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 1.0 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 six 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, 2021 and 2020 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended August 31, 2021 2020 Expected term (in years) 6 6 Volatility 0.76 0.71 Risk-free interest rate 1.01 % 0.38 % Weighted average grant date fair value $ 1.93 $ 1.16 There were no ESPP purchase rights granted to employees for the three months ended August 31, 2021 and 2020. There were no ESPP shares issued during the three months ended August 31, 2021 and 2020. As of August 31, 2021, there were 436,000 ESPP shares available for issuance. The following tables summarize the Company’s stock option and RSU transactions during the three months ended August 31, 2021 (in thousands): Available Shares Balance, May 31, 2021 1,137 Options granted (206 ) RSUs granted (238 ) Options cancelled and adjusted (8 ) Balance, August 31, 2021 685 The following table summarizes the stock option transactions during the three months ended August 31, 2021 (in thousands, except per share data): Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances, May 31, 2021 2,766 $ 2.16 $ 807 Options granted 206 $ 2.93 Options cancelled (6 ) $ 1.95 Options exercised (641 ) $ 2.46 Balances, August 31, 2021 2,325 $ 2.14 $ 12,365 Options fully vested and expected to vest at August 31, 2021 2,290 $ 2.14 $ 12,177 The options outstanding and exercisable at August 31, 2021 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding at August 31, 2021 Options Exercisable at August 31, 2021 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 $1.22-$1.34 125 5.78 $ 1.27 67 5.90 $ 1.29 $1.64-$1.86 924 4.60 $ 1.70 556 4.20 $ 1.69 $2.03-$2.42 883 3.01 $ 2.21 702 2.66 $ 2.20 $2.76-$2.93 231 6.38 $ 2.92 29 3.03 $ 2.82 $3.46-$3.93 162 2.90 $ 3.87 162 2.90 $ 3.87 $1.22-$3.93 2,325 4.12 $ 2.14 1,516 3.40 $ 2.16 $ 8,034 The total intrinsic value of options exercised during the three months ended August 31, 2021 and 2020 was $1,902,000 and $92,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at August 31, 2021 was 4.11 years. During the three months ended August 31, 2021, RSUs for 119,000 shares were granted to employees on July 13, 2021. The market value on the date of the grant of these RSUs was $2.93 per share. During the three months ended August 31, 2021, RSUs for 49,000 shares, net of 40,000 shares withheld to settle payroll taxes, granted to employees on July 6, 2021 became fully vested. The market value on the date of the grant of these RSUs was $2.50 per share. During the three months ended August 31, 2021, RSUs for 11,000 RSUs granted to employees became fully vested. As of August 31, 2021, 240,000 RSUs were unvested which had an intrinsic value of $1,790,000. During the three months ended August 31, 2020, RSUs for 161,000 shares were granted to employees. The market value on the date of the grant of these RSUs was $1.86 per share. During the three months ended August 31, 2020, 3,000 RSUs granted to employees became fully vested. As of August 31, 2020, 166,000 RSUs were unvested which had an intrinsic value of $296,000. During the three months ended August 31, 2021, RSUs for 30,000 shares were granted to members of the Company’s Board of Directors in lieu of cash payment of board fees and fully vested. The market value on the date of the grant of these RSUs was $2.93 per share. During the three months ended August 31, 2020, RSUs for 35,000 shares were granted to members of the Company’s Board of Directors in lieu of cash payment of board fees and fully vested. The market value on the date of the grant of these RSUs was $1.86 per share.

SEGMENT AND CONCENTRATION INFOR

SEGMENT AND CONCENTRATION INFORMATION	3 Months Ended
	Aug. 31, 2021
SEGMENT AND CONCENTRATION INFORMATION
15. SEGMENT AND CONCENTRATION INFORMATION	15. SEGMENT AND CONCENTRATION 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, 2021 2021 United States $ 640 $ 647 Asia 36 30 Europe - - $ 676 $ 677 As of August 31, 2021, the operating lease right-of-use assets of $1,320,000 and $117,000 are allocated in the United States and Asia, respectively. There were no revenues through distributors for the three months ended August 31, 2021 and 2020. Sales to the Company’s five largest customers accounted for approximately 95% and 81% of its net sales for the three months ended August 31, 2021 and 2020, respectively. Two customers accounted for approximately 69% and 16% of the Company’s net sales in the three months ended August 31, 2021. Four customers accounted for approximately 21%,19%, 17%, and 15% of the Company’s net sales in the three months ended August 31, 2020. No other customers represented more than 10% of the Company's net sales for either of the three months ended August 31, 2021 and 2020.

