Aehr Test Systems (AEHR) 10-Q 13 Apr 22 2022 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Feb. 28, 2022	Mar. 31, 2022
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	Feb. 28, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		26,922,827
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 Interactive Data Current	Yes
Entity Address Address Line 1	400 Kato Terrace
Entity Address City Or Town	Fremont
Entity Address State Or Province	CA
Entity Address Postal Zip Code	94539
City Area Code	510
Local Phone Number	623-9400
Security 12b Title	Common Stock par value of $0.01 per share
Trading Symbol	AEHR
Security Exchange Name	NASDAQ

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Feb. 28, 2022	May 31, 2021
ASSETS
Inventories	$ 14,152	$ 8,849
Prepaid expenses and other current assets	559	551
Total current assets	55,274	19,184
Property and equipment, net	776	677
Current assets:
Operating lease right-of-use assets	1,091	1,606
Other assets	214	198
Total assets	57,355	21,665
Cash and cash equivalents	32,020	4,582
Current liabilities:
Accounts payable	3,307	2,893
Accrued expenses	2,535	2,163
Operating lease liabilities, short-term	778	737
Customer deposits and deferred revenue, short-term	6,197	189
Line of credit	0	1,400
Current portion of long-term debt	0	1,679
Total current liabilities	12,817	9,061
Operating lease liabilities, long-term	415	1,007
Deferred revenue, long-term	90	99
Other long-term liabilities	45	49
Total liabilities	13,367	10,216
Shareholders' equity:
Common stock, $0.01 par value: Authorized: 75,000 shares; Issued and outstanding: 26,914 shares and 23,725 shares at February 28, 2022 and May 31, 2021, respectively	269	237
Additional paid-in capital	116,507	87,553
Accounts receivable, net	8,543	5,202
Accumulated other comprehensive loss	(131)	(28)
Accumulated deficit	(72,657)	(76,313)
Total shareholders' equity	43,988	11,449
Total liabilities and shareholders' equity	$ 57,355	$ 21,665

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Feb. 28, 2022	May 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares outstanding	26,914,000	23,725,000
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	26,914,000	23,725,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Net sales	$ 15,283	$ 5,267	$ 30,540	$ 8,962
Cost of sales	8,886	3,373	17,343	6,464
Gross profit	6,397	1,894	13,197	2,498
Operating expenses:
Selling, general and administrative	2,612	1,643	7,054	4,658
Research and development	1,529	903	4,163	2,623
Total operating expenses	4,141	2,546	11,217	7,281
Income (loss) from operations	2,256	(652)	1,980	(4,783)
Interest income (expense), net	1	(10)	(9)	(35)
Net gain from dissolution of Aehr Test Systems Japan	0	0	0	2,186
Gain from forgiveness of PPP loan	0	0	1,698	0
Other income (expense), net	10	(39)	68	(139)
Income (loss) before income tax (expense) benefit	2,267	(701)	3,737	(2,771)
Income tax (expense) benefit	(24)	(34)	(81)	177
Net income (loss)	$ 2,243	$ (735)	$ 3,656	$ (2,594)
Net income (loss) per share
Earnings Per Share Basic	$ 0.08	$ (0.03)	$ 0.14	$ (0.11)
EarningsPerShareDiluted	$ 0.08	$ (0.03)	$ 0.13	$ (0.11)
Shares used in per share calculations:
Basic	26,871	23,525	25,684	23,390
Diluted	28,854	23,525	27,510	23,390

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
Net income (loss)	$ 2,243	$ (735)	$ 3,656	$ (2,594)
Net change in cumulative translation adjustments	(23)	39	(103)	143
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	0	0	0	(2,401)
Total comprehensive income (loss)	2,220	(696)	3,553	(4,852)
Less: Comprehensive income attributable to noncontrolling interest	0	0	0	21
Comprehensive income (loss), attributable to Aehr Test Systems	$ 2,220	$ (696)	$ 3,553	$ (4,873)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (unaudited) - USD ($) shares in Thousands, $ in Thousands	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	491
Balance, amount at May. 31, 2020	$ 14,056	$ 231	$ 14,077	$ 85,898	$ 2,234	$ (74,286)	$ (21)
Issuance of common stock under employee plans, amount	483	5	483	478	0	0	0
Stock-based compensation	798		798	798			0
Net income (loss)	(2,594)		(2,594)	0	0	(2,594)	0
Foreign currency translation adjustment	143	0	144	0	144	0	(1)
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	(2,401)		(2,423)		(2,423)		22
Balance, amount at Feb. 28, 2021	10,485	$ 236	$ 10,485	87,174	(45)	(76,880)	0
Balance, shares at Feb. 28, 2021		23,598
Balance, shares at Nov. 30, 2020		23,487	111
Balance, amount at Nov. 30, 2020	10,792	$ 235	$ 10,792	86,786	(62)	(76,167)	0
Issuance of common stock under employee plans, amount	118	1	118	117	0	0	0
Stock-based compensation	271	0	271	271	0	0
Net income (loss)	(735)		(735)	0	0	(735)	0
Foreign currency translation adjustment	39	0	39	0	17	22	0
Balance, amount at Feb. 28, 2021	10,485	$ 236	$ 10,485	87,174	(45)	(76,880)	$ 0
Balance, shares at Feb. 28, 2021		23,598
Balance, shares at May. 31, 2021		23,725
Balance, amount at May. 31, 2021	11,449	$ 237		87,553	(28)	(76,313)
Issuance of common stock under employee plans, shares		1,492
Issuance of common stock under employee plans, amount	2,770	$ 15		2,755	0	0
Stock-based compensation	2,186	$ 0		2,186	0	0
Net income (loss)	3,656			0	0	3,656
Foreign currency translation adjustment	(103)			0	(103)	0
Proceeds from public offerings, net of issuance costs, shares		1,697
Proceeds from public offerings, net of issuance costs, amount	24,030	$ 17		24,013	0	0
Balance, shares at Feb. 28, 2022		26,914
Balance, amount at Feb. 28, 2022	43,988	$ 269		116,507	(131)	(72,657)
Balance, shares at Nov. 30, 2021		26,835
Balance, amount at Nov. 30, 2021	40,862	$ 268		115,602	(108)	(74,900)
Issuance of common stock under employee plans, shares		79
Issuance of common stock under employee plans, amount	26	$ 1		25	0	0
Stock-based compensation	880	0		880	0	0
Net income (loss)	2,243			0	0	2,243
Foreign currency translation adjustment	(23)	$ 0		0	(23)	0
Balance, shares at Feb. 28, 2022		26,914
Balance, amount at Feb. 28, 2022	$ 43,988	$ 269		$ 116,507	$ (131)	$ (72,657)

