10-Q 1 aehr_10q.htm FORM 10-Q aehr_10q.htm

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

 

 

For the quarterly period ended November 30, 2023 

 

or

 

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

 

 

 

For the transition period from _______________ to ______________   

 

Commission File Number 000-22893

 

AEHR TEST SYSTEMS

(Exact name of Registrant as Specified in its Charter)

 

California 

 

94-2424084 

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

400 Kato Terrace, Fremont, CA

 

94539 

(Address of Principal Executive Offices)

 

(Zip Code)

 

(510) 623-9400

(Registrant’s Telephone Number, Including Area Code)

 

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 28,849,237 shares of the Registrant’s Common Stock outstanding as of December 31, 2023.

 

 

 

TABLE OF CONTENTS

 

 

Page

PART I FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures About Market Risk

23

Item 4. Controls and Procedures

23

PART II OTHER INFORMATION

 

Item 1. Legal Proceedings

24

Item 1A. Risk Factors

24

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

24

Item 3. Defaults Upon Senior Securities

24

Item 4. Mine Safety Disclosures

24

Item 5. Other Information

24

Item 6. Exhibits

25

SIGNATURES 

26

 

 
2

Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

November 30,

 

 

May 31,

 

(In thousands, except par value)

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$50,514

 

 

$30,054

 

Short-term investments

 

 

-

 

 

 

17,853

 

Accounts receivable, net

 

 

4,573

 

 

 

16,594

 

Inventories

 

 

33,817

 

 

 

23,908

 

Prepaid expenses and other current assets

 

 

2,861

 

 

 

621

 

Total current assets

 

 

91,765

 

 

 

89,030

 

Property and equipment, net

 

 

3,185

 

 

 

2,759

 

Operating lease right-of-use assets, net

 

 

5,987

 

 

 

6,123

 

Other non-current assets

 

 

238

 

 

 

231

 

Total assets

 

$101,175

 

 

$98,143

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$4,183

 

 

$9,206

 

Accrued expenses

 

 

3,232

 

 

 

4,143

 

Operating lease liabilities, short-term

 

 

397

 

 

 

137

 

Deferred revenue, short-term

 

 

147

 

 

 

2,822

 

Total current liabilities

 

 

7,959

 

 

 

16,308

 

Operating lease liabilities, long-term

 

 

6,016

 

 

 

6,163

 

Deferred revenue, long-term

 

 

4

 

 

 

31

 

Other long-term liabilities

 

 

42

 

 

 

41

 

Total liabilities

 

 

14,021

 

 

 

22,543

 

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: 28,826 shares and 28,539 shares at November 30, 2023 and May 31, 2023, respectively

 

 

288

 

 

 

285

 

Additional paid-in-capital

 

 

128,543

 

 

 

127,776

 

Accumulated other comprehensive loss

 

 

(134)

 

 

(155)

Accumulated deficit

 

 

(41,543)

 

 

(52,306)

Total shareholders' equity

 

 

87,154

 

 

 

75,600

 

Total liabilities and shareholders’ equity

 

$101,175

 

 

$98,143

 

 

The Condensed Consolidated Balance Sheet as of May 31, 2023 has been derived from the audited consolidated financial statements at that date.

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
3

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$19,837

 

 

$14,007

 

 

$39,194

 

 

$23,595

 

Services

 

 

1,594

 

 

 

808

 

 

 

2,861

 

 

 

1,891

 

Total revenue

 

 

21,431

 

 

 

14,815

 

 

 

42,055

 

 

 

25,486

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

9,707

 

 

 

6,497

 

 

 

19,626

 

 

 

12,011

 

Services

 

 

766

 

 

 

407

 

 

 

1,490

 

 

 

1,083

 

Total cost of revenue

 

 

10,473

 

 

 

6,904

 

 

 

21,116

 

 

 

13,094

 

Gross profit

 

 

10,958

 

 

 

7,911

 

 

 

20,939

 

 

 

12,392

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,972

 

 

 

1,551

 

 

 

4,429

 

 

 

3,049

 

Selling, general and administrative

 

 

3,518

 

 

 

2,875

 

 

 

6,927

 

 

 

5,400

 

Total operating expenses

 

 

5,490

 

 

 

4,426

 

 

 

11,356

 

 

 

8,449

 

Income from operations

 

 

5,468

 

 

 

3,485

 

 

 

9,583

 

 

 

3,943

 

Interest income, net

 

 

631

 

 

 

263

 

 

 

1,212

 

 

 

384

 

Other income (expense), net

 

 

10

 

 

 

(5)

 

 

4

 

 

 

19

 

Income before provision for income taxes

 

 

6,109

 

 

 

3,743

 

 

 

10,799

 

 

 

4,346

 

Provision for income taxes

 

 

20

 

 

 

18

 

 

 

36

 

 

 

32

 

Net income

 

$6,089

 

 

$3,725

 

 

$10,763

 

 

$4,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$0.21

 

 

$0.14

 

 

$0.37

 

