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 November 28, 2025

☐	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
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(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)

Securities registered pursuant to Section 12(b) of the Exchange 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

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 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, indicated 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 ☒

There were 30,627,342 shares of the Registrant’s Common Stock outstanding as of January 2, 2026.

	Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	25
PART II OTHER INFORMATION
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3. Defaults Upon Senior Securities	26
Item 4. Mine Safety Disclosures	26
Item 5. Other Information	26
Item 6. Exhibits	27
SIGNATURES	28
2
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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
			May 30,
(In thousands, except par value)			2025
ASSETS
Current assets:
Cash and cash equivalents	30,835		$	24,529
Accounts receivable	10,282			14,191
Inventories	42,723			41,997
Prepaid expenses and other current assets	4,349			8,061
Total current assets	88,189			88,778
Property and equipment, net	8,987			8,969
Goodwill	10,719			10,719
Intangible assets, net	10,143			10,781
Deferred tax assets, net	21,076			19,114
Operating lease right-of-use assets, net	9,272			9,601
Other non-current assets	348			546
Total assets	148,734		$	148,508
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	3,548		$	6,728
Accrued expenses and other current liabilities	3,729			6,020
Operating lease liabilities, short-term	585			909
Deferred revenue, short-term	443			1,981
Total current liabilities	8,305			15,638
Operating lease liabilities, long-term	9,578			9,921
Deferred revenue, long-term	35			36
Other long-term liabilities	40			42
Total liabilities	17,958			25,637
Commitments and contingencies (Note 6)
Shareholders’ equity:
Preferred stock, 0.01 par value: Authorized: 10,000 shares;
Issued and outstanding: none	-			-
Common stock, 0.01 par value: Authorized: 75,000 shares;
Issued and outstanding: 30,624 shares and 29,877 shares at November 28, 2025 and May 30, 2025, respectively	306			299
Additional paid-in capital	158,954			145,758
Accumulated other comprehensive loss	(110	)		(126	)
Accumulated deficit	(28,374	)		(23,060	)
Total shareholders' equity	130,776			122,871
Total liabilities and shareholders’ equity	148,734		$	148,508

All values are in US Dollars.

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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AEHR TEST SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands, except per share data)	2025			2024			2025			2024
Revenue	$	9,884		$	13,453		$	20,853		$	26,572
Cost of revenue		7,339			8,053			14,589			14,094
Gross profit		2,545			5,400			6,264			12,478
Operating expenses:
Research and development		2,972			2,276			5,821			4,637
Selling, general and administrative		4,434			4,637			9,151			9,195
Restructuring charges		(213	)		-			6			-
Total operating expenses		7,193			6,913			14,978			13,832
Loss from operations		(4,648	)		(1,513	)		(8,714	)		(1,354	)
Interest income, net		194			228			373			909
Other income, net		10			40			1,061			14
Loss before income tax benefit		(4,444	)		(1,245	)		(7,280	)		(431	)
Income tax benefit		(1,214	)		(217	)		(1,966	)		(63	)
Net loss	$	(3,230	)	$	(1,028	)	$	(5,314	)	$	(368	)
Net loss per share:
Basic	$	(0.11	)	$	(0.03	)	$	(0.18	)	$	(0.01	)
Diluted	$	(0.11	)	$	(0.03	)	$	(0.18	)	$	(0.01	)
Shares used in per share calculations:
Basic		30,177			29,659			30,050			29,383
Diluted		30,177			29,659			30,050			29,383

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands)	2025			2024			2025			2024
Net loss	$	(3,230	)	$	(1,028	)	$	(5,314	)	$	(368	)
Other comprehensive income (loss), net of tax:
Net change in cumulative translation adjustment		(15	)		(57	)		16			(33	)
Comprehensive loss	$	(3,245	)	$	(1,085	)	$	(5,298	)	$	(401	)

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
									Accumulated
						Additional			Other						Total
	Common Stock					Paid-in			Comprehensive			Accumulated			Shareholders'
(In thousands)	Shares			Amount		Capital			Loss			Deficit			Equity
Three Months Ended November 28, 2025
Balances, August 29, 2025		29,973		$	300	$	147,333		$	(95	)	$	(25,144	)		122,394
Issuance of common stock in public offering		384			3		9,368			-			-			9,371
Issuance of common stock under employee plans		285			3		894			-			-			897
Shares repurchased for tax withholdings on vesting of restricted stock units		(18	)		-		(491	)		-			-			(491	)
Stock-based compensation		-			-		1,850			-			-			1,850
Net loss		-			-		-			-			(3,230	)		(3,230	)
Foreign currency translation adjustment		-			-		-			(15	)		-			(15	)
Balances, November 28, 2025		30,624		$	306	$	158,954		$	(110	)	$	(28,374	)	$	130,776
									Accumulated
						Additional			Other						Total
	Common Stock					Paid-in			Comprehensive			Accumulated				Shareholders'
(In thousands)	Shares			Amount		Capital			Loss			Deficit			Equity
Six Months Ended November 28, 2025
Balances, May 30, 2025		29,877		$	299	$	145,758		$	(126	)	$	(23,060	)	$	122,871
Issuance of common stock in public offering		384			3		9,368			-			-			9,371
Issuance of common stock under employee plans		403			4		1,063			-			-			1,067
Shares repurchased for tax withholdings on vesting of restricted stock units		(40	)		-		(819	)		-			-			(819	)
Stock-based compensation		-			-		3,584			-			-			3,584
Net loss		-			-		-			-			(5,314	)		(5,314	)
Foreign currency translation adjustment		-			-		-			16			-			16
Balances, November 28, 2025		30,624		$	306	$	158,954		$	(110	)	$	(28,374	)	$	130,776