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021
Cash flows from operating activities:
Net income (loss)	$ 3,656	$ (2,594)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation expense	2,186	798
Depreciation and amortization	226	239
Net gain from dissolution of Aehr Test Systems Japan	0	(2,186)
Income tax benefit related to dissolution of Aehr Test Systems Japan	0	(215)
Gain from forgiveness of PPP loan	(1,698)	0
Changes in operating assets and liabilities:
Accounts receivable	(3,454)	1,063
Inventories	(5,449)	(349)
Prepaid expenses and other assets	(28)	(45)
Accounts payable	444	78
Accrued expenses	375	179
Customer deposits and deferred revenue	5,999	475
Other long-term liabilities	0	43
Income taxes payable	18	3
Net cash provided by (used in) operating activities	2,275	(2,511)
Cash flows from investing activities:
Purchases of property and equipment	(218)	(205)
Net cash used in investing activities	(218)	(205)
Cash flows from financing activities:
Line of credit (repayments) borrowings, net	(1,400)	(1,400)
Proceeds from issuance of common stock under employee plans, net of taxes paid related to share settlement of equity awards	2,770	483
Proceeds from issuance of common stock from public offering, net of issuance costs	24,030	0
Net cash provided by financing activities	25,400	1,883
Effect of exchange rates on cash, cash equivalents and restricted cash	(19)	138
Net increase (decrease) in cash, cash equivalent and restricted cash	27,438	(695)
Cash, cash equivalents and restricted cash, beginning of period	4,662	5,513
Cash, cash equivalents and restricted cash, end of period	$ 32,100	$ 4,818

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES	9 Months Ended
	Feb. 28, 2022
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
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 the 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 and nine months ended February 28, 2022.

RECENT ACCOUNTING PRONOUNCEMENT

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

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Feb. 28, 2022
Net income (loss) per share
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 (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Numerator: Net income (loss) $ 2,243 $ (735 ) $ 3,656 $ (2,594 ) Denominator for basic net income (loss) per share: Weighted average shares outstanding 26,871 23,525 25,684 23,390 Shares used in basic net income (loss) per share calculation 26,871 23,525 25,684 23,390 Effect of dilutive securities 1,983 -- 1,826 -- Denominator for diluted net income (loss) per share 28,854 23,525 27,510 23,390 Basic net income (loss) per share $ 0.08 $ (0.03 ) $ 0.14 $ (0.11 ) Diluted net income (loss) per share $ 0.08 $ (0.03 ) $ 0.13 $ (0.11 ) For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive. In the three and nine months ended February 28, 2022, stock options to purchase 11,000 shares of common stock were outstanding, but were not included in the computation of diluted net income per share, because the inclusion of such shares would be anti-dilutive. In the three and nine months ended February 28, 2021, 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 2,804,000 shares of common stock, RSUs for 143,000 shares and ESPP rights to purchase 139,000 ESPP shares were outstanding as of February 28, 2021, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Feb. 28, 2022
FAIR VALUE OF FINANCIAL INSTRUMENTS
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 February 28, 2022 (in thousands): Balance as of February 28, 2022 Level 1 Level 2 Level 3 Money market funds $ 30,584 $ 30,584 $ - $ - Assets $ 30,584 $ 30,584 $ - $ - 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 February 28, 2022 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 February 28, 2022 and May 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	9 Months Ended
	Feb. 28, 2022
ACCOUNTS RECEIVABLE NET
ACCOUNTS RECEIVABLE, NET	6. ACCOUNTS RECEIVABLE, NET Accounts receivable represent customer trade receivables. As of February 28, 2022 and May 31, 2021, there were no allowances for doubtful accounts. Accounts receivable are derived from the sale of products throughout the world to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers and burn-in and test service companies. The Company’s allowance for doubtful accounts is based upon historical experience and review of trade receivables by aging category to identify specific customers with known disputes or collection issues. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.

INVENTORIES

INVENTORIES	9 Months Ended
	Feb. 28, 2022
INVENTORIES
INVENTORIES	7. INVENTORIES Inventories are comprised of the following (in thousands): February 28, May 31, 2022 2021 Raw materials and sub-assemblies $ 9,286 $ 5,859 Work in process 4,866 2,988 Finished goods - 2 $ 14,152 $ 8,849 For the three and nine months ended February 28, 2022, the Company wrote down $1,026,000 and $1,046,000 of inventory, respectively. For the three and nine months ended February 28, 2021, the Company wrote down $104,000 and $117,000 of inventory, respectively.

PRODUCT WARRANTIES

PRODUCT WARRANTIES	9 Months Ended
	Feb. 28, 2022
PRODUCT WARRANTIES
PRODUCT WARRANTIES	8. PRODUCT WARRANTIES The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required. The standard warranty period is one year for systems and ninety days for parts and service. The following is a summary of changes in the Company's liability for product warranties during the three and nine months ended February 28, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Balance at the beginning of the period $ 415 $ 244 $ 494 $ 246 Accruals for warranties issued during the period 37 78 294 270 Adjustments to previously existing warranty accruals 26 259 98 346 Consumption of reserves (108 ) (81 ) (516 ) (362 ) Balance at the end of the period $ 370 $ 500 $ 370 $ 500 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	9 Months Ended
	Feb. 28, 2022
CUSTOMER DEPOSITS AND DEFERRED REVENUE SHORT-TERM
CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM	9. CUSTOMER DEPOSITS AND DEFERRED REVENUE, SHORT-TERM Customer deposits and deferred revenue, short-term (in thousands): February 28, May 31, 2022 2021 Customer deposits $ 6,043 $ 27 Deferred revenue 154 162 $ 6,197 $ 189