DISSOLUTION OF AEHR TEST SYSTEM

DISSOLUTION OF AEHR TEST SYSTEMS JAPAN	3 Months Ended
	Aug. 31, 2021
DISSOLUTION OF AEHR TEST SYSTEMS JAPAN
16. DISSOLUTION OF AEHR TEST SYSTEMS JAPAN	16. DISSOLUTION OF AEHR TEST SYSTEMS JAPAN On July 31, 2020, the Company completed the liquidation of Aehr Test Systems Japan K.K. (“ATS-Japan”), a majority owned subsidiary. Accordingly, the Company deconsolidated ATS-Japan and recognized an aggregate net gain of $2,401,000 for the period ended August 31, 2020. The net gain was mainly due to cumulative translation adjustment reclassified into earnings of $2,186,000 and the residual income tax effect in connection with the cumulative translation adjustment released into income tax benefits of $215,000.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Aug. 31, 2021
SUBSEQUENT EVENTS
17. SUBSEQUENT EVENTS	17. SUBSEQUENT EVENTS On August 25, 2021, the Board authorized Management to take actions necessary for the execution of a $75 million shelf registration, which S-3 was filed with the SEC on September 3, 2021. A Prospectus Supplement for an "At the Market" ("ATM") sale of $25 million of common stock was subsequently filed on September 17, 2021. As of the date of this report, the Company has fully executed the ATM offering by selling 1,696,729 shares at an average selling price of $14.73. The gross proceeds to the Company were $25.0 million, before commission fee and offering expenses. The estimated net proceeds to the Company after commission fee and estimated offering expenses were $24.0 million.

BASIS OF PRESENTATION AND SUM_2

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES (Policies)	3 Months Ended
	Aug. 31, 2021
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
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 (the “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, 2021 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, 2021. 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. The Company (as defined below) has been impacted by the outbreak of the novel coronavirus, known as COVID-19, which has spread throughout the world. Due to the impact of the COVID-19 pandemic on customers and customers’ customers, the Company experienced a drop in customer orders and revenues during the fiscal year ended May 31, 2021 and in the last quarter of fiscal year ended May 31, 2020. In response, the Company implemented cost reduction initiatives to mitigate operating losses, including mandatory vacation days, shutdown days, and executive staff pay reductions. The Company eliminated all cost reduction initiatives in the last quarter of the fiscal year ended May 31, 2021. The Company will continue to monitor the situation. As of the date of this report, the Company cannot predict with certainty the potential effects the COVID-19 pandemic may have on the Company’s business and its operating results. While the overall environment remains uncertain, the Company continues to invest in priority areas with the objective of driving profitable growth over the long term.
PRINCIPLES OF CONSOLIDATION	PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its subsidiaries (collectively, the "Company"). On November 18, 2020, the Company established a wholly owned new subsidiary, Aehr Test Systems Philippines, which is in full operation as of March 31, 2021. All significant intercompany balances have been eliminated in consolidation. The liquidation of Aehr Test Systems Japan K.K. (“ATS-Japan”), the Company’s majority owned subsidiary, was completed on July 31, 2020 and noncontrolling interest was eliminated. See Note 16.
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, 2021. There have been no significant changes in the Company’s significant accounting policies during the three months ended August 31, 2021.