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
									Accumulated
						Additional			Other						Total
	Common Stock					Paid-in			Comprehensive			Accumulated			Shareholders'
(In thousands)	Shares			Amount		Capital			Loss			Deficit			Equity
Three Months Ended November 29, 2024
Balances, August 30, 2024		29,584		$	295	$	140,812		$	(134	)	$	(18,490	)	$	122,483
Issuance of common stock under employee plans		137			2		773			-			-			775
Shares repurchased for tax withholdings on vesting of restricted stock units		(12	)		-		(181	)		-			-			(181	)
Stock-based compensation		-			-		1,189			-			-			1,189
Net loss		-			-		-			-			(1,028	)		(1,028	)
Foreign currency translation adjustment		-			-		-			(57	)		-			(57	)
Balances, November 29, 2024		29,709		$	297	$	142,593		$	(191	)	$	(19,518	)	$	123,181
									Accumulated
						Additional			Other						Total
	Common Stock					Paid-in			Comprehensive			Accumulated				Shareholders'
(In thousands)	Shares			Amount		Capital			Loss			Deficit			Equity
Six Months Ended November 29, 2024
Balances, May 31, 2024		28,995		$	289	$	130,612		$	(158	)	$	(19,150	)	$	111,593
Issuance of common stock for business acqusition		552			6		9,375			-			-			9,381
Issuance of common stock under employee plans		184			2		829			-			-			831
Shares repurchased for tax withholdings on vesting of restricted stock units		(22	)		-		(343	)		-			-			(343	)
Stock-based compensation		-			-		2,120			-			-			2,120
Net loss		-			-		-			-			(368	)		(368	)
Foreign currency translation adjustment		-			-		-			(33	)					(33	)
Balances, November 29, 2024		29,709		$	297	$	142,593		$	(191	)	$	(19,518	)	$	123,181

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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AEHR TEST SYSTEMS
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Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended
	November 28,			November 29,
(In thousands)	2025			2024
Cash flows from operating activities:
Net loss	$	(5,314	)	$	(368	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		3,512			1,945
Depreciation and amortization		1,433			953
Deferred income taxes		(1,962	)		(90	)
Amortization of operating lease right-of-use assets		360			506
Changes in operating assets and liabilities:
Accounts receivable		3,891			3,718
Inventories		(654	)		(3,638	)
Prepaid expenses and other current assets		2,108			(2,940	)
Accounts payable		(2,114	)		(1,880	)
Accrued expenses		(483	)		5
Deferred revenue		(1,539	)		(1,209	)
Operating lease liabilities		(697	)		(478	)
Income taxes payable		6			(17	)
Net cash used in operating activities		(1,453	)		(3,493	)
Cash flows from investing activities:
Purchases of property and equipment		(1,858	)		(518	)
Payments for business acquisition, net of cash and cash equivalents acquired		(1,801	)		(10,615	)
Net cash used in investing activities		(3,659	)		(11,133	)
Cash flows from financing activities:
Proceeds from issuance of common stock from public offering, net of issuance costs		9,371			-
Proceeds from issuance of common stock under employee plans		1,067			831
Shares repurchased for tax withholdings on vesting of restricted stock units		(819	)		(343	)
Net cash provided by financing activities		9,619			488
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2	)		(3	)
Net increase (decrease) in cash, cash equivalents and restricted cash		4,505			(14,141	)
Cash, cash equivalents and restricted cash, beginning of period^(1)^		26,480			49,309
Cash, cash equivalents and restricted cash, end of period ^(1)^	$	30,985		$	35,168

(1) Includes restricted cash within prepaid expenses and other current assets and other non-current assets.

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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AEHR TEST SYSTEMS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization ****

Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and develops and manufactures test and burn-in equipment used in the semiconductor industry. The Company’s principal products are the FOX-XP, FOX-NP, and FOX-CP wafer contact and singulated die/module parallel test and burn-in systems, the Sonoma, Tahoe and Echo packaged parts burn-in products, the WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures.

Basis of Presentation ****

The unaudited Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include certain information and footnote disclosures normally included in the annual consolidated financial statements. 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 30, 2025 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 should be read in conjunction with the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended May 30, 2025.

Principles of Consolidation ****

The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated upon consolidation.

Critical Accounting Policies and use of Estimates

The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 30, 2025. There have been no significant changes to the Company’s critical accounting policies during the six months ended November 28, 2025. 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, the 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. Critical accounting estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value, valuation of intangible assets and impairment of long-lived assets and goodwill. Actual results could differ from those estimates.

Concentration of Credit Risk ****

Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. The Company had revenues from individual customers in excess of 10% of total revenues as follows:

	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
	2025			2024			2025			2024
Customer A		58.8	%	*				28.0	%	*
Customer C	*			*				22.4	%	*
Customer D	*			*				13.5	%	*
Customer E	*				46.5	%	*				68.4	%
Customer F	*				12.1	%	*			*

* Amount was less than 10% of total revenues

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The Company had gross accounts receivable from individual customers in excess of 10% of gross accounts receivable as follows:

	November 28,			May 30,
	2025			2025
Customer A		56.8	%		17.1	%
Customer B		11.8	%		26.2	%
Customer E	*				12.0	%
Customer G	*				17.2	%

* Amount was less than 10% of total gross accounts receivable

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the United States and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an accounting standard update to improve income statement expenses disclosures. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets. The new guidance allows companies to apply a practical expedient when estimating credit losses on current accounts receivable and contract assets. This ASU is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted for periods in which financial statements have not yet been issued or made ready for issuance on a prospective basis. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements.

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 — Unobservable inputs that are supported by little or no market activities.

