Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-216792
PROSPECTUS SUPPLEMENT
(To
Prospectus dated March 24, 2017)
3,846,154
Shares
We are selling
3,846,154 shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus.
Our
common stock trades on The NASDAQ Capital Market under the symbol “AEHR.” On April 12, 2017, the last reported sale
price of our common stock on The NASDAQ Capital Market was $4.04 per share.
Investing
in our common stock involves risks that are described in the “Risk Factors” beginning on page S-3 of this prospectus
supplement, page 4 of the accompanying prospectus and the risk factors described in the documents incorporated by reference into
this prospectus supplement.
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Per Share
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Total
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Public offering price
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$
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3.90
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$
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15,000,001
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Underwriting discounts and commissions
(1)
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$
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0.24375
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$
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937,500
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Proceeds, before expenses, to us
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$
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3.65625
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$
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14,062,501
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(1)
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We refer you to the section entitled “Underwriting” of this prospectus supplement for additional information regarding total underwriting compensation.
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The underwriter may
also exercise its option to purchase up to an additional 576,923
shares
of common stock from us, at the public offering price, less the underwriting discounts and commissions, for 30 days after the
date of this prospectus supplement to cover over-allotments, if any.
Neither
the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed
upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary
is a criminal offense.
Delivery
of the shares of common stock is expected to be made on or about April 19,
2017, subject to customary closing conditions.
Craig-Hallum
Capital Group
The
date of this prospectus supplement is April 13, 2017.
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus dated March 24, 2017 form part of a registration statement on Form S-3 (File
No. 333-216792) that we filed with the Securities and Exchange Commission (SEC), utilizing a “shelf” registration
process. This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this
common stock offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated
by reference herein and therein. The second part, the accompanying prospectus, provides more general information. Generally, when
we refer to this prospectus, we are referring to both parts of this document combined. To the extent there is a conflict between
the information contained in this prospectus supplement and the information contained in the accompanying prospectus or any document
incorporated by reference herein or therein filed prior to the date of this prospectus supplement, you should rely on the information
in this prospectus supplement; provided that if any statement in one of these documents is inconsistent with a statement in another
document having a later date—for example, a document incorporated by reference in the accompanying prospectus—the
statement in the document having the later date modifies or supersedes the earlier statement.
Neither
us nor the underwriter have authorized anyone to provide any information other than that contained or incorporated by reference
in this prospectus supplement, the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us or
to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other
information that others may give you. This prospectus supplement and the accompanying prospectus or any free writing prospectus
do not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this prospectus supplement
and the accompanying prospectus or any free writing prospectus in any jurisdiction to or from any person to whom or from whom
it is unlawful to make such offer or solicitation of an offer in such jurisdiction. The information contained in this prospectus
supplement or the accompanying prospectus, or incorporated by reference herein or therein or any free writing prospectus is accurate
only as of the respective dates thereof, regardless of the time of delivery of this prospectus supplement and the accompanying
prospectus or any free writing prospectus or of any sale of our common stock. It is important for you to read and consider all
information contained in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference
herein and therein or any free writing prospectus, in making your investment decision. You should also read and consider the information
in the documents to which we have referred you in the sections entitled “Where You Can Find More Information” and
“Information Incorporated by Reference” in this prospectus supplement and in the accompanying prospectus.
We
are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted.
The distribution of this prospectus supplement and the accompanying prospectus or any free writing prospectus and the offering
of the common stock in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession
of this prospectus supplement and the accompanying prospectus or any free writing prospectus must inform themselves about, and
observe any restrictions relating to, the offering of the common stock and the distribution of this prospectus supplement and
the accompanying prospectus or any free writing prospectus outside the United States.
Unless
the context requires otherwise, references in this prospectus supplement to “Aehr Test,” “the Company,”
“we,” “us” and “our” refer to Aehr Test Systems.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary description about us and our business highlights selected information contained elsewhere in this prospectus supplement
or incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary does not contain all
of the information that you should consider before deciding to invest in our common stock. You should carefully read this entire
prospectus supplement, the accompanying prospectus and any related free writing prospectus, including each of the documents incorporated
herein or therein by reference, before making an investment decision. Investors should carefully consider the information set
forth under “Risk Factors” in this prospectus supplement, in the accompanying prospectus and in any related free writing
prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus supplement
and the accompanying prospectus. You also should carefully read the information incorporated by reference into this prospectus
supplement and the accompanying prospectus, including our financial statements, other information and the exhibits to the registration
statement of which the accompanying prospectus is a part.
Overview
We
develop, manufacture and sell systems which are designed to reduce the cost of testing and to perform reliability screening, or
burn-in, of complex logic, memory devices, sensors and optical devices. These systems can be used to simultaneously perform parallel
testing and burn-in of packaged integrated circuits, or ICs, singulated bare die or ICs still in wafer form. Increased quality
and reliability needs of the mobility, automotive, photonics and flash memory integrated circuit markets are driving additional
testing requirements, capacity needs and opportunities for our products in package and wafer level testing. Leveraging our expertise
as a long-time leading provider of burn-in equipment, with over 2,500 systems shipped worldwide, we have developed and introduced
several innovative product families, including the FOX system, the Advanced Burn-in and Test System (ABTS), the WaferPak cartridge
and the DiePak carrier. The FOX systems are full wafer contact parallel test and burn-in systems designed to make contact with
all pads of a wafer simultaneously, thus enabling full wafer parallel test and burn-in. The latest ABTS family of packaged part
burn-in and test systems can perform tests during burn-in of complex devices, such as digital signal processors, microprocessors,
microcontrollers and systems-on-a-chip, and offers individual temperature control for high-power advanced logic devices. The WaferPak
cartridge includes innovative contact technology for use in testing wafers and chip-size packages in FOX systems. The DiePak carrier
is a reusable, temporary package that enables IC manufacturers to perform cost-effective, final test and burn-in of singulated
bare die.
Recent
Developments
On
April 4, 2017, we announced the receipt of a $3.7 million follow-on order from a subcontractor to our lead customer for the FOX-XP
Test and Burn-in System. This order is for a second production FOX-XP test and burn-in system configured with our new highly parallel
singulated die /module test interface technology, and includes a FOX-XP system and set of proprietary DiePak carriers.
On April 6, 2017, we announced the receipt of an initial production order of $850,000 for multiple ABTS thermal
chambers. This order is part of a partnership agreement with this customer in which we will deliver the critical thermal chamber
subsystem for use with the customer’s own electronics and software for a custom application.
Corporate
Information
We
were incorporated in the State of California on May 25, 1977. The mailing address and telephone number of our principal executive
offices are 400 Kato Terrace, Fremont, CA 94539 and (510) 623-9400, respectively. Our website is www.aehr.com. Information contained
on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider
information on our website to be part of this prospectus.
Our
logo and our other trade names, trademarks and service marks appearing in this prospectus are our property. Other trade names,
trademarks and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience,
our trademarks and tradenames referred to in this prospectus appear without the ™ symbol, but those references are not intended
to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the
applicable licensor to these trademarks and tradenames.
The
Offering
The
following summary contains the principal terms of this offering. The summary is not intended to be complete. You should read the
full text and more specific details contained elsewhere in this prospectus supplement and the accompanying prospectus.
Issuer
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Aehr
Test Systems.
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Common
stock offered by us
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3,846,154
shares.
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Option
to purchase additional shares of common stock
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We
have granted the underwriter a 30-day option to purchase up to an additional 576,923 shares
of common stock from us at the same price to the public, and with the same underwriting discount, to cover over-allotments,
if any.
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Common
stock outstanding immediately before this offering
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16,753,892
shares.
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Common
stock to be outstanding immediately after this offering
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20,600,046
shares (or 21,176,969 shares if the
underwriter exercises its option to purchase additional shares in full).
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Use
of proceeds
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We
estimate that the net proceeds from this offering will be approximately $13.7 million, or approximately $15.8 million if the underwriter exercises its option to purchase additional shares of common
stock in full, in each case, after deducting underwriting discounts and commissions and our estimated expenses related to the
offering. We will use the net proceeds from this offering for general corporate purposes, which may include working capital,
capital expenditures, other corporate expenses and acquisitions of complementary products, technologies or businesses. See
“Use of Proceeds.”
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Risk
Factors
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Investing
in our common stock involves a high degree of risk. See “Risk Factors” and the other information incorporated
by reference into this prospectus supplement and the accompanying prospectus for a discussion of certain factors you should
carefully consider before deciding to invest in our common stock.
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The
NASDAQ Capital Market symbol
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AEHR.
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The
number of shares of our common stock to be outstanding before and after this offering is based on 16,753,892 shares of common
stock outstanding as of February 28, 2017, and excludes, as of that date:
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●
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3,156,734
shares of common stock issuable upon the exercise of options outstanding, at a weighted-average
exercise price of $1.72 per share, and 34,125 shares of common stock issuable upon the
vesting of outstanding restricted stock units;
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●
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2,169,259
shares of common stock reserved for future issuance under our 2016 Equity Incentive Plan;
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467,410
shares of common stock reserved for future issuance under our Amended and Restated 2006 Employee Stock Purchase Plan (ESPP);
and
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2,656,521
shares of common stock issuable upon conversion of outstanding convertible promissory notes issued to QVT Fund LP and Quintessence
Fund L.P. pursuant to that certain Convertible Note Purchase and Credit Facility Agreement dated April 10, 2015, as amended
August 22, 2016.
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Unless
otherwise noted, the information in this prospectus supplement reflects and assumes no exercise of outstanding options or warrants
to purchase common stock after February 28, 2017, and no exercise by the underwriter of its option to purchase additional shares
of our common stock in this offering.
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as all other
information included or incorporated by reference in this prospectus supplement, the accompanying prospectus and in our other
filings with the SEC before you decide to purchase shares of our common stock. If any of the following risks actually occurs,
our business, financial condition, operating results, prospects and ability to accomplish our strategic objectives could be materially
harmed. As a result, the trading price of our common stock could decline and you could lose all or part of your investment. Additional
risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations
and the market price of our common stock.
We
generate a large portion of our sales from a small number of customers. If we were to lose one or more of our large customers,
operating results could suffer dramatically.
The
semiconductor manufacturing industry is highly concentrated, with a relatively small number of large semiconductor manufacturers
and contract assemblers accounting for a substantial portion of the purchases of semiconductor equipment. Sales to our five largest
customers accounted for approximately 94%, 79%, and 90% of our net sales in fiscal 2016, 2015 and 2014, respectively. During fiscal
2016, Apple and Texas Instruments accounted for approximately 47% and 32%, respectively, of our net sales. During fiscal 2015,
Texas Instruments and Micronas accounted for approximately 45% and 11%, respectively, of our net sales. During fiscal 2014, Texas
Instruments, Spansion and Micronas accounted for approximately 40%, 30% and 12%, respectively, of our net sales. No other customers
accounted for more than 10% of our net sales for any of these periods.
We
expect that sales of our products to a limited number of customers will continue to account for a high percentage of net sales
for the foreseeable future. In addition, sales to particular customers may fluctuate significantly from quarter to quarter. The
loss of, reduction or delay in an order, or orders from a significant customer, or a delay in collecting or failure to collect
accounts receivable from a significant customer could adversely affect our business, financial condition and operating results.
If
we are not able to reduce our operating expenses sufficiently during periods of weak revenue, or if we utilize significant amounts
of cash to support operating losses, we may erode our cash resources and may not have sufficient cash to operate our business.
In
recent years, in the face of a downturn in our business and a decline in our net sales, we implemented a variety of cost controls
and restructured our operations with the goal of reducing our operating costs to position ourselves to more effectively meet the
needs of the then weak market for test and burn-in equipment. While we took significant steps to minimize our expense levels and
to increase the likelihood that we would have sufficient cash to support operations during the downturn, from fiscal 2009 through
fiscal 2016, with the exception of fiscal 2014, we experienced operating losses. We anticipate that our existing cash balance
together with the proceeds from this offering, income from operations, collections of existing accounts receivable, revenue from
our existing backlog of products, the sale of inventory on hand, and deposits and down payments against significant orders will
be adequate to meet our short-term working capital and capital equipment requirements. We extended the maturity date of our outstanding
convertible promissory notes to April 10, 2019 which improves our ability to meet current liabilities for fiscal 2017. Depending
on our rate of growth and profitability, and our ability to obtain significant orders with down payments, in addition to the proceeds
from this offering, we may require additional equity or debt financing to meet our working capital requirements or capital equipment
needs. There can be no assurance that additional financing will be available when required, or if available, that such financing
can be obtained on terms satisfactory to us.
We
rely on increasing market acceptance for our FOX system, and we may not be successful in attracting new customers or maintaining
our existing customers.
A
principal element of our business strategy is to increase our presence in the test equipment market through system sales in our
FOX wafer-level test and burn-in product family. The market for the FOX systems is in the early
stages of development. Market
acceptance of the FOX system is subject to a number of risks. Before a customer will incorporate the FOX system into a production
line, lengthy qualification and correlation tests must be performed. We anticipate that potential customers may be reluctant to
change their procedures in order to transfer burn-in and test functions to the FOX system. Initial purchases are expected to be
limited to systems used for these qualifications and for engineering studies. Market acceptance of the FOX system also may be
affected by a reluctance of IC manufacturers to rely on relatively small suppliers such as us. As is common with new complex products
incorporating leading-edge technologies, we may encounter reliability, design and manufacturing issues as we begin volume production
and initial installations of FOX systems at customer sites. The failure of the FOX system to achieve increased market acceptance
would have a material adverse effect on our future operating results, long-term prospects and our stock price.