INCOME TAXES

INCOME TAXES	9 Months Ended
	Feb. 28, 2022
INCOME TAXES
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 $24,000 and $81,000 for the three and nine months ended February 28, 2022 which consisted primarily of foreign withholding taxes and foreign income taxes. The Company recorded a tax expense of $34,000 for the three months ended February 28, 2021, and a tax benefit of $177,000 for the nine months ended February 28, 2021, primarily 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	9 Months Ended
	Feb. 28, 2022
LEASES
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 year 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 1.7 years at February 28, 2022 and the weighted-average discount rate was 5.4%. The Company’s operating lease cost was $191,000 and $576,000 for the three and nine months ended February 28, 2022, respectively. For the three and nine months ended February 28, 2021, operating lease cost was $193,000 and $568,000, respectively. The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands): Nine Months Ended February 28, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 612 $ 579 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 February 28, 2022 (in thousands): Fiscal year Operating Leases 2022 (remaining three months of 2022) $ 202 2023 829 2024 168 2025 31 2026 19 Total future minimum operating lease payments $ 1,249 Less: imputed interest (56 ) Present value of operating lease liabilities $ 1,193

BORROWING AND FINANCING ARRANGE

BORROWING AND FINANCING ARRANGEMENTS	9 Months Ended
	Feb. 28, 2022
BORROWING AND FINANCING ARRANGEMENTS
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 “First Amendment”) with Silicon Valley Bank. The First Amendment, among other things, extended the Revolving Line Maturity Date to July 14, 2021; provided, however, that if the Company achieved specified operating metrics on a consolidated basis on or prior to May 31, 2021 the Amended Revolving Line Maturity Date would be extended to January 13, 2022. As of November 30, 2021, the Revolving Line Maturity Date had been extended to January 13, 2022. On January 11, 2022, the Company entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) with Silicon Valley Bank. The Second Amendment, among other things, (A) increases the available amount of the line up to the lesser of (i) $10 million or (ii) the available amount under the borrowing base, under a revolving line of credit, (B) allows for borrowing up to $3 million of the available balance based upon eligible customer purchase orders, (C) reduces the interest rate for account advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.0%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.25%, reduces the interest rate for purchase order advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.5%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.75%, and (D) extends the maturity date on the loan to January 13, 2023. At February 28, 2022, the Company had not drawn 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 February 28, 2022 was $2,522,000. There are no financial covenants in the agreement.

LONGTERM DEBT

LONGTERM DEBT	9 Months Ended
	Feb. 28, 2022
LONGTERM DEBT
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. 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	9 Months Ended
	Feb. 28, 2022
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION	14. STOCK-BASED COMPENSATION Stock-based compensation expense consists of expenses for stock options, RSUs including performance-based grants, 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. 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 and nine months ended February 28, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 90 $ 14 $ 248 $ 45 Selling, general and administrative 487 194 1,259 593 Research and development 303 63 679 160 Total stock-based compensation $ 880 $ 271 $ 2,186 $ 798 As of February 28, 2022 and 2021, there were no stock-based compensation expenses capitalized as part of inventory. During the three months ended February 28, 2022 and 2021, the Company recorded stock-based compensation expense related to stock options and RSUs under the 2016 Plan of $516,000 and $253,000, respectively. During the nine months ended February 28, 2022 and 2021, the Company recorded stock-based compensation expense related to stock options and RSUs of $1,416,000 and $736,000, respectively. As of February 28, 2022, the total compensation expense related to unvested stock-based awards under the 2016 Plan, but not yet recognized, was approximately $1,915,000. This expense will be amortized on a straight-line basis over a weighted average period of approximately 1.2 years. During the three months ended February 28, 2022 and 2021, the Company recorded stock-based compensation expense related to the ESPP of $364,000 and $18,000, respectively. During the nine months ended February 28, 2022 and 2021, the Company recorded stock-based compensation expense related to the ESPP of $770,000 and $62,000, respectively. As of February 28, 2022, the total compensation expense related to purchase rights under the ESPP but not yet recognized was approximately $648,000. 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 five or six years based on weighted average of the expected term of 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 values of the Company’s stock options granted to employees for the three and nine months ended February 28, 2022 and 2021, were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended February 28, February 28, 2022 2022 2021 Expected term (in years) 5 6 6 Volatility 117 % 77 % 72 % Risk-free interest rate 1.56 % 1.03 % 0.39 % Weighted average grant date fair value $ 9.43 $ 2.56 $ 1.09 There were no stock options granted during the three months ended February 28, 2021. The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2022 and 2021 were estimated using the following assumptions: Nine Months Ended Nine Months Ended February 28, 2022 February 28, 2021 Expected term (in years) 0.5-2.0 0.5-2.0 Volatility 101%-143% 74%-82% Risk-free interest rates 0.05%-0.27% 0.10%-0.14% Weighted average grant date fair value $ 9.57 $ 0.44 There were no ESPP purchase rights granted to employees for the three months ended February 28, 2022 and 2021. During the nine months ended February 28, 2022 and 2021, ESPP purchase rights of 103,000 and 81,000 were granted, respectively. Total ESPP shares issued during the nine months ended February 28, 2022 and 2021 were 75,000 and 72,000 shares, respectively. There were 361,000 and 511,000 ESPP shares available for issuance as of February 28, 2022 and 2021, respectively. The following tables summarize the Company’s stock option and RSU transactions during the three and nine months ended February 28, 2022 and shows the shares available to be issued at the end of each period (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 Options reserved 1,414 Options granted (10 ) RSUs granted (14 ) RSUs performance-based grants (270 ) Options cancelled 51 Balance, November 30, 2021 1,856 Options granted (2 ) RSUs cancelled 10 Options cancelled 41 Balance, February 28, 2022 1,905 The following table summarizes the stock option transactions during the three and nine months ended February 28, 2022 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price 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 granted 10 $ 19.85 Options cancelled (51 ) $ 1.73 Options exercised (571 ) $ 2.14 Balances, November 30, 2021 1,713 $ 2.26 $ 25,997 Options granted 2 $ 11.55 Options cancelled (41 ) $ 1.22 Options exercised (66 ) $ 2.03 Balances, February 28, 2022 1,608 $ 2.29 $ 18,248 Options fully vested and expected to vest at February 28, 2022 1,582 $ 2.30 $ 17,952 The options outstanding and exercisable at February 28, 2022 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding at February 28, 2022 Options Exercisable at February 28, 2022 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 51 5.64 $ 1.34 51 5.64 $ 1.34 $1.64-$1.86 671 4.27 $ 1.71 387 3.89 $ 1.69 $2.03-$2.46 547 3.13 $ 2.23 447 2.92 $ 2.23 $2.63-$2.93 223 5.87 $ 2.92 47 4.01 $ 2.86 $3.46-$3.93 104 2.42 $ 3.84 104 2.42 $ 3.84 $9.94-$19.85 12 6.69 $ 16.54 1 6.65 $ 19.46 $1.22-$19.85 1,608 4.04 $ 2.29 1,037 3.42 $ 2.19 $ 11,831 The total intrinsic value of options exercised during the three and nine months ended February 28, 2022 was $867,000 and $11,902,000, respectively. The total intrinsic value of options exercised during the three and nine months ended February 28, 2021 was $57,000 and $151,000, respectively. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at February 28, 2022 was 4.04 years. The weighted average remaining contractual life of the options exercisable and expected to be exercisable at February 28, 2021 was 3.68 years. There were no RSUs granted to employees during the three months ended February 28, 2022. During the nine months ended February 28, 2022, RSUs for 169,000 shares, net of 40,000 shares withheld to settle payroll taxes, were granted to employees. The weighted average market value on the date of the grant of these RSUs was $2.98 per share. During the three and nine months ended February 28,2022, 21,000 and 50,000 RSUs became fully vested, respectively. As of February 28, 2022, 475,000 RSUs remain unvested which had an intrinsic value of $6,460,000. During the three months ended February 28, 2021, RSUs for 4,000 shares, net of 4,000 shares withheld to settle payroll taxes, were granted and fully vested to employees. The market value on the date of the grant of these RSUs was $2.25 per share. During the nine months ended February 28, 2021, RSUs for 165,000 shares, net of 4,000 shares withheld to settle payroll taxes, were granted to employees. The weighted average market value on the date of the grant of these RSUs was $1.87 per share. During the three and nine months ended February 28, 2021, 19,000 and 34,000 RSUs became fully vested, respectively. As of February 28, 2021, 143,000 RSUs remain unvested which had an intrinsic value of $400,000. Early in fiscal 2022, the Board of Directors approved the granting of performance-based RSUs to key officers based upon revenue thresholds for the year ended May 31, 2022. The total maximum amount of RSUs to be vested if all revenue goals are achieved will be approximately 270,000. As of February 28, 2022 none of the revenue goals have been achieved and thus none of the RSUs are vested. The Company expects that by year end all the revenue goals will be achieved. During the three and nine months ended February 28, 2022 the Company recognized approximately $278,000 and $524,000, respectively, in stock-based compensation expense for these performance RSUs. There were no RSUs granted to members of the Company’s Board of Directors during the three months ended February 28, 2022. During the nine months ended February 28, 2022, RSUs for 43,000 shares were granted to members of the Company’s Board of Directors. The weighted average market value on the dates of the grant of these RSUs was $8.02 per share. During the nine months ended February 28, 2022, 33,000 RSUs to the members of the Company’s Board of Directors became fully vested. As of February 28, 2022, 10,000 RSUs remain unvested which had an intrinsic value of $136,000. During the three months ended February 28, 2021, RSUs for 34,000 shares were granted to members of the Company’s Board of Directors. The market value on the date of the grant of these RSUs was $2.25 per share. During the nine months ended February 28, 2021, RSUs for 126,000 shares were granted to members of the Company’s Board of Directors. The weighted average market value on the date of the grant of these RSUs was $1.73 per share. All of these RSUs were immediately fully vested.

