Good day and welcome to the Aehr Test Systems' First Quarter Fiscal 2021 Financial Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jim Byers of the MKR Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon and welcome to Aehr Test Systems' first quarter fiscal 2021 financial results conference call. With me on today's call are Aehr Test Systems' President and Chief Executive Officer, Gayn Erickson; and Chief Financial Officer, Ken Spink. Before I turn the call over to Gayn and Ken, I'd like to cover a few quick items. This afternoon Aehr Test issued a press release announcing its first quarter fiscal 2021 results. That release will be available on the company's website at aehr.com. This call is being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's website. I'd like to remind everyone that on today's call, management 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. These factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company's 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. And now, with that said, I'd like to turn the conference call over to Gayn Erickson, President and Chief Executive Officer. Gayn?

Thanks, Jim. Good afternoon to those joining us on today's conference call and also listening in online. Ken will go over our first quarter financial results later in the call, but first, let's spend a few minutes providing some details around the challenges we experienced during the quarter and how we responded. Then I'll turn to what we're seeing now and why we think things are moving in the right direction. And then following our remarks, we'll open up the lines for your questions. As we anticipated on our last earnings call, our first quarter financial results were impacted by the challenging global business environment created by the COVID-19 pandemic and pushouts of forecasted customer orders during the past six months for FOX-P systems and consumables. We saw this from customers serving data centers and some 5G end use applications with silicon photonics transceivers, but we also saw pushouts of forecasted orders for devices used in automotive applications, and also sensors used in mobile devices. These customers have indicated that they believe the pushouts are temporary, and that they will require the additional system capacity and consumables later in the current fiscal 2021 year. A majority of our revenue forecast for this fiscal year comes from current customers that have already qualified our systems and consumables for production applications. This includes follow-on orders from our silicon photonics customers, forecasted production ramp of current devices, as well as adding new devices with our initial silicon carbide customer that we won last year, and follow-on orders from our growing installed base of FOX wafer level and singulated die and module test systems consumables. Consumables sales of our FOX WaferPaks and DiePaks accounted for almost 50% of our revenue last year. And we anticipate that it will be a significant part of our…

Thank you, Gayn, and good afternoon, everyone. As Gayn noted, our first quarter financial results reflect the impact of the challenging global business environment around the COVID pandemic and customers who pushed out forecasted orders for our FOX systems and consumables during the past six months. These customers have indicated the pushouts are temporary and that they will require the additional system capacity and consumables later in our current fiscal year. As such, we expect our fiscal year orders and revenues to be backend loaded. At the same time, we discussed on our last earnings call, we have taken actions to control spending. In our fourth quarter, we completed the restructuring to strengthen our sales capabilities and reduce our costs. These actions, including closing our Aehr Test Systems Japan subsidiary and moving to a sales rep distributorship model in Japan and Germany, resulted in permanent savings of approximately $120,000 per quarter. We believe these enhancements will improve our efficiency and materially increase our sales activity and bookings going forward and increase our penetration of key customers in our targeted markets. As we have shifted to higher margin, highly differentiated systems and consumables, these changes also position us for success with sales of our current products, as well as additional new products planned for introduction this year. We have also implemented temporary cost reduction initiatives. These actions reflect prudent short-term cost reductions in response to the decrease in order and shipment activities in Q4 '20 and Q4 '21, and our commitment to managing cash and expenses as we weather through these challenging times. These temporary cost saving measures resulted in savings of over $200,000 in operating expenses in Q4 and over $350,000 in savings in Q1 '21. As we announced in our 8-K filing earlier this month, starting in the current…

[Operator Instructions]. We'll take our first question in queue. This comes from Christian Schwab, Craig-Hallum Capital Group. Please go ahead.

Gayn, can you help us understand the applications or the specifics, I guess, I kind of missed it in the prepared comments about the customer commitments, for the meaningful revenue over the next 2 to 3 quarters to get to our target revenue range for the year? Can you walk us through some of the commitments that you feel very confident about?