The
semiconductor equipment industry is intensely competitive. In each of the markets we serve, we face competition from established
competitors and potential new entrants, many of which have greater financial, engineering, manufacturing and marketing resources
than us.
Our
FOX full wafer contact systems face competition from larger systems manufacturers that have significant technological know-how
and manufacturing capability. Our ABTS Test During Burn-in (TDBI) systems have faced and are expected to continue to face increasingly
severe competition, especially from several regional, low-cost manufacturers and from systems manufacturers. Some users of such
systems, such as independent test labs, build their own burn-in systems, while others, particularly large IC manufacturers in
Asia, acquire burn-in systems from captive or affiliated suppliers. Our WaferPak products are facing and are expected to face
increasing competition. Several companies have developed or are developing full-wafer and single-touchdown probe cards.
We
expect our competitors to continue to improve the performance of their current products and to introduce new products with improved
price and performance characteristics. New product introductions by our competitors or by new market entrants could cause a decline
in sales or loss of market acceptance of our products. We have observed price competition in the systems market, particularly
with respect to our less advanced products. Increased competitive pressure could also lead to intensified price-based competition,
resulting in lower prices which could adversely affect our operating margins and results. We believe that to remain competitive
we must invest significant financial resources in new product development and expand our customer service and support worldwide.
There can be no assurance that we will be able to compete successfully in the future.
We
rely on continued market acceptance of our ABTS system and our ability to complete certain enhancements.
Continued
market acceptance of the ABTS family, first introduced in fiscal 2008, is subject to a number of risks. It is important that we
achieve customer acceptance, customer satisfaction and increased market acceptance as we add new features and enhancements to
the ABTS product. To date, we have shipped ABTS systems to customers worldwide for use in both reliability and production applications.
We have recognized a weakening of ABTS product sales over the last fiscal year. The failure of the ABTS family to increase revenues
above current levels would have a material adverse effect on our future operating results.
A
substantial portion of our net sales is generated by relatively small volume, high value transactions.
We
derive a substantial portion of our net sales from the sale of a relatively small number of systems which typically range in purchase
price from approximately $300,000 to well over $1 million per system. As a result, the loss or deferral of a limited number of
system sales could have a material adverse effect on our net sales and operating results in a particular period. Most customer
purchase orders are subject to cancellation or rescheduling by the customer with limited penalties, and, therefore, backlog at
any particular date is not necessarily indicative of actual sales for any succeeding period. From time to time, cancellations
and rescheduling of customer orders have occurred, and delays by our suppliers in providing components or subassemblies to us
have caused delays in our shipments of our own products. There can be no assurance that we will not be materially adversely affected
by future cancellations or rescheduling. For non-standard products where we have not effectively demonstrated the ability to meet
specifications in the customer environment, we defer revenue until we have met such customer specifications. Any delay in meeting
customer specifications could have a material adverse effect on our operating results. A substantial portion of our net sales
is typically realized near the end of each quarter. A delay or reduction in shipments near the end of a particular quarter, due,
for example, to unanticipated shipment rescheduling, cancellations or deferrals by customers, customer credit issues, unexpected
manufacturing difficulties experienced by us or delays in deliveries by suppliers, could cause net sales in a particular quarter
to fall significantly below our expectations.
We
may experience increased costs associated with new product introductions.
As
is common with new complex products incorporating leading-edge technologies, we have encountered reliability, design and manufacturing
issues as we began volume production and initial installations of certain products at customer sites. Some of these issues in
the past have been related to components and subsystems supplied to us by third parties who have in some cases limited the ability
of us to address such issues promptly. This process in the past required and in the future is likely to require us to incur un-reimbursed
engineering expenses and to experience larger than anticipated warranty claims which could result in product returns. In the early
stages of product development there can be no assurance that we will discover any reliability, design and manufacturing issues
or, that if such issues arise, that they can be resolved to the customers’ satisfaction or that the resolution of such problems
will not cause us to incur significant development costs or warranty expenses or to lose significant sales opportunities.
Periodic
economic and semiconductor industry downturns could negatively affect our business, results of operations and financial condition.
Periodic
global economic and semiconductor industry downturns have negatively affected and could continue to negatively affect our business,
results of operations, and financial condition. Financial turmoil in the banking system and financial markets has resulted, and
may result in the future, in a tightening of the credit markets, disruption in the financial markets and global economy downturn.
These events may contribute to significant slowdowns in the industry in which we operate. Difficulties in obtaining capital and
deteriorating market conditions can pose the risk that some of our customers may not be able to obtain necessary financing on
reasonable terms, which could result in lower sales. Customers with liquidity issues may lead to additional bad debt expense.
Turmoil
in the international financial markets has resulted, and may result in the future, in dramatic currency devaluations, stock market
declines, restriction of available credit and general financial weakness. In addition, flash, memory and other device prices have
historically declined, and will likely do so again in the future. These developments may affect us in several ways. The market
for semiconductors and semiconductor capital equipment has historically been cyclical, and we expect this to continue in the future.
The uncertainty of the semiconductor market may cause some manufacturers in the future to further delay capital spending plans.
Economic conditions may also affect the ability of our customers to meet their payment obligations, resulting in cancellations
or deferrals of existing orders and limiting additional orders. In addition, some governments have subsidized portions of fabrication
facility construction, and financial turmoil may reduce these governments’ willingness to continue such subsidies. Such
developments could have a material adverse effect on our business, financial condition and results of operations.
The
recent economic conditions and uncertainty about future economic conditions make it challenging for us to forecast our operating
results, make business decisions, and identify the risks that may affect our business, financial condition and results of operations.
If such conditions recur, and we are not able to timely and appropriately adapt to changes resulting from the difficult macroeconomic
environment, our business, financial condition or results of operations may be materially and adversely affected.
We
sell our products and services worldwide, and our business is subject to risks inherent in conducting business activities in geographic
regions outside of the United States.
Approximately
80%, 64%, and 56% of our net sales for fiscal 2016, 2015 and 2014, respectively, were attributable to sales to customers for delivery
outside of the United States. We operate a sales, service and limited manufacturing organization in Germany and sales and service
organizations in Japan and Taiwan. We expect that sales of products for delivery outside of the United States will continue to
represent a substantial portion of our future net sales. Our future performance will depend, in significant part, upon our ability
to continue to compete in foreign markets which in turn will depend, in part, upon a continuation of current trade relations between
the United States and foreign countries in which semiconductor manufacturers or assemblers have operations. A change toward more
protectionist trade legislation in either the United States or such foreign countries, such as a change in the current tariff
structures, export compliance or other trade policies, could adversely affect our ability to sell our products in foreign markets.
In addition, we are subject to other risks associated with doing business internationally, including longer receivable collection
periods and greater difficulty in accounts receivable collection, the burden of complying with a variety of foreign laws, difficulty
in staffing and managing global operations, risks of civil disturbance or other events which may limit or disrupt markets, international
exchange restrictions, changing political conditions and monetary policies of foreign governments.
Approximately
97%, 2% and 1% of our net sales for fiscal 2016 were denominated in U.S. Dollars, Euros and Japanese Yen, respectively. Although
the percentages of our net sales denominated in Euros and Japanese Yen were small in fiscal 2016, they have been larger in the
past and could become significant again in the future. A large percentage of net sales to European customers are denominated in
U.S. Dollars, but sales to many Japanese customers are denominated in Japanese Yen. Because a substantial portion of our net sales
is from sales of products for delivery outside the United States, an increase in the value of the U.S. Dollar relative to foreign
currencies would increase the cost of our products compared to products sold by local companies in such markets. In addition,
since the price is determined at the time a purchase order is accepted, we are exposed to the risks of fluctuations in the U.S.
Dollar exchange rate during the lengthy period from the date a purchase order is received until payment is made. This exchange
rate risk is partially offset to the extent our foreign operations incur expenses in the local currency. To date, we have not
invested in any instruments designed to hedge currency risks. Our operating results could be adversely affected by fluctuations
in the value of the U.S. Dollar relative to other currencies.
Our
industry is subject to rapid technological change and our ability to remain competitive depends on our ability to introduce new
products in a timely manner.
The
semiconductor equipment industry is subject to rapid technological change and new product introductions and enhancements. Our
ability to remain competitive depends in part upon our ability to develop new products and to introduce them at competitive prices
and on a timely and cost-effective basis. Our success in developing new and enhanced products depends upon a variety of factors,
including product selection, timely and efficient completion of product design, timely and efficient implementation of manufacturing
and assembly processes, product performance in the field and effective sales and marketing. Because new product development commitments
must be made well in advance of sales, new product decisions must anticipate both future demand and the technology that will be
available to supply that demand. Furthermore, introductions of new and complex products typically involve a period in which design,
engineering and reliability issues are identified and addressed by our suppliers and by us. There can be no assurance that we
will be successful in selecting, developing, manufacturing and marketing new products that satisfy market demand. Any such failure
would materially and adversely affect our business, financial condition and results of operations.
Because
of the complexity of our products, significant delays can occur between a product’s introduction and the commencement of
the volume production of such product. We have experienced, from time to time, significant delays in the introduction of, and
technical and manufacturing difficulties with, certain of our products and may experience delays and technical and manufacturing
difficulties in future introductions or volume production of our new products. Our inability to complete new product development,
or to manufacture and ship products in time to meet customer requirements would materially adversely affect our business, financial
condition and results of operations.
Our
dependence on subcontractors and sole source suppliers may prevent us from delivering our products on a timely basis and expose
us to intellectual property infringement.
We
rely on subcontractors to manufacture many of the components or subassemblies used in our products. Our FOX and ABTS systems and
WaferPak contactors contain several components, including environmental chambers, power supplies, high-density interconnects,
wafer contactors, signal distribution substrates, WaferPak Aligners and certain ICs that are currently supplied by only one or
a limited number of suppliers. Our reliance on subcontractors and single source suppliers involves a number of significant risks,
including the loss of control over the manufacturing process, the potential absence of adequate capacity and reduced control over
delivery schedules, manufacturing yields, quality and costs. In the event that any significant subcontractor or single source
supplier is unable or unwilling to continue to manufacture subassemblies, components or parts in required volumes, we would have
to identify and qualify acceptable replacements. The process of qualifying subcontractors and suppliers could be lengthy, and
no assurance can be given that any additional sources would be available to us on a timely basis. Any delay, interruption or termination
of a supplier relationship could adversely affect our ability to deliver products, which would harm our operating results.
Our
suppliers manufacture components, tooling, and provide engineering services. During this process, our suppliers are allowed access
to our intellectual property. While we maintain patents to protect from intellectual property infringement, there can be no assurance
that technological information gained in the manufacture of our products will not be used to develop a new product, improve processes
or techniques which compete against our products. Litigation may be necessary to enforce or determine the validity and scope of
our proprietary rights, and there can be no assurance that our intellectual property rights, if challenged, will be upheld as
valid.
Future
changes in semiconductor technologies may make our products obsolete.
Future
improvements in semiconductor design and manufacturing technology may reduce or eliminate the need for our products. For example,
improvements in semiconductor process technology and improvements in conventional test systems, such as reduced cost or increased
throughput, may significantly reduce or eliminate the market for one or more of our products. If we are not able to improve our
products or develop new products or technologies quickly enough to maintain a competitive position in our markets, our business
may decline.
We
depend on our key personnel and our success depends on our ability to attract and retain talented employees.
Our
success depends to a significant extent upon the continued service of Gayn Erickson, our President and Chief Executive Officer,
as well as other executive officers and key employees. We do not maintain key person life insurance for our benefit on any of
our personnel, and none of our employees are subject to a non-competition agreement with us. The loss of the services of any of
our executive officers or a group of key employees could have a material adverse effect on our business, financial condition and
operating results. Our future success will depend in significant part upon our ability to attract and retain highly skilled technical,
management, sales and marketing personnel. There is a limited number of personnel with the requisite skills to serve in these
positions, and it has become increasingly difficult for us to hire such personnel. Competition for such personnel in the semiconductor
equipment industry is intense, and there can be no assurance that we will be successful in attracting or retaining such personnel.
Changes in management could disrupt our operations and adversely affect our operating results.
We
may be subject to litigation relating to intellectual property infringement which would be time-consuming, expensive and a distraction
from our business.
If
we do not adequately protect our intellectual property, competitors may be able to use our proprietary information to erode our
competitive advantage, which could harm our business and operating results. Litigation may be necessary to enforce or determine
the validity and scope of our proprietary rights, and there can be no assurance that our intellectual property rights, if challenged,
will be upheld as valid. Such litigation could result in substantial costs and diversion of resources and could have a material
adverse effect on our operating results, regardless of the outcome of the litigation. In addition, there can be no assurance that
any of the patents issued to us will not be challenged, invalidated or circumvented or that the rights granted thereunder will
provide competitive advantages to us.