RECENT ACCOUNTING PRONOUNCEME_2

RECENT ACCOUNTING PRONOUNCEMENTS (Policies)	3 Months Ended
	Aug. 31, 2021
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	Accounting Standards Adopted Income Taxes On December 18, 2019, the FASB issued Accounting Standards Update ASU 2019-12 on Simplifying the Accounting for Income Taxes. The board decided to remove the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example discontinued operations or other comprehensive income). There are also provisions related to state taxes and calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2020. The Company has adopted ASU 2019-12 in the quarter ended August 31, 2021 with no material impact. Accounting Standards Not Yet Adopted Financial Instruments In June 2016, the FASB issued an accounting standard update (“ASU”) that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Due to a subsequent ASU in November 2019, the accounting standard will be effective for the Company beginning in the first quarter of fiscal 2024 on a modified retrospective basis, and early adoption in fiscal 2021 is permitted. The Company does not expect a material impact of this accounting standard on its consolidated financial statements.

REVENUE (Tables)

REVENUE (Tables)	3 Months Ended
	Aug. 31, 2021
REVENUE
Disaggregation of revenue	The Company’s revenues by product category are as follows (in thousands): Three Months Ended August 31, 2021 2020 Type of good / service: Systems $ 3,879 $ 801 Contactors 952 627 Services 815 584 $ 5,646 $ 2,012 Product lines: Wafer-level $ 5,143 $ 1,559 Test During Burn-In 503 453 $ 5,646 $ 2,012 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, 2021 2020 Geographic region: United States $ 506 $ 1,041 Asia 5,137 969 Europe 3 2 $ 5,646 $ 2,012 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to the customers. The following presents revenue based on timing of recognition (in thousands): Three Months Ended August 31, 2021 2020 Timing of revenue recognition: Products and services transferred at a point in time $ 5,290 $ 1,570 Services transferred over time 356 442 $ 5,646 $ 2,012

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Aug. 31, 2021
Net income per share:
Earnings per share	The following table presents the computation of basic and diluted net income per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended August 31, 2021 2020 Numerator: Net income $ 696 $ 107 Denominator for basic net income per share: Weighted average shares outstanding 23,999 23,248 Shares used in basic net income per share calculation 23,999 23,248 Effect of dilutive securities 1,357 207 Denominator for diluted net income per share 25,356 23,455 Basic net income per share $ 0.03 $ 0.00 Diluted net income per share $ 0.03 $ 0.00

FAIR VALUE OF FINANCIAL INSTR_2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Aug. 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
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, 2021 (in thousands): Balance as of August 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 580 $ 580 $ - $ - Assets $ 580 $ 580 $ - $ - The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of May 31, 2021 (in thousands): Balance as of May 31, 2021 Level 1 Level 2 Level 3 Money market funds $ 580 $ 580 $ - $ - Assets $ 580 $ 580 $ - $ -

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Aug. 31, 2021
INVENTORIES
Schedule of inventories	Inventories are comprised of the following (in thousands): August 31, May 31, 2021 2021 Raw materials and sub-assemblies $ 7,162 $ 5,859 Work in process 2,946 2,988 Finished goods 38 2 $ 10,146 $ 8,849

PRODUCT WARRANTIES (Tables)

PRODUCT WARRANTIES (Tables)	3 Months Ended
	Aug. 31, 2021
PRODUCT WARRANTIES
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, 2021 and 2020 (in thousands): Three Months Ended August 31, 2021 2020 Balance at the beginning of the period $ 494 $ 246 Accruals for warranties issued during the period 162 79 Adjustments to previously existing warranty accruals - 76 Consumption of reserves (151 ) (71 ) Balance at the end of the period $ 505 $ 330

CUSTOMER DEPOSITS AND DEFERRE_2

CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM (Tables)	3 Months Ended
	Aug. 31, 2021
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM
Schedule of Customer deposits and deferred revenue	Customer deposits and deferred revenue, short-term (in thousands): August 31, May 31, 2021 2021 Customer deposits $ 3,124 $ 27 Deferred revenue 155 162 $ 3,279 $ 189

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Aug. 31, 2021
LEASES
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, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 203 $ 190 Right-of-use assets obtained in exchange for operating lease liabilities - -
Maturity of operating lease liabilities	The following table presents the maturities of the Company’s operating lease liabilities as of August 31, 2021 (in thousands): Fiscal year Operating Leases 2022 (excluding the first three months of 2022) $ 611 2023 829 2024 168 2025 31 2026 18 Thereafter - Total future minimum operating lease payments 1,657 Less: imputed interest 94 Present value of operating lease liabilities $ 1,563