Sure. I want to be -- I haven't thought through exactly being able to say it because in some cases, the customers are unique and people have a pretty good idea what they are. So I'll try and water it down a little, only in intend to trying to protect the non-disclosures with the specific customers. But let me just -- so let me just talk first about few of the markets. So in silicon photonics, we -- I would say most of those customers, all have clearly indicated that they will be increasing their production capacity, as I think through this, all of them are saying they're increasing their production capacity throughout the year. And that would be consistent with the market growing. The silicon photonics market is like 40% or something CAGR in terms of revenue, maybe a little higher than that in unit growth, for the silicon photonics transceivers. And just as a reminder, as I've gone into it in detail before, these are basically fiber optic transceivers that are heavily used in data centers and in long-haul telecommunications applications and are big part of the 5G infrastructure. So in reality, all of those are growing. And candidly, everyone has said, boy, with this downturn or with this COVID and everyone being home, everyone is using data centers and on Zoom and everything else, isn't data exploding? The answer, I think, across the board is, yes, but if you go and you look at companies, there have been companies in the space like Ciena and some others, have actually specifically talked about slowdowns in the data centers. And we know specifically, there's been slowdowns in 5G infrastructure build, and as a result of people not having vendors on their floors are doing the upgrades. So we've had…

Yes, just a little bit potential further clarity. So you would expect the majority of the revenue, they come from silicon photonics? Is that correct? Or am I thinking about that wrong?

No. I mean, I would say the majority of it is silicon photonics, silicon carbide, mobile sensors. And actually, we do anticipate the -- we haven't talked about them -- I didn't -- in fact, I didn't put it in the conference call bullets as I think about it. We had won a big customer a couple of years ago that we referred to kind of very generically and hazy as a significant data center, high-volume application or data storage, I think we described it. There's reasons why we're being elusive, it will eventually come out. But that program was delayed for reasons that we know include specific things related to COVID in terms of when they were going to roll this thing out. But we currently have forecast that Aehr at the end of this fiscal year for systems to be taken. So it's a balance of all of those. And in fact, it's probably in that order of dollars, but all of those are material. I'd say each of those could be 10% or more of our -- even the smallest market segment would be over 10% of our forecast.

Okay. Fabulous. And then lastly, what happens if COVID related travel restrictions remain in place through a few more quarters? Any way for us to figure out how that would impact your business? Or do you believe that most of those negative impacts are behind you, and that's why you're confident in reiterating previous guidance for the year?

Thanks, Christian. And actually, we had a couple of other folks ping us on this question. So I just -- I actually just quickly right before the call jotted down some notes so I just -- so people don't want to accuse me anything. I'm going to actually read a little bit from my notes here on this one. But because as I wrote it down, I just want to be thorough, I guess, and as clear as I can on it. And I might repeat some things, but anyhow. First of all, not all customers are impacted by the travel restrictions, either because we have resources locally, so we can put people on it or we've worked around them. Meaning, for example, we've had a couple of specific examples where we sent ahead our applications and service people to those locations, and they had 14-day quarantines locally. One of those was international, and one of those was in the States, okay? And it wasn't flying from California into the state, which is kind of interesting. But the customers themselves had a quarantine put in place. So we planned to put the guys in hotels and waited there out. It turns out working remotely doesn't always make that much difference, when you're supporting customers over the phone and over the computers, which is how we normally are doing it. So it doesn't make that much difference whether you're in your home or a hotel, setting aside the burden on the employees, right? So we have these very committed employees. As such, the impact of the 14-day quarantine has been basically manageable or effective, right? So the guys go, they're working every single day, kind of like they would be doing from home and then they're released and they can get…

Our next question in queue comes from Larry Chlebina with Chlebina Capital. Please go ahead.

