Good day, and welcome to the Aehr Test Systems’ fiscal 2016 fourth quarter and full year financial results conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR Group. Please go ahead, sir.

Thank you, operator. Good afternoon and thank you for joining us today to discuss Aehr Test Systems’ fiscal 2016 fourth quarter and full year financial results. By now, you should have received a copy of today’s press release. But if not, you may call the office of MKR Group, Investor Relations for Aehr Test, at 323-468-2300 and we will get a copy out to you right away. With us today from Aehr Test Systems are Gayn Erickson, President and Chief Executive Officer and Ken Spink, Chief Financial Officer. Management will review the company’s operating performance for the quarter before opening the call to your questions. Before turning the call over to management, I’d like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that may cause results to differ materially from those in the forward-looking statements are discussed in our most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance provided during today’s call, are only valid as of this date and Aehr Test Systems undertakes no obligation to update the forward-looking statements. With that, I’d like to introduce Gayn Erickson, Chief Executive Officer.

Thanks, Jim, and good afternoon to those joining us on the conference call and also listening in online. Ken will go over the fourth quarter and full year fiscal results later, but first, I’ll spend a few minutes discussing our business and product highlights, including our continued progress with the development and introduction of our new FOX-P platform of wafer level test and burn-in products. After that, we’ll open up the lines for your questions. We made substantial progress this past fiscal year, including completing development of a single wafer version of our FOX-XP wafer level test and burn-in system, which customers are able to evaluate and use to validate Aehr Test’s ability to test and burn-in their devices and demonstrate our ability to do full wafer testing of a broad range of devices. As most of you know, the FOX-XP system is our next-generation multi-wafer test and burn-in solution for high-volume production and early failure rate test. It's capable of functional test and burning in/cycling of flash memories, microcontrollers, sensors, optical devices, laser diodes, VCSELs, LEDs and other leading-edge ICs in wafer form before they are assembled into multi-die packages or other applications where known good die are critical. These end applications can span enterprise solid state drives, automotive devices, highly valuable mobile applications, communications and mission critical integrated circuits and sensors. The FOX-XP system utilizes our proprietary FOX WaferPak contactor, which provides a cost effective solution for making electrical contact with a full wafer or substrate in a multi-wafer environment. Our WaferPak contactors contain up to tens of thousands of probes to contact all devices on wafers and substrates up to 300 millimeter simultaneously. Over the fiscal year, we've established a very good relationship with the customer who has become our initial lead customer for the FOX-XP multi-wafer…

Great. Thank you, Gayn. As we reported in today's press release, we finished the 2016 fiscal year with total revenue of $14.5 million, a 45% increase over $10 million in revenue for fiscal 2015. Net sales in the fourth quarter were $1.6 million, compared to $1.7 million in the preceding quarter and $1.8 million in the fourth quarter of the previous year. As Gayn indicated, just after fiscal year end, we received our first order for our new FOX-XP production test cell from our second lead customer for the FOX-XP system. The order included over $1.4 million related to inventory on hand, immediately deliverable to the customer. Had the order been received prior to our fiscal year end, our revenues in the fourth quarter would have been $3 million with the delivery of the on hand inventory. This revenue will be included in our first quarter fiscal 2017 results. Non-GAAP net loss for the fourth quarter was $2.8 million or $0.21 per diluted share, compared to a non-GAAP net loss of $2.8 million or $0.21 per diluted share in the preceding quarter and a non-GAAP net loss of $1.6 million or $0.13 per diluted share in the fourth quarter of the previous year. The non-GAAP results exclude the impact of stock-based compensation expense. On a GAAP basis, net loss for the fourth quarter was $3.1 million or $0.23 per diluted share. This compares to a GAAP net loss of $3 million or $0.23 per diluted share in the preceding quarter and a GAAP net loss of $1.9 million or $0.15 per diluted share in the fourth quarter of the previous year. Gross loss in the fourth quarter was $100,000 or negative 6% of sales. This compares to a gross profit of $169,000 or 10% of net sales in the preceding…

Thank you. [Operator Instructions] And we’ll go first to Larry Chlebina with Chlebina Capital.

Gayn, did I hear that right that you existed Q4 with $5.3 million of backlog and then the way to think about that you had another 8.5 million since then?

Yes that's right minus at least 1.5 million that we already acknowledged that we shipped with our initial XP order as for us where our backlog would be but yes, basically between those two that’s the backlog that we have in this fiscal year at least.

Right, so announced so far for this fiscal year would be the total of those two?

[indiscernible] that's right.

So, 13.8. The 1P was - I assume there is, did you book any portion of that sale or that shipment, when you shipped in Q4 or was that further backlog?

So the shipment of the system actually was shipped during this current quarter that we’re in right now. And we - I'm not sure we would break that down, I mean, we typically with the initial product any final payments would be typically associated with the acceptance of that product. So our plan is to recognize the revenue of the remaining balance of that original development of that first test had upon acceptance. And then we will - we have payments related to the shipment of the follow-on production systems that include a substantial amount of shipment and then a remaining balance within a period of time after it gets shipped.

Do you have any of those orders already in that backlog or those, I'm assuming...?

Yes, yes we have multiple production systems in that backlog that's correct.

That's all I had very good - I think, I know you have been through a lot of challenging times given it’s done but looks like you’re at the starting gate.

Thank you Larry, I appreciate it.