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Aug. 31, 2021
STOCK-BASED COMPENSATION
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, 2021 and 2020 (in thousands): Three Months Ended August 31, 2021 2020 Stock-based compensation in the form of stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 82 $ 16 Selling, general and administrative 395 205 Research and development 111 49 Total stock-based compensation $ 588 $ 270
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, 2021 and 2020 were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended August 31, 2021 2020 Expected term (in years) 6 6 Volatility 0.76 0.71 Risk-free interest rate 1.01 % 0.38 % Weighted average grant date fair value $ 1.93 $ 1.16
Fair value assumption of the ESPP Purchase Rights
Stock option and RSU transactions	The following tables summarize the Company’s stock option and RSU transactions during the three months ended August 31, 2021 (in thousands): Available Shares Balance, May 31, 2021 1,137 Options granted (206 ) RSUs granted (238 ) Options cancelled and adjusted (8 ) Balance, August 31, 2021 685
Stock option transactions	The following table summarizes the stock option transactions during the three months ended August 31, 2021 (in thousands, except per share data): Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances, May 31, 2021 2,766 $ 2.16 $ 807 Options granted 206 $ 2.93 Options cancelled (6 ) $ 1.95 Options exercised (641 ) $ 2.46 Balances, August 31, 2021 2,325 $ 2.14 $ 12,365 Options fully vested and expected to vest at August 31, 2021 2,290 $ 2.14 $ 12,177
Options outstanding	The options outstanding and exercisable at August 31, 2021 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding at August 31, 2021 Options Exercisable at August 31, 2021 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 $1.22-$1.34 125 5.78 $ 1.27 67 5.90 $ 1.29 $1.64-$1.86 924 4.60 $ 1.70 556 4.20 $ 1.69 $2.03-$2.42 883 3.01 $ 2.21 702 2.66 $ 2.20 $2.76-$2.93 231 6.38 $ 2.92 29 3.03 $ 2.82 $3.46-$3.93 162 2.90 $ 3.87 162 2.90 $ 3.87 $1.22-$3.93 2,325 4.12 $ 2.14 1,516 3.40 $ 2.16 $ 8,034

SEGMENT AND CONCENTRATION INF_2

SEGMENT AND CONCENTRATION INFORMATION (Tables)	3 Months Ended
	Aug. 31, 2021
SEGMENT AND CONCENTRATION INFORMATION
Property and equipment by geographic region

REVENUE (Details)

REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Net sales	$ 5,646	$ 2,012
Systems
Net sales	3,879	801
Contactors
Net sales	952	627
Services
Net sales	815	584
Wafer-Level
Net sales	5,143	1,559
Test During Burn-In
Net sales	$ 503	$ 453

REVENUE (Details 1)

REVENUE (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Net sales	$ 5,646	$ 2,012
United States
Net sales	506	1,041
Asia
Net sales	5,137	969
Europe
Net sales	$ 3	$ 2

REVENUE (Details 2)

REVENUE (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Net sales	$ 5,646	$ 2,012
Products and Services Transferred at a Point in Time
Net sales	5,290	1,570
Services Transferred over Time
Net sales	$ 356	$ 442

REVENUE (Details Narrative)

REVENUE (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2021	May 31, 2023	May 31, 2022	May 31, 2021
REVENUE
Contract liabilities	$ 3,429,000			$ 288,000
Recognition of contract liabilities	109,000
Remaining performance obligations	$ 258,000
Remaining performance obligation revenue recognition		71.00%	29.00%

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Net income	$ 696	$ 107
Denominator for basic net income per share: Weighted average shares outstanding (in thousands)	23,999	23,248
Denominator for diluted net income per share (in thousands)	25,356	23,455
Numerator [Member]
Net income	$ 696	$ 107
Denominator [Member]
Denominator for basic net income per share: Weighted average shares outstanding (in thousands)	23,999	23,248
Shares used in basic net income per share calculation (in thousands)	23,999	23,248
Effect of dilutive securities (in thousands)	1,357	207
Denominator for diluted net income per share (in thousands)	25,356	23,455
Basic net income per share	$ 0.03	$ 0
Diluted net income per share	$ 0.03	$ 0