Gayn, you mentioned that there's two process methods for testing silicon carbide wafers. The first one is -- apparently was the easiest, and that was the lead customer for that application that you have in production currently. Are you trialing anyone with the other method to debug it and prove your system will work for the second method of testing silicon carbide wafers?

Okay. So Larry, let me just sort of repeat back for everyone else that doesn't follow that as much. And just as a reminder, silicon carbide is a new complex semiconductor device that's claim to fame is you can run it to thousands of volts, and it operates very efficiently, whereas normal semiconductors can only run to tens of volts. And the big aha and kind of most notable one is when Tesla integrated a silicon carbide discrete FETs into their Model 3 and end up getting, like, I know, 20%, 30% longer-range on the car. It's turned the electric vehicle -- hybrid electric vehicle industry completely on edge. And every single one of them is shifting towards this as fast as they can. And so they're all going to the silicon carbide, and there's just not that many people and not much capacity that's out there. The beauty of it, and it's a little odd, but as a tester guy, the beauty of it for us is, while silicon carbide is extremely reliable long-term, it actually has a very high infant mortality rate, which means that a higher percentage of the devices fail early in the first so many hours of use. But after that, they don't fail anymore, and they're much lower -- or much higher reliability or lower failure rates than other components. And they're much more efficient. That's the perfect dream for us because that means you need our equipment to go in and weed out the infant mortalities by testing them for hours, days at a time to remove the infant mortality and then they're more reliable, okay, first of all. Now these devices, the hot ones, field-effect transistors or FETs, they're actually a very simple device. And there's two known methods that are published…

So Gayn, did I hear you say that another approach, a possible approach for that higher voltage application could be the singulate the dies first and roll them in a DiePak configuration? Is that one of the options?

Yes. And a really cool option at high-voltage up to 2,000 volts, yes, on a FOX system. That's right.

So why don't you make a deal with one of these guys and build a DiePak for them and prove it to them?

We're working on it. Remember that little thing I had earlier, just like we've got a program we're working on, that's part of it. We are specifically approaching certain customers about engaging that in a -- in the sort of a partnership way. So…

Of the non-silicon carbide targeted customers, how many do the reverse bias high-voltage approach? And how many do the low voltage?

So, so far, candidly, let's say there are 10 obvious top guys. There's even smaller ones in that. We are aware of about half of them what they do. They actually -- there are certain ones, particularly down the list in terms of size that have not yet shared with us what their preference is. I'm not totally sure why. And by the way, again, some of this is -- normally, I would jump on a plane and go visit them and we -- and I’m unable to do that. We're definitely -- it's definitely something I feel. But we are getting to some of the big guys.

So you didn't answer the question, though. Of the known approaches...

Of the ones I know, I know 3 that are gate and 2 that are reverse, so far.

So possibly, it could be half and half or maybe even more of the low voltage and less of the high-voltage, am I right?

Correct. And I know specifically, one of the big guys that does reverse, which is the high-voltage one, they have specifically asked us about gate and have discussed implementing that or benchmarking it because it has some other advantages, by the way. But they had qualified with their automotive customers reverse, and it's actually kind of hard to change your qualification process. So one thing we're also trying to do is -- I mean, the reality is, what, 5 big automotive guys, right? So our lead customer is engaged in several of them. And so just getting qualified with this at wafer-level burn-in, which has already been done, I think will help. And one of the thoughts is how do we get the industry message out there, but this is a viable qualification process.

So, I mean, you proved that one, with your current customer, it just seems like it's such an incredible benefit in terms of not only efficiency and throughput, but also savings from having to throw away modules that have a defect in them. And you're screening the module before the die.

I totally agree. Yes, I completely agree.

So I mean, I'm really struck. You landed your current customer a year ago. And here we are a year later, and you still don't have any additional customers in that area, which is -- I don't know, I just find that hard to understand, when there's such a clear benefit.