SEGMENT INFORMATION

SEGMENT INFORMATION	9 Months Ended
	Feb. 28, 2022
SEGMENT INFORMATION
SEGMENT INFORMATION	15. 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): February 28, May 31, 2022 2021 United States $ 739 $ 647 Asia 37 30 $ 776 $ 677 As of February 28, 2022, the operating lease right-of-use assets of $990,000 and $101,000 are allocated in the United States and Asia, respectively. There were no revenues through distributors for the three and nine months ended February 28, 2022 and 2021. Sales to the Company’s five largest customers accounted for approximately 99% and 97% of its net sales in the three and nine months ended February 28, 2022, respectively. One customer accounted for approximately 90% of the Company’s net sales in the three months ended February 28, 2022. One customer accounted for approximately 84% of the Company’s net sales in the nine months ended February 28, 2022. Sales to the Company’s five largest customers accounted for approximately 95% and 82% of its net sales in the three and nine months ended February 28, 2021, respectively. Four customers accounted for approximately 55%, 15%, 11% and 11% of the Company’s net sales in the three months ended February 28, 2021. Four customers accounted for approximately 33%, 15%, 14% and 11% of the Company’s net sales in the nine months ended February 28, 2021. No other customers represented more than 10% of the Company’s net sales in the three and nine months ended February 28, 2022 and 2021.

DISSOLUTION OF AEHR TEST SYSTEM

DISSOLUTION OF AEHR TEST SYSTEMS JAPAN	9 Months Ended
	Feb. 28, 2022
DISSOLUTION OF AEHR TEST SYSTEMS JAPAN
DISSOLUTION OF AEHR TEST SYSTEMS JAPAN	16. DISSOLUTION OF AEHR TEST SYSTEMS JAPAN On July 31, 2020, the Company completed the liquidation of 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.

EQUITY

EQUITY	9 Months Ended
	Feb. 28, 2022
EQUITY
EQUITY	17. EQUITY 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. On October 8, 2021, the Company 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 fees of $0.7 million and offering expenses of $0.3 million.

BASIS OF PRESENTATION AND SUM_2

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES (Policies)	9 Months Ended
	Feb. 28, 2022
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES
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	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 the 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 and nine months ended February 28, 2022.

RECENT ACCOUNTING PRONOUNCEME_2

RECENT ACCOUNTING PRONOUNCEMENTS (Policies)	9 Months Ended
	Feb. 28, 2022
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)	9 Months Ended
	Feb. 28, 2022
REVENUE
Disaggregation of revenue	The Company’s revenues by product category are as follows (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Type of good / service: Systems $ 7,172 $ 2,435 $ 14,805 $ 3,407 Contactors 7,426 1,930 13,468 3,330 Services 685 902 2,267 2,225 $ 15,283 $ 5,267 $ 30,540 $ 8,962 Product lines: Wafer-level $ 14,879 $ 4,993 $ 29,130 $ 7,804 Test During Burn-In 404 274 1,410 1,158 $ 15,283 $ 5,267 $ 30,540 $ 8,962 The following presents information about the Company’s operations in different geographic areas. Net sales are based upon ship-to location (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Geographic region: United States $ 1,057 $ 1,113 $ 2,458 $ 3,124 Asia 14,213 4,122 28,066 5,723 Europe 13 32 16 115 $ 15,283 $ 5,267 $ 30,540 $ 8,962 With the exception of the amount of service contracts and extended warranties, the Company’s product category revenues are recognized at a point in time when control transfers to customers. The following presents revenue based on timing of recognition (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Timing of revenue recognition: Products and services transferred at a point in time $ 14,932 $ 4,944 $ 29,492 $ 7,728 Services transferred over time 351 323 1,048 1,234 $ 15,283 $ 5,267 $ 30,540 $ 8,962

