condensed consolidated financial information has been prepared by Aehr Test Systems, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission, or SEC, and therefore does not include all information and footnotes necessary for a
fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally
accepted in the United States of America.
opinion of management, the unaudited condensed consolidated financial statements for the interim periods presented reflect all
adjustments, consisting of only 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 condensed consolidated financial statements
and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in Aehr Test
Systems' Annual Report on Form 10-K for the fiscal year ended May 31, 2012. Results for the interim periods presented
herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.
OF CONSOLIDATION. The condensed consolidated financial statements include the accounts of Aehr Test Systems and its
subsidiaries (collectively, the "Company," "we," "us," and "our"). All significant intercompany balances have been eliminated
in consolidation. For the majority owned subsidiary, we reflected the noncontrolling interest of the portion we do not
own on our Consolidated Balance Sheets in Shareholders Equity and in the Consolidated Statements of Operations.
reclassifications have been made to the consolidated financial statements to conform to the current period presentation. These
reclassifications did not result in any change in previously reported net income, total assets or shareholders equity.
ESTIMATES. The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.
ACCOUNTING POLICIES. The Companys significant accounting policies are disclosed in the Companys Annual
Report on Form 10-K for the year ended May 31, 2012. During the first quarter of fiscal 2013, the Company entered into an
agreement with a customer to develop a next generation system. The project identifies multiple milestones with values assigned
to each. The consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition:
(i) the value is commensurate with the vendors performance to meet the milestone, (ii) it relates solely to past performance,
(iii) and it is reasonable relative to all of the deliverables and payment terms within the arrangement.
than recognition of revenue under the milestone method related to the development contract described above, the Company has not
otherwise materially changed its significant accounting policies.