I think some of that is very fair, Larry, and we've been in discussions with -- some of the things we've done, for example, as we -- let’s say the by-product of it. If you look at silicon carbide, there's really three main areas that it's being built, right? First, it was in the U.S. customers, Cree being the most notable one, it's up and down the East Coast. Then it's in Europe, between Italy and Germany that’s very big hotspots for silicon carbide, we know specifically, and Japan. And what you'll note is that we made the decision to shut down those sales offices entirely in Japan, and we have the sales management team and there have all retired, and we have replaced them with reps. It's actually one of the specific things we're trying to do as well as -- and we have a really great rep up and running in Germany that takes Northern Europe. And we've had some recent traction with our rep in Italy and France in this area as well.

So in your LD conference -- in your LD presentation, you indicated your thought that you were running trials with other silicon carbide customers? Is that...

I think it would be more -- I want to be a little careful on all the competitive stuff, but I think it would be more clear that we have discussions with those customers related to trials and not on wafer.

Ken, on your balance sheet, you show a split of short-term and long-term debt. That's the PPP loan. Why does some show up on short-term and other -- and the rest of it on the long term?

Well, the PPP loan actually has the two components. It's not due for 2 years with the actual first payment not being due within 6 months from the loan origination. So that's the requirement why it's broken out from a GAAP standpoint into short-term and long-term. However, as I mentioned, we -- the plan is, as we expect to have loan forgiveness of the entire $1.7 million, the portal at our bank that will allow us to apply for the forgiveness actually just opened up to us yesterday. So the plan is, as we expect to have that forgiven, and hopefully, that will be removed from our balance sheet somewhere near our next reporting.

That was my next question. Lastly, has the CP status gain -- has that slipped appreciably? I think you said last quarter that would be in the second half. It hasn't slipped anymore since then, has it? Or...

It has not. We have done some things from that customer. We actually had some -- that would be an example where we had, what I would call, a fairly simple upgrade that we were planning to do. We shipped all the equipment ahead. And at the last second, the customer called and said, "Listen, we've got to shut down. Vendors can't get in the building right now." It's not critical, like it's not keeping them from production or anything like that. So I don't know if it were critical, they would have let us in. But there's an example where we haven't flown in and done it. But we -- based on what we know right now from them, they're going to need additional tools in -- late -- in a year and into -- and then the ramp sort of starts for about a 2-year ramp.

Okay. One last real quick question on silicon carbide. Everybody that's involved in it is really excited about the potential. But where does it really stand right now in terms of wafer starts? Do you have a sense of where it is today versus -- I know the projections are something like 0.5 million wafer starts in 4 years per year, which would imply that if you could get all of that business, it would require something like 160 XPs to handle it all, if it's a 48-hour burn-in. But where does it stand today? Is it still relatively smaller or…?

So I want to be careful of exactly your numbers because I don't have that in front of me, but your math, generically, is correct. The forecasted wafers over the next few years is significant, and it requires a lot of XPs. So related to right now, I don't have in front of me, and I would -- I think the Yole Développement is probably one of the people that have their finger on the best estimates of it. For certain, there are released products. We know for a fact that products off our system are going and they're going into -- I don't want to name the big customer, but well-known EV and electric vehicles, okay? We know that we're engaged with customers on other applications that are also released. And then we have a number of applications for new cars. There's so many electric vehicle and -- electric and hybrid electric vehicles that are in place. So there's tons and tons of evaluations going on and qualifications going on. So I don't know, I have a really good feel. Our -- certainly, our customer and the customer we're talking to have capacity and will be ramping this year. And some of those are -- many of them are bigger than ours to begin with. The one thing that is subtle about this market, that's interesting. So if you look at silicon carbide and you look at the players, and you see by their revenue, they stock up just publicly, top to bottom, ST, Cree, and if you go down, a few, ROHM and down a little ways to like an ON Semiconductor or something. However, the application, the application, which is power modules, silicon carbide is displacing other power modules, okay? And they're more efficient. In fact, they're so much more efficient that nobody can even imagine selling an IGBT into that application in 2 or 3 years. So the real opportunity is when you look at the power module companies and then you realize that companies on the list that are pretty far down the line on silicon carbide have $1 billion or $2 billion businesses in that space. So those companies that are rushing into silicon carbide are -- have the ability to swap customers from $1 billion worth of power silicon or the IGBT modules over to silicon carbide. So I think that the folks like -- the market guys are trying to figure out how fast does that transition. And obviously, the customers are our customers, but those vendors have an ability to negotiate with their suppliers. Do you want an IGBT for this price, or do you want a silicon carbide for that? And they are supplying the market today on all those electric vehicles. So I think that work gets interesting.

