aehr_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2022

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _________ to __________

Commission file number: 000-22893

AEHR TEST SYSTEMS

(Exact name of Registrant as specified in its charter)

California		94-2424084
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

400 Kato Terrace, Fremont, CA		94539
(Address of principal executive offices)		(Zip Code)

(510) 623-9400

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock par value of $0.01 per share	AEHR	The NASDAQ Capital Market

Number of shares of the registrant’s common stock, $0.01 par value, outstanding as of March 31, 2022 was 26,922,827.

AEHR TEST SYSTEMS

FORM 10-Q

FOR THE QUARTER ENDED FEBRUARY 28, 2022

INDEX

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets at February 28, 2022 and May 31, 2021	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended February 28, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended February 28, 2022 and 2021	5

	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended February 28, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended February 28, 2022 and 2021	8

	Notes to Condensed Consolidated Financial Statements	9

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risks	30

ITEM 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	31

ITEM 1A.	Risk Factors	31

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

ITEM 3.	Defaults Upon Senior Securities	31

ITEM 4.	Mine Safety Disclosures	31

ITEM 5.	Other Information	31

ITEM 6.	Exhibits	32

SIGNATURES		33

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (Unaudited)

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	February 28,			May 31,
	2022			2021
					(1)
ASSETS
Current assets:
Cash and cash equivalents	$	32,020		$	4,582
Accounts receivable, net		8,543			5,202
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
Operating lease right-of-use assets		1,091			1,606
Other assets		214			198

Total assets	$	57,355		$	21,665

LIABILITIES AND SHAREHOLDERS' EQUITY
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		-			1,400
Current portion of long-term debt		-			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
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

____________

(1)The condensed consolidated balance sheet at May 31, 2021 has been derived from the audited consolidated financial statements at that date.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2022			2021			2022			2021

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		-			-			-			2,186
Gain from forgiveness of PPP loan		-			-			1,698			-
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
Basic	$	0.08		$	(0.03	)	$	0.14		$	(0.11	)
Diluted	$	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2022			2021			2022			2021

Net income (loss)	$	2,243		$	(735	)	$	3,656		$	(2,594	)

Other comprehensive income (loss), net of tax:
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		-			-			-			(2,401	)

Total comprehensive income (loss)		2,220			(696	)		3,553			(4,852	)
Less: Comprehensive income attributable to noncontrolling interest		-			-			-			21

Comprehensive income (loss), attributable to Aehr Test Systems	$	2,220		$	(696	)	$	3,553		$	(4,873	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Shareholders'
Three Months Ended February 28, 2022	Shares		Amount		Capital		Loss			Deficit			Equity
Balances, November 30, 2021		26,835	$	268	$	115,602	$	(108	)	$	(74,900	)	$	40,862

Issuance of common stock under employee plans		79		1		25		-			-			26
Stock-based compensation		-		-		880		-			-			880
Net income		-		-		-		-			2,243			2,243
Foreign currency translation adjustment		-		-		-		(23	)		-			(23	)

Balances, February 28, 2022		26,914	$	269	$	116,507	$	(131	)	$	(72,657	)	$	43,988

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Shareholders'
Nine Months Ended February 28, 2022	Shares		Amount		Capital		Loss			Deficit			Equity
Balances, May 31, 2021		23,725	$	237	$	87,553	$	(28	)	$	(76,313	)	$	11,449

Issuance of common stock under employee plans		1,492		15		2,755		-			-

SEC Form 10-Q filed by Aehr Test Systems