 

$0.16

 

Diluted

 

$0.20

 

 

$0.13

 

 

$0.36

 

 

$0.15

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,801

 

 

 

27,579

 

 

 

28,725

 

 

 

27,410

 

Diluted

 

 

29,769

 

 

 

29,080

 

 

 

29,700

 

 

 

28,934

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
4

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$6,089

 

 

$3,725

 

 

$10,763

 

 

$4,314

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cumulative translation adjustment

 

 

7

 

 

 

1

 

 

 

4

 

 

 

(44)

Net change in unrealized gain (loss) on investments

 

 

-

 

 

 

(6)

 

 

17

 

 

 

(6)

Comprehensive income

 

$6,096

 

 

$3,720

 

 

$10,784

 

 

$4,264

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
5

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Three Months Ended November 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, August 31, 2023

 

 

28,763

 

 

$288

 

 

$127,630

 

 

$(141)

 

$(47,632)

 

$80,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee plans

 

 

74

 

 

 

-

 

 

 

774

 

 

 

-

 

 

 

-

 

 

 

774

 

Issuance cost of common stock offering

 

 

-

 

 

 

-

 

 

 

(72)

 

 

-

 

 

 

-

 

 

 

(72)

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(11)

 

 

-

 

 

 

(448)

 

 

-

 

 

 

-

 

 

 

(448)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

659

 

 

 

-

 

 

 

-

 

 

 

659

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,089

 

 

 

6,089

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7

 

 

 

-

 

 

 

7

 

Balances, November 30, 2023

 

 

28,826

 

 

$288

 

 

$128,543

 

 

$(134)

 

$(41,543)

 

$87,154

 

  

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

 

Total

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Six Months Ended November 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, May 31, 2023

 

 

28,539

 

 

$285

 

 

$127,776

 

 

$(155)

 

$(52,306)

 

$75,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee plans

 

 

321

 

 

 

3

 

 

 

1,089

 

 

 

-

 

 

 

-

 

 

 

1,092

 

Issuance cost of common stock offering

 

 

-

 

 

 

-

 

 

 

(72)

 

 

-

 

 

 

-

 

 

 

(72)

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(34)

 

 

-

 

 

 

(1,460)

 

 

-

 

 

 

-

 

 

 

(1,460)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,210

 

 

 

-

 

 

 

-

 

 

 

1,210

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,763

 

 

 

10,763

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

-

 

 

 

4

 

Net unrealized gains on investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17

 

 

 

-

 

 

 

17

 

Balances, November 30, 2023

 

 

28,826

 

 

$288

 

 

$128,543

 

 

$(134)

 

$(41,543)

 

$87,154

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
6

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

 

Total

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Three Months Ended November 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, August 31, 2022

 

 

27,395

 

 

$274

 

 

$117,668

 

 

$(150)

 

$(66,274)

 

$51,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee plans

 

 

339

 

 

 

3

 

 

 

654

 

 

 

-

 

 

 

-

 

 

 

657

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(2)

 

 

-

 

 

 

(37)

 

 

-

 

 

 

-

 

 

 

(37)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

809

 

 

 

-

 

 

 

-

 

 

 

809

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,725

 

 

 

3,725

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Net unrealized loss on investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6)

 

 

-

 

 

 

(6)

Balances, November 30, 2022

 

 

27,732

 

 

$277

 

 

$119,094

 

 

$(155)

 

$(62,549)

 

$56,667

 

   

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

 

Total

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Six Months Ended November 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, May 31, 2022

 

 

27,120

 

 

$271

 

 

$117,686

 

 

$(105)

 

$(66,863)

 

$50,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee plans

 

 

761

 

 

 

7

 

 

 

1,105

 

 

 

-

 

 

 

-

 

 

 

1,112

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(149)

 

 

(1)

 

 

(1,215)

 

 

-

 

 

 

-

 

 

 

(1,216)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,518

 

 

 

-

 

 

 

-

 

 

 

1,518

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,314

 

 

 

4,314

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(44)

 

 

-

 

 

 

(44)

Net unrealized loss on investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6)

 

 

-

 

 

 

(6)

Balances, November 30, 2022

 

 

27,732

 

 

$277

 

 

$119,094

 

 

$(155)

 

$(62,549)

 

$56,667

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
7

Table of Contents

 

AEHR TEST SYSTEMS

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$10,763

 

 

$4,314

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,160

 

 

 

1,503

 

Depreciation and amortization

 

 

283

 

 

 

225

 

Accretion of investment discount

 

 

(130)

 

 

(64)

Amortization of operating lease right-of-use assets

 

 

337

 

 

 

356

 

Provision for doubtful accounts

 

 

-

 

 

 

24

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

12,037

 

 

 

2,618

 

Inventories

 

 

(9,996)

 

 

(3,094)

Prepaid expenses and other current assets

 

 

(2,245)

 

 

(196)

Accounts payable

 

 

(5,099)

 

 

(210)

Accrued expenses

 