The real driver, though, for your equipment, for your process is the module. Discretes isn't a big driver. But if they go wafer-level burn-in with your system, they'll use it for the discrete parts also, right?

I believe that's fair. And I think that's the right way of looking at it. The module is so overwhelmingly advantageous to do at a wafer level. But we've heard from other customers that there's advantages to doing it anyhow once you get there, right? So like our customer, we believe, our shipping products that are going into discrete components having done wafer-level burn-in already.

The application for silicon carbide in modules is fairly new, isn't it, in terms of certainly the automotive. In other words, the first application that you cited with Tesla on a Model 3, that was with discrete products, right?

It was. They put, I think, 8 of them in the module.

It isn't -- it wasn't as obvious or is it advantageous to go wafer-level burn-in until you start ramping on modules. And that's a fairly recent event, is that correct?

It is. I think you're in the early stages of an overwhelming ramp.

Yes, exactly. And that's what I'm getting at. So how you go at this and you knock these down, you have to knock them down, start knocking them down now. It isn't -- the Model 3 has been out for years. But it's the modules, that's the driver, and that's a recent event. And that's why you should -- burn should be knocking these down left and right, I would think. All -- anyway, that's all I think.

I will -- several of our investors, and Larry, I acknowledge you're one of the folks that has a deep understanding of silicon carbide and we have customers that have portfolios in that space that we're a part of. I've done this personally, and this is an odd thing to do publicly. If you bring me a silicon carbide customer, we will make it very cost-effective, if not free, to do a benchmark. And one of the challenges is to get some of those attention. We had planned -- I think we were in 4 or 5 shows this year that have all been canceled. They're not even virtual. Actually caught us at an odd time. So -- and I'll buy you a dinner when we're able to do it.

But I'm wondering if they start losing business that somebody that is taking an approach like this that finds it and can offer a much more economic price, because they're not throwing away -- maybe half or 40% of their modules or something because they have a...

Exactly. And as the news gets out there. By the way, I've mentioned this, if you go back to the notes from last quarter or maybe some of the other ones. So I always allude to silicon carbide customer, and I don't go into a lot of the detail. But I don't know, I think the Yahoo! message boards, they were pointing to it. That paper has been removed. So it's not publicly available. But if you give us the -- a number of our shareholders actually have their fingers on it, Larry, I think you're one of them. So folks, just -- it's interesting because they were out touting how great it was and now they kind of pulled back. It is an odd scenario because customers see the value of it, and they're out -- they are selling it as a differentiation to their customers. Well, obviously, if everybody goes to it, then it kind of normalizes. And we're the only game in town.

Our next question in queue comes from John Fichthorn, Dialectic Capital. Your line is open. Please go ahead.

Yes. So a few questions. I'll try and be quick. First of all, it sounded like you reduced your breakeven quarterly to around $4.5 million. Is that right? And if so, is there some kind of EBITDA guidance for -- if you guys hit your targets for the year?

So I'll let Ken -- I mean, the first one is easy, which is yes, but I don't know we've given that guidance.

Gayn, I'd like to jump in here. We've reduced our breakeven by $4.5 million. Our breakeven is not $4.5 million. And just kind of walk through where...