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The following table represents the Company’s assets measured at fair value on a recurring basis as of November 28, 2025, and the basis for that measurement:

	Balance as of
(In thousands)	November 28, 2025		Level 1		Level 2		Level 3
Money market funds	$	28,673	$	28,673	$	-	$	-
Total	$	28,673	$	28,673	$	-	$	-

The following table represents the Company’s assets measured at fair value on a recurring basis as of May 30, 2025, and the basis for that measurement:

	Balance as of
(In thousands)	May 30, 2025		Level 1		Level 2		Level 3
Money market funds	$	21,461	$	21,461	$	-	$	-
Total	$	21,461	$	21,461	$	-	$	-

As of November 28, 2025 and May 30, 2025, restricted cash of $0.2 million representing a security deposit for the Company’s United States manufacturing and office space lease was included in money market funds. There were no financial liabilities measured at fair value as of November 28, 2025 and May 30, 2025. There were no transfers between Level 1 and Level 2 fair value measurements during the six months ended November 28, 2025. The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturity.

3. BALANCE SHEET INFORMATION

Inventories

Inventories consisted of the following:

	November 28,		May 30,
(In thousands)	2025		2025
Raw materials and sub-assemblies	$	32,781	$	30,644
Work in process		9,404		9,263
Finished goods		538		2,090
	$	42,723	$	41,997

Property and equipment

Property and equipment, net consisted of the following:

	Useful life	November 28,			May 30,
(In thousands)	(in years)	2025			2025
Leasehold improvements	*	$	6,101		$	5,999
Machinery and equipment	3 - 5		3,850			3,846
Test equipment	4 - 5		2,883			2,898
Furniture and fixtures	2 - 5		1,475			1,331
Construction-in-process			888			362
			15,197			14,436
Less: accumulated depreciation			(6,210	)		(5,467	)
		$	8,987		$	8,969

* Lesser of estimated useful life or lease term.

Depreciation expense was $0.4 million and $0.8 million for the three and six months ended November 28, 2025, respectively. Depreciation expense was $0.2 million and $0.4 million for the three and six months ended November 29, 2024, respectively.

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.

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The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 28, 2025 and November 29, 2024:

	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands)	2025			2024			2025			2024
Balance at the beginning of the period	$	510		$	219		$	428		$	234
Accruals for warranties issued during the period		145			130			314			308
Warranties acquired through business combination		-			144			-			144
Consumption of reserves		(310	)		(135	)		(601	)		(328	)
Adjustments to previously existing warranty accruals		204			-			408			-
Balance at the end of the period	$	549		$	358		$	549		$	358

Adjustments to previously existing warranty accruals represent changes in estimates based on updated information regarding historical warranty experience and expected future claims. The accrued warranty balance is included in accrued expenses on the accompanying Condensed Consolidated Balance Sheets.

Deferred revenue

Deferred revenue, short-term consisted of the following:

	November 28,		May 30,
(In thousands)	2025		2025
Customer deposits	$	214	$	1,802
Deferred revenue		229		179
	$	443	$	1,981

4. GOODWILL AND PURCHASED INTANGIBLE ASSETS

Goodwill

There were no impairments to goodwill during the three and six months ended November 28, 2025 and November 29, 2024, respectively.

Purchased Intangible Assets

The Company’s purchased intangible assets, net, were as follows:

	November 28, 2025							May 30, 2025
(In thousands)			Accumulated							Accumulated
Finite-lived intangible assets:	Gross		Amortization			Net		Gross		Amortization			Net
Developed technology	$	9,130	$	(1,015	)	$	8,115	$	9,130	$	(634	)	$	8,496
Trade names		1,050		(140	)		910		1,050		(88	)		962
Customer relationships		810		(98	)		712		810		(61	)		749
Non-compete agreements and others		1,010		(604	)		406		1,010		(436	)		574
Total	$	12,000	$	(1,857	)	$	10,143	$	12,000	$	(1,219	)	$	10,781

Amortization expense related to purchased intangible assets with finite lives was $0.3 million and $0.6 million for the three and six months ended November 28, 2025, respectively. Amortization expense was $0.3 million and $0.5 million for the three and six months ended November 29, 2024, respectively. There were no impairments to purchased intangible assets during the three and six months ended November 28, 2025 and November 29, 2024, respectively.

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As of November 28, 2025, the estimated future amortization expense of purchased intangible assets with finite lives is as follows:

(In thousands)	Amount
Remainder of 2026		591
2027		1,183
2028		981
2029		939
2030		939
2031		939
Thereafter		4,571
Total		10,143

5. INCOME TAXES

The following table provides details of income taxes:

	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands)	2025			2024			2025			2024
Loss before income tax benefit	$	(4,444	)	$	(1,245	)	$	(7,280	)	$	(431	)
Income tax benefit	$	(1,214	)	$	(217	)	$	(1,966	)	$	(63	)
Effective tax rate		27.3	%		17.4	%		27.0	%		14.6	%

The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to the tax deduction from stock-based compensation. During interim periods, tax expenses are recorded for jurisdictions that are anticipated to be profitable for fiscal 2026.

In accordance with ASC 740-270, Interim Reporting, the provision for income taxes for interim periods is based on the Company’s estimated annual effective tax rate. For the three and six months ended November 28, 2025 and November 29, 2024, the Company recognized income tax benefits primarily related to quarter-to-date and year-to-date losses in the United States.

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 recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.

6. COMMITMENTS AND CONTINGENCIES

Purchase Obligations

The Company has purchase obligations to certain suppliers. In some cases, the products the Company purchases are unique and have provisions against cancellation of the order.