There
are no pending claims against us regarding infringement of any patents or other intellectual property rights of others. However,
in the future we may receive communications from third parties asserting intellectual property claims against us. Such claims
could include assertions that our products infringe, or may infringe, the proprietary rights of third parties, requests for indemnification
against such infringement or suggestions that we may be interested in acquiring a license from such third parties. There can be
no assurance that any such claim will not result in litigation, which could involve significant expense to us, and, if we are
required or deem it appropriate to obtain a license relating to one or more products or technologies, there can be no assurance
that we would be able to do so on commercially reasonable terms, or at all.
While
we believe we have complied with all applicable environmental laws, our failure to do so could adversely affect our business as
a result of having to pay substantial amounts in damages or fees.
Federal,
state and local regulations impose various controls on the use, storage, discharge, handling, emission, generation, manufacture
and disposal of toxic and other hazardous substances used in our operations. We believe that our activities conform in all material
respects to current environmental and land use regulations applicable to our operations and our current facilities, and that we
have obtained environmental permits necessary to conduct our business. Nevertheless, failure to comply with current or future
regulations could result in substantial fines, suspension of production, alteration of our manufacturing processes or cessation
of operations. Such regulations could require us to acquire expensive remediation equipment or to incur substantial expenses to
comply with environmental regulations. Any failure to control the use, disposal or storage of or adequately restrict the discharge
of, hazardous or toxic substances could subject us to significant liabilities.
If
we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial
reporting may be adversely affected.
We
are required to comply with Section 404 of the Sarbanes-Oxley Act of 2002. The provisions of the act require, among other things,
that we maintain effective internal control over financial reporting and disclosure controls and procedures. Preparing our financial
statements involves a number of complex processes, many of which are done manually and are dependent upon individual data input
or review. These processes include, but are not limited to, calculating revenue, deferred revenue and inventory costs. While we
continue to automate our processes and enhance our review and put in place controls to reduce the likelihood for errors, we expect
that for the foreseeable future, many of our processes will remain manually intensive and thus subject to human error.
Risks
Related to This Offering and Our Common Stock
New
investors in our common stock will experience immediate and substantial dilution after this offering.
If
you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution of $3.17 per
share, or $3.09 per share if the underwriter exercises its
over-allotment option in full, in the as adjusted net tangible book value per share of our common stock as of February 28,
2017, based on the difference between the public offering price of
$3.90 per share and the as adjusted net
tangible book value per share of our common stock as of February 28, 2017, because the price that you pay will be
substantially greater than our net tangible book value per share of the common stock that you acquire. This dilution is due
in large part to the fact that our earlier investors paid substantially less than the public offering price when they
purchased their shares of our capital stock. You will experience additional dilution upon exercise of options to purchase
common stock under our equity incentive plans, upon conversion of outstanding convertible promissory notes, or if we
otherwise issue additional shares of our common stock. For a further description of the dilution that you will experience
immediately after this offering, see “Dilution.”
Our
stockholders may experience further dilution if we issue additional shares of common stock in the future.
Any
additional future issuances of common stock by us will reduce the percentage of our common stock owned by investors purchasing
shares in this offering who do not participate in such future issuances. In most circumstances stockholders will not be entitled
to vote on whether or not we issue additional common stock. In addition, depending on the terms and pricing of an additional offering
of our common stock and the value of our assets, our stockholders may experience dilution in both the book value and fair value
of their shares.
We
will have broad discretion in the use of proceeds from this offering and our existing cash, cash equivalents and short-term investments,
and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return.
We
will have broad discretion in the application of the net proceeds from this offering and our existing cash, cash equivalents and
short-term investments. You may not agree with our decisions, and our use of the proceeds and our existing cash, cash equivalents
and short-term investments may not improve our results of operation or enhance the value of our common stock. In addition, we
may also use a portion of our net proceeds to acquire and invest in complementary products or businesses; however, we currently
have no agreements or commitments to complete any such transaction. Investors will be relying on our judgment regarding the use
of the net proceeds from this offering. You will not have the opportunity to influence our management’s decisions on how
to use the net proceeds from this offering. Our failure to apply the net proceeds of this offering effectively could result in
financial losses that could materially impair our ability to pursue our strategy, cause the market price of our common stock to
decline, or require us to raise additional capital.
Our
common stock may be delisted from The NASDAQ Capital Market if we cannot maintain compliance with NASDAQ’s continued listing
requirements.
In
order to maintain our listing on The NASDAQ Capital Market, we are required to maintain compliance with NASDAQ’s continued
listing requirements. The continued listing requirements include, among others, a minimum bid price of $1.00 per share and any
of: (i) a minimum stockholders’ equity of $2.5 million; (ii) a market value of listed securities of at least $35 million;
or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three
fiscal years. There are no assurances that we will be able to sustain long-term compliance with NASDAQ’s continued listing
requirements. On April 19, 2016, we were notified by NASDAQ
that we were no longer in compliance with NASDAQ’s continued
listing requirements as we did not have a minimum stockholders’ equity of $2.5 million. On October 3, 2016, we were notified
by NASDAQ that we had regained compliance with NASDAQ’s continued listing requirements. If we fail to maintain compliance
with the applicable NASDAQ continued listing requirements, our stock may be delisted.
If
we are delisted, we would expect our common stock to be traded in the over-the-counter market, which could make trading our common
stock more difficult for investors, potentially leading to declines in our share price and liquidity. Delisting from The NASDAQ
Capital Market would also constitute an event of default under our Convertible Notes. In addition, delisting could result in negative
publicity and make it more difficult for us to raise additional capital.
Our
stock price may fluctuate.
The
price of our common stock has fluctuated in the past and may fluctuate significantly in the future. We believe that factors such
as announcements of developments related to our business, fluctuations in our operating results, general conditions in the semiconductor
and semiconductor equipment industries as well as the worldwide economy, announcement of technological innovations, new systems
or product enhancements by us or our competitors, fluctuations in the level of cooperative development funding, acquisitions,
changes in governmental regulations, developments in patents or other intellectual property rights and changes in our relationships
with customers and suppliers could cause the price of our common stock to fluctuate substantially. In addition, in recent years
the stock market in general, and the market for small capitalization and high technology stocks in particular, have experienced
extreme price fluctuations which have often been unrelated to the operating performance of the affected companies. Such fluctuations
could adversely affect the market price of our common stock.
We
are not currently paying dividends and will likely not pay dividends for the foreseeable future.
We
have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and any
future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the
foreseeable future. In addition, our outstanding convertible notes restrict us from paying any dividends or making any other distribution
or payment on account of our common stock. Any future determination to pay dividends will be at the discretion of our board of
directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions and
other factors that our board of directors deems relevant.
If
securities or industry analysts issue an adverse opinion regarding our stock, our stock price and trading volume could decline.
The
trading market for our common stock is influenced by the research and reports that securities or industry analysts may publish
about us, our business, our market or our competitors. We currently have limited research coverage by securities and industry
analysts. If any of the analysts who may cover us change their recommendation regarding our common stock adversely, or provide
more favorable relative recommendations about our competitors, the trading price of our common stock would likely decline. If
any analyst who may cover us were to cease coverage of our company or fail or to regularly publish reports on us, we could lose
visibility in the financial markets, which in turn could cause the trading price of our common stock or trading volume to decline.
FORWARD-LOOKING
STATEMENTS
This
prospectus supplement, the accompanying prospectus and the information incorporated by reference in this prospectus supplement
and the accompanying prospectus contain certain statements that constitute “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange
Act of 1934, as amended (Exchange Act). The words “believe,” “may,” “will,” “potentially,”
“estimate,” “continue,” “anticipate,” “intend,” “could,” “would,”
“project,” “plan,” “expect” and the negative and plural forms of these words and similar expressions
are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Those statements
appear in this prospectus supplement, the accompanying prospectus and the documents incorporated herein and therein by reference,
particularly in the sections titled “Prospectus Supplement Summary,” “Prospectus Summary,” “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
“Business,” and include statements regarding the intent, belief or current expectations of the Company and management
that are subject to known and unknown risks, uncertainties and assumptions.
This
prospectus supplement and the accompanying prospectus and the information incorporated by reference in this prospectus supplement
and the accompanying prospectus also contain statements that are based on the current expectations of our Company and management.
You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified,
you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in
the forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in
the forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the
rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements contained herein
after we distribute this prospectus supplement, whether as a result of any new information, future events or otherwise.
USE
OF PROCEEDS
We
estimate that the net proceeds to us from the sale of our common stock in this offering will be approximately $13.7 million
after deducting underwriting discounts and commissions and estimated offering expenses payable by us, or approximately
$15.8 million if the underwriter exercises its
option to purchase additional shares in full.
We
expect to use the net proceeds from the sale of our common stock in this offering for general corporate purposes, which may include
working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies or businesses.
However, we do not have any current plans, agreements or commitments for any specific acquisitions at this time. The timing and
amount of our actual expenditures will be based on many factors, including, among others, cash flows from operations and the anticipated
growth of our business. As a result, our management will have broad discretion to allocate the net proceeds of the offerings.
Pending their ultimate use, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.
PRICE
RANGE OF OUR COMMON STOCK
Our
common stock is listed on The NASDAQ Capital Market under the symbol “AEHR.” The following table sets forth, for the
periods indicated, the high and low sales prices of our common stock as reported on The NASDAQ Capital Market:
|
|
High
|
|
|
Low
|
|
Fiscal Year ended May 31, 2015
|
|
|
|
|
|
|
First Quarter ended August 31, 2014
|
|
$
|
3.24
|
|
|
$
|
1.92
|
|
Second Quarter ended November 30, 2014
|
|
$
|
2.80
|
|
|
$
|
1.80
|
|
Third Quarter ended February 28, 2015
|
|
$
|
2.80
|
|
|
$
|
2.18
|
|
Fourth Quarter ended May 31, 2015
|
|
$
|
2.86
|
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year ended May 31, 2016
|
|
|
|
|
|
|
|
|
First Quarter ended August 31, 2015
|
|
$
|
2.49
|
|
|
$
|
1.95
|
|
Second Quarter ended November 30, 2015
|
|
$
|
2.59
|
|
|
$
|
1.72
|
|
Third Quarter ended February 29, 2016
|
|
$
|
2.02
|
|
|
$
|
1.01
|
|
Fourth Quarter ended May 31, 2016
|
|
$
|
1.76
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year ended May 31, 2017
|
|
|
|
|
|
|
|
|
First Quarter ended August 31, 2016
|
|
$
|
3.42
|
|
|
$
|
0.96
|
|
Second Quarter ended November 30, 2016
|
|
$
|
3.58
|
|
|
$
|
2.05
|
|
Third Quarter ended February 28, 2017
|
|
$
|
5.28
|
|
|
$
|
2.15
|
|
Fourth Quarter (through April 12, 2017)
|
|
$
|
6.10
|
|
|
$
|
3.37
|
|
As
of February 28, 2017, there were 153 holders of record of our common stock. On April 12, 2017, the last sale price reported on
The NASDAQ Capital Market for our common stock was $4.04 per share.
The
comparisons contained herein may not provide meaningful information to you in determining whether to purchase our common stock.
You are urged to obtain current sale prices of our common stock and to carefully review the other information contained in this
prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein or therein. See “Where
You Can Find More Information” and “Information Incorporated by Reference” in this prospectus supplement.
DIVIDEND
POLICY
We
have never declared or paid any dividends on our capital stock. We currently expect to retain future earnings, if any, for use
in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. In addition,
our outstanding convertible notes restrict us from paying any dividends or making any other distribution or payment on account
of our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend
on our financial condition, results of operations, capital requirements, contractual restrictions and other factors that our board
of directors deems relevant.
DILUTION
If
you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the amount per
share paid by purchasers of shares of our common stock in this public offering and the as adjusted net tangible book value per
share of our common stock immediately after completion of this offering.
Our net tangible book
value is the amount of our total tangible assets less our total liabilities. Net tangible book value per share is our net tangible
book value divided by the number of shares of common stock outstanding as of February 28, 2017. Our net tangible book value as
of February 28, 2017 was $
1.3 million, or $0.08 per share, based on 16,753,892 shares of our
common stock outstanding as of February 28, 2017.
After
giving effect to the sale of 3,846,154 shares of common stock by us in this offering at the public offering price of $3.90
per share, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our
as adjusted net tangible book value at February 28, 2017 would have been approximately $15.0 million, or
$0.73 per share of common stock. This represents an immediate increase in as
adjusted net tangible book value of $0.65 per share to existing stockholders and an immediate dilution of
$3.17 per share to investors purchasing shares of common stock in this
offering.
The
following table illustrates this dilution on a per share basis:
Public offering price per share
|
|
|
|
|
$
|
3.90
|
Net tangible book value per share as of February 28, 2017
|
|
$
|
0.08
|
|
|
|
|
|
Increase in net tangible book value per share attributable to investors participating in this offering
|
|
|
0.65
|
|
|
|
|
|
As adjusted net tangible book value
per share immediately after this offering
|
|
|
|
|
|
$
|
0.73
|
|
As adjusted dilution per share
to investors participating in this offering
|
|
|
|
|
|
$
|
3.17
|
|
If
the underwriter exercises in full its option to purchase an additional 576,923 shares of common stock at the public offering
price of $3.90 per share, the as adjusted net tangible book value after this
offering would be $0.81 per share, representing an increase in net tangible book
value of $0.73 per share to existing stockholders and immediate dilution of
$3.09 per share to investors purchasing our common stock in this
offering.