I meant your breakeven is around $4.5 million a quarter is what I said not -- yes, you reduced it $4.5 million annually. But however you want to break that.

Absolutely. So kind of talk about it quarterly. I think I've said before that our breakeven historically, based upon our fixed run rate structure and our average margin is a little over $6.5 million a quarter, or a little bit over $26 million a year. And that's what we said in the past. With these cost reduction initiatives, reducing that $26.5 million or $6.5 million a quarter down, or $700,000 a quarter in spending, that gets our breakeven per quarter down about $5.5 million a quarter or about $22 million a year.

And that's a GAAP number?

That is a GAAP number, correct.

Fine. I was thinking more of an adjusted EBITDA number, but that's fine. So if you guys come in at $28 million, then that should all -- the excess should drop to the bottom. Right?

Yes. And again, so you talked about EBITDA. We actually did a cash breakeven. If you take a look at what our stock comp is, you can pull out our depreciation expenses, which are right off of our SEC filings and our reporting. You can see that if you look at cash breakeven, that brings us significantly under $19 million a year or right about $4.9 million per quarter revenue for a cash breakeven.

So I thought somewhere you guys had said you had 2 dozen new kind of customers in the pipeline before. And this press release said 1 dozen. I'm just wondering if, I don't know, if I'm just misremembering or whether you lost a dozen people in your pipeline.

We haven't lost a dozen people, and I realize that we -- I don't know if we've ever actually stitched together the words 2 dozen before. But you'll see there's some conflicting. We talked about well over a dozen, and then we specifically say well over a dozen into silicon photonics and silicon carbide. The number -- I'll just go out there. I mean, I was doing a review with our sales team last week, and it is over 2 dozen. It's a long list. And some of those are -- but there's a significant funnel of activities. And one thing, in particular, when -- in preparation for it, some of those customers are just -- have told us that they're just on hold. And so we tried not to get into because then you have to start qualifying all of it. But we're clearly directly engaged continuously, kind of regular cadence with well over a dozen of those, but there's more. And I think had the COVID stuff, like, kicked in, we would be struggling right now with just all of the activities. We would be -- we'd be adding some apps engineers and some other things. And I want to give Vernon credit because he was kind of out in front. Not anticipating COVID, but putting this apps center in place and a number of other processes to allow us to do a lot more benchmarks in parallel. And we are. We are working with customers right now on benchmarks despite all the COVID stuff. But it does feel like it's now done.

Well, I can't wait to complain about you being too swamped with business and not being able to keep…

Yes. That would be nice.

I think you announced a couple of new wins, commitments, the OSAT business, some other things. Were those already in your AOP for this year? Or is that additional pipe? Or should I assume that your year kind of has a further upside, how does that -- how do I think about that?

So certainly the OSAT and that win that we installed was already in our plan. I mean, that was anticipated. It's just it was more positiveness about it. There are some new customers in the list already just from last quarter that I'm not counting on. I want to be careful of saying they're not in our plan because if one drops out and it comes in, I don't want to feel like I -- we failed at it. Obviously, we...

We don't know what your plan is anyway. We just have your guidance. So I'm just -- I'm curious.

The only thing I have specifically called out is that on the mobile side of things, we still get consumables every single year on that. It's been a couple of years since we actually added a lot of -- any significant capacity. But we always get new consumables every year with different design turns and things like that, and we're still planning on that. We do have some new opportunities that have come up, that have an opportunity to add capacity. There's some new applications and all, that would be upside that aren't in the plan. Again, they could also offset any other risk. But that's the only one I've specifically talked about. And for those that have followed, I'm really hesitant to get too ahead of myself on this -- on my sleeves there because we've had some scenarios in the past where we got all excited about how big it was, and then it didn't play out. And so I'd rather just shock you guys when an order comes in and say we knew it was going to happen all along. But for now, I'm just going to say, there are some opportunities. It looks like it's delayed in our fiscal year and into next year, but still. It looks -- I'm pretty excited about it.

