Company: AEHR
Filing Date: 2025-07-28
Form Type: 10-K
Source: 0001654954-25-008553
Chunk: 856

Company: AEHR TEST SYSTEMS
Filing Date: 2025-07-28
Form: 10-K
Item: Item 8
Chunk 856
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 The components of the net deferred tax assets and liabilities are as follows:   May 30,  May 31, (In thousands) 2025  2024 Deferred tax assets:      Net operating losses $7,945  $9,344 Lease liability  2,295   1,310 Credit carryforwards  6,681   6,739 Inventory reserves  1,067   1,070 Reserves and accruals  1,368   855 Capitalized research and development  4,291   2,645 Other  -   23    23,647   21,986 Deferred tax liabilities:        Operating lease right-of-use assets  (2,035)  (1,213)Intangibles  (2,285)  - Other  (213)  - Net deferred tax assets  $19,114  $20,773  During the year ended May 31, 2024, the Company concluded that its deferred tax assets are more likely than not to become realizable, and as such, the Company reversed all its existing valuation allowance totaling $21.9 million. The conclusion that a valuation allowance was no longer needed was based on three years of cumulative pre-tax income, current year utilization of federal and state net operating losses, combined with estimates of future years' pre-tax income that are sufficient to realize the remaining deferred tax assets. The amount of the deferred tax asset considered realizable can change if estimates of future taxable income change or if objective negative and positive evidence change. 

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At May 30, 2025 and May 31, 2024, the Company has federal net operating loss carryforwards of approximately $28.0 million and $34.6 million and respectively, that are available to reduce future taxable income. A portion of the federal net operating losses will begin to expire in 2034. Federal net operating losses of $14.4 million will carryforward indefinitely and would be subject to an 80% taxable income limitation in the year utilized. At May 31, 2025 and May 31, 2024, the Company has state net operating loss carryforwards of $29.7 million and $29.8 million respectively, that are available to reduce future taxable income. The state net operating loss