The
number of shares of our common stock set forth in the table above excludes the following as of February 28, 2017:
|
●
|
3,156,734
shares of common stock issuable upon the exercise of options
outstanding, at a weighted-average exercise price of $1.72 per share, and 34,125 shares of common stock issuable upon the vesting
of outstanding restricted stock units;
|
|
●
|
2,169,259
shares of common stock reserved for future issuance under our 2016 Equity Incentive Plan;
|
|
●
|
467,410
shares of common stock reserved for future issuance under our Amended and Restated 2006 Employee Stock Purchase Plan (ESPP);
and
|
|
●
|
2,656,521
shares of common stock issuable upon conversion of outstanding convertible promissory notes issued to QVT Fund LP and Quintessence
Fund L.P. pursuant to that certain Convertible Note Purchase and Credit Facility Agreement dated April 10, 2015, as amended
August 22, 2016.
|
Because
there is no minimum offering amount required as a condition to the closing of this offering, the dilution per share to new investors
may be more than that indicated above in the event that the actual number of shares sold, if any, is less than the maximum number
of shares of our common stock we are offering.
Furthermore,
we may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or
strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent
we issue additional shares of common stock or other equity or convertible debt securities in the future, there will be further
dilution to investors participating in this offering.
UNDERWRITING
We
are offering the shares of common stock described in this prospectus supplement and the accompanying prospectus through the underwriter
listed below. Craig-Hallum Capital Group LLC is acting as the sole book-running manager of this offering. The underwriter named
below has agreed to buy, subject to the terms of the underwriting agreement, the number of shares of common stock listed opposite
its name below. The underwriter is committed to purchase and pay for all of the shares if any are purchased, other than those
shares covered by the over-allotment option described below.
Underwriter
|
|
|
Number of Shares
|
|
Craig-Hallum Capital Group LLC
|
|
|
3,846,154
|
|
Total
|
|
|
3,846,154
|
|
The
underwriter has advised us that it proposes to offer the shares of common stock to the public at a price of $3.90 per
share. The underwriter proposes to offer the shares of common stock to certain dealers at the same price less a concession of
not more than $0.14625 per share. After the offering, these figures may be changed by
the underwriter.
The
shares sold in this offering are expected to be ready for delivery on or about April 19,
2017, against payment in immediately available funds. The underwriter may reject all or part of any order.
We
have granted to the underwriter an option to purchase up to an additional 576,923 shares of common stock from us at the same
price to the public, and with the same underwriting discount, as set forth in the table below. The underwriter may exercise
this option any time during the 30-day period after the date of this prospectus supplement, but only to cover
over-allotments, if any. To the extent the underwriter exercises the option, the underwriter will become obligated, subject
to certain conditions, to purchase the shares for which it exercises the option.
The
table below summarizes the underwriting discounts that we will pay to the underwriter. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option. In addition to the underwriting discount, we have agreed to pay up to
$90,000 of the fees and expenses of the underwriter, which may include the fees and expenses of counsel to the underwriter. The
fees and expenses of the underwriter that we have agreed to reimburse are not included in the underwriting discounts set forth
in the table below. The underwriting discount and reimbursable expenses the underwriter will receive were determined through arms’
length negotiations between us and the underwriter.
|
|
Per Share
|
|
|
Total with no
Over-Allotment
|
|
|
Total with
Over-Allotment
|
|
Underwriting discount to be paid by us
|
|
$
|
0.24375
|
|
|
$
|
937,500
|
|
|
$
|
1,078,125
|
|
We
estimate that the total expenses of this offering, excluding underwriting discounts, will be $345,000. This includes $90,000 of the
fees and expenses of the underwriter. These expenses are payable by us.
We
also have agreed to indemnify the underwriter against certain liabilities, including civil liabilities under the Securities Act
of 1933, as amended, or to contribute to payments that the underwriter may be required to make in respect of those liabilities.
No
Sales of Similar Securities
We
and each of our directors and officers have agreed not to offer, sell, agree to sell, directly or indirectly, or otherwise dispose
of any shares of common stock or any securities convertible into or exchangeable for shares of common stock without the prior
written consent of the underwriter for a period of 90 days after the date of this prospectus supplement. These lock-up agreements
provide limited exceptions and their restrictions may be waived at any time by the underwriter.
Price
Stabilization, Short Positions and Penalty Bids
To
facilitate this offering, the underwriter may engage in transactions that stabilize, maintain or otherwise affect the price of
our common stock during and after the offering. Specifically, the underwriter may over-allot or otherwise create a short position
in our common stock for its own account by selling more shares of common stock than we have sold to the underwriter. The underwriter
may close out any short position by either exercising its option to purchase additional shares or purchasing shares in the open
market.
In
addition, the underwriter may stabilize or maintain the price of our common stock by bidding for or purchasing shares in the open
market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to broker-dealers participating in
this offering are reclaimed if shares previously distributed in this offering are repurchased, whether in connection with stabilization
transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of our common stock
at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price
of our common stock to the extent that it discourages resales of our common stock. The magnitude or effect of any stabilization
or other transactions is uncertain. These transactions may be effected on The NASDAQ Capital Market or otherwise and, if commenced,
may be discontinued at any time.
In
connection with this offering, the underwriter and selling group members may also engage in passive market making transactions
in our common stock on The NASDAQ Capital Market. Passive market making consists of displaying bids on The NASDAQ Capital Market
limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow.
Rule 103 of Regulation M promulgated by the Securities and Exchange Commission limits the amount of net purchases that
each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of
our common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued
at any time.
Neither
we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither we nor the underwriter make any representation
that the underwriter will engage in these transactions or that any transaction, if commenced, will not be discontinued without
notice.
Affiliations
The
underwriter, together with its affiliates, is a full service financial institution engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal
investment, hedging, financing and brokerage activities. The underwriter may in the future engage in investment banking and other
commercial dealings in the ordinary course of business with us or our affiliates. The underwriter may in the future receive customary
fees and commissions for these transactions.
In
the ordinary course of its various business activities, the underwriter and its affiliates may make or hold a broad array of investments
and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans)
for its own account and for the accounts of its customers, and such investment and securities activities may involve securities
and/or instruments of the issuer. The underwriter and its affiliates may also make investment recommendations and/or publish or
express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients
that they acquire, long and/or short positions in such securities and instruments.
Electronic
Offer, Sale and Distribution
In
connection with this offering, the underwriter or certain of the securities dealers may distribute prospectuses by electronic
means, such as e-mail. In addition, the underwriter may facilitate Internet distribution for this offering to certain of its Internet
subscription customers. The underwriter may allocate a limited number of shares for sale to its online brokerage customers. An
electronic prospectus is available on the Internet websites maintained by any such underwriter. Other than the prospectus in electronic
format, the information on the websites of the underwriter is not part of this prospectus supplement or the accompanying prospectus.
Listing
Our
common stock is listed on The NASDAQ Capital Market under the symbol “AEHR.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent and registrar’s
address is Computershare Trust Company, N.A., P.O. Box 43070, Providence, RI 02940-3070. Our shares of common stock are issued
in uncertificated form only, subject to limited circumstances.
Selling
Restrictions
Canada
.
The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45 106
Prospectus Exemptions
or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31 103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations
. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this
prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission
or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33 105
Underwriting Conflicts
(NI 33 105), the underwriter is not required to comply
with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering.
European
Economic Area.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive
(each, a “Relevant Member State”) an offer to the public of any shares of our common stock may not be made in that
Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may
be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant
Member State:
|
●
|
to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
|
|
●
|
to
fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive,
150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under
the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
|
|
●
|
in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of
our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article
3 of the Prospectus Directive.
|
For
the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock
in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the
offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common
stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State,
the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending
Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant
Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United
Kingdom.
The underwriter has represented and agreed that:
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it
has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”))
received by it in connection with the
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issue
or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and
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it
has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to
the shares of our common stock in, from or otherwise involving the United Kingdom.
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Switzerland.
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the “SIX”)
or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to
the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the
shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this document nor any other offering or marketing material relating to the offering, or the shares have been or will be filed
with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares
will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will
not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). Accordingly, no public distribution,
offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any non-qualified
investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor
protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of shares.
Australia.
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the
Australian Securities and Investments Commission (“ASIC”), in relation to the offering.
This
prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations
Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product
disclosure statement or other disclosure document under the Corporations Act.
Any
offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated
investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within
the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708
of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations
Act.
The
shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after
the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations
Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is
pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe
such Australian on-sale restrictions.
This
prospectus contains general information only and does not take account of the investment objectives, financial situation or particular
needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making
an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives
and circumstances, and, if necessary, seek expert advice on those matters.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and other reports, proxy statements and other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file
at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, including any amendments to those reports, and other information that we file with or furnish to the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act can also be accessed free of charge through the Internet. These filings
will be available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We
have filed with the SEC a registration statement under the Securities Act relating to the offering of these securities. The registration
statement, including the attached exhibits, contains additional relevant information about us and the securities. This prospectus
does not contain all of the information set forth in the registration statement. You can obtain a copy of the registration statement,
at prescribed rates, from the SEC at the address listed above. The registration statement and the documents referred to below
under “Information Incorporated by Reference” are also available on our Internet website, www.aehr.com. We have not
incorporated by reference into this prospectus the information on our website, and you should not consider it to be a part of
this prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus supplement and the accompanying prospectus certain information
we file with it, which means that we can disclose important information by referring you to those documents. The information incorporated
by reference is considered to be a part of this prospectus supplement and the accompanying prospectus, and information that we
file later with the SEC will automatically update and supersede information contained in this prospectus supplement and the accompanying
prospectus. We incorporate by reference the documents listed below that we have previously filed with the SEC (excluding any portions
of any Form 8-K that are not deemed “filed” pursuant to the General Instructions of Form 8-K):
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our
Annual Report on Form 10-K for the fiscal year ended May 31, 2016, filed with the SEC on August 29, 2016, including the information
specifically incorporated by reference into the Annual Report from our definitive proxy statement on Schedule 14A, filed
with the SEC on September 26, 2016;
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our
Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 2016 (filed with the SEC on October 14, 2016),
November 30, 2016 (filed with the SEC on January 13, 2017) and February 28, 2017 (filed with the SEC on April 6, 2017);
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our
Current Reports on Form 8-K filed with the SEC on August 24, 2016, September 28, 2016, September 30, 2016, October 4, 2016
and October 20, 2016, respectively; and
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the
description of our common stock contained in our Registration Statement on Form 8-A as filed with the SEC on July 29, 1997
pursuant to Section 12(b) of the Exchange Act.
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We
also incorporate by reference into this prospectus supplement and the accompanying prospectus additional documents (other than
current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits on such form that are related to such items) that
we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the completion or termination of
the offering, but excluding any information deemed furnished and not filed with the SEC. Any statements contained in a previously
filed document incorporated by reference into this prospectus supplement and the accompanying prospectus is deemed to be modified
or superseded for purposes of this prospectus supplement and the accompanying prospectus to the extent that a statement contained
in this prospectus supplement or the accompanying prospectus, or in a subsequently filed document also incorporated by reference
herein, modifies or supersedes that statement.
This
prospectus supplement and the accompanying prospectus may contain information that updates, modifies or is contrary to information
in one or more of the documents incorporated by reference in this prospectus supplement or
accompanying prospectus. You should
rely only on the information incorporated by reference or provided in this prospectus supplement and the accompanying prospectus.
We have not authorized anyone else to provide you with different information. You should not assume that the information in this
prospectus supplement or the accompanying prospectus is accurate as of any date other than the date of this prospectus supplement
or the accompanying prospectus or the date of the documents incorporated by reference in this prospectus supplement or the accompanying
prospectus.
We
will provide to each person, including any beneficial owner, to whom this prospectus supplement and the accompanying prospectus
is delivered, upon written or oral request, at no cost to the requester, a copy of any and all of the information that is incorporated
by reference in this prospectus supplement and the accompanying prospectus.
Requests
for such documents should be directed to:
Aehr
Test Systems
400 Kato Terrace
Fremont, California 94539
Attention: Chief Financial Officer
You
may also access the documents incorporated by reference in this prospectus supplement and the accompanying prospectus through
our website at www.aehr.com. Except for the specific incorporated documents listed above, no information available on or through
our website shall be deemed to be incorporated in this prospectus supplement and the accompanying prospectus or the registration
statement of which they form a part.
LEGAL
MATTERS
The
validity of the common stock offered hereby will be passed upon by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto,
California. Mario M. Rosati is a member of Wilson Sonsini Goodrich & Rosati, P.C. and a director of Aehr Test Systems. Certain
members of, and investment partnerships comprised of members of, and persons associated with, Wilson Sonsini Goodrich & Rosati,
P.C., own an aggregate of 227,685 shares of our common stock and options to purchase an additional 178,254 shares of our common
stock. Certain legal matters in connection with the offering will be passed upon for the underwriter by Faegre Baker Daniels LLP,
Minneapolis, Minnesota.