Great. And consumables this year, I don't know if you guys broke it out, but roughly -- I don't care how wide range you give me, consumables will be roughly what of revenues?

I don't think we have -- I'm going to have Ken correct me, but my guess is it's closer to like a third or something like that this year, although that could shift. Last year was higher than what we thought our run rate was going to be when it hit 50%. And that's actually because the systems dropped out in the last. So systems that we were anticipating to be shipping in Q4, we didn't ship any systems at all. And so that's part of the reason it was a higher percentage. We also had a scenario where our -- one of our lead customers have been buying systems without WaferPaks, and we've been talking about that, and then they finally caught up. So normally, the -- if you just look at the hardware to consumable mix, they're going to be closer to like a third of the business. But over time, as the installed base buys just uniquely, like we've seen in some of our FOX -- some of our older FOX products, they haven't bought a system in a while, but they keep buying consumables. That will grow. And we do believe that there's a point where even in a normalized steady state year that consumables would be over 50% of our business.

Great. So this is my last question, and it's not a question. It's a comment. Actually, no, I have a question then a comment. When does the window open for insider buying after you guys have released earnings? Is it kind of the standard 48 or 72 hours?

We have not announced when our windows open for insiders, and we're not going to do it at this point in time.

Okay. So my comment after the non-answer to the first question is, I appreciate John's service to your Board, and I wish Geoff the best of luck at representing shareholders. I know he represents a substantial amount of shares. It's listed in your proxy at 660,000. Whether that's him or his clients, I don't know. But I appreciate having a shareholder on your Board. And I would like to say that Rhea and Mario, who's been on the Board for 40 years and have overseen a $30 million consumption in cash and a 90% drop in the stock price since the IPO or greater, I don't see them buying stock in the open market. And I've lost money and every one of your shareholders has lost money because your share price had ebb and flows. And it's very frustrating. We lose money that we put at risk for ourselves, for our clients, they don't. They get money, they get rigged at $100,000 a year. He gets his health insurance paid. He gets 30,000 options, struck at the market. And if I -- when I'm on a Board, and I've been on three public boards over the last year, and I'm on two currently. I believe that every public company board member should be risking their own capital by buying stock in the public market of the boards that they're on. And if they don't believe in the story enough to put their own money on the line, then get off the Board. You're telling me the story that's amazing. I love it. I've put my friends, my family, my investors capital at risk, because I think it's a great story. I love the future and the upside. And yet your Board doesn't seem like it's worth their time to reach into their pocket and buy the stock too with us. And I am offended as a shareholder. And if I don't see them start buying stock and you don't deliver, I promise you, I will become a different type of filing shareholder. So that's my comment, not my question. And thank you very much for your efforts, and I hope you guys succeed going forward.

We'll take our last question from [Marty Kotan], [Chipchat]. Please go ahead.

Hello, Gayn. Hello, Ken. My question is -- I've got 3 questions. One of them is regarding the closure of the Japan office. And there's some savings associated with that, which we see -- pretty easy to see, pretty clear on that. It's replaced by a sales representative, and there are costs to sales representatives. My question is do we see the cost of the sales representatives somewhere? Or is that something that gets rediscovered later on? So in other words, are we only seeing the growth cost of closing the Japan office, but not the net cost because you do have to pay money, I think typically commissions, for sales reps?

Yes. And that's true. That is true, and that is true of other regions that we have sales reps today. And that's true in the European region as well as in Japan going forward. So we do have arrangements with those sales representatives. I don't think we have any distribution networks where they buy and resell. So it is paid as a commission, it will show up in SG&A cost or cost of sales. And so yes, it's not free, but at least it is tied directly to revenue shipments as opposed to the opposite. And we think that within a normal revenue range and including some significant growth, we're going to be thrilled to death to pay them those commissions.