Contingencies

The Company may, from time to time, be involved in legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

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On December 3, 2024, a putative shareholder class action lawsuit captioned Lucid Alternative Fund, LP v. Aehr Test Systems, Inc. was filed in the United States District Court for the Northern District of California against the Company. The lawsuit alleged, in part, that the Company and certain of its executives made materially false and misleading statements regarding the Company’s earnings guidance and other financial projections for 2024. The lawsuit sought unspecified monetary damages and purported to represent purchasers of the Company’s securities between January 9, 2024 and March 24, 2024. On February 3, 2025, Lucid and individual investor Yue Guo each filed motions requesting appointment as lead plaintiff. On March 19, 2025, the court appointed Yue Guo, who was represented by Rosen Law, as lead plaintiff in the shareholder class action. On April 4, 2025, the court ordered lead plaintiff to file an amended complaint or designate the existing complaint as operative by May 16, 2025; defendants to file their anticipated motion to dismiss by June 6, 2025; lead plaintiff to respond to the motion by June 27, 2025; and defendants to reply by July 11, 2025. The court scheduled a hearing on defendants’ motion to dismiss for August 8, 2025. On May 16, 2025, the court-appointed lead plaintiff elected to dismiss the case voluntarily, with all parties to bear their own fees and costs. The Court subsequently closed the case. Additionally, two shareholder derivative complaints were filed, alleging breaches of fiduciary duties and other misconduct by certain directors and officers of the Company. The derivative complaints were consolidated before the same judge as the putative shareholder class action lawsuit under the caption In re Aehr Test Systems, Inc. Stockholder Derivative Litigation, No. 3:24-cv-09236-SI. On April 28, 2025, the court entered an order staying the consolidated action pending resolution of any motion(s) to dismiss, including any related appeal(s), in the Lucid litigation. On June 9, 2025, the court dismissed the derivative action without prejudice pursuant to the parties’ stipulation. The Company believes the claims in all three lawsuits were without merit. Following the voluntary dismissal of the shareholder class action and the court’s dismissal of the consolidated derivative action, no related proceedings are currently pending.

On October 16, 2024, the Company filed a complaint with the China Suzhou Intermediate Court to protect its intellectual property rights in China against Suzhou Semight Instruments Co., Ltd. (“Semight”) and its related entities and/or distributors, alleging infringement of the Company’s two patents related to wafer burn-in systems and wafer reliability test systems. The Company is seeking injunctive relief and damage compensation, claiming that Semight’s actions have infringed upon its intellectual property rights and caused substantial harm to its business. The Company believes its claims are valid and is vigorously pursuing its legal remedies. At this stage, the outcome of the litigation is uncertain, and the Company is unable to predict the likelihood of success or estimate the potential financial impact, if any, on its condensed consolidated financial statements. The Company has also incurred and expects to continue to incur legal expenses related to this matter. On November 15 and December 6, 2024, Semight filed a petition for invalidation to the two aforementioned Chinese patents with the Department of National Intellectual Properties in Beijing, respectively. The oral hearings for both of the patents have been held, and the decision has been issued for both patents that upholds part of the claims. In addition, the Company received a suspension ruling from Suzhou Intermediate People’s Court on the infringement proceedings, pending the outcome of the validity rulings. With both patents having been upheld, the suspended infringement proceedings have resumed. The hearing for the divisional patent was held on August 28, 2025, and the hearing for the parent patent was held on October 17, 2025. In December 2025, the Company received a first-instance judgment from the Suzhou Intermediate People’s Court with respect to the infringement cases, which dismissed the Company’s claims based on the court’s opinion that there was insufficient evidence to establish infringement. The Company filed the appeals for both cases on January 4, 2026.

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, with respect to certain matters, for example, including against losses arising from a breach of representations or covenants, or from intellectual property infringement or other claims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have not had a material impact on the Company’s operating results, financial position or cash flow.

7. SHAREHOLDERS’ EQUITY

On October 15, 2024, the Board of Directors authorized management to execute a $100 million shelf registration, and a Registration Statement on Form S-3 was filed with the SEC. Additionally, a Prospectus Supplement for sales of $40 million of common stock pursuant to an ATM offering program was subsequently filed on October 29, 2024. In November 2025, the Company sold 384,380 shares of common stock at an average selling price of $25.89 per share. The gross proceeds to the Company were approximately $10.0 million, before commission fees of $0.3 million and offering expenses of $0.3 million. As of November 28, 2025, the remaining amount of the ATM offering program was approximately $30.0 million.

8. 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.

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Performance obligations include sales of systems, contactors, spare parts, as well as installation and training services included in customer contracts. A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period.

For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies. Revenue for systems and spares is recognized at a point in time, which is generally upon shipment or delivery and evidenced by transfer of title and risk of loss to the customer. Revenue from services is recognized over time as the customer receives the benefit 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.

Disaggregation of revenue

The following presents information about the Company’s net revenues in different geographic areas, which are based upon ship-to locations, and by product category:

	Three Months Ended				Six Months Ended
	November 28,		November 29,		November 28,		November 29,
(In thousands)	2025		2024		2025		2024
Asia	$	7,617	$	9,825	$	10,093	$	22,403
United States		1,942		3,462		6,754		3,984
Europe and Middle East		325		166		4,006		185
	$	9,884	$	13,453	$	20,853	$	26,572
	Three Months Ended				Six Months Ended
---	---	---	---	---	---	---	---	---
	November 28,		November 29,		November 28,		November 29,
(In thousands)	2025		2024		2025		2024
Systems	$	4,974	$	3,410	$	11,739	$	3,470
Contactors		3,444		8,575		6,057		20,669
Services		1,466		1,468		3,057		2,433
	$	9,884	$	13,453	$	20,853	$	26,572
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With the exception of the amount of service contracts and extended warranties, the Company’s product net revenues are recognized at a point in time when control transfers to the customer. The following presents net revenues based on timing of recognition:

	Three Months Ended				Six Months Ended
	November 28,		November 29,		November 28,		November 29,
(In thousands)	2025		2024		2025		2024
Timing of revenue recognition:
Products and services transferred at a point in time	$	9,148	$	13,231	$	19,373	$	26,148
Services transferred over time		736		222		1,480		424
	$	9,884	$	13,453	$	20,853	$	26,572

Contract balances

Accounts receivable is recognized in the period the Company delivers goods or provides services and when the Company’s right to payment is unconditional. Contract assets include unbilled receivables which represent revenues that are earned in advance of scheduled billings to customers. These amounts are primarily related to product sales where transfer of control has occurred but the Company has not yet invoiced. As of November 28, 2025 and May 30, 2025, unbilled receivables were $1.9 million and $3.6 million, respectively, and were included in prepaid expenses and other current assets on the accompanying Condensed Consolidated Balance Sheets.

Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities as of November 28, 2025 and May 30, 2025 were $0.5 million and $2.0 million, respectively, and were included in deferred revenue, short-term and deferred revenue, long-term on the accompanying Condensed Consolidated Balance Sheets. During the three and six months ended November 28, 2025, the Company recognized $0.1 million and $1.8 million in revenue, respectively, which were included in contract liabilities as of May 30, 2025.

Remaining performance obligations

As of November 28, 2025, the remaining performance obligations, exclusive of customer deposits, which were comprised of deferred service contracts and extended warranty contracts not yet delivered, are not material. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less and 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 expenses 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.

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9. STOCK-BASED COMPENSATION

Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), performance RSUs (“PRSUs”), restricted shares, performance restricted shares and employee stock purchase plan (“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, PRSUs, restricted shares and performance restricted shares, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as equity instruments. See Note 12 in the Company’s Annual Report on Form 10-K for fiscal 2025 filed on July 28, 2025 for further information regarding the equity incentive plans and the ESPP.

The following table summarizes the stock-based compensation expense for the three and six months ended November 28, 2025 and November 29, 2024:

	Three Months Ended				Six Months Ended
	November 28,		November 29,		November 28,		November 29,
(In thousands)	2025		2024		2025		2024
Cost of sales	$	215	$	69	$	374	$	162
Research and development		380		278		745		486
Selling, general and administrative		1,246		728		2,393		1,297
	$	1,841	$	1,075	$	3,512	$	1,945

Stock-based compensation expense totaling $0.4 million and $0.3 million was capitalized as part of inventory as of November 28, 2025 and May 30, 2025, respectively.

The Company’s nonvested RSU, PRSU and restricted shares activities during the six months ended November 28, 2025 were as follows:

				Weighted
				Average Grant
				Date Fair
	Shares			Value
	(in thousands)			Per Share
Unvested, May 30, 2025		664		$	16.89
Granted (1)		529			15.13
Vested		(61	)		14.81
Forfeited		(4	)		17.54
Unvested, August 29, 2025		1,128			16.18
Granted		1			27.42
Vested		(76	)		15.59
Forfeited		(1	)		16.45
Unvested, November 28, 2025		1,052		$	16.24
(1)	Includes 241,000 shares of performance-based awards, of which approximately 70,000 shares of performance-based awards have target achievement goals whereby the grantee can earn up to 200% of the original award (up to 141,000 shares) if the maximum target goals are met. The remaining awards are earned at 100% if the target goals are achieved
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There were no options granted during the three and six months ended November 28, 2025 and November 29, 2024.

During the six months ended November 28, 2025 and November 29, 2024, the Company issued 67,000 and 41,000 shares, respectively, under the ESPP. As of November 28, 2025 and November 29, 2024, there were 443,000 and 285,000 shares, respectively, available for issuance under the ESPP.

On October 20, 2025, the Company’s shareholders approved amendments to the 2023 Equity Incentive Plan and the Amended and Restated 2006 Employee Stock Purchase Plan to increase the share reserves by 2,500,000 shares and 300,000 shares, respectively. The additional shares became available for future issuance upon shareholder approval.

10. RESTRUCTURING CHARGES

During the three months ended May 30, 2025, the Company initiated a restructuring plan to consolidate facilities and optimize cost structure in order to more effectively support the Company’s long-term strategic objectives. Restructuring charges relate to impairment of long-lived assets that will no longer be used in operations, including right-of-use assets and facility-related property, contract termination costs and facility exit-related costs. During the three months ended November 28, 2025, the Company entered into a lease termination agreement with the landlord and paid a termination fee of $0.2 million and was released from its remaining lease obligation. Consequently, the Company recognized a credit to the restructuring charge of $0.2 million during the period. There was no restructuring liability outstanding as of November 28, 2025.

Separately, the Company implemented a workforce reduction to align resources with its business needs in the three months ended August 29, 2025. The Company recorded $0.2 million of restructuring charges in the Condensed Consolidated Statements of Operations during the three months ended August 29, 2025, primarily related to employee termination benefits. There were no additional charges incurred related to this reduction during the three months ended November 28, 2025. No restructuring liability remained as of November 28, 2025, related to this initiative.

There were no restructuring charges during the three and six months ended November 29, 2024.

11. EMPLOYEE RETENTION CREDIT

The Company filed claims for the Employee Retention Credit (“ERC”) with the Internal Revenue Service in February 2024 under the provisions of the Coronavirus Aid, Relief, and Economic Security Act, as amended. During the three months ended August 29, 2025, the Company received a refund of approximately $1.3 million, which was recognized as other income in the Condensed Consolidated Statements of Operations.

In connection with filing the ERC claims, the Company engaged a third-party service provider under a contingent-fee arrangement. As a result, the Company incurred a service fee of approximately $0.3 million, which was recorded in other expense in the Condensed Consolidated Statements of Operations during the three months ended August 29, 2025.

There was no additional ERC-related activity during the three months ended November 28, 2025.

12. NET LOSS PER SHARE

Basic net loss per share is determined using the weighted average number of common shares outstanding during the period. Diluted net loss per share is determined using the weighted average number of common shares and potential common shares (representing the hypothetical number of incremental shares issuable under the assumed exercise of outstanding stock options, and vesting of outstanding RSUs and ESPP shares) during the period using the treasury stock method. The calculation of dilutive shares outstanding excludes securities that would have an antidilutive effect on net loss per share.