EXPERTS
The
consolidated financial statements of Aehr Test Systems as of May 31, 2016 and 2015 and for each of the three years in the period
ended May 31, 2016, incorporated herein by reference to the Annual Report on Form 10-K for the year ended May 31, 2016, have been
so incorporated in reliance on the report of BPM LLP, an independent registered public accounting firm, given on the authority
of said firm as experts in auditing and accounting.
PROSPECTUS
$30,000,000
Aehr
Test Systems
By
this prospectus, Aehr Test Systems may offer, from time to time:
● Common stock
● Preferred stock
● Depositary shares
● Warrants
● Debt securities
● Subscription Rights
● Units
We
may offer and sell from time to time, in one or more series or issuances and on terms that we will determine at the time of the
offering, any combination of the securities described in this prospectus, up to an aggregate amount of $30,000,000.
We
will provide specific terms of any offering in a supplement to this prospectus. Any prospectus supplement may also add, update
or change information contained in this prospectus. You should carefully read this prospectus and the applicable prospectus supplement
as well as the documents incorporated or deemed to be incorporated by reference in this prospectus before you purchase any of
the securities offered hereby.
These
securities may be offered and sold in the same offering or in separate offerings; to or through underwriters, dealers and agents;
or directly to purchasers. The names of any underwriters, dealers or agents involved in the sale of our securities, their compensation
and any over-allotment options held by them will be described in the applicable prospectus supplement. See the section titled
“Plan of Distribution.”
Our
common stock is listed on The NASDAQ Capital Market under the symbol “AEHR.” We will provide information in any applicable
prospectus supplement regarding any listing of securities other than shares of our common stock on any securities exchange.
As
of February 28, 2017, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $70,312,652,
which was calculated based on 13,418,445 shares of outstanding common stock held by non-affiliates and on a price per share of
$5.24. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell the securities in a public primary offering
pursuant to this registration statement with a value exceeding more than one-third of the aggregate market value of our voting
and non-voting common equity held by non-affiliates in any 12-month period as long as the aggregate market value of our outstanding
voting and non-voting common equity held by non-affiliates is less than $75 million. During the 12 calendar months prior to and
including the date of this prospectus, we have not offered or sold any securities pursuant to General Instruction I.B.6 of Form
S-3.
INVESTING
IN OUR SECURITIES INVOLVES SIGNIFICANT RISKS. YOU SHOULD REVIEW CAREFULLY THE “RISK FACTORS” ON PAGE 4 OF THIS PROSPECTUS,
AS WELL AS IN THE APPLICABLE PROSPECTUS SUPPLEMENT, ANY RELATED FREE WRITING PROSPECTUS AND OTHER INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSEPCTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT BEFORE INVESTING IN OUR SECURITIES.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is March 24, 2017
Table
of Contents
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Page
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About This Prospectus
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1
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Prospectus Summary
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2
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Risk Factors
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4
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Forward-Looking Statements
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4
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Use of Proceeds
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5
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Description of Capital Stock
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6
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Description of the Depositary Shares
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8
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Description of the Warrants
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11
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Description of the Debt Securities
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14
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Description of Subscription Rights
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26
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Description of Units
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27
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Plan of Distribution
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Legal Matters
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31
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Experts
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Where You Can Find More Information
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Information Incorporated by Reference
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed with the United States Securities and Exchange Commission,
or the SEC, using a “shelf” registration process. Under this shelf process, we may, from time to time, sell any combination
of the securities described in this prospectus in one or more offerings up to a total amount of $30,000,000.
This
prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide
a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may
also add to, update or change information contained in the prospectus and, accordingly, to the extent inconsistent, information
in this prospectus is superseded by the information in the prospectus supplement.
The
prospectus supplement to be attached to the front of this prospectus may describe, as applicable: the terms of the securities
offered; the initial public offering price; the price paid for the securities; net proceeds; and the other specific terms related
to the offering of the securities.
You
should only rely on the information contained or incorporated by reference in this prospectus and any prospectus supplement or
free writing prospectus relating to a particular offering. No person has been authorized to give any information or make any representations
in connection with this offering other than those contained or incorporated by reference in this prospectus, any accompanying
prospectus supplement and any related free writing prospectus in connection with the offering described herein and therein, and,
if given or made, such information or representations must not be relied upon as having been authorized by us. Neither this prospectus
nor any prospectus supplement nor any related free writing prospectus shall constitute an offer to sell or a solicitation of an
offer to buy offered securities in any jurisdiction in which it is unlawful for such person to make such an offering or solicitation.
This prospectus does not contain all of the information included in the registration statement. For a more complete understanding
of the offering of the securities, you should refer to the registration statement, including its exhibits.
You
should read the entire prospectus and any prospectus supplement and any related free writing prospectus, as well as the documents
incorporated by reference into this prospectus or any prospectus supplement or any related free writing prospectus, before making
an investment decision. Neither the delivery of this prospectus or any prospectus supplement or any free writing prospectus nor
any sale made hereunder shall under any circumstances imply that the information contained or incorporated by reference herein
or in any prospectus supplement or free writing prospectus is correct as of any date subsequent to the date hereof or of such
prospectus supplement or free writing prospectus, as applicable. You should assume that the information appearing in this prospectus,
any prospectus supplement, any related free writing prospectus or any document incorporated by reference is accurate only as of
the date of the applicable documents, regardless of the time of delivery of this prospectus or any sale of securities. Our business,
financial condition, results of operations and prospects may have changed since that date.
Prospectus
Summary
This
summary description about us and our business highlights selected information contained elsewhere in this prospectus or incorporated
in this prospectus by reference. This summary does not contain all of the information you should consider before buying securities
in this offering. You should carefully read this entire prospectus and any applicable prospectus supplement, including each of
the documents incorporated herein or therein by reference, before making an investment decision. Unless the context otherwise
requires, the terms “Aehr Test,” “the Company,” “we,” “us” and “our”
in this prospectus refer to Aehr Test Systems, and its subsidiaries.
Aehr
Test Systems
Overview
We
develop, manufacture and sell systems which are designed to reduce the cost of testing and to perform reliability screening, or
burn-in, of complex logic, memory devices, sensors and optical devices. These systems can be used to simultaneously perform parallel
testing and burn-in of packaged integrated circuits, or ICs, singulated bare die or ICs still in wafer form. Increased quality
and reliability needs of the mobility, automotive, photonics and flash memory integrated circuit markets are driving additional
testing requirements, capacity needs and opportunities for our products in package and wafer level testing. Leveraging our expertise
as a long-time leading provider of burn-in equipment, with over 2,500 systems shipped worldwide, we have developed and introduced
several innovative product families, including the FOX and ABTS systems, the WaferPak cartridge and the DiePak carrier. The FOX
systems are full wafer contact parallel test and burn-in systems designed to make contact with all pads of a wafer simultaneously,
thus enabling full wafer parallel test and burn-in. The latest ABTS family of packaged part burn-in and test systems can perform
test during burn-in of complex devices, such as digital signal processors, microprocessors, microcontrollers and systems-on-a-chip,
and offers individual temperature control for high-power advanced logic devices. The WaferPak cartridge includes innovative contact
technology for use in testing wafers and chip size packages in FOX systems. The DiePak carrier is a reusable, temporary package
that enables IC manufacturers to perform cost-effective final test and burn-in of singulated bare die.
Corporate
Information
We
were incorporated in the state of California on May 25, 1977. The mailing address and telephone number of our principal executive
offices are 400 Kato Terrace, Fremont, CA 94539 and (510) 623-9400, respectively. Our website is www.aehr.com. Information contained
on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider
information on our website to be part of this prospectus.
Our
logo and our other trade names, trademarks and service marks appearing in this prospectus are our property. Other trade names,
trademarks and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience,
our trademarks and tradenames referred to in this prospectus appear without the ™ symbol, but those references are not intended
to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the
applicable licensor to these trademarks and tradenames.
The
Securities We May Offer
We
may offer up to $30,000,000 of common stock, preferred stock, depositary shares, warrants, debt securities, subscription rights
and units in one or more offerings and in any combination.
Common
Stock
Holders
of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. Our restated
articles of incorporation do not provide for cumulative voting rights. Subject to preferences that may apply to any shares of
preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally
available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts
that our board of directors may determine. If we become subject to a
liquidation, dissolution or
winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the
holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of
all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on
any outstanding shares of preferred stock.
Preferred
Stock and Depositary Shares
Our
board of directors has the authority, subject to limitations prescribed by California law, to issue preferred stock in one or
more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers,
preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without
further vote or action by our stockholders.
We
may also issue fractional shares of preferred stock that will be represented by depositary shares and depositary receipts.
Each
series of preferred stock, depositary shares or depositary receipts, if issued, will be more fully described in the particular
prospectus supplement that will accompany this prospectus, including redemption provisions, rights in the event of our liquidation,
dissolution or winding-up, voting rights and rights to convert into common stock. We have no present plans to issue any shares
of preferred stock, depositary shares or depositary receipts nor are any shares of our preferred stock, depositary shares or depositary
receipts presently outstanding.
Warrants
We
may issue warrants for the purchase of common stock, preferred stock or debt securities. We may issue warrants independently or
together with other securities.
Debt
Securities
We
may offer secured or unsecured obligations in the form of one or more series of senior or subordinated debt. The senior debt securities
and the subordinated debt securities are together referred to in this prospectus as the “debt securities.” The subordinated
debt securities generally will be entitled to payment only after payment of our senior debt. Senior debt generally includes all
debt for money borrowed by us, except debt that is stated in the instrument governing the terms of that debt to be not senior
to, or to have the same rank in right of payment as, or to be expressly junior to, the subordinated debt securities. We may issue
debt securities that are convertible into shares of our common stock.
The
senior and subordinated debt securities will be issued under separate indentures between us and a trustee. We have summarized
the general features of the debt securities to be governed by the indentures. These indentures have been filed as exhibits to
the registration statement of which this prospectus forms a part. We encourage you to read these indentures. Instructions on how
you can get copies of these documents are provided in the section titled “Where You Can Find More Information.”
Subscription
Rights
We
may issue subscription rights to purchase our common stock, preferred stock or debt securities. These subscription rights may
be offered independently or together with any other security offered hereby and may or may not be transferable by the stockholder
receiving the subscription rights in such offering.
Units
We
may issue units comprised of one or more of the other classes of securities issued by us as described in this prospectus in any
combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit.
RISK FACTORS
An
investment in our securities involves a high degree of risk. The prospectus supplement applicable to each offering of our securities
will contain a discussion of the risks applicable to an investment in our securities. Prior to making a decision about investing
in our securities, you should carefully consider the specific factors discussed in the section titled “Risk Factors”
in the applicable prospectus supplement, together with all of the other information contained or incorporated by reference in the
prospectus supplement or appearing or incorporated by reference in this prospectus. You should also consider the risks, uncertainties
and assumptions discussed under “Part I—Item 1A—Risk Factors” in our Annual Report on Form 10-K for the
fiscal year ended May 31, 2016,
and “Part II—Item 1A—Risk Factors” in our Quarterly Reports
on Form 10-Q, all of which are incorporated herein by reference, and as may be amended, supplemented or superseded from time to
time by other reports we file with the SEC in the future and any prospectus supplement related to a particular offering. The risks
and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown risks might
cause you to lose all or part of your investment in the offered securities.
FORWARD-LOOKING STATEMENTS
This
prospectus, each prospectus supplement and the information incorporated by reference in this prospectus and each prospectus supplement
contain certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act. The words “believe,” “may,” “will,” “potentially,” “estimate,”
“continue,” “anticipate,” “intend,” “could,” “would,” “project,”
“plan,” “expect” and the negative and plural forms of these words and similar expressions are intended
to identify forward-looking statements, but are not the exclusive means of identifying such statements. Those statements appear
in this prospectus, any accompanying prospectus supplement and the documents incorporated herein and therein by reference, particularly
in the sections titled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and “Business,” and include statements regarding the intent,
belief or current expectations of the Company and management that are subject to known and unknown risks, uncertainties and assumptions.
This
prospectus, any prospectus supplement and the information incorporated by reference in this prospectus and any prospectus supplement
also contain statements that are based on the current expectations of our Company and management. You are cautioned that any such
forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results
may differ materially from those projected in the forward-looking statements as a result of various factors.
Because forward-looking statements
are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon forward-looking
statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be
achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as
required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we do
not plan to publicly update or revise any forward-looking statements contained herein after we distribute this prospectus, whether
as a result of any new information, future events or otherwise.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus
supplement, we will use the net proceeds from the sale of securities offered by this prospectus for general corporate purposes,
which may include working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies
or businesses. However, we do not have any current plans, agreements or commitments for any specific acquisitions at this time.
The timing and amount of our actual expenditures will be based on many factors, including, among others, cash flows from operations
and the anticipated growth of our business. As a result, unless otherwise indicated in the prospectus supplement, our management
will have broad discretion to allocate the net proceeds of the offerings. Pending their ultimate use, we intend to invest the net
proceeds in short-term, investment-grade, interest-bearing instruments.