Yes. Yes, I'm all for paying commissions. I'm just -- it's more curiosity that as we see the savings on the one action. And the question was, is it possible or do we see the savings -- or the cost of the representative, which you've got to pay them and they do earn their money. But it sounds...

We do not have any fixed cost relationships with them. So they are only paid upon success. The other thing I just want to be clear on, although we do save money, and as I said at some point, obviously, if things go wildly successful, there is a real scenario, we would pay them more than we would have done direct. I'll be thrilled with that. But number 2, that's not why we did it. The reality is, is that the customers that are in silicon carbide, the wafer-level customers, the front end, there's more test, is a different type of customer. And we think that we needed to do some things to be able to get at those customers by doing something differently. So it's less about saving money. It's actually putting a better strategy and higher expectations for actually getting sales, because we -- in reality, we've had little to no sales in those regions. And we have been working on this to take action. By the way, it is not very easy at all to shut down things in Germany and Japan. This has been a -- this has taken us well over a year to do.

Yes. Okay. Second question is, Gayn, earlier in your presentation, you iterated a list of applications or like data centers, mobile communications, automobile. And then you also talked about new prospects, companies that they're not regular customers yet, but they are considering the FOX system. Could you make a comment that's, say, separating the prospects, what percentage might represent 100% production test, which you're going to sell a lot of machines? And what percentage might represent sampling tests or engineering applications? And the reason for this was...

Actually easy. So it's actually easy compared to historically.

If you just have one customer that does 100% production test, he might be worth many times, many customers that use it for sampling and many more that use it for engineering development.

So [Marty], I would say -- I believe, of that entire list of customers, the 2 dozen, let's say, all of them are production. I'm not sure I know one that's engineering for -- in the wafer-level side of things. On the package part, I know that a couple of them are absolutely qualifications and they're just quals, which means they do it early on in the life of the product and then they do monitors. So you could have one product and sit on it for a while. In production, if they grow, we grow, okay? Or if they grow, they buy from us. And if they grow exponentially, then we grow. It's technically, if you want to be specific. So the production makes really more sense. It's actually reasonably rare to have a sampling done at wafer. And there's not a lot of applications where that makes sense or qualifications. We do have customers that do monitoring. One of our big customers has an installed base of systems that are used to monitor and sample with our singulated die flash module systems. So it does exist. But today, I think everyone we're talking to is production. And on other devices and will be going to their customers -- after they test them, they ship it to their customers.

And they're testing 100% of their die on 100% of their wafers?

Yes. That's right.

And then the final question is, are you -- how much of your business is with the People's Republic of China?

So it's interesting. We had, I think, 10 package part burn-in customers on our ABTS in China since I've been here. We, today, have no wafer-level systems in China. And I believe we only have one customer who is not Chinese who plans to install systems in China.

But I thought you had sold a FOX machine to a Chinese entity 4 or 5 years ago?

No.

No. Okay. I...

Yes, Ken has just talked about that. Because one of the discussions was with all the trade stuff going on, how would it impact us? And people -- I think I shared in the past, we used to buy chambers out of China. We also buy them out of Singapore. Those are 2 vendors today. And today, we're not taking chambers out of China. So we don't actually have any supply chain -- I think we've built some printed circuit boards from a U.S. manufacturer that builds them in China. But almost nothing is exposed to China right now.

There are no more questions at this time. I will now turn it back over to management for any closing remarks.

Alright. Thank you. A lot of questions this time. We appreciate all of them. And as always, we do invite you to set up a call if we can have a follow-on with you. I often say, I invite you to come over and see what we're doing, but we're not doing that right now, unless it's really urgent, unless you happen to be a buying customer. But other than that, we'll be happy to just set that up and talk to you. And we do hope everyone stays safe and healthy, and we'll talk to you next quarter.

Thank you. Ladies and gentlemen, this concludes today's presentation. You may now disconnect.