 

(974)

 

 

(1,045)

Deferred revenue

 

 

(2,703)

 

 

1,221

 

Operating lease liabilities

 

 

(89)

 

 

(390)

Income taxes payable

 

 

12

 

 

 

4

 

Net cash provided by operating activities

 

 

3,356

 

 

 

5,266

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(440)

 

 

(99)

Proceeds from maturities of investments

 

 

18,000

 

 

 

-

 

Purchases of investments

 

 

-

 

 

 

(17,652)

Net cash provided by (used in) investing activities

 

 

17,560

 

 

 

(17,751)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock under employee plans

 

 

1,092

 

 

 

1,112

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(1,460)

 

 

(1,216)

Issuance cost of common stock offering

 

 

(72)

 

 

-

 

Net cash used in financing activities

 

 

(440)

 

 

(104)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(16)

 

 

(21)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

20,460

 

 

 

(12,610)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, beginning of period (1)

 

 

30,204

 

 

 

31,564

 

Cash, cash equivalents and restricted cash, end of period (1)

 

$50,664

 

 

$18,954

 

 

(1) Includes restricted cash in other 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 WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures.

 

Basis of PresentationThe 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 31, 2023 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 31, 2023.

 

Principles of ConsolidationThe 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 31, 2023. There have been no significant changes in the Company’s significant accounting policies during the three and six months ended November 30, 2023. 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. Significant estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value and warranty reserves. Actual results could differ from those estimates.

 

Reclassifications - Certain reclassifications have been made to the prior period Condensed Consolidated Financial Statements to conform to the current period presentation. The reclassifications had no impact on net income, total assets, total liabilities, or shareholders’ equity.

 

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 November 30,

 

 

Six Months Ended November 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer A

 

 

46.9%

 

 

79.0%

 

 

66.9%

 

 

74.0%

Customer B

 

 

34.6%

 

*

 

 

 

20.0%

 

*

 

Customer C

 

*

 

 

 

15.0%

 

*

 

 

 

18.0%

 

* Amount was less than 10% of total revenue

 

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

 

 
9

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November 30,

 

 

May 31,

 

 

 

2023

 

 

2023

 

 

 

 

 

 

 

 

Customer A

 

 

29.2%

 

 

81.6%

Customer B

 

 

22.8%

 

 

16.5%

Customer D

 

 

22.6%

 

*

 

Customer E

 

 

14.7%

 

*

 

 

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

 

Recent Accounting Pronouncements —The Company's accounts receivable are recorded at invoiced amounts less allowance for any credit losses. According to the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13 that the Company adopted on June 1, 2023, the Company recognizes credit losses based on forward-looking current expected credit losses ("CECL"). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses is recognized in the condensed consolidated statements of operations. The uncollectible accounts receivable are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The total allowance for credit losses was $0 at both November 30, 2023 and May 31, 2023, and there was no write-off of accounts receivable for the periods presented. The adoption of ASU 2016-13 did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

 

Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a significant impact on its Condensed Consolidated Financial Statements.

 

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Fair Value of Measurements — 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.

 

The following table represents the Company’s assets measured at fair value on a recurring basis as of November 30, 2023, and the basis for that measurement:

 

 

 

Balance as of

 

 

 

 

 

 

 

(In thousands)

 

November 30, 2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Money market funds

 

$46,606

 

 

$46,606

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$46,606

 

 

$46,606

 

 

$-

 

 

$-

 

 

 
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Table of Contents

 

The following table represents the Company’s assets measured at fair value on a recurring basis as of May 31, 2023, and the basis for that measurement:

 

 

 

Balance as of

 

 

 

 

 

 

 

(In thousands)

 

May 31, 2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Money market funds

 

$27,022

 

 

$27,022

 

 

$-

 

 

$-

 

U. S. treasury securities

 

 

17,853

 

 

 

17,853

 

 

 

 

 

 

 

 

 

Total

 

$44,875

 

 

$44,875

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in money market funds as of November 30, 2023 and May 31, 2023 is $150,000 restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease. There were no financial liabilities measured at fair value as of November 30, 2023 and May 31, 2023. There were no transfers between Level 1 and Level 2 fair value measurements during the three and six months ended November 30, 2023. 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 maturities.

 

The following table summarizes the Company’s cash, cash equivalents and investments by security type as of November 30, 2023 and May 31, 2023, respectively:

 

 

 

 

 

Gross

 

 

 

Balances as of November 30, 2023

 

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Loss

 

 

Fair Value

 

Cash

 

$4,058

 

 

$-

 

 

$4,058

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$46,456

 

 

$-

 

 

$46,456

 

Total cash and cash equivalents

 

$50,514

 

 

$-

 

 

$50,514

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$150

 

 

$-

 

 

$150

 

Total cash, cash equivalents and investments

 

$50,664

 

 

$-

 

 

$50,664

 

 

 

 

 

 

Gross

 

 

 

Balances as of May 31, 2023

 

 

 

Unrealized

 