DESCRIPTION
OF CAPITAL STOCK
General
The
following description summarizes the most important terms of our capital stock as set forth in our restated articles of incorporation
and amended and restated bylaws. This summary does not purport to be complete and is qualified in its entirety by the provisions
of our restated articles of incorporation and amended and restated bylaws, copies of which have been filed with the SEC. For a
complete description of our capital stock, you should refer to our restated articles of incorporation and amended and restated
bylaws that have been filed with the SEC, and to the applicable provisions of California law. Our authorized capital stock consists
of 75,000,000 shares of common stock, $0.01 par value per share, and 10,000,000 shares of preferred stock, $0.01 par value per
share.
Common
Stock
Outstanding
Shares
As
of February 28, 2017, there were 16,753,892 shares of common stock outstanding, held of record by 153 stockholders. Our board
of directors is authorized, without stockholder approval, to issue additional shares of our capital stock.
Dividend
Rights
Subject
to preferences that may be applicable to any then outstanding convertible preferred stock, holders of our common stock are entitled
to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. We
have never declared or paid cash dividends on any of our capital stock and currently do not anticipate paying any cash dividends
after this offering or in the foreseeable future.
Voting
Rights
There
are 75,000,000 shares of common stock authorized for issuance. Each holder of our common stock is entitled to one vote for each
share on all matters submitted to a vote of stockholders. Pursuant to our restated articles of incorporation and amended and restated
bylaws, corporate actions can generally be taken by a majority of our board and/or stockholders holding a majority of our outstanding
shares. Additionally, our stockholders have cumulative voting rights in the election of directors.
Right
to Receive Liquidation Distributions
In
the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the net
assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the
satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.
Rights
and Preferences
Holders
of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund
provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject
to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate
in the future.
Fully
Paid and Nonassessable
All
of our outstanding shares of common stock are, and the shares of common stock to be issued pursuant to this offering, when paid
for, will be fully paid and nonassessable.
Preferred
Stock
Our
board of directors has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences
and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may
be greater than the rights of common stock. The issuance of preferred stock by us could adversely affect the voting power of holders
of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition,
the issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control of our company
or other corporate action. No shares of preferred stock are outstanding, and we have no present plan to issue any shares of preferred
stock.
Stock
Options
As
of February 28, 2017, there were 3,156,734 shares of our common stock issuable upon exercise of outstanding stock options, at
a weighted-average exercise price of $1.72 per share.
Restricted
Stock Units
As
of February 28, 2017, there were 34,125 shares of our common stock issuable upon vesting of outstanding restricted stock units.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent and registrar’s
address is Computershare Trust Company, N.A., P.O. Box 43070, Providence, RI 02940-3070. Our shares of common stock are issued
in uncertificated form only, subject to limited circumstances.
Market
Listing
Our
common stock is listed on The NASDAQ Capital Market under the symbol “AEHR.”
DESCRIPTION
OF
THE DEPOSITARY SHARES
General
At
our option, we may elect to offer fractional shares of preferred stock, rather than full shares of preferred stock. If we do elect
to offer fractional shares of preferred stock, we will issue receipts for depositary shares and each of these depositary shares
will represent a fraction of a share of a particular series of preferred stock, as specified in the applicable prospectus supplement.
Each owner of a depositary share will be entitled, in proportion to the applicable fractional interest in shares of preferred
stock underlying that depositary share, to all rights and preferences of the preferred stock underlying that depositary share.
These rights may include dividend, voting, redemption and liquidation rights.
The
shares of preferred stock underlying the depositary shares will be deposited with a bank or trust company selected by us to act
as depositary, under a deposit agreement by and among us, the depositary and the holders of the depositary receipts. The depositary
will be the transfer agent, registrar and dividend disbursing agent for the depositary shares.
The
depositary shares will be evidenced by depositary receipts issued pursuant to the depositary agreement. Holders of depositary
receipts agree to be bound by the deposit agreement, which requires holders to take certain actions such as filing proof of residence
and paying certain charges.
The
summary of terms of the depositary shares contained in this prospectus is not complete, and is subject to modification in any
prospectus supplement for any issuance of depositary shares. You should refer to the forms of the deposit agreement, our restated
articles of incorporation and the certificate of designation that are, or will be, filed with the SEC for the applicable series
of preferred stock.
Dividends
The
depositary will distribute cash dividends or other cash distributions, if any, received in respect of the series of preferred
stock underlying the depositary shares to the record holders of depositary receipts in proportion to the number of depositary
shares owned by those holders on the relevant record date. The relevant record date for depositary shares will be the same date
as the record date for the preferred stock.
In
the event of a distribution other than in cash, the depositary will distribute property received by it to the record holders of
depositary receipts that are entitled to receive the distribution, unless the depositary determines that it is not feasible to
make the distribution. If this occurs, the depositary, with our approval, may adopt another method for the distribution, including
selling the property and distributing the net proceeds to the holders.
Liquidation
Preference
If
a series of preferred stock underlying the depositary shares has a liquidation preference, in the event of our voluntary or involuntary
liquidation, dissolution or winding up, holders of depositary shares will be entitled to receive the fraction of the liquidation
preference accorded each share of the applicable series of preferred stock, as set forth in the applicable prospectus supplement.
Redemption
If
a series of preferred stock underlying the depositary shares is subject to redemption, the depositary shares will be redeemed
from the proceeds received by the depositary resulting from the redemption, in whole or in part, of the preferred stock held by
the depositary. Whenever we redeem any preferred stock held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock so redeemed. The depositary will mail the notice of redemption
to the record holders of the depositary receipts promptly upon receiving the notice from us and not fewer than 20 or more than
60 days, unless otherwise provided in the applicable prospectus supplement, prior to the date fixed for redemption of the preferred
stock.
Voting
Upon
receipt of notice of any meeting at which the holders of preferred stock are entitled to vote, the depositary will mail the information
contained in the notice of meeting to the record holders of the depositary receipts underlying the preferred stock. Each record
holder of those depositary receipts on the record date will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock underlying that holder’s depositary shares. The record date for the depositary
will be the same date as the record date for the preferred stock. The depositary will, to the extent practicable, vote the preferred
stock underlying the depositary shares in accordance with these instructions. We will agree to take all action that may be deemed
necessary by the depositary in order to enable the depositary to vote the preferred stock in accordance with these instructions.
The depositary will not vote the preferred stock to the extent that it does not receive specific instructions from the holders
of depositary receipts.
Withdrawal
of Preferred Stock
Owners
of depositary shares will be entitled to receive upon surrender of depositary receipts at the principal office of the depositary
and payment of any unpaid amount due to the depositary, the number of whole shares of preferred stock underlying their depositary
shares.
Partial
shares of preferred stock will not be issued. Holders of preferred stock will not be entitled to deposit the shares under the
deposit agreement or to receive depositary receipts evidencing depositary shares for the preferred stock.
Amendment
and Termination of the Deposit Agreement
The
form of depositary receipt evidencing the depositary shares and any provision of the deposit agreement may be amended by agreement
between the depositary and us. However, any amendment which materially and adversely alters the rights of the holders of depositary
shares, other than fee changes, will not be effective unless the amendment has been approved by at least a majority of the outstanding
depositary shares. The deposit agreement may be terminated by the depositary or us only if:
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all
outstanding depositary shares have been redeemed; or
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there
has been a final distribution of the preferred stock in connection with our dissolution
and such distribution has been made to all the holders of depositary shares.
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Charges
of Depositary
We
will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangement.
We will also pay charges of the depositary in connection with:
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the
initial deposit of the preferred stock;
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the
initial issuance of the depositary shares;
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any
redemption of the preferred stock; and
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all
withdrawals of preferred stock by owners of depositary shares.
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Holders
of depositary receipts will pay transfer, income and other taxes and governmental charges and other specified charges as provided
in the deposit agreement for their accounts. If these charges have not been paid, the depositary may:
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refuse
to transfer depositary shares;
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withhold
dividends and distributions; and
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sell
the depositary shares evidenced by the depositary receipt.
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Miscellaneous
The
depositary will forward to the holders of depositary receipts all reports and communications we deliver to the depositary that
we are required to furnish to the holders of the preferred stock. In addition, the depositary will make available for inspection
by holders of depositary receipts at the principal office of the depositary, and at such other places as it may from time to time
deem advisable, any reports and communications we deliver to the depositary as the holder of preferred stock.
Neither
the depositary nor we will be liable if either the depositary or we are prevented or delayed by law or any circumstance beyond
the control of either the depositary or us in performing our respective obligations under the deposit agreement. Our obligations
and the depositary’s obligations will be limited to the performance in good faith of our or the depositary’s respective
duties under the deposit agreement. Neither the depositary nor we will be obligated to prosecute or defend any legal proceeding
in respect of any depositary shares or preferred stock unless satisfactory indemnity is furnished. The depositary and we may rely
on:
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written
advice of counsel or accountants;
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information
provided by holders of depositary receipts or other persons believed in good faith to
be competent to give such information; and
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documents
believed to be genuine and to have been signed or presented by the proper party or parties.
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Resignation
and Removal of Depositary
The
depositary may resign at any time by delivering a notice to us. We may remove the depositary at any time. Any such resignation
or removal will take effect upon the appointment of a successor depositary and its acceptance of such appointment. The successor
depositary must be appointed within 60 days after delivery of the notice for resignation or removal. The successor depositary
must be a bank and trust company having its principal office in the United States of America and having a combined capital and
surplus of at least $50,000,000.
Federal
Income Tax Consequences
Owners
of the depositary shares will be treated for U.S. federal income tax purposes as if they were owners of the preferred stock underlying
the depositary shares. As a result, owners will be entitled to take into account for U.S. federal income tax purposes any deductions
to which they would be entitled if they were holders of such preferred stock. No gain or loss will be recognized for U.S. federal
income tax purposes upon the withdrawal of preferred stock in exchange for depositary shares. The tax basis of each share of preferred
stock to an exchanging owner of depositary shares will, upon such exchange, be the same as the aggregate tax basis of the depositary
shares exchanged. The holding period for preferred stock in the hands of an exchanging owner of depositary shares will include
the period during which such person owned such depositary shares.
DESCRIPTION
OF THE WARRANTS
General
We
may issue warrants for the purchase of our debt securities, preferred stock or common stock, or any combination thereof. Warrants
may be issued independently or together with our debt securities, preferred stock or common stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between
us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with the warrants.
The warrant agent will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners
of warrants. This summary of certain provisions of the warrants is not complete. For the terms of a particular series of warrants,
you should refer to the prospectus supplement for that series of warrants and the warrant agreement for that particular series.
Debt
Warrants
The
prospectus supplement relating to a particular issue of warrants to purchase debt securities will describe the terms of the debt
warrants, including the following:
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the
title of the debt warrants;
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the
offering price for the debt warrants, if any;
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the
aggregate number of the debt warrants;
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the
designation and terms of the debt securities, including any conversion rights, purchasable
upon exercise of the debt warrants;
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if
applicable, the date from and after which the debt warrants and any debt securities issued
with them will be separately transferable;
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the
principal amount of debt securities that may be purchased upon exercise of a debt warrant
and the exercise price for the warrants, which may be payable in cash, securities or
other property;
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the
dates on which the right to exercise the debt warrants will commence and expire;
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if
applicable, the minimum or maximum amount of the debt warrants that may be exercised
at any one time;
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whether
the debt warrants represented by the debt warrant certificates or debt securities that
may be issued upon exercise of the debt warrants will be issued in registered or bearer
form;
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information
with respect to book-entry procedures, if any; the currency or currency units in which
the offering price, if any, and the exercise price are payable;
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if
applicable, a discussion of material U.S. federal income tax considerations;
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the
anti-dilution provisions of the debt warrants, if any;
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the
redemption or call provisions, if any, applicable to the debt warrants;
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any
provisions with respect to the holder’s right to require us to repurchase the warrants
upon a change in control or similar event; and
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any
additional terms of the debt warrants, including procedures, and limitations relating
to the exchange, exercise and settlement of the debt warrants.
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Debt
warrant certificates will be exchangeable for new debt warrant certificates of different denominations. Debt warrants may be exercised
at the corporate trust office of the warrant agent or any other office indicated in the prospectus supplement. Prior to the exercise
of their debt warrants, holders of debt warrants will not have any of the rights of holders of the debt securities purchasable
upon exercise and will not be entitled to payment of principal or any premium, if any, or interest on the debt securities purchasable
upon exercise.
Equity
Warrants
The
prospectus supplement relating to a particular series of warrants to purchase our common stock or preferred stock will describe
the terms of the warrants, including the following:
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the
title of the warrants;
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the
offering price for the warrants, if any;
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the
aggregate number of warrants;
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the
designation and terms of the common stock or preferred stock that may be purchased upon
exercise of the warrants;
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if
applicable, the designation and terms of the securities with which the warrants are issued
and the number of warrants issued with each security;
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if
applicable, the date from and after which the warrants and any securities issued with
the warrants will be separately transferable;
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the
number of shares of common stock or preferred stock that may be purchased upon exercise
of a warrant and the exercise price for the warrants;
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the
dates on which the right to exercise the warrants shall commence and expire;
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if
applicable, the minimum or maximum amount of the warrants that may be exercised at any
one time;
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the
currency or currency units in which the offering price, if any, and the exercise price
are payable;
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if
applicable, a discussion of material U.S. federal income tax considerations;
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the
anti-dilution provisions of the warrants, if any;
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the
redemption or call provisions, if any, applicable to the warrants;
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any
provisions with respect to the holder’s right to require us to repurchase the warrants
upon a change in control or similar event; and
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any
additional terms of the warrants, including procedures, and limitations relating to the
exchange, exercise and settlement of the warrants.
