aehr_10q

10-Q 1 aehr_10q.htm QUARTERLY REPORT aehr_10q

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, 2021

☐ 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:

	Trading
Title of each class	Symbol(s)	Name of each exchange on which registered
Common Stock par value $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, 2021 was 23,597,730.

AEHR TEST SYSTEMS

FORM 10-Q

FOR THE QUARTER ENDED FEBRUARY 28, 2021

INDEX

PART I.	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at February 28, 2021 and May 31, 2020	4

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended February 28, 2021 and February 29, 2020	5

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended February 28, 2021 and February 29, 2020	6

	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended February 28, 2021 and February 29, 2020	7

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended February 28, 2021 and February 29, 2020	8

	Notes to Condensed Consolidated Financial Statements	9

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

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

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,
	2021	2020
		(1)
ASSETS
Current assets:
Cash and cash equivalents	$4,738	$5,433
Accounts receivable, net	2,721	3,717
Inventories	8,339	7,989
Prepaid expenses and other current assets	571	512

Total current assets	16,369	17,651

Property and equipment, net	617	663
Operating lease right-of-use assets	1,763	2,107
Other assets	142	153

Total assets	$18,891	$20,574

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit	$1,400	$--
Accounts payable	1,086	945
Accrued expenses	1,624	1,439
Operating lease liabilities, short-term	722	658
Customer deposits and deferred revenue, short-term	587	170
Current portion of long-term debt	1,492	653

Total current liabilities	6,911	3,865

Operating lease liabilities, long-term	1,185	1,605
Long-term debt, net of current portion	187	1,026
Deferred revenue, long-term	80	22
Other long-term liabilities	43	--

Total liabilities	8,406	6,518

Aehr Test Systems shareholders' equity:
Common stock, $0.01 par value: Authorized: 75,000 shares; Issued and outstanding: 23,598 shares and 23,107 shares at February 28, 2021 and May 31, 2020, respectively	236	231
Additional paid-in capital	87,174	85,898
Accumulated other comprehensive (loss) income	(45)	2,234
Accumulated deficit	(76,880)	(74,286)

Total Aehr Test Systems shareholders' equity	10,485	14,077
Noncontrolling interest	--	(21)

Total shareholders' equity	10,485	14,056

Total liabilities and shareholders' equity	$18,891	$20,574

(1)

The condensed consolidated balance sheet at May 31, 2020 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.

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended		Nine Months Ended
	February 28,	February 29,	February 28,	February 29,
	2021	2020	2021	2020


Net sales	$5,267	$6,111	$8,962	$18,518
Cost of sales	3,373	3,120	6,464	10,054
Gross profit	1,894	2,991	2,498	8,464

Operating expenses:
Selling, general and administrative	1,643	1,891	4,658	5,856
Research and development	903	845	2,623	2,532
Total operating expenses	2,546	2,736	7,281	8,388

(Loss) income from operations	(652)	255	(4,783)	76

Interest (expense) income, net	(10)	13	(35)	27
Net gain from dissolution of Aehr Test Systems Japan	--	--	2,186	--
Other (expense) income, net	(39)	(9)	(139)	6

(Loss) income before income tax (expense) benefit	(701)	259	(2,771)	109

Income tax (expense) benefit	(34)	(14)	177	(26)
Net (loss) income	(735)	245	(2,594)	83
Less: Net income attributable to the noncontrolling interest	--	--	--	--
Net (loss) income attributable to Aehr Test Systems common shareholders	$(735)	$245	$(2,594)	$83

Net (loss) income per share
Basic	$(0.03)	$0.01	$(0.11)	$0.00
Diluted	$(0.03)	$0.01	$(0.11)	$0.00

Shares used in per share calculations:
Basic	23,525	22,937	23,390	22,823
Diluted	23,525	23,130	23,390	22,940

The accompanying notes are an integral part of these

condensed consolidated financial statements.

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, unaudited)

	Three Months Ended		Nine Months Ended
	February 28,	February 29,	February 28,	February 29,
	2021	2020	2021	2020

Net (loss) income	$(735)	$245	$(2,594)	$83

Other comprehensive income (loss), net of tax: Net change in cumulative translation adjustments	39	5	143	(15)
Reclassification of cumulative translation adjustment as a result of dissolution of Aehr Test Systems Japan	--	--	(2,401)	--

Total comprehensive (loss) income	(696)	250	(4,852)	68
Less: Comprehensive income (loss) attributable to noncontrolling interest	--	--	21	(1)

Comprehensive (loss) income, attributable to Aehr Test Systems	$(696)	$250	$(4,873)	$69

The accompanying notes are an integral part of these

condensed consolidated financial statements.

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

				Accumulated		Total Aehr Test
			Additional	Other		Systems		Total
	Common Stock		Paid-in	Comprehensive	Accumulated	Shareholders’	Noncontrolling	Shareholders'
Three Months Ended February 28, 2021	Shares	Amount	Capital	(Loss) Income	Deficit	Equity	Interest	Equity
Balances, November 30, 2020	23,487	$235	$86,786	$(62)	$(76,167)	$10,792	$--	$10,792

Issuance of common stock under employee plans	111	1	117	--	--	118	--	118
Stock-based compensation	--	--	271	--	--	271	--	271
Net loss	--	--	--	--	(735)	(735)	--	(735)
Foreign currency translation adjustment	--	--	--	17	22	39	--	39

Balances, February 28, 2021	23,598	$236