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Feb. 28, 2022
Net income (loss) per share
Earnings per share	The following table presents the computation of basic and diluted net income (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Numerator: Net income (loss) $ 2,243 $ (735 ) $ 3,656 $ (2,594 ) Denominator for basic net income (loss) per share: Weighted average shares outstanding 26,871 23,525 25,684 23,390 Shares used in basic net income (loss) per share calculation 26,871 23,525 25,684 23,390 Effect of dilutive securities 1,983 -- 1,826 -- Denominator for diluted net income (loss) per share 28,854 23,525 27,510 23,390 Basic net income (loss) per share $ 0.08 $ (0.03 ) $ 0.14 $ (0.11 ) Diluted net income (loss) per share $ 0.08 $ (0.03 ) $ 0.13 $ (0.11 )

FAIR VALUE OF FINANCIAL INSTR_2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Feb. 28, 2022
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 February 28, 2022 (in thousands): Balance as of February 28, 2022 Level 1 Level 2 Level 3 Money market funds $ 30,584 $ 30,584 $ - $ - Assets $ 30,584 $ 30,584 $ - $ - 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)	9 Months Ended
	Feb. 28, 2022
INVENTORIES
Schedule of inventories	Inventories are comprised of the following (in thousands): February 28, May 31, 2022 2021 Raw materials and sub-assemblies $ 9,286 $ 5,859 Work in process 4,866 2,988 Finished goods - 2 $ 14,152 $ 8,849

PRODUCT WARRANTIES (Tables)

PRODUCT WARRANTIES (Tables)	9 Months Ended
	Feb. 28, 2022
PRODUCT WARRANTIES
Liability for product warranties	The following is a summary of changes in the Company's liability for product warranties during the three and nine months ended February 28, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Balance at the beginning of the period $ 415 $ 244 $ 494 $ 246 Accruals for warranties issued during the period 37 78 294 270 Adjustments to previously existing warranty accruals 26 259 98 346 Consumption of reserves (108 ) (81 ) (516 ) (362 ) Balance at the end of the period $ 370 $ 500 $ 370 $ 500

CUSTOMER DEPOSITS AND DEFERRE_2

CUSTOMER DEPOSITS AND DEFERRED REVENUE SHORT-TERM (Tables)	9 Months Ended
	Feb. 28, 2022
CUSTOMER DEPOSITS AND DEFERRED REVENUE SHORT-TERM (Tables)
Schedule of Customer deposits and deferred revenue	Customer deposits and deferred revenue, short-term (in thousands): February 28, May 31, 2022 2021 Customer deposits $ 6,043 $ 27 Deferred revenue 154 162 $ 6,197 $ 189

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Feb. 28, 2022
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): Nine Months Ended February 28, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 612 $ 579 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 February 28, 2022 (in thousands): Fiscal year Operating Leases 2022 (remaining three months of 2022) $ 202 2023 829 2024 168 2025 31 2026 19 Total future minimum operating lease payments $ 1,249 Less: imputed interest (56 ) Present value of operating lease liabilities $ 1,193

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Feb. 28, 2022
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 and nine months ended February 28, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended February 28, February 28, 2022 2021 2022 2021 Stock-based compensation in the form of employee stock options, RSUs and ESPP purchase rights, included in: Cost of sales $ 90 $ 14 $ 248 $ 45 Selling, general and administrative 487 194 1,259 593 Research and development 303 63 679 160 Total stock-based compensation $ 880 $ 271 $ 2,186 $ 798
Fair value assumptions for Option Valuation Model	Fair Value. The fair values of the Company’s stock options granted to employees for the three and nine months ended February 28, 2022 and 2021, were estimated using the following weighted average assumptions in the Black-Scholes option valuation model: Three Months Ended Nine Months Ended February 28, February 28, 2022 2022 2021 Expected term (in years) 5 6 6 Volatility 117 % 77 % 72 % Risk-free interest rate 1.56 % 1.03 % 0.39 % Weighted average grant date fair value $ 9.43 $ 2.56 $ 1.09
Fair value assumption of the ESPP Purchase Rights	The fair values of the ESPP purchase rights granted for the nine months ended February 28, 2022 and 2021 were estimated using the following assumptions: Nine Months Ended Nine Months Ended February 28, 2022 February 28, 2021 Expected term (in years) 0.5-2.0 0.5-2.0 Volatility 101%-143% 74%-82% Risk-free interest rates 0.05%-0.27% 0.10%-0.14% Weighted average grant date fair value $ 9.57 $ 0.44
Stock option and RSU transactions	The following tables summarize the Company’s stock option and RSU transactions during the three and nine months ended February 28, 2022 and shows the shares available to be issued at the end of each period (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 Options reserved 1,414 Options granted (10 ) RSUs granted (14 ) RSUs performance-based grants (270 ) Options cancelled 51 Balance, November 30, 2021 1,856 Options granted (2 ) RSUs cancelled 10 Options cancelled 41 Balance, February 28, 2022 1,905
Stock option transactions	The following table summarizes the stock option transactions during the three and nine months ended February 28, 2022 (in thousands, except per share data): Outstanding Options Weighted Number Average Aggregate of Exercise Intrinsic Shares Price 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 granted 10 $ 19.85 Options cancelled (51 ) $ 1.73 Options exercised (571 ) $ 2.14 Balances, November 30, 2021 1,713 $ 2.26 $ 25,997 Options granted 2 $ 11.55 Options cancelled (41 ) $ 1.22 Options exercised (66 ) $ 2.03 Balances, February 28, 2022 1,608 $ 2.29 $ 18,248 Options fully vested and expected to vest at February 28, 2022 1,582 $ 2.30 $ 17,952
Options outstanding	The options outstanding and exercisable at February 28, 2022 were in the following exercise price ranges (in thousands, except per share data): Options Outstanding at February 28, 2022 Options Exercisable at February 28, 2022 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 51 5.64 $ 1.34 51 5.64 $ 1.34 $1.64-$1.86 671 4.27 $ 1.71 387 3.89 $ 1.69 $2.03-$2.46 547 3.13 $ 2.23 447 2.92 $ 2.23 $2.63-$2.93 223 5.87 $ 2.92 47 4.01 $ 2.86 $3.46-$3.93 104 2.42 $ 3.84 104 2.42 $ 3.84 $9.94-$19.85 12 6.69 $ 16.54 1 6.65 $ 19.46 $1.22-$19.85 1,608 4.04 $ 2.29 1,037 3.42 $ 2.19 $ 11,831