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Holders
of equity warrants will not be entitled:
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to
vote, consent or receive dividends;
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receive
notice as stockholders with respect to any meeting of stockholders for the election of
our directors or any other matter; or
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exercise
any rights as stockholders of us.
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This
summary of certain provisions of the warrants is not complete. For the terms of a particular series of warrants, you should refer
to the prospectus supplement for that series of warrants and the warrant agreement for that particular series.
DESCRIPTION
OF THE DEBT SECURITIES
The
debt securities may be either secured or unsecured and will either be our senior debt securities or our subordinated debt securities.
The debt securities will be issued under one or more separate indentures between us and a trustee to be specified in an accompanying
prospectus supplement. Senior debt securities will be issued under a senior indenture and subordinated debt securities will be
issued under a subordinated indenture. Together, the senior indenture and the subordinated indenture are called indentures in
this description. This prospectus, together with the applicable prospectus supplement, will describe the terms of a particular
series of debt securities.
The
following is a summary of selected provisions and definitions of the indentures and debt securities to which any prospectus supplement
may relate. The summary of selected provisions of the indentures and the debt securities appearing below is not complete and is
subject to, and qualified entirely by reference to, all of the provisions of the applicable indenture and certificates evidencing
the applicable debt securities. For additional information, you should look at the applicable indenture and the certificate evidencing
the applicable debt security that is filed as an exhibit to the registration statement that includes the prospectus. In this description
of the debt securities, the words “we,” “us,” or “our” refer only to Aehr Test Systems and
not to any of our subsidiaries, unless we expressly state or the context otherwise requires.
The
following description sets forth selected general terms and provisions of the applicable indenture and debt securities to which
any prospectus supplement may relate. Other specific terms of the applicable indenture and debt securities will be described in
the applicable prospectus supplement. If any particular terms of the indenture or debt securities described in a prospectus supplement
differ from any of the terms described below, then the terms described below will be deemed to have been superseded by that prospectus
supplement.
General
Debt
securities may be issued in separate series without limitation as to aggregate principal amount. We may specify a maximum aggregate
principal amount for the debt securities of any series.
We
are not limited as to the amount of debt securities we may issue under the indentures. Unless otherwise provided in a prospectus
supplement, a series of debt securities may be reopened to issue additional debt securities of such series.
The
prospectus supplement relating to a particular series of debt securities will set forth:
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whether
the debt securities are senior or subordinated;
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the
offering price;
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the
title;
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any
limit on the aggregate principal amount;
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the
person who shall be entitled to receive interest, if other than the record holder on
the record date;
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the
date or dates the principal will be payable;
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the
interest rate or rates, which may be fixed or variable, if any, the date from which interest
will accrue, the interest payment dates and the regular record dates, or the method for
calculating the dates and rates;
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the
place where payments may be made;
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any
mandatory or optional redemption provisions or sinking fund provisions and any applicable
redemption or purchase prices associated with these provisions;
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if
issued other than in denominations of U.S. $1,000 or any multiple of U.S. $1,000, the
denominations in which the debt securities shall be issuable;
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if
applicable, the method for determining how the principal, premium, if any, or interest
will be calculated by reference to an index or formula;
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if
other than U.S. currency, the currency or currency units in which principal, premium,
if any, or interest will be payable and whether we or a holder may elect payment to be
made in a different currency;
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the
portion of the principal amount that will be payable upon acceleration of maturity, if
other than the entire principal amount;
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if
the principal amount payable at stated maturity will not be determinable as of any date
prior to stated maturity, the amount or method for determining the amount which will
be deemed to be the principal amount;
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if
applicable, whether the debt securities shall be subject to the defeasance provisions
described below under “Satisfaction and discharge; defeasance” or such other
defeasance provisions specified in the applicable prospectus supplement for the debt
securities;
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any
conversion or exchange provisions;
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whether
the debt securities will be issuable in the form of a global security;
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the
deletion, addition or change in any event of default;
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any
change or modification to the subordination provisions applicable to the subordinated
debt securities if different from those described below under “Subordinated debt
securities;”
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any
deletion, addition or change in the covenants set forth in Article 10 of the indenture;
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any
paying agents, authenticating agents, security registrars or other agents for the debt
securities, if other than the trustee;
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any
provisions relating to any security provided for the debt securities, including any provisions
regarding the circumstances under which collateral may be released or substituted;
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any
provisions relating to guaranties for the securities and any circumstances under which
there may be additional obligors;
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any
provisions granting special rights to holders when a specified event occurs;
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any
special tax provisions that apply to the debt securities;
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with
respect to the debt securities that do not bear interest, the dates for certain required
reports to the applicable trustee;
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any
and all additional, eliminated or changed terms that will apply to the debt securities;
and
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any
other terms of such debt securities.
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Unless
otherwise specified in the prospectus supplement, the debt securities will be registered debt securities. Debt securities may
be sold at a substantial discount below their stated principal amount, bearing no interest or interest at
a rate which at time
of issuance is below market rates. The U.S. federal income tax considerations applicable to debt securities sold at a discount
will be described in the applicable prospectus supplement.
Exchange
and Transfer
Debt
securities may be transferred or exchanged at the office of the security registrar or at the office of any transfer agent designated
by us.
We
will not impose a service charge for any transfer or exchange, but we may require holders to pay any tax or other governmental
charges associated with any transfer or exchange.
In
the event of any partial redemption of debt securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange, any debt security of that series during a period
beginning at the opening of business 15 days before the day of mailing of a notice of
redemption and ending at the close of business on the day of the mailing; or
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register
the transfer of or exchange any debt security of that series selected for redemption,
in whole or in part, except the unredeemed portion being redeemed in part.
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We
will appoint the trustee as the initial security registrar. Any transfer agent, in addition to the security registrar initially
designated by us, will be named in the prospectus supplement. We may designate additional transfer agents or change transfer agents
or change the office of the transfer agent. However, we will be required to maintain a transfer agent in each place of payment
for the debt securities of each series.
Global
Securities
The
debt securities of any series may be represented, in whole or in part, by one or more global securities. Each global security
will:
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be
registered in the name of a depositary, or its nominee, that we will identify in a prospectus
supplement;
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be
deposited with the depositary or nominee or custodian; and
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bear
any required legends.
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No
global security may be exchanged in whole or in part for debt securities registered in the name of any person other than the depositary
or any nominee unless:
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the
depositary has notified us that it is unwilling or unable to continue as depositary or
has ceased to be qualified to act as depositary;
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an
event of default is continuing with respect to the debt securities of the applicable
series; or
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any
other circumstance described in a prospectus supplement has occurred permitting or requiring
the issuance of any such security.
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As
long as the depositary, or its nominee, is the registered owner of a global security, the depositary or nominee will be considered
the sole owner and holder of the debt securities represented by the global security for all purposes under the indentures. Except
in the above limited circumstances, owners of beneficial interests in a global security will not be:
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entitled
to have the debt securities registered in their names;
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entitled
to physical delivery of certificated debt securities; or
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considered
to be holders of those debt securities under the indenture.
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Payments
on a global security will be made to the depositary or its nominee as the holder of the global security. Some jurisdictions have
laws that require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws
may impair the ability to transfer beneficial interests in a global security.
Institutions
that have accounts with the depositary or its nominee are referred to as “participants.” Ownership of beneficial interests
in a global security will be limited to participants and to persons that may hold beneficial interests through participants. The
depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities
represented by the global security to the accounts of its participants.
Ownership
of beneficial interests in a global security will be shown on and effected through records maintained by the depositary, with
respect to participants’ interests, or any participant, with respect to interests of persons held by participants on their
behalf.
Payments,
transfers and exchanges relating to beneficial interests in a global security will be subject to policies and procedures of the
depositary. The depositary policies and procedures may change from time to time. Neither any trustee nor we will have any responsibility
or liability for the depositary’s or any participant’s records with respect to beneficial interests in a global security.
Payment
and Paying Agents
Unless
otherwise indicated in a prospectus supplement, the provisions described in this paragraph will apply to the debt securities.
Payment of interest on a debt security on any interest payment date will be made to the person in whose name the debt security
is registered at the close of business on the regular record date. Payment on debt securities of a particular series will be payable
at the office of a paying agent or paying agents designated by us. However, at our option, we may pay interest by mailing a check
to the record holder. The trustee will be designated as our initial paying agent.
We
may also name any other paying agents in a prospectus supplement. We may designate additional paying agents, change paying agents
or change the office of any paying agent. However, we will be required to maintain a paying agent in each place of payment for
the debt securities of a particular series.
All
moneys paid by us to a paying agent for payment on any debt security that remain unclaimed for a period ending the earlier of:
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10
business days prior to the date the money would be turned over to the applicable state;
or
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at
the end of two years after such payment was due, will be repaid to us thereafter. The
holder may look only to us for such payment.
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No
Protection in the Event of a Change of Control
Unless
otherwise indicated in a prospectus supplement with respect to a particular series of debt securities, the debt securities will
not contain any provisions that may afford holders of the debt securities protection in the event we have a change in control
or in the event of a highly leveraged transaction, whether or not such transaction results in a change in control.
Covenants
Unless
otherwise indicated in a prospectus supplement with respect to a particular series of debt securities, the debt securities will
not contain any financial or restrictive covenants.
Consolidation,
Merger and Sale of Assets
Unless
we indicate otherwise in a prospectus supplement with respect to a particular series of debt securities, we may not consolidate
with or merge into any other person (other than one of our subsidiaries), in a transaction in which we are not the surviving corporation,
or convey, transfer or lease our properties and assets substantially as an entirety to, any person (other than a subsidiary of
Aehr Test Systems), unless:
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the
successor entity, if any, is a U.S. corporation, limited liability company, partnership,
trust or other business entity;
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the
successor entity assumes our obligations on the debt securities and under the indentures;
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immediately
after giving effect to the transaction, no default or event of default shall have occurred
and be continuing; and
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certain
other conditions specified in the indenture are met.
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Events
of Default
Unless
we indicate otherwise in a prospectus supplement, the following will be events of default for any series of debt securities under
the indentures:
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(1)
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we
fail to pay principal of or any premium on any debt security of that series when due;
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(2)
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we fail to pay any interest on any debt security of that series for 30 days after it becomes due;
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(3)
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we fail to deposit any sinking fund payment when due;
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(4)
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we fail to perform any other covenant in the indenture and such failure continues for 90 days after we are given the notice required
in the indentures; and
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(5)
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certain events involving our bankruptcy, insolvency or reorganization.
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Additional
or different events of default applicable to a series of debt securities may be described in a prospectus supplement. An event
of default of one series of debt securities is not necessarily an event of default for any other series of debt securities.
The
trustee may withhold notice to the holders of any default, except defaults in the payment of principal, premium, if any, interest,
any sinking fund installment on, or with respect to any conversion right of, the debt securities of such series. However, the
trustee must consider it to be in the interest of the holders of the debt securities of such series to withhold this notice.
Unless
we indicate otherwise in a prospectus supplement, if an event of default, other than an event of default described in clause (5)
above, shall occur and be continuing with respect to any series of debt securities, either the trustee or the holders of at least
25% in aggregate principal amount of the outstanding securities of that series may declare the principal amount and premium, if
any, of the debt securities of that series, or if any debt securities of that series are original issue discount securities, such
other amount as may be specified in the applicable prospectus supplement, in each case together with accrued and unpaid interest,
if any, thereon, to be due and payable immediately.
Unless
we indicate otherwise in a prospectus supplement, if an event of default described in clause (5) above shall occur, the principal
amount and premium, if any, of all the debt securities of that series, or if any debt securities of that series are original issue
discount securities, such other amount as may be specified in the applicable prospectus supplement, in each case together with
accrued and unpaid interest, if any, thereon, will automatically become
immediately due and payable. Any payment by us on the
subordinated debt securities following any such acceleration will be subject to the subordination provisions described below under
“Subordinated debt securities.”
Notwithstanding
the foregoing, each indenture will provide that we may, at our option, elect that the sole remedy for an event of default relating
to our failure to comply with our obligations described under the section entitled “Reports” below or our failure
to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act will for the first 360 days after the occurrence
of such an event of default consist exclusively of the right to receive additional interest on the relevant series of debt securities
at an annual rate equal to (i) 0.25% of the principal amount of such series of debt securities for the first 180 days after the
occurrence of such event of default and (ii) 0.50% of the principal amount of such series of debt securities from the 181
st
day to, and including, the 360
th
day after the occurrence of such event of default, which we call “additional
interest.” If we so elect, the additional interest will accrue on all outstanding debt securities from and including the
date on which such event of default first occurs until such violation is cured or waived and shall be payable on each relevant
interest payment date to holders of record on the regular record date immediately preceding the interest payment date. On the
361
st
day after such event of default (if such violation is not cured or waived prior to such 361
st
day),
the debt securities will be subject to acceleration as provided above. In the event we do not elect to pay additional interest
upon any such event of default in accordance with this paragraph, the debt securities will be subject to acceleration as provided
above.