EARNINGS PER SHARE (Details Nar

EARNINGS PER SHARE (Details Narrative) - shares	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Stock Option [Member]
Options not included in the computation of diluted net loss per share	112,000	2,594,000

FAIR VALUE OF FINANCIAL INSTR_3

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Aug. 31, 2021	May 31, 2021
Assets
Investment securities	$ 580	$ 580
Money Market Fund
Assets
Investment securities	580	580
Level 1
Assets
Investment securities	580	580
Level 1 | Money Market Fund
Assets
Investment securities	580	580
Level 2
Assets
Investment securities	0	0
Level 2 | Money Market Fund
Assets
Investment securities	0	0
Level 3
Assets
Investment securities	0	0
Level 3 | Money Market Fund
Assets
Investment securities	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTR_4

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	Aug. 31, 2021	May 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
Restricted cash	$ 80,000	$ 80,000
Financial liabilities at fair value	0	0
Transfer between Level 1 and Level 2 fair value measurements	$ 0	$ 0

ACCOUNTS RECEIVABLE (Details Na

ACCOUNTS RECEIVABLE (Details Narrative) - USD ($)	May 31, 2021	May 31, 2020
ACCOUNTS RECEIVABLE, NET
Allowance for doubtful accounts	$ 0	$ 0

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Aug. 31, 2021	May 31, 2021
INVENTORIES (Details)
Raw materials and sub-assemblies	$ 7,162	$ 5,859
Work in process	2,946	2,988
Finished goods	38	2
Inventories	$ 10,146	$ 8,849

PRODUCT WARRANTIES (Details)

PRODUCT WARRANTIES (Details) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
PRODUCT WARRANTIES (Details)
Balance at the beginning of the year	$ 494,000	$ 246,000
Accruals for warranties issued during the year	162,000	79,000
Adjustment to previously existing warranty accruals	0	76,000
Consumption of reserves	(151,000)	(71,000)
Balance at the end of the year	$ 505,000	$ 330,000

PRODUCT WARRANTIES (Details Nar

PRODUCT WARRANTIES (Details Narrative)	3 Months Ended
	Aug. 31, 2021
PRODUCT WARRANTIES
Standard warranty period	The standard warranty period is one year for systems and ninety days for parts and service.

CUSTOMER DEPOSITS AND DEFERRE_3

CUSTOMER DEPOSITS AND DEFERRED REVENUE SHORT-TERM (Details) - USD ($) $ in Thousands	Aug. 31, 2021	May 31, 2021
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM
Customer deposits	$ 3,124	$ 27
Deferred revenue	155	162
Total	$ 3,279	$ 189

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
INCOME TAXES
Provision for income tax	$ (23)	$ 215

LEASES (Details)

LEASES (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Cash paid for amounts included in measurement of operating lease liabilities:
Operating cash flows for operating leases	$ 203	$ 190
Right-of-use assets obtained in exchange for operating lease liabilities	$ 0	$ 0

LEASES (Details 1)

LEASES (Details 1) $ in Thousands	Aug. 31, 2021USD ($)
LEASES (Details 1)
2022 (excluding the first three months of 2022)	$ 611
2023	829
2024	168
2025	31
2026	18
Thereafter	0
Total future minimum operating lease payments	1,657
Less: imputed interest	94
Present value of operating lease liabilities	$ 1,563

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Operating lease, weighted-average remaining lease term	2 years 1 month 6 days
Operating lease, weighted-average discount rate	5.43%
Operating lease, cost	$ 192,000	$ 186,000
Minimum
Operating lease term	6 years
Maximum
Operating lease term	4 years

BORROWING AND FINANCING ARRAN_2

BORROWING AND FINANCING ARRANGEMENTS (Details Narrative) - Silicon Valley Bank	3 Months Ended
	Aug. 31, 2021USD ($)
Line of credit, maximum borrowing capacity	$ 4,000,000
Variable interest rate	the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%
Revolving line maturity date	Jan. 13, 2022
Outstanding credit facility balance	$ 0
Balance available to borrow under the line of credit	$ 1,707,000