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	9 Months Ended
	Feb. 28, 2022
SEGMENT INFORMATION
Property and equipment by geographic region	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): February 28, May 31, 2022 2021 United States $ 739 $ 647 Asia 37 30 $ 776 $ 677

REVENUE (Details)

REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Net sales	$ 15,283	$ 5,267	$ 30,540	$ 8,962
Systems
Net sales	7,172	2,435	14,805	3,407
Contactors
Net sales	7,426	1,930	13,468	3,330
Services
Net sales	685	902	2,267	2,225
Wafer-Level
Net sales	14,879	4,993	29,130	7,804
Test During Burn-In
Net sales	$ 404	$ 274	$ 1,410	$ 1,158

REVENUE (Details 1)

REVENUE (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Net sales	$ 15,283	$ 5,267	$ 30,540	$ 8,962
Asia [Member]
Net sales	14,213	4,122	28,066	5,723
United States
Net sales	1,057	1,113	2,458	3,124
Europe
Net sales	$ 13	$ 32	$ 16	$ 115

REVENUE (Details 2)

REVENUE (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Net sales	$ 15,283	$ 5,267	$ 30,540	$ 8,962
Products and Services Transferred at a Point in Time
Net sales	14,932	4,944	29,492	7,728
Services Transferred over Time
Net sales	$ 351	$ 323	$ 1,048	$ 1,234

REVENUE (Details Narrative)

REVENUE (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2022	May 31, 2023	May 31, 2022	May 31, 2021
REVENUE
Remaining performance obligation revenue recognition			86.00%	14.00%
Contract liabilities	$ 6,287,000	$ 6,287,000			$ 288,000
Recognition of contract liabilities	22,000	163,000
Remaining performance obligations	$ 225,000	$ 225,000

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Net income (loss)	$ 2,243	$ (735)	$ 3,656	$ (2,594)
Denominator for basic net income (loss) per share: Weighted average shares outstanding	26,871,000	23,525,000	25,684,000	23,390,000
Denominator for diluted net income (loss) per share	28,854,000	23,525,000	27,510,000	23,390,000
Basic net income (loss) per share	$ 0.08	$ (0.03)	$ 0.14	$ (0.11)
Diluted net income (loss) per share	$ 0.08	$ (0.03)	$ 0.13	$ (0.11)
Numerator [Member]
Net income (loss)	$ 2,243	$ (735)	$ 3,656	$ (2,594)
Denominator [Member]
Denominator for basic net income (loss) per share: Weighted average shares outstanding	26,871,000	23,525,000	25,684,000	23,390,000
Shares used in basic net income (loss) per share calculation	26,871,000	23,525,000	25,684,000	23,390,000
Effect of dilutive securities	1,983,000	0	1,826,000	0
Denominator for diluted net income (loss) per share	28,854,000	23,525,000	27,510,000	23,390,000
Basic net income (loss) per share	$ 0.08	$ (0.03)	$ 0.14	$ (0.11)
Diluted net income (loss) per share	$ 0.08	$ (0.03)	$ 0.13	$ (0.11)

EARNINGS PER SHARE (Details Nar

EARNINGS PER SHARE (Details Narrative) - shares	3 Months Ended	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2022	Feb. 28, 2021
Espp [Member]
Options not included in the computation of diluted net income (loss) per share			139,000
Stock Option
Options not included in the computation of diluted net income (loss) per share	11,000	11,000	2,804,000
Restricted Stock Units
Options not included in the computation of diluted net income (loss) per share			143,000

FAIR VALUE OF FINANCIAL INSTR_3

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Feb. 28, 2022	May 31, 2021
Level 1
Investment securities	$ 30,584	$ 580
Level 2
Investment securities	0	0
Level 3
Investment securities	0	0
Money Market Fund
Investment securities	30,584	580
Money Market Fund | Level 1
Investment securities	30,584	580
Money Market Fund | Level 2
Investment securities	0	0
Money Market Fund | Level 3
Investment securities	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTR_4

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	Feb. 28, 2022	May 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
Transfer between Level 1 and Level 2 fair value measurements	$ 0	$ 0
Restricted cash	80,000	80,000
Financial liabilities at fair value	$ 0	$ 0

ACCOUNTS RECEIVABLE (Details Na

ACCOUNTS RECEIVABLE (Details Narrative) - USD ($)	Feb. 28, 2022	May 31, 2021
ACCOUNTS RECEIVABLE NET
Allowance for doubtful accounts	$ 0	$ 0

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Feb. 28, 2022	May 31, 2021
INVENTORIES (Details)
Finished goods	$ 0	$ 2
Raw materials and sub-assemblies	9,286	5,859
Inventories	14,152	8,849
Work in process	$ 4,866	$ 2,988

INVENTORIES (Details Narrative)

INVENTORIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
INVENTORIES (Details)
Wrote down of inventory	$ 1,026,000	$ 104,000	$ 1,046,000	$ 117,000

PRODUCT WARRANTIES (Details)

PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
PRODUCT WARRANTIES (Details)
Accruals for warranties issued during the period	$ 37	$ 78	$ 294	$ 270
Balance at the beginning of the year	415	244	494	246
Adjustments to previously existing warranty accruals	26	259	98	346
Consumption of reserves	(108)	(81)	(516)	(362)
Balance at the end of the period	$ 370	$ 500	$ 370	$ 500

PRODUCT WARRANTIES (Details Nar

PRODUCT WARRANTIES (Details Narrative)	9 Months Ended
	Feb. 28, 2022
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 SHORTTERM (Details) - USD ($) $ in Thousands	Feb. 28, 2022	May 31, 2021
CUSTOMER DEPOSITS AND DEFERRED REVENUE SHORTTERM (Details)
Total	$ 6,197	$ 189
Customer deposits	6,043	27
Deferred revenue	$ 154	$ 162