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The following table presents the computation of basic and diluted net loss per share:

	Three Months Ended						Six Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands, except per share data)	2025			2024			2025			2024
Numerator:
Net loss	$	(3,230	)	$	(1,028	)	$	(5,314	)	$	(368	)
Denominator:
Basic weighted average shares outstanding		30,177			29,659			30,050			29,383
Dilutive effect of common equivalent shares outstanding		-			-			-			-
Diluted weighted average shares outstanding		30,177			29,659			30,050			29,383
Net loss per share - Basic	$	(0.11	)	$	(0.03	)	$	(0.18	)	$	(0.01	)
Net loss per share - Diluted	$	(0.11	)	$	(0.03	)	$	(0.18	)	$	(0.01	)
Antidilutive employee share-based awards, excluded		1,883			1,747			1,904			1,622

13. SEGMENT AND CONCENTRATION INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in one operating segment.

Property and equipment, net by geographic area are as follows:

	November 28,		May 30,
(In thousands)	2025		2025
United States	$	8,937	$	8,892
International		50		77
Total property and equipment, net	$	8,987	$	8,969
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential”, “target” or “continue,” the negative effect of terms like these or other similar expressions. Any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries, which may be provided by us are also forward-looking statements. These forward-looking statements are only predictions. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those anticipated or projected. All forward-looking statements included in this document are based on information available to us on the date of filing and we further caution investors that our business and financial performance are subject to substantial risks and uncertainties. We assume no obligation to update any such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including the risk factors set forth in Item 1. “Business” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended May 30, 2025, filed with the Securities and Exchange Commission on July 28, 2025. All references to “we”, “us”, “our”, “Aehr Test”, “Aehr Test Systems” or the “Company” refer to Aehr Test Systems.

Overview

We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and have installed thousands of systems worldwide. The rapid advancement of generative artificial intelligence (AI) and the accelerating electrification of transportation and global infrastructure represent two of the most significant macro-trends impacting the semiconductor industry today. These transformative forces are driving enormous growth in semiconductor demand while fundamentally increasing the performance, reliability, safety, and security requirements of the devices used across computing and data infrastructure, telecommunications networks, hard disk drive and solid-state storage solutions, electric vehicles, charging systems, and renewable energy generation. As these applications operate at ever-higher power levels and in increasingly mission-critical environments, the need for comprehensive test and burn-in has become more essential than ever. Semiconductor manufacturers are turning to advanced wafer-level and package-level burn-in systems to screen for early-life failures, validate long-term reliability, and ensure consistent performance under extreme electrical and thermal stress. This growing emphasis on reliability testing reflects a fundamental shift in the industry—from simply achieving functionality to guaranteeing dependable operation throughout a product’s lifetime, a requirement that continues to expand alongside the scale and complexity of next-generation semiconductor devices.

We have developed and introduced several innovative products including the FOX-P family of test and burn-in systems and FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices used in artificial intelligence. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables Integrated Circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1,024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time.

In connection with the acquisition of Incal Technology, Inc. (“Incal”), our product portfolio further expanded to include packaged parts burn-in solutions for the full range of power and complexity of integrated circuits. Incal’s product lines feature the Sonoma series for ultra-high-power burn-in testing, the Tahoe series for medium-power reliability burn-in, and the Echo series for low-power and high parallelism testing. The Sonoma line, with its ultra-high-power capabilities, is specifically designed to address the reliability and burn-in needs of the burgeoning demand for AI accelerators, graphics processing units (“GPUs”), high-performance computing (“HPC”) processors, and devices that can reach over a thousand watts of power per device. The Tahoe and Echo lines for medium-power and low-power burn-in solutions, respectively, target logic, system on a chip (“SoC”), and mixed-signal devices employed in mobile communications, mobility, medical, military, aerospace, and data center applications. These systems are frequently used by independent test and burn-in labs, as well as semiconductor manufacturers.

Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, Sonoma systems, Tahoe systems, Echo systems, test fixtures, upgrades and spare parts, service contracts revenues, and non-recurring engineering charges. Our selling arrangements may include contractual customer acceptance provisions, which are mostly deemed perfunctory or inconsequential, and installation of the product occurs after shipment, transfer of title and risk of loss.

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Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to customer programs and incentives, inventories, and income taxes. Our estimates are derived from historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Those results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of the critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025.

There have been no material changes to our critical accounting policies and estimates during the six months ended November 28, 2025 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025.

Results of Operations

Discussion of Results of Operations for the Three and Six Months Ended November 28, 2025 compared to the Three and Six Months Ended November 29, 2024

Revenues

	Three Months Ended							Six Months Ended
	November 28,		November 29,		Percent			November 28,		November 29,		Percent
(Dollars in thousands)	2025		2024		Change			2025		2024		Change
Revenues	$	9,884	$	13,453		(27	)%	$	20,853	$	26,572		(22	)%

For the three months ended November 28, 2025, revenue decreased by $3.6 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $5.1 million, partially offset by an increase in package-level burn-in systems revenue of $1.6 million, driven by increased demand from customers in AI-related applications.

For the six months ended November 28, 2025, revenue decreased by $5.7 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $14.6 million, partially offset by an increase in systems revenue of $8.3 million, reflecting increased demand from customers in AI–related applications and other markets, and an increase in service revenue of $0.6 million.

Revenue by Geography	Three Months Ended									Six Months Ended
	November 28,			November 29,			Percent			November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change			2025			2024			Change
Asia	$	7,617		$	9,825			(22	)%	$	10,093		$	22,403			(55	)%
United States		1,942			3,462			(44	)%		6,754			3,984			70	%
Europe and Middle East		325			166			96	%		4,006			185		N.M.
Total revenues	$	9,884		$	13,453			(27	)%	$	20,853		$	26,572			(22	)%
Asia as a percentage of total revenues		77.1	%		73.0	%					48.4	%		84.3	%
United States as a percentage of total revenues		19.6	%		25.7	%					32.4	%		15.0	%
Europe and Middle East as a percentage of total revenues		3.3	%		1.3	%					19.2	%		0.7	%

N.M.-Not meaningful

On a geographic basis, revenues represent products that were shipped to or services that were performed at our customer locations. For the three months ended November 28, 2025, compared to the same period in the prior year, revenue decreased in both Asia and the United States primarily due to the ongoing softness in demand for electric vehicles.