LONG-TERM DEBT (Details Narrati

LONG-TERM DEBT (Details Narrative) - Silicon Valley Bank - USD ($)	Jun. 12, 2021	Apr. 23, 2020
PPP loan		$ 1,678,789
Interest rate		1.00%
Interest on loan	$ 18,933

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Total stock-based compensation	$ 588	$ 270
Cost of Sales
Total stock-based compensation	82	16
Selling, General and Administrative
Total stock-based compensation	395	205
Research and Development
Total stock-based compensation	$ 111	$ 49

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details 1) - Stock Option [Member] - $ / shares	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Expected term (in years)	6 years	6 years
Volatility	0.76%	0.71%
Risk-free interest rates	1.01%	0.38%
Weighted-average grant date fair value	$ 1.93	$ 1.16

STOCK-BASED COMPENSATION (Det_3

STOCK-BASED COMPENSATION (Details 2) - Stock Option and RSU Transactions [Member] shares in Thousands	3 Months Ended
	Aug. 31, 2021shares
Available shares, beginning (in thousands)	1,137
Options granted (in thousands)	(206)
RSUs granted (in thousands)	(238)
Options cancelled and adjusted (in thousands)	(8)
Available shares, ending (in thousands)	685

STOCK-BASED COMPENSATION (Det_4

STOCK-BASED COMPENSATION (Details 3) - Outstanding Options Stock Option Transactions [Member] $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Aug. 31, 2021USD ($)$ / sharesshares
Options outstanding, beginning (in thousands) | shares	2,766
Options granted (in thousands) | shares	206
Options cancelled and adjusted (in thousands) | shares	(6)
Options exercised (in thousands) | shares	(641)
Options outstanding, ending (in thousands) | shares	2,325
Options fully vested and expected to vest (in thousands) | shares	2,290
Weighted average exercise price outstanding, beginning | $ / shares	$ 2.16
Weighted average exercise price Options granted | $ / shares	2.93
Weighted average exercise price Options cancelled | $ / shares	1.95
Weighted average exercise price Options exercised | $ / shares	2.46
Weighted average exercise price outstanding, ending | $ / shares	2.14
Weighted average exercise price fully vested and expected to vest | $ / shares	$ 2.14
Aggregate intrinsic value, beginning | $	$ 807
Aggregate intrinsic value, ending | $	12,365
Aggregate intrinsic value for options fully vested and expected to vest | $	$ 12,177

STOCK-BASED COMPENSATION (Det_5

STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Aug. 31, 2021USD ($)$ / sharesshares
$1.22-$1.34
Options outstanding, ending (in thousands) | shares	125
Weighted average remaining contractual life (Years) options outstanding	5 years 9 months 10 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.27
Option exercisable shares (in thousands) | shares	67
Weighted average remaining contractual life (Years) options exercisable	5 years 10 months 24 days
Weighted average exercise price for options exercisable | $ / shares	$ 1.29
$1.64-$1.86
Options outstanding, ending (in thousands) | shares	924
Weighted average remaining contractual life (Years) options outstanding	4 years 7 months 6 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.70
Option exercisable shares (in thousands) | shares	556
Weighted average remaining contractual life (Years) options exercisable	4 years 2 months 12 days
Weighted average exercise price for options exercisable | $ / shares	$ 1.69
$2.03-$2.42
Options outstanding, ending (in thousands) | shares	883
Weighted average remaining contractual life (Years) options outstanding	3 years 3 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.21
Option exercisable shares (in thousands) | shares	702
Weighted average remaining contractual life (Years) options exercisable	2 years 7 months 28 days
Weighted average exercise price for options exercisable | $ / shares	$ 2.20
$2.76-$2.93
Options outstanding, ending (in thousands) | shares	231
Weighted average remaining contractual life (Years) options outstanding	6 years 4 months 17 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.92
Option exercisable shares (in thousands) | shares	29
Weighted average remaining contractual life (Years) options exercisable	3 years 10 days
Weighted average exercise price for options exercisable | $ / shares	$ 2.82
$3.46-$3.93
Options outstanding, ending (in thousands) | shares	162
Weighted average remaining contractual life (Years) options outstanding	2 years 10 months 24 days
Weighted average exercise price outstanding, ending | $ / shares	$ 3.87
Option exercisable shares (in thousands) | shares	162
Weighted average remaining contractual life (Years) options exercisable	2 years 10 months 24 days
Weighted average exercise price for options exercisable | $ / shares	$ 3.87
$1.22-$3.93
Options outstanding, ending (in thousands) | shares	2,325
Weighted average remaining contractual life (Years) options outstanding	4 years 1 month 13 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.14
Option exercisable shares (in thousands) | shares	1,516
Weighted average remaining contractual life (Years) options exercisable	3 years 4 months 24 days
Weighted average exercise price for options exercisable | $ / shares	$ 2.16
Aggregate intrinsic value for options exercisable | $	$ 8,034