 

Estimated

 

(In thousands)

 

Cost

 

 

Loss

 

 

Fair Value

 

Cash

 

$3,182

 

 

$-

 

 

$3,182

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$26,872

 

 

$-

 

 

$26,872

 

Total cash and cash equivalents

 

$30,054

 

 

$-

 

 

$30,054

 

Short term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U. S. treasury securities

 

$17,870

 

 

$(17)

 

$17,853

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$150

 

 

$-

 

 

$150

 

Total cash, cash equivalents and investments

 

$48,074

 

 

$(17 )

 

$48,057

 

 

Long-term investments are included in other assets on the accompanying Condensed Consolidated Balance Sheets. Unrealized gains and temporary losses on investments classified as available-for-sale debt securities are included within accumulated other comprehensive loss, net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to results of operations.

 

3. BALANCE SHEET INFORMATION

 

Inventories

 

 
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Inventories consisted of the following:

 

 

 

November 30,

 

 

May 31,

 

(In thousands)

 

2023

 

 

2023

 

Raw materials and sub-assemblies

 

$20,717

 

 

$15,953

 

Work in process

 

 

11,926

 

 

 

5,764

 

Finished goods

 

 

1,174

 

 

 

2,191

 

 

 

$33,817

 

 

$23,908

 

 

Property and equipment

 

Property and equipment, net consisted of the following:

 

 

 

Useful life

 

November 30,

 

 

May 31,

 

(In thousands)

 

(in years)

 

2023

 

 

2023

 

Leasehold improvements

 

 *

 

$1,553

 

 

$1,310

 

Machinery and equipment

 

 3 - 6

 

 

5,782

 

 

 

5,445

 

Test equipment

 

 4 - 6

 

 

3,121

 

 

 

2,998

 

Furniture and fixtures

 

 2 - 6

 

 

702

 

 

 

706

 

 

 

 

 

 

11,158

 

 

 

10,459

 

Less: accumulated depreciation and amortization

 

 

 

 

(7,973)

 

 

(7,700)

 

 

 

 

$3,185

 

 

$2,759

 

 

* Lesser of estimated useful life or lease term.

 

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.

 

The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 30, 2023 and 2022:

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Balance at the beginning of the period

 

$232

 

 

$424

 

 

$267

 

 

$410

 

Accruals for warranties issued during the period

 

 

162

 

 

 

5

 

 

 

227

 

 

 

123

 

Adjustments to previously existing warranty accruals

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61

 

Consumption of reserves

 

 

(173)

 

 

(118)

 

 

(273)

 

 

(283)

Balance at the end of the period

 

$221

 

 

$311

 

 

$221

 

 

$311

 

 

Deferred revenue

 

Deferred revenue, short-term consisted of the following:

 

 

 

November 30,

 

 

May 31,

 

(In thousands)

 

2023

 

 

2023

 

Customer deposits

 

$68

 

 

$2,690

 

Deferred revenue

 

 

79

 

 

 

132

 

 

 

$147

 

 

$2,822

 

 

 
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4. INCOME TAX  

 

The Company is subject to U.S federal and state and foreign income taxes as a corporation. The Company’s tax provision and the resulting effective tax rate for the interim period is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded a provision for income taxes of $20,000 and $36,000 for the three and six months ended November 30, 2023, respectively, which consisted primarily of foreign withholding taxes and foreign income taxes. The Company recorded a provision for income taxes of $18,000 and $32,000 for the three and six months ended November 30, 2022, respectively, which consisted primarily of foreign withholding taxes and foreign income taxes.

 

Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse, or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized.

 

Since fiscal 2009, a full valuation allowance was established against all deferred tax assets, as management determined that it was more likely than not that certain deferred tax assets would not be realized. The Company continues to reassess the need for a valuation allowance on a quarterly basis.

 

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.

 

5. BORROWING ARRANGEMENTS

 

On January 16, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). Pursuant to the Loan Agreement, the Company may borrow up to (a) the lesser of (i) the revolving line of $4.0 million or (ii) the amount available under the borrowing base under a revolving line of credit which is collateralized by all the Company’s assets except intellectual property. The borrowing base is 80% of eligible accounts, as determined by SVB from the Company’s most recent borrowing base statement; provided, however, SVB has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of certain events or conditions, which may adversely affect the collateral or its value. Subject to an event of default, the principal amount outstanding under the revolving line of credit will accrue interest at a floating per annum rate equal to the greater of (a) the prime rate plus an additional percentage of up to 1%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 4.75%. Interest is payable monthly on the last calendar day of each month and the outstanding principal amount, the unpaid interest and all other obligations are due on the maturity date, which is 364 days from the effective date of January 13, 2020.

 

On January 14, 2021, the Company entered into the First Amendment to Loan and Security Agreement (the “Amendment”) with SVB. The Amendment, among other things, extended the Revolving Line Maturity Date to July 14, 2021; provided, however, that if the Company achieved specified operating metrics on a consolidated basis on or prior to May 31, 2021 the Amended Revolving Line Maturity Date would be extended to January 13, 2022.