[Operator Instructions] We’ll take our next question from Geoffrey Scott with Scott Asset Management.

I would be willing to say that you are very, very pleased that the IP has finally shipped.

For heaven's sake at least that much, yes. Actually it’s a big deal for us and it's been as we all know it's taken us a whole lot longer and I think last quarter, I even pointed out if someone told me we were going to actually ship and take revenue on the XP before the 1P, I would have thought they were crazy but that's exactly how it is played out but yes, we are all pretty elated around here to move on...

I'm sure you’re tired during our question of when is it going to ship. So I'm going to give you a second opportunity, if you go back to about a year ago, you were talking about a second FOX-1 customer?

Yes.

Where do we stand with that engagement?

I would say that we have not been focusing a lot of energy on one that, that particular engagement shifted away from us and I would - the bulk of our energy has been related to the customer engagement on the FOX-XP. There were actually a number of customers we originally talked to about the FOX-1P who shifted to XP conversations, but if we were to have listed the specific customer that we were talking at the time, we’re actually not engaged with them at this point on the 1P.

Okay. Another conversation from the past, you talked about maybe the second quarter of last year call about a new ABTS customer, you were in evaluation and they were looking at the ABTS, I think it was the PI. And they currently were I guess using a competitor system for engineering but they were looking for as I recall something for their production side.

That's right.

Is that headed forward or…?

Let me jump in on that one that actually that was - that’s an interesting deal that’s still in play. That customer in fact did an evaluation or is in the process of an evaluation where we - they are using one of our test houses that owns our ABTS systems and using the capacity there they bought a full set of burn-in board which is measured in the hundreds of thousands of dollars to do the evaluation of the system and I believe that it’s still in play and so far it's been quite successful. So if that's a deal that for a couple of reasons has also taken longer than originally expected but they’re still in our funnel.

Still in the funnel. Okay, bring us up to date on where you stand with the flash memory side, everything you've done so far has been on the sensor side, you had gone through I guess one checkpoint on the flash side.

That's right.

Where do your potential customer stand?

So, actually one of the very first applications that we did on the XP was about a year ago, we had now successfully completion I think in August or so of a full wafer benchmark with the FOX-XP, it was actually the first application that was brought up, we are still talking to flash manufacturers about the product, some of those conversations have been focused on burn-in side, some on test related activities. So we have discussions with NOR and NAND flash customers on the FOX-P platform arguably on both sides of that platform, but I think in recent quarters I've even pointed out that the energy and the focus kind of the immediacy shifted towards the sensors and other devices that we have announced the initial orders on. The initial orders for the FOX-XP production system certainly with, it's funny we talk about customer number two and customer number one, we’re not trying to confuse anyone but there was a chronology there, our first lead customer while they bought the engineering or single slot system has yet to place their production orders and then the second customer skipped the engineering and went right to the production system. Neither of those are in Flash memory yet, so again, the kind of a - the lead customer that have appeared to be doing the focus of the ramp are actually not in the flash memory which leaves the flash memory still as a significant time and opportunity for us.

In the backlog there is no FOX-XP number in that 5.3 million right?

No.

That's only the FOX-1 multiple systems, the evaluation that you’ve delivered and the production orders that you...

Correct, [indiscernible] plus some miscellaneous other revenue, we have a bunch of FOX-XP, you know that's interesting as you point this out Geoff, we haven't talked much about it. During the quarter, we’ve had a number of follow-on orders for the FOX WaferPak for our install base and they are coming in at several hundreds of thousand dollars at a time, we didn't send out press releases for all of those, we probably should have aggregated them in our comments here. But that's made up in that as well. So a lot of FOX WaferPaks, we have some upgrades to our FOX Systems install base and then there is always service support contracts and miscellaneous small enhancements and accessories and stuff.

Okay last, just a housekeeping question for Ken. The customer who gives you an annual service contract, when you show the geographic revenue in your 10-Qs and 10-Ks, is all of that allocated to the head office country of that customer or is it allocated to the specific location of the machine that you service?

So Geoff, so what happens is all for reporting from a regional standpoint is based upon the customer site location where either the goods or services are shipped to or provided, so service contracts are related to where the entity is located.

So if it were $1 million contract and the third of the machines were in the US, it would be 333,000 to the US [indiscernible] Asia would be 333,000 to Asia and that kind of thing?

Correct and it makes it very easily because the customers themselves place the POs in their geographic region, so we don't have to take a large customer that has multi-regional service and support contracts and break up one P.O.

Okay good, I’ll pass to somebody else. Thank you.

Thanks Geoff.

[Operator Instructions]

You folks are going easy on us here. I think last time...

There are no other questions at this time.

Okay, let me just make sure, I'll give you guys another second here, so I know we have a relatively full house based upon the folks that were calling in. So, no other questions is that right?

Yes.

Alright, then I’ll wrap it up here. As always we leave ourselves open if you folks want to set up some time to ask some questions, we’ll be happy to take them. As always we would - if you happen to be in the Bay Area and would like to stop by, we’d love to show you our facility and all the great technology and products that we're working on right now. I appreciate everybody's patience, this was a tough year for us in just getting us through, I know that we've been making these key investments to get these new products out, we really believe that that was the right thing to have done and looking forward to a strong year this year and we’ll talk to you next quarter. Thank you.

Thank you everyone that does conclude today’s conference, we thank you for your participation.