For the six months ended November 28, 2025, compared to the same period in the prior year, revenue decreased in Asia primarily due to the ongoing softness in demand for electric vehicles, which was partially offset by increases in FOX-P systems sold in the United States, Europe and Middle East, driven by customer demand outside of the electric vehicle market.

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Gross Margin

	Three Months Ended									Six Months Ended
	November 28,			November 29,			Percent			November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change			2025			2024			Change
Gross profit	$	2,545		$	5,400			(53	)%	$	6,264		$	12,478			(50	)%
Gross margin		25.7	%		40.1	%					30.0	%		47.0	%

Gross profit decreased by $2.9 million for the three months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 14.4 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, and increased freight expenses.

Gross profit decreased by $6.2 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 17.0 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, increased freight expenses, and higher tariffs on imported parts following recent government policy changes.

Research and Development

	Three Months Ended									Six Months Ended
	November 28,			November 29,			Percent			November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change			2025			2024			Change
Research and development	$	2,972		$	2,276			31	%	$	5,821		$	4,637			26	%
As a percentage of total revenues		30.1	%		16.9	%					27.9	%		17.5	%

Research and development expenses consist primarily of compensation and benefits for product development personnel, outside development service costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Research and development expenses increased by $0.7 million and $1.2 million, respectively, for the three and six months ended November 28, 2025, compared to the same periods in the prior year. The increase was primarily driven by higher employment-related costs, including stock-based compensation, resulting from increased headcount and higher project-related expenses.

Selling, General and Administrative

	Three Months Ended									Six Months Ended
	November 28,			November 29,			Percent			November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change			2025			2024			Change
Selling, general and administrative	$	4,434		$	4,637			(4	)%	$	9,151		$	9,195			(0	)%
As a percentage of total revenues		44.9	%		34.5	%					43.9	%		34.6	%

Selling, general and administrative expenses consist primarily of compensation and benefits for sales, marketing and general and administrative personnel, legal and accounting service costs, marketing communications costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Selling, general and administrative expenses remained consistent for the three months and six months ended November 28, 2025, compared to the same periods in the prior year, as higher stock-based compensation was partially offset by lower professional service fees and lower accrual for bonuses.

Restructuring Charges

	Three Months Ended							Six Months Ended
	November 28,			November 29,			Percent	November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change	2025			2024			Change
Restructuring charges	$	(213	)	$	-		N.M.	$	6		$	-		N.M.
As a percentage of total revenues		(2	)%		0.0	%			0.0	%		0.0	%

N.M.-Not meaningful

There was a recovery of previously expensed restructuring charges for the three months ended November 28, 2025 primarily related to the early termination of the Incal lease, which resulted in a net credit of $0.2 million.

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For the six months ended November 28, 2025, restructuring costs associated with a workforce reduction implemented during the three months ended August 29, 2025 to better align our resources with our business needs were partially offset by a credit recognized during the three months ended November 28, 2025 resulting from the early termination of the Incal lease.

For further explanation of our restructuring charges, see Note 10, Restructuring Charges, in Notes to Condensed Consolidated Financial Statements.

Interest and Other Income, Net

	Three Months Ended							Six Months Ended
	November 28,		November 29,		Percent			November 28,		November 29,		Percent
(Dollars in thousands)	2025		2024		Change			2025		2024		Change
Interest income, net	$	194	$	228		(15	)%	$	373	$	909		(59	)%
Other income, net		10		40		(75	)%		1,061		14	N.M.
Interest and other income, net	$	204	$	268		(24	)%	$	1,434	$	923		55	%

N.M.-Not meaningful

Interest and other income, net, primarily consists of interest income, foreign currency transaction exchange gains and losses and other non-operating income and expense. Interest income, net, decreased by $34,000 and $0.5 million for the three and six months ended November 28, 2025, respectively, compared to the same periods in the prior year, primarily driven by lower interest income earned on a lower average cash balances and lower yields from our investments in money market funds. For the six months ended November 28, 2025, other income, net, increased by $1.0 million, compared to the same period in the prior year, primarily attributable to the Employee Retention Credit (“ERC”) refund of $1.3 million received, net of a $0.3 million third-party service fee incurred in connection with the filing of the ERC claims during the six months ended November 28, 2025.

For further explanation of the ERC, see Note 11, Employee Retention Credit, in Notes to Condensed Consolidated Financial Statements.

Income Tax Benefit

	Three Months Ended									Six Months Ended
	November 28,			November 29,			Percent			November 28,			November 29,			Percent
(Dollars in thousands)	2025			2024			Change			2025			2024			Change
Income tax benefit	$	(1,214	)	$	(217	)		459	%	$	(1,966	)	$	(63	)	N.M.

N.M.-Not meaningful

For the three and six months ended November 28, 2025, the Company recognized an income tax benefits of $1.2 million and $2.0 million, respectively, primarily driven by quarter-to-date and year-to-date losses in the United States. For the three and six months ended November 29, 2024, the income tax benefit was also primarily related to quarter-to-date and year-to-date losses in the United States.

Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash were $31.0 million as of November 28, 2025, compared to $35.2 million as of November 29, 2024. We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures and other obligations for the next twelve months.

	Six Months Ended
	November 28,			November 29,
(In thousands)	2025			2024			Change
Operating activities	$	(1,453	)	$	(3,493	)	$	2,040
Investing activities		(3,659	)		(11,133	)		7,474
Financing activities		9,619			488			9,131
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2	)		(3	)		1
Net increase (decrease) in cash, cash equivalents and restricted cash	$	4,505		$	(14,141	)	$	18,646
23
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Net Cash Flows Used in Operating Activities

The $2.0 million increase in cash flows from operating activities for the six months ended November 28, 2025, compared to the same period in the prior year, was driven primarily by decreases in prepayments to vendor and in unbilled receivables, lower cash outflows for inventory purchases, and higher non-cash charges including stock-based compensation expense, partially offset by a higher loss before income tax benefit.