 

On January 11, 2022, the Company entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) with SVB. The Second Amendment, among other things, (A) increased the available amount of the line up to the lesser of (i) $10 million or (ii) the available amount under the borrowing base, under a revolving line of credit, (B) allowed for borrowing up to $3 million of the available balance based upon eligible customer purchase orders, (C) reduced the interest rate for account advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.0%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.25%, reduces the interest rate for purchase order advances under the line to the greater of (a) prime rate plus an additional percentage up to 1.5%, which additional percentage depends on the Company’s adjusted quick ratio, and (b) 3.75%, and (D) extended the maturity date to January 13, 2023.

 

On January 10, 2023, the Company entered into the Third Amendment to the Loan and Security Agreement (the “Third Amendment”) with SVB. The Third Amendment, among other things, extends the Revolving Line Maturity Date to January 13, 2024, provided, however, that (i) if the Company submits a fiscal year 2024 plan of record that is generally acceptable to SVB, and (ii) the minimum net liquidity at the end of November 30, 2023 is at least $20.0 million, the Amended Revolving Line Maturity Date would be extended to January 13, 2025. The Company terminated the revolving line on January 4, 2024.

 

As of November 30, 2023, the Company had not drawn against the credit facility and was in compliance with all covenants related to obligations to meet reporting requirements. The balance available to borrow under the line as of November 30, 2023 was $4,212,000.  There are no financial covenants in the agreement.

 

 
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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.

 

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 August 25, 2021, the Board of Directors authorized management to take actions necessary for the execution of a $75 million shelf registration. A Registration Statement on Form S-3 was filed with the SEC on September 3, 2021. A Prospectus Supplement for an "At the Market" ("ATM") sale of $25 million of common stock was subsequently filed on September 17, 2021. On October 8, 2021, the Company executed the ATM offering by selling 1,696,729 shares of common stock at an average selling price of $14.73 per share. The gross proceeds to the Company were $25.0 million, before commission fees of $0.7 million and offering expenses of $0.3 million. Another Prospectus Supplement for an ATM sale of $25 million of common stock was subsequently filed on February 8, 2023. The Company partially executed the ATM offering by selling 208,917 shares of common stock at an average selling price of $34.78 per share. The gross proceeds to the Company were $7.3 million, before commissions of $0.2 million and offering expenses of $0.2 million. As of November 30, 2023, the remaining amount of the ATM offering was $17.7 million.

 

8. ACCUMULATED OTHER COMPREHENSIVE LOSS

 

Changes in the components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):

 

 

 

Cumulative

 

 

Unrealized loss

 

 

 

(In thousands)

 

translation adjustment

 

 

on investments, net

 

 

Total

 

Balance as of May 31, 2023

 

$(138)

 

$(17)

 

$(155)

Other comprehensive income (loss) before reclassifications

 

 

4

 

 

 

17

 

 

 

21

 

Balance as of November 30, 2023

 

$(134)

 

$-

 

 

$(134)

 

9. 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, and services, 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 November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Asia

 

$18,922

 

 

$12,216

 

 

$38,153

 

 

$20,024

 

Europe

 

 

1,833

 

 

 

44

 

 

 

2,437

 

 

 

44

 

United States

 

 

676

 

 

 

2,555

 

 

 

1,465

 

 

 

5,418

 

 

 

$21,431

 

 

$14,815

 

 

$42,055

 

 

$25,486

 

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Systems

 

$10,685

 

 

$7,400

 

 

$18,779

 

 

$16,494

 

Contactors

 

 

9,152

 

 

 

6,607

 

 

 

20,415

 

 

 

7,101

 

Services

 

 

1,594

 

 

 

808

 

 

 

2,861

 

 

 

1,891

 

 

 

$21,431

 

 

$14,815

 

 

$42,055

 

 

$25,486

 

 

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 November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

Products and services transferred at a point in time

 

$20,974

 

 

$14,427

 

 

$40,985

 

 

$24,681

 

Services transferred over time

 

 

457

 

 

 

388

 

 

 

1,070

 

 

 

805

 

 

 

$21,431

 

 

$14,815

 

 

$42,055

 

 

$25,486

 

 

Contract balances   

 

Accounts receivable are recognized in the period the Company delivers goods or provides services and when the Company’s right to consideration 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 30, 2023, unbilled receivables were $2,051,000 and were included in prepaid expenses and other current assets on the accompanying Condensed Consolidated Balance Sheets. Contract assets were not significant as of May 31, 2023.

 

 
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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 30, 2023 and May 31, 2023 were $151,000 and $2,853,000, 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 30, 2023, the Company recognized $2,101,000 and $2,771,000 in revenue, respectively, which were included in contract liabilities as of May 31, 2023.