STOCK-BASED COMPENSATION (Det_6

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Total intrinsic values of options exercised	$ 1,902,000	$ 92,000
Weighted average contractual life of the options exercisable and expected to be exercisable	4 years 1 month 9 days
RSUs granted	119,000	161,000
RSUs granted on July 6, 2021	49,000
Shares withheld for taxes and not issued on July 6, 2021	40,000
Market value on July 6, 2021	$ 2.50
Market value on the date of the grant	$ 2.93	$ 1.86
RSUs vested	11,000	3,000
RSUs unvested	240,000	166,000
Intrinsic value of RSUs, nonvested	$ 1,790,000	$ 296,000
Employee Stock Purchase Plan
Unrecognized stock-based compensation	$ 355,000
Weighted average period for recognition of costs	1 year
Stock-based compensation related to the ESPP	$ 104,000	$ 25,000
ESPP purchase right granted	0	0
ESPP shares issued	0	0
ESPP Shares available for issuance	436,000
Stock Option and RSU
Stock-based compensation expense related to stock options and RSUs	$ 484,000	$ 245,000
2016 Equity Incentive Plan
Unrecognized stock-based compensation	1,586,000
Estimated forfeitures of unvested stock based awards, amount	$ 4,000
Weighted average period for recognition of costs	2 years
Board Of Directors
RSUs granted	30,000	35,000
Market value on the date of the grant	$ 2.93	$ 1.86

SEGMENT AND CONCENTRATION INF_3

SEGMENT AND CONCENTRATION INFORMATION (Details) - USD ($) $ in Thousands	Aug. 31, 2021	May 31, 2021
Property and equipment, net	$ 676	$ 677
United States [Member]
Property and equipment, net	640	647
Asia [Member]
Property and equipment, net	36	30
Europe [Member]
Property and equipment, net	$ 0	$ 0

SEGMENT AND CONCENTRATION INF_4

SEGMENT AND CONCENTRATION INFORMATION (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
United States [Member]
Operating lease right-of-use assets	$ 1,320,000
Asia [Member]
Operating lease right-of-use assets	$ 117,000
Customer A [Member]
Customers accounted for 10% or more of total revenues	69.00%	21.00%
Customers B [Member]
Customers accounted for 10% or more of total revenues	16.00%	19.00%
Five Largest Customers [Member]
Customers accounted for 10% or more of total revenues	95.00%	81.00%
Customers C [Member]
Customers accounted for 10% or more of total revenues		17.00%
Customers D [Member]
Customers accounted for 10% or more of total revenues		15.00%

DISSOLUTION OF AEHR TEST SYST_2

DISSOLUTION OF AEHR TEST SYSTEMS JAPAN (Details Narrative) - USD ($)	3 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
DISSOLUTION OF AEHR TEST SYSTEMS JAPAN
Deconsolidation net gain	$ 0	$ 2,401,000
Net gain due to cumulative translation adjustment reclassiefied to earnings	0	2,186,000
Income tax benefits	$ 0	$ (215,000)

SUBSEQUENT EVENT (Details Narra

SUBSEQUENT EVENT (Details Narrative) $ / shares in Units, $ in Millions	2 Months Ended
	Oct. 14, 2021USD ($)$ / sharesshares
SUBSEQUENT EVENTS
Number of shared sold under ATM offering | shares	1,696,729
Gross proceeds before commission fee and offering expenses	$ 25
ATM offering average selling price per share | $ / shares	$ 14.73
Net proceeds after commission fee and offering expenses	$ 24