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
INCOME TAXES
Income tax (expense) benefit	$ (24)	$ (34)	$ (81)	$ 177

LEASES (Details)

LEASES (Details) - USD ($)	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021
Cash paid for amounts included in measurement of operating lease liabilities:
Operating cash flows for operating leases	$ 612,000	$ 579,000
Right-of-use assets obtained in exchange for operating lease liabilities	$ 0	$ 0

LEASES (Details 1)

LEASES (Details 1) $ in Thousands	Feb. 28, 2022USD ($)
LEASES (Details 1)
Total future minimum operating lease payments	$ 1,249
Less: imputed interest	(56)
Present value of operating lease liabilities	1,193
2022 (remaining three months of 2022)	202
2023	829
2024	168
2025	31
2026	$ 19

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Operating lease, weighted-average discount rate	5.40%		5.40%
Operating lease, cost	$ 191,000	$ 193,000	$ 576,000	$ 568,000
Operating lease, weighted-average remaining lease term	1 year 8 months 12 days
Minimum
Operating lease term	1 year
Maximum
Operating lease term	4 years

BORROWING AND FINANCING ARRAN_2

BORROWING AND FINANCING ARRANGEMENTS (Details Narrative) - USD ($)	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021
Borrowing under line of credit	$ 1,400,000	$ 1,400,000
Second Amendment To Loan And Security Agreement
Line of Credit, maximum borrowing	$ 10,000,000
Variable interest rate	prime rate plus an additional percentage up to 1.0%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.25%, reduces the interest rate for purchase order advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.5%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.75%
Revolving line maturity date	Jan. 13, 2023
Second Amendment To Loan And Security Agreement | Customer Purchase Order
Line of Credit, maximum borrowing	$ 3,000,000
Original Loan and Security Agreement
Line of Credit, maximum borrowing	$ 4,000,000
Variable interest rate	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%.
Borrowing under line of credit	$ 0
Balance available to borrow under the line of credit	$ 2,522,000
First Amendment to Loan and Security Agreement
Revolving line maturity date	Jan. 13, 2022

LONGTERM DEBT (Details Narrativ

LONGTERM DEBT (Details Narrative) - USD ($)	Jun. 12, 2021	Feb. 28, 2022	Feb. 28, 2021	Apr. 23, 2020
Gain on loan forgiveness		$ 1,698,000	$ 0
Silicon Valley Bank
Gain on loan forgiveness	$ 1,697,722
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		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Total stock-based compensation	$ 880	$ 271	$ 2,186	$ 798
Cost of Sales
Total stock-based compensation	90	14	248	45
Selling, General and Administrative
Total stock-based compensation	487	194	1,259	593
Research and Development
Total stock-based compensation	$ 303	$ 63	$ 679	$ 160

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details 1) - $ / shares	3 Months Ended	9 Months Ended
	Feb. 28, 2022	Feb. 28, 2022	Feb. 28, 2021
Stock Option
Expected term (in years)	5 years	6 years	6 years
Volatility	117.00%	77.00%	72.00%
Risk-free interest rates	1.56%	1.03%	0.39%
Weighted-average grant date fair value	$ 9.43	$ 2.56	$ 1.09
Employee Stock Purchase Plan
Weighted-average grant date fair value		$ 9.57	$ 0.44
Maximum | Employee Stock Purchase Plan
Expected term (in years)		2 years	2 years
Volatility		143.00%	82.00%
Risk-free interest rates		0.27%	0.14%
Minimum | Employee Stock Purchase Plan
Expected term (in years)		6 months	6 months
Volatility		101.00%	74.00%
Risk-free interest rates		0.05%	0.10%

STOCK-BASED COMPENSATION (Det_3

STOCK-BASED COMPENSATION (Details 2) - Stock Option and RSU Transactions [Member] - shares shares in Thousands	3 Months Ended			9 Months Ended
	Feb. 28, 2022	Nov. 30, 2021	Aug. 31, 2021	Feb. 28, 2022
Available shares, beginning	1,856	685	1,137	1,137
Options reserved		1,414
Options granted	(2)	(10)	(206)
RSUs granted		(14)	(238)
RSUs cancelled	10
Options cancelled and adjusted	41	51	(8)
RSUs - performance grants		(270)
Available shares, ending	1,905	1,856	685	1,905

STOCK-BASED COMPENSATION (Det_4

STOCK-BASED COMPENSATION (Details 3) - Outstanding Options Stock Option Transactions [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended			9 Months Ended
	Feb. 28, 2022	Nov. 30, 2021	Aug. 31, 2021	Feb. 28, 2022
Options outstanding, beginning (in thousands)	1,713	2,325	2,766	2,766
Options granted (in thousands)	2	10	206
Options cancelled (in thousands)	(41)	(51)	(6)
Options exercised (in thousands)	(66)	(571)	(641)
Options outstanding, ending (in thousands)	1,608	1,713	2,325	1,608
Options fully vested and expected to vest (in thousands)	1,582			1,582
Weighted average exercise price outstanding, beginning	$ 2.26	$ 2.14	$ 2.16	$ 2.16
Weighted average exercise price Options granted	11.55	19.85	2.93
Weighted average exercise price Options cancelled	1.22	1.73	1.95
Weighted average exercise price Options exercised	2.03	2.14	2.46
Weighted average exercise price outstanding, ending	2.29	2.26	$ 2.14	2.29
Weighted average exercise price fully vested and expected to vest	$ 2.30	$ 4.22		$ 2.30
Aggregate intrinsic value, beginning	$ 25,997	$ 12,365	$ 807	$ 807
Aggregate intrinsic value, ending	18,248	$ 25,997	$ 12,365	18,248
Aggregate intrinsic value for options fully vested and expected to vest	$ 17,952			$ 17,952