 

Remaining performance obligations

 

On November 30, 2023, the Company had $83,000 of remaining performance obligations, which were comprised of service contracts and extended warranty contracts not yet delivered. The Company expects to recognize approximately 63.5% of its remaining performance obligations as revenue in the remainder of fiscal 2024, and an additional 36.5% in fiscal 2025 and thereafter. 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.

 

10. 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 13 in the Company’s Annual Report on Form 10-K for fiscal 2023 filed on August 28, 2023 for further information regarding the 2016 Equity Incentive Plan and the ESPP. On October 23, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan and on October 27, 2023, the Company filed the Form S-8 to issue awards during this quarter onwards from a pool of 1,500,000 shares. Full value awards, which are equity awards other than options, stock appreciation rights or other awards that are based solely on an increase in value of the shares following the grant date, when granted or forfeited will be counted as the same number of common stock shares added or deducted to the remaining available shares for issuance under the 2023 Equity Incentive Plan. 

 

The following table summarizes the stock-based compensation expense for the three and six months ended November 30, 2023 and 2022:

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cost of sales

 

$101

 

 

$85

 

 

$164

 

 

$177

 

Research and development

 

 

139

 

 

 

201

 

 

 

292

 

 

 

355

 

Selling, general and administrative

 

 

398

 

 

 

507

 

 

 

704

 

 

 

971

 

 

 

$638

 

 

$793

 

 

$1,160

 

 

$1,503

 

 

There was $170,000 and $120,000 in stock-based compensation expense capitalized as part of inventory as of November 30, 2023 and as of May 31, 2023, respectively.

 

 

 
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The Company’s nonvested RSU, PRSU and restricted shares activities during the three and six months ended November 30, 2023, were as follows:

 

 

 

 

 

 

Weighted

 

 

 

 

 

Average Grant

 

 

 

 

 

Date Fair

 

 

 

Shares

 

 

Value

 

 

 

(in thousands)

 

 

Per Share

 

Unvested, May 31, 2023

 

 

345

 

 

$6.40

 

Granted

 

 

-

 

 

 

 

 

Vested

 

 

(77)

 

 

7.16

 

Forfeited

 

 

(52)

 

 

5.79

 

Unvested, August 31, 2023

 

 

216

 

 

$6.27

 

Granted

 

 

203

 

 

 

31.51

 

Vested

 

 

(28)

 

 

8.02

 

Forfeited

 

 

(1)

 

 

29.79

 

Unvested, November 30, 2023

 

 

390

 

 

$19.28

 

 

Under the ESPP, the Company issued 24,000 and 109,000 shares, respectively, during the six months ended November 30, 2023 and 2022. As of November 30, 2023 and 2022, there were 373,000 and 499,000 ESPP shares available for issuance, respectively.

 

11. NET INCOME PER SHARE

 

Basic net income per share is determined using the weighted average number of common shares outstanding during the period. Diluted net income 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 income per share.

 

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

 

 

 

Three Months Ended November 30,

 

 

Six Months Ended November 30,

 

(In thousands, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$6,089

 

 

$3,725

 

 

$10,763

 

 

$4,314

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

28,801

 

 

 

27,579

 

 

 

28,725

 

 

 

27,410

 

Dilutive effect of common equivalent shares outstanding

 

 

968

 

 

 

1,501

 

 

 

975

 

 

 

1,524

 

Diluted weighted average shares outstanding

 

 

29,769

 

 

 

29,080

 

 

 

29,700

 

 

 

28,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - Basic

 

$0.21

 

 

$0.14

 

 

$0.37

 

 

$0.16

 

Net income per share - Diluted

 

$0.20

 

 

$0.13

 

 

$0.36

 

 

$0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee share-based award shares, excluded

 

 

9

 

 

 

14

 

 

 

4

 

 

 

14

 

 

 
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Table of Contents

 

12. 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.

 

Long-lived assets, net by geographic area are as follows:

 

 

 

November 30,

 

 

May 31,

 

(In thousands)

 

2023

 

 

2023

 

United States

 

$3,121

 

 

$2,713

 

International

 

 

64

 

 

 

46

 

Total long-lived assets, net

 

$3,185

 

 

$2,759

 

 

 
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Table of Contents

 

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 31, 2023, filed with the Securities and Exchange Commission on August 28, 2023. 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. Increasing quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, data and telecommunications infrastructure, and solid-state memory and storage, are driving additional test requirements, incremental capacity needs, and new opportunities for our test products and solutions.

 

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. 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.

 

Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, 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.

 

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, product returns, credit losses, inventories, income taxes, warranty obligations, and long-term service contracts. 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 31, 2023.

 

There have been no material changes to our critical accounting policies and estimates during the three and six months ended November 30, 2023 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.