Net Cash Flows Used in Investing Activities

Net cash used in investing activities decreased by $7.5 million for the six months ended November 28, 2025, compared to the same period in the prior year. The decrease was primarily due to the $10.6 million payment to acquire Incal during the six months ended November 29, 2024, compared to a $1.8 million escrow release related to the acquisition during the current period. This decrease was partially offset by a $1.3 million increase in cash spending on property and equipment, primarily related to an office renovation.

Net Cash Flows Provided by Financing Activities

Net cash provided by financing activities increased by $9.1 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily driven by net proceeds of $9.4 million from the issuance of common stock under the Company’s ATM offering program.

Off-Balance Sheet Agreements

We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. There have been no material changes in the composition, magnitude or other key characteristics of our contractual obligations or other commitments as disclosed in the Company's Annual Report on Form 10-K for the year ended May 30, 2025.

24
Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer, or CEO, and chief financial officer, or CFO, evaluated the effectiveness of our "disclosure controls and procedures" as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of November 28, 2025, in connection with the filing of this Quarterly Report on Form 10-Q. Based on that evaluation as of November 28, 2025, our CEO and CFO concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the three months ended November 28, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

25
Table of Contents

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to various claims and legal proceedings that arise in the ordinary course of business. We accrue for losses related to litigation when a potential loss is probable and the loss can be reasonably estimated in accordance with FASB requirements. For additional information regarding legal proceedings, refer to Note 6 – Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

Item 1A, “Risk Factors,” on pages 12 through 20 of the Company’s Annual Report on Form 10-K for the year ended May 30, 2025, provides information on the significant risks associated with our business. There have been no subsequent material changes to these risks. ****

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

During the three months ended November 28, 2025, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408(a).

26
Table of Contents

Item 6. Exhibits

Exhibit<br><br>Number	Description
3.1(1)	Restated Article of Incorporation of Registrant
3.2(2)	Amended and Restated Bylaws of the Registrant
4.1(3)	Form of Common Stock certificate
10.1(4)	Amendment to the Amended and Restated 2006 Employee Stock Purchase Plan
10.2(5)	Amendment to the 2023 Equity Incentive Plan
31. 1	Certification of the principal executive officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
31. 2	Certification of the principal financial and accounting officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
32. 1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
32. 2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS	XBRL Instance Document †
101.SCH	XBRL Taxonomy Extension Schema Document †
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document †
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document †
101.LAB	XBRL Taxonomy Extension Label Linkbase Document †
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document †
1	Incorporated by reference to the same-numbered exhibit previously filed with the Company’s Registration Statement on Form S-1 filed June 11, 1997 (File No. 333-28987)
---	---
2	Incorporated by reference to Exhibit 3.1 previously filed with the Company’s Current Report on Form 10-K filed July 28, 2025 (File No. 000-22893)
3	Incorporated by reference to the same-numbered exhibit previously filed with Amendment No.1 to the Company’s Registration Statement on Form S-1 filed July 17, 1997 (File No. 333-28987)
4	Incorporated by reference to Exhibit 10.1 previously filed with the Company’s Current Report on Form 8-K filed November 7, 2025 (File No. 000-22893)
5	Incorporated by reference to Exhibit 10.2 previously filed with the Company’s Current Report on Form 8-K filed November 7, 2025 (File No. 000-22893)
†	Filed herewith.
**	Furnished, and not filed.
27
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AEHR TEST SYSTEMS
Date: January 12, 2026	By:	/s/ GAYN ERICKSON
		Gayn Erickson
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: January 12, 2026	By:	/s/ CHRIS P. SIU
---	---	---
		Chris P. Siu
		Executive Vice President of Finance,<br><br>and Chief Financial Officer
		(Principal Financial and Accounting Officer)
28
---

aehr_ex311.htm EXHIBIT 31. 1

CERTIFICATIONS

I, Gayn Erickson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Aehr Test Systems;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ GAYN ERICKSON

| | Gayn Erickson |

| | President and Chief Executive Officer |

| | (Principal Executive Officer) |

Date: January 12, 2026

aehr_ex312.htm EXHIBIT 31. 1

CERTIFICATIONS

I, Gayn Erickson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Aehr Test Systems;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ GAYN ERICKSON

| | Gayn Erickson |

| | President and Chief Executive Officer |

| | (Principal Executive Officer) |

Date: January 12, 2026

aehr_ex321.htm EXHIBIT 32. 1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Aehr Test Systems (the “Company”) on Form 10-Q for the quarter ended November 28, 2025, as filed with the Securities and Exchange Commission on January 12, 2026 (the “Report”), I, Gayn Erickson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ GAYN ERICKSON

| | Gayn Erickson |

| | President and Chief Executive Officer |

| | (Principal Executive Officer) |

Date: January 12, 2026

aehr_ex322.htm EXHIBIT 32. 2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Aehr Test Systems (the “Company”) on Form 10-Q for the quarter ended November 28, 2025 as filed with the Securities and Exchange Commission on January 12, 2026 (the “Report”), I, Chris P. Siu, Executive Vice President of Finance, Chief Financial Officer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ CHRIS P. SIU

| | Chris P. Siu |

| | Executive Vice President of Finance,<br> <br>and Chief Financial Officer |

| | (Principal Financial and Accounting Officer) |

Date: January 12, 2026

10-Q

FORM 10-Q

Commission File Number 000-22893

(510) 623-9400

TABLE OF CONTENTS

Item 3. Quantitative and Qualitative Disclosures about Market Risk

PART II — OTHER INFORMATION