STOCK-BASED COMPENSATION (Det_5

STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Feb. 28, 2022USD ($)$ / sharesshares
$1.22-$1.34
Options outstanding, ending (in thousands) | shares	51
Weighted average remaining contractual life (Years) options outstanding	5 years 7 months 20 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.34
Option exercisable shares (in thousands) | shares	51
Weighted average remaining contractual life (Years) options exercisable	5 years 7 months 20 days
Weighted average exercise price for options exercisable | $ / shares	$ 1.34
$1.64-$1.86
Options outstanding, ending (in thousands) | shares	671
Weighted average remaining contractual life (Years) options outstanding	4 years 3 months 7 days
Weighted average exercise price outstanding, ending | $ / shares	$ 1.71
Option exercisable shares (in thousands) | shares	387
Weighted average remaining contractual life (Years) options exercisable	3 years 10 months 20 days
Weighted average exercise price for options exercisable | $ / shares	$ 1.69
$2.03-$2.46
Options outstanding, ending (in thousands) | shares	547
Weighted average remaining contractual life (Years) options outstanding	3 years 1 month 17 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.23
Option exercisable shares (in thousands) | shares	447
Weighted average remaining contractual life (Years) options exercisable	2 years 11 months 1 day
Weighted average exercise price for options exercisable | $ / shares	$ 2.23
$2.63-$2.93
Options outstanding, ending (in thousands) | shares	223
Weighted average remaining contractual life (Years) options outstanding	5 years 10 months 13 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.92
Option exercisable shares (in thousands) | shares	47
Weighted average remaining contractual life (Years) options exercisable	4 years 3 days
Weighted average exercise price for options exercisable | $ / shares	$ 2.86
$3.46-$3.93
Options outstanding, ending (in thousands) | shares	104
Weighted average remaining contractual life (Years) options outstanding	2 years 5 months 1 day
Weighted average exercise price outstanding, ending | $ / shares	$ 3.84
Option exercisable shares (in thousands) | shares	104
Weighted average remaining contractual life (Years) options exercisable	2 years 5 months 1 day
Weighted average exercise price for options exercisable | $ / shares	$ 3.84
$9.94-$19.85
Options outstanding, ending (in thousands) | shares	12
Weighted average remaining contractual life (Years) options outstanding	6 years 8 months 8 days
Weighted average exercise price outstanding, ending | $ / shares	$ 16.54
Option exercisable shares (in thousands) | shares	1
Weighted average remaining contractual life (Years) options exercisable	6 years 7 months 24 days
Weighted average exercise price for options exercisable | $ / shares	$ 19.46
$1.22-$19.85
Options outstanding, ending (in thousands) | shares	1,608
Weighted average remaining contractual life (Years) options outstanding	4 years 14 days
Weighted average exercise price outstanding, ending | $ / shares	$ 2.29
Option exercisable shares (in thousands) | shares	1,037
Weighted average remaining contractual life (Years) options exercisable	3 years 5 months 1 day
Weighted average exercise price for options exercisable | $ / shares	$ 2.19
Aggregate intrinsic value for options exercisable | $	$ 11,831

STOCK-BASED COMPENSATION (Det_6

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
Total intrinsic values of options exercised	$ 867,000	$ 57,000	$ 11,902,000	$ 151,000
RSUs granted	0	4,000	169,000	165,000
Shares withheld for taxes and not issued		4,000	40,000	4,000
Market value on the date of the grant		$ 2.25	$ 2.98	$ 1.87
RSUs fully vested	21,000	19,000	50,000	34,000
RSUs unvested	475,000	143,000	475,000	143,000
Intrinsic value of RSUs, nonvested	$ 6,460,000	$ 400,000	$ 6,460,000	$ 400,000
Weighted average contractual life of the options exercisable and expected to be exercisable			4 years 14 days	3 years 8 months 4 days
Employee Stock Purchase Plan
Unrecognized stock-based compensation	648,000		$ 648,000
Weighted average period for recognition of costs			1 year
Stock-based compensation related to the ESPP	$ 364,000	$ 18,000	$ 770,000	$ 62,000
ESPP purchase right granted	0	0	103,000	81,000
ESPP shares issued			75,000	72,000
ESPP Shares available for issuance	361,000	511,000	361,000	511,000
Board Of Directors
RSUs granted	0	34,000	43,000	126,000
Market value on the date of the grant		$ 2.25	$ 8.02	$ 1.73
RSUs fully vested			33,000
RSUs unvested	10,000		10,000
Intrinsic value of RSUs, nonvested	$ 136,000		$ 136,000
RSU - Performance [Member]
RSUs unvested	270,000		270,000
Stock-based compensation expenses	$ 278,000		$ 524,000
Stock Option and RSU
Stock-based compensation expense related to stock options and RSUs	516,000	$ 253,000	1,416,000	$ 736,000
2016 Equity Incentive Plan
Unrecognized stock-based compensation	$ 1,915,000		$ 1,915,000
Weighted average period for recognition of costs			1 year 2 months 12 days

SEGMENT INFORMATION (Details)

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	Feb. 28, 2022	May 31, 2021
Property and equipment, net	$ 776	$ 677
Asia [Member]
Property and equipment, net	37	30
United States [Member]
Property and equipment, net	$ 739	$ 647

SEGMENT INFORMATION (Details Na

SEGMENT INFORMATION (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021	May 31, 2021
Operating lease right-of-use assets	$ 1,091,000		$ 1,091,000		$ 1,606,000
Asia [Member]
Operating lease right-of-use assets	101,000		101,000
United States [Member]
Operating lease right-of-use assets	$ 990,000		$ 990,000
Customer One [Member]
Customers accounted for 10% or more of total revenues	90.00%		84.00%
Customer A [Member]
Customers accounted for 10% or more of total revenues		55.00%		33.00%
Customers B [Member]
Customers accounted for 10% or more of total revenues		15.00%		15.00%
Customers C [Member]
Customers accounted for 10% or more of total revenues		11.00%		14.00%
Customers D [Member]
Customers accounted for 10% or more of total revenues		11.00%		11.00%
Five Largest Customers [Member]
Customers accounted for 10% or more of total revenues	99.00%	95.00%	97.00%	82.00%

DISSOLUTION OF AEHR TEST SYST_2

DISSOLUTION OF AEHR TEST SYSTEMS JAPAN (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Feb. 28, 2022	Feb. 28, 2021	Feb. 28, 2022	Feb. 28, 2021
DISSOLUTION OF AEHR TEST SYSTEMS JAPAN
Deconsolidation net gain	$ 0	$ 0	$ 0	$ 2,401,000
Net gain due to cumulative translation adjustments reclassiefied to earnings				2,186,000
Income tax benefits				$ 215,000

EQUITY (Details Narrative)

EQUITY (Details Narrative) $ / shares in Units, $ in Millions	Oct. 08, 2021USD ($)$ / sharesshares
EQUITY
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
Commission fee related to the ATM offering	$ 0.7
Offering expense related to the ATM offering	$ 0.3