 

 
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Table of Contents

 

Results of Operations

 

Discussion of Results of Operations for the Three and Six Months Ended November 30, 2023 compared to the Three and Six Months Ended November 30, 2022

 

Revenues

 

Revenue by Category

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Products

 

$19,837

 

 

$14,007

 

 

 

42%

 

$39,194

 

 

$23,595

 

 

 

66%

Services

 

 

1,594

 

 

 

808

 

 

 

97%

 

 

2,861

 

 

 

1,891

 

 

 

51%

Total revenues

 

$21,431

 

 

$14,815

 

 

 

45%

 

$42,055

 

 

$25,486

 

 

 

65%

Products as a percentage of total revenues

 

 

92.6%

 

 

94.5%

 

 

 

 

 

 

93.2%

 

 

92.6%

 

 

 

 

Services as a percentage of total revenues

 

 

7.4%

 

 

5.5%

 

 

 

 

 

 

6.8%

 

 

7.4%

 

 

 

 

 

Revenue increased to $21.4 million for the three months ended November 30, 2023 from $14.8 million for the three months ended November 30, 2022, driven by growth in all our revenue streams. Our systems revenue increased by $3.3 million, our contactors revenue increased by $2.5 million, and our services revenue increased by $0.8 million.

 

Revenue increased to $42.1 million for the six months ended November 30, 2023 from $25.5 million for the six months ended November 30, 2022, also driven by growth in all our revenue streams.  Our contactors revenue increased by $13.3 million, our systems revenue increased by $2.3 million, and our services revenue increased by $1.0 million.

 

Revenue by Geography

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Asia

 

$18,922

 

 

$12,216

 

 

 

55%

 

$38,153

 

 

$20,024

 

 

 

91%

Europe

 

 

1,833

 

 

 

44

 

 

N.M.

 

 

 

2,437

 

 

 

44

 

 

N.M

 

United States

 

$676

 

 

$2,555

 

 

(74

%)

 

$1,465

 

 

$5,418

 

 

(73

%)

Total revenues

 

$21,431

 

 

$14,815

 

 

 

45%

 

$42,055

 

 

$25,486

 

 

 

65%

Asia as a percentage of total revenues

 

 

88.3%

 

 

82.5%

 

 

 

 

 

 

90.7%

 

 

78.6%

 

 

 

 

Europe as a percentage of total revenues

 

 

8.6%

 

 

0.3%

 

 

 

 

 

 

5.8%

 

 

0.2%

 

 

 

 

United States as a percentage of total revenues

 

 

3.1%

 

 

17.2%

 

 

 

 

 

 

3.5%

 

 

21.2%

 

 

 

 

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 and six months ended November 30, 2023, international revenues significantly increased, compared to the same periods in the prior year, primarily as a result of the shipments to our customers in Asia and Europe, partially offset by the decline in net revenue from a customer in the United States.

 

Gross Margin

 

Gross Profit by Category

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Products

 

$10,130

 

 

$7,510

 

 

 

35%

 

$19,568

 

 

$11,584

 

 

 

69%

Services

 

 

828

 

 

 

401

 

 

 

106%

 

 

1,371

 

 

 

808

 

 

 

70%

Gross profit

 

$10,958

 

 

$7,911

 

 

 

39%

 

$20,939

 

 

$12,392

 

 

 

69%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin by Category

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

51.1%

 

 

53.6%

 

 

 

 

 

 

49.9%

 

 

49.1%

 

 

 

 

Services

 

 

51.9%

 

 

49.6%

 

 

 

 

 

 

47.9%

 

 

42.7%

 

 

 

 

Gross margin

 

 

51.1%

 

 

53.4%

 

 

 

 

 

 

49.8%

 

 

48.6%

 

 

 

 

 

Gross profit increased to $11.0 million for the three months ended November 30, 2023 from $7.9 million for the three months ended November 30, 2022. Gross margin decreased to 51.1% for the three months ended November 30, 2023 from 53.4% for the three months ended November 30, 2022. The decrease in gross margin of 2.3 percentage points was primarily due to an increase in inventory reserve, and higher warranty expenses and logistics costs.

 

 
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Table of Contents

 

Gross profit increased to $20.9 million for the six months ended November 30, 2023 from $12.4 million for the six months ended November 30, 2022. Gross margin increased to 49.8% for the six months ended November 30, 2023 from 48.6% for the six months ended November 30, 2022. The increase in gross margin of 1.2 percentage points was primarily due to the increased sales of higher margin contactor products, as well as manufacturing efficiencies due to higher production rates.

 

Research and Development

 

 

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Research and development

 

$1,972

 

 

$1,551

 

 

 

27%

 

$4,429

 

 

$3,049

 

 

 

45%

As a percentage of total revenues

 

 

9.2%

 

 

10.5%

 

 

 

 

 

 

10.5%

 

 

12.0%

 

 

 

 

 

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 to $2.0 million for the three months ended November 30, 2023, compared to $1.6 million for the three months ended November 30, 2022. The increase of $0.4 million was primarily driven by higher employment costs due to an increase in headcount. We anticipate our expenses in research and development will fluctuate in absolute dollars from period to period as a result of the timing of product development projects and revenue generating activity requirements.

 

Research and development expenses increased to $4.4 million for the six months ended November 30, 2023, compared to $3.0 million for the six months ended November 30, 2022. The increase of $1.4 million was primarily due to non-recurring engineering services charges of $0.6 million and higher employment related costs of $0.5 million.

 

Selling, General and Administrative

 

 

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Selling, general and administrative

 

$3,518

 

 

$2,875

 

 

 

22%

 

$6,927

 

 

$5,400

 

 

 

28%

As a percentage of total revenues

 

 

16.4%

 

 

19.4%

 

 

 

 

 

 

16.5%

 

 

21.2%

 

 

 

 

 

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 increased to $3.5 million for the three months ended November 30, 2023, compared to $2.9 million for the three months ended November 30, 2022. The increase of $0.6 million was primarily driven by higher employment cost due to an increase in headcount.  

 

Selling, general and administrative expenses increased to $6.9 million for the six months ended November 30, 2023, compared to $5.4 million for the six months ended November 30, 2022. The increase of $1.5 million was primarily due to an increase in employment cost of $1.3 million and an increase in audit and legal service fees of $0.3 million.

 

Interest and Other Income (Expense), Net

 

 

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Interest income

 

$631

 

 

$263

 

 

 

140%

 

$1,212

 

 

$384

 

 

 

216%

Other income (expense), net

 

 

10

 

 

 

(5)

 

 

300%

 

 

4

 

 

 

19

 

 

(79

%)

Interest and other income (expense), net

 

$641

 

 

$258

 

 

 

148%

 

$1,216

 

 

$403

 

 

 

202%

 

Interest and other income (expense), net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest and other income (expense), net, increased for the three and six months ended November 30, 2023, compared to the same periods in the prior year, primarily driven by higher interest income earned due to higher yields from our investments in money market funds.

 

 
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Table of Contents

 

Provision for Income Taxes 

 

 

 

Three Months Ended November 30,

 

 

Percent

 

 

Six Months Ended November 30,

 

 

Percent

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

Change

 

 

2023

 

 

2022

 

 

Change

 

Provision for income taxes

 

$20

 

 

$18

 

 

 

11%

 

$36

 

 

$32

 

 

 

13%

 

Income tax expense was not significant due to the available net operating losses and research and development credits carryforwards.

 

Liquidity and Capital Resources

 

Cash, cash equivalents, and restricted cash were $50.7 million as of November 30, 2023, compared to $19.0 million as of November 30, 2022. 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 30,

 

 

 

(In thousands)

 

2023

 

 

2022

 

 

Change

 

Operating activities

 

$3,356

 

 

$5,266

 

 

$(1,910)

Investing activities

 

 

17,560

 

 

 

(17,751)

 

 

35,311

 

Financing activities

 

 

(440)

 

 

(104)

 

 

(336)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(16)

 

 

(21)

 

 

5

 

Net increase in cash, cash equivalents and restricted cash

 

$20,460

 

 

$(12,610)

 

$33,070

 

 

Net Cash Flows Provided by Operating Activities

 

Cash flow from operating activities during the six months ended November 30, 2023 mostly consisted of net income, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, share-based compensation expense and amortization of operating lease right-of-use assets. The $1.9 million decrease in cash flows from operating activities for the six months ended November 30, 2023, compared to the six months ended November 30, 2022, was driven primarily by an increase in cash used in inventory production and vendor payments due to anticipated customer demand, and a decrease in cash provided by deferred revenue due to timing of customer deposits and revenue recognition, partially offset by an increase in cash provided by collection of accounts receivable and a higher net income.

 

Net Cash Flows Provided by (Used in) Investing Activities

 

Net cash provided by investing activities increased by $35.3 million for the six months ended November 30, 2023 compared to the six months ended November 30, 2022. The increase was primarily due to the maturity of our short-term investments, which were purchased in the six months ended November 30, 2022.

 

Net Cash Flows Used in Financing Activities

 

Net cash used in financing activities increased by $0.3 million for the six months ended November 30, 2023, compared to the six months ended November 30, 2022. For the six months ended November 30, 2023, net cash used in financing activities primarily consisted of cash used to repurchase shares of our common stock on vesting of RSUs, partially offset by the proceeds from issuance of common stock under our employee plans.

 

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 31, 2023.  

 

 
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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 30, 2023, in connection with the filing of this Quarterly Report on Form 10-Q. Based on that evaluation as of November 30, 2023, 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 and six months ended November 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 

 

 
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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. During the reported period, we were not a party to any material legal proceedings, thus no loss was probable and no amount was accrued as of November 30, 2023.

 

Item 1A. Risk Factors

 

Item 1A, “Risk Factors,” on pages 10 through 16 of the Company’s Annual Report on Form 10-K for the year ended May 31, 2023, 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

 

None.

 

 
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Item 6. Exhibits

 

Exhibit

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

 

 

 

31.01

 

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.†

 

 

 

31.02

 

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.†

 

 

 

32.01

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

 

 

 

32.02

 

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 8-K filed September 9, 2020 (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).

Filed herewith.

 **

Furnished, and not filed.

 

 
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SIGNATURES