In
order to elect to pay the additional interest as the sole remedy during the first 360 days after the occurrence of any event of
default relating to the failure to comply with the reporting obligations in accordance with the preceding paragraph, we must notify
all holders of debt securities and the trustee and paying agent of such election prior to the close of business on the first business
day following the date on which such event of default occurs. Upon our failure to timely give such notice or pay the additional
interest, the debt securities will be immediately subject to acceleration as provided above.
After
acceleration, the holders of a majority in aggregate principal amount of the outstanding securities of that series may, under
certain circumstances, rescind and annul such acceleration if all events of default, other than the non-payment of accelerated
principal, or other specified amounts or interest, have been cured or waived.
Other
than the duty to act with the required care during an event of default, the trustee will not be obligated to exercise any of its
rights or powers at the request of the holders unless the holders shall have offered to the trustee reasonable indemnity. Generally,
the holders of a majority in aggregate principal amount of the outstanding debt securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee.
A
holder of debt securities of any series will not have any right to institute any proceeding under the indentures, or for the appointment
of a receiver or a trustee, or for any other remedy under the indentures, unless:
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(1)
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the holder has previously given to the trustee written
notice of a continuing event of default with respect to the debt securities of that series;
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(2)
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the holders of at least 25% in aggregate principal amount
of the outstanding debt securities of that series have made a written request and have offered reasonable indemnity to the trustee
to institute the proceeding; and
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(3)
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the trustee has failed to institute the proceeding and
has not received direction inconsistent with the original request from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series within 60 days after the original request.
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Holders
may, however, sue to enforce the payment of principal, premium or interest on any debt security on or after the due date or to
enforce the right, if any, to convert any debt security (if the debt security is convertible) without following the procedures
listed in (1) through (3) above.
We
will furnish the trustee an annual statement from our officers as to whether or not we are in default in the performance of the
conditions and covenants under the indenture and, if so, specifying all known defaults.
Modification
and Waiver
Unless
we indicate otherwise in a prospectus supplement, the applicable trustee and we may make modifications and amendments to an indenture
with the consent of the holders of a majority in aggregate principal amount of the outstanding securities of each series affected
by the modification or amendment.
We
may also make modifications and amendments to the indentures for the benefit of holders without their consent, for certain purposes
including, but not limited to:
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evidencing
the succession of another person to Aehr Test, or successive successions, and the assumption
by any such successor of the covenants of Aehr Test in the indentures in compliance with
Article 8 of the indentures;
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adding
covenants;
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adding
events of default;
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making
certain changes to facilitate the issuance of the debt securities;
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adding
to, changing or eliminating any of the provisions of the indentures or more series of
securities, provided that any such addition, change or elimination (A) shall neither
(i) apply to any security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the rights of
the holder of any such security with respect to such provision or (B) shall become effective
only when there is no such security outstanding;
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securing
the debt securities;
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providing
for guaranties of, or additional obligors on, the debt securities;
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establishing
the form or term of debt securities as permitted by Sections 2.1 and 3.1 of the indenture;
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providing
for a successor trustee or additional trustees;
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conforming
the indenture to the description of the securities set forth in this prospectus or the
accompanying prospectus supplement;
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curing
any ambiguity, defect or inconsistency; provided that such action shall not adversely
affect the interest of the holders in any material respect;
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permitting
or facilitating the defeasance and discharge of the debt securities;
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making
such other provisions in regard to matters or questions arising under the indentures
or under any supplemental indentures as our board of directors may deem necessary or
desirable, and which does not in each case adversely affect the interests of the holders
of the debt securities of a series; and
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complying
with requirements of the SEC in order to effect or maintain the qualifications of the
indentures under the Trust Indenture Act of 1939, as amended (the “Trust Indenture
Act”).
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However,
neither the trustee nor we may make any modification or amendment without the consent of the holder of each outstanding security
of that series affected by the modification or amendment if such modification or amendment would:
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change
the stated maturity of the principal of, or any installment of principal or interest
on, any debt security;
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reduce
the principal, premium, if any, or interest on any debt security or any amount payable
upon redemption or repurchase, whether at our option or the option of any holder, or
reduce the amount of any sinking fund payments;
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reduce
the principal of an original issue discount security or any other debt security payable
on acceleration of maturity;
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change
the place of payment or the currency in which any debt security is payable;
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impair
the right to enforce any payment after the stated maturity or redemption date;
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if
subordinated debt securities, modify the subordination provisions in a materially adverse
manner to the holders;
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adversely
affect the right to convert any debt security if the debt security is a convertible debt
security; or
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change
the provisions in the indenture that relate to modifying or amending the indenture.
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Satisfaction
and Discharge; Defeasance
We
may be discharged from our obligations on the debt securities, subject to limited exceptions, of any series that have matured
or will mature or be redeemed within one year if we deposit enough money with the trustee to pay all the principal, interest and
any premium due to the stated maturity date or redemption date of the debt securities.
Each
indenture contains a provision that permits us to elect either or both of the following:
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we
may elect to be discharged from all of our obligations, subject to limited exceptions,
with respect to any series of debt securities then outstanding. If we make this election,
the holders of the debt securities of the series will not be entitled to the benefits
of the indenture, except for the rights of holders to receive payments on debt securities
or the registration of transfer and exchange of debt securities and replacement of lost,
stolen or mutilated debt securities.
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we
may elect to be released from our obligations under some or all of any financial or restrictive
covenants applicable to the series of debt securities to which the election relates and
from the consequences of an event of default resulting from a breach of those covenants.
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To
make either of the above elections, we must irrevocably deposit in trust with the trustee enough money to pay in full the principal,
interest and premium on the debt securities. This amount may be made in cash and/or U.S. government obligations or, in the case
of debt securities denominated in a currency other than U.S. dollars, cash in the currency in which such series of securities
is denominated and/or foreign government obligations. As a condition to either of the above elections, for debt securities denominated
in U.S. dollars we must deliver to the trustee an opinion of counsel that the holders of the debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of the action.
With
respect to debt securities of any series that are denominated in a currency other than U.S. dollars, “foreign government
obligations” means:
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direct
obligations of the government that issued or caused to be issued the currency in which
such securities are denominated and for the payment of which obligations its full faith
and credit is pledged, or, with respect to debt securities of any series which are denominated
in Euros, direct obligations of certain members of the European Union for the payment
of which obligations the full faith and credit of such members is pledged, which in each
case are not callable or redeemable at the option of the issuer thereof; or
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obligations
of a person controlled or supervised by or acting as an agency or instrumentality of
a government described in the bullet above the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by such government, which are not callable
or redeemable at the option of the issuer thereof.
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Notices
Notices
to holders will be given by mail to the addresses of the holders in the security register.
Governing
Law
The
indentures and the debt securities will be governed by, and construed under, the laws of the State of New York.
No
Personal Liability of Directors, Officers, Employees and Stockholders
No
incorporator, stockholder, employee, agent, officer, director or subsidiary of ours will have any liability for any obligations
of ours, or because of the creation of any indebtedness under the debt securities, the indentures or supplemental indentures.
The indentures provide that all such liability is expressly waived and released as a condition of, and as a consideration for,
the execution of such indentures and the issuance of the debt securities.
Regarding
the Trustee
The
indentures limit the right of the trustee, should it become our creditor, to obtain payment of claims or secure its claims.
The
trustee will be permitted to engage in certain other transactions with us. However, if the trustee acquires any conflicting interest,
and there is a default under the debt securities of any series for which it is trustee, the trustee must eliminate the conflict
or resign.
Subordinated
Debt Securities
The
following provisions will be applicable with respect to each series of subordinated debt securities, unless otherwise stated in
the prospectus supplement relating to that series of subordinated debt securities.
The
indebtedness evidenced by the subordinated debt securities of any series is subordinated, to the extent provided in the subordinated
indenture and the applicable prospectus supplement, to the prior payment in full, in cash or other payment satisfactory to the
holders of senior debt, of all senior debt, including any senior debt securities.
Upon
any distribution of our assets upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary,
marshalling of assets, assignment for the benefit of creditors, or in bankruptcy, insolvency, receivership or other similar proceedings,
payments on the subordinated debt securities will be subordinated in right of payment to the prior payment in full in cash or
other payment satisfactory to holders of senior debt of all senior debt.
In
the event of any acceleration of the subordinated debt securities of any series because of an event of default with respect to
the subordinated debt securities of that series, holders of any senior debt would be entitled to payment in
full in cash or other
payment satisfactory to holders of senior debt of all senior debt before the holders of subordinated debt securities are entitled
to receive any payment or distribution.
In
addition, the subordinated debt securities will be structurally subordinated to all indebtedness and other liabilities of our
subsidiaries, including trade payables and lease obligations. This occurs because our right to receive any assets of our subsidiaries
upon their liquidation or reorganization, and your right to participate in those assets, will be effectively subordinated to the
claims of that subsidiary’s creditors, including trade creditors, except to the extent that we are recognized as a creditor
of such subsidiary. If we are recognized as a creditor of that subsidiary, our claims would still be subordinate to any security
interest in the assets of the subsidiary and any indebtedness of the subsidiary senior to us.
We
are required to promptly notify holders of senior debt or their representatives under the subordinated indenture if payment of
the subordinated debt securities is accelerated because of an event of default.
Under
the subordinated indenture, we may also not make payment on the subordinated debt securities if:
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a
default in our obligations to pay principal, premium, if any, interest or other amounts
on our senior debt occurs and the default continues beyond any applicable grace period,
which we refer to as a payment default; or
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any
other default occurs and is continuing with respect to designated senior debt that permits
holders of designated senior debt to accelerate its maturity, which we refer to as a
non-payment default, and the trustee receives a payment blockage notice from us or some
other person permitted to give the notice under the subordinated indenture.
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We
will resume payments on the subordinated debt securities:
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in
case of a payment default, when the default is cured or waived or ceases to exist, and
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in
case of a nonpayment default, the earlier of when the default is cured or waived or ceases
to exist or 179 days after the receipt of the payment blockage notice.
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No
new payment blockage period may commence on the basis of a nonpayment default unless 365 days have elapsed from the effectiveness
of the immediately prior payment blockage notice. No nonpayment default that existed or was continuing on the date of delivery
of any payment blockage notice to the trustee shall be the basis for a subsequent payment blockage notice.
As
a result of these subordination provisions, in the event of our bankruptcy, dissolution or reorganization, holders of senior debt
may receive more, ratably, and holders of the subordinated debt securities may receive less, ratably, than our other creditors.
The subordination provisions will not prevent the occurrence of any event of default under the subordinated indenture.
The
subordination provisions will not apply to payments from money or government obligations held in trust by the trustee for the
payment of principal, interest and premium, if any, on subordinated debt securities pursuant to the provisions described under
the section entitled “Satisfaction and discharge; defeasance,” if the subordination provisions were not violated at
the time the money or government obligations were deposited into trust.
If
the trustee or any holder receives any payment that should not have been made to them in contravention of subordination provisions
before all senior debt is paid in full in cash or other payment satisfactory to holders of senior debt, then such payment will
be held in trust for the holders of senior debt.
Senior
debt securities will constitute senior debt under the subordinated indenture.
Additional
or different subordination provisions may be described in a prospectus supplement relating to a particular series of debt securities.
Definitions
“Designated
senior debt” means our obligations under any particular senior debt in which the instrument creating or evidencing the same
or the assumption or guarantee thereof, or related agreements or documents to which we are a party, expressly provides that such
indebtedness shall be designated senior debt for purposes of the subordinated indenture. The instrument, agreement or other document
evidencing any designated senior debt may place limitations and conditions on the right of such senior debt to exercise the rights
of designated senior debt.
“Indebtedness”
means the following, whether absolute or contingent, secured or unsecured, due or to become due, outstanding on the date of the
indenture for such series of securities or thereafter created, incurred or assumed:
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our
indebtedness evidenced by a credit or loan agreement, note, bond, debenture or other
written obligation;
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all
of our obligations for money borrowed;
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all
of our obligations evidenced by a note or similar instrument given in connection with
the acquisition of any businesses, properties or assets of any kind,
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our
obligations:
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as
lessee under leases required to be capitalized on the balance sheet of the lessee under
generally accepted accounting principles, or
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as
lessee under leases for facilities, capital equipment or related assets, whether or not
capitalized, entered into or leased for financing purposes;
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all
of our obligations under interest rate and currency swaps, caps, floors, collars, hedge
agreements, forward contracts or similar agreements or arrangements;
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all
of our obligations with respect to letters of credit, bankers’ acceptances and
similar facilities, including reimbursement obligations with respect to the foregoing;
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all
of our obligations issued or assumed as the deferred purchase price of property or services,
but excluding trade accounts payable and accrued liabilities arising in the ordinary
course of business;
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all
obligations of the type referred to in the above clauses of another person, the payment
of which, in either case, we have assumed or guaranteed, for which we are responsible
or liable, directly or indirectly, jointly or severally, as obligor, guarantor or otherwise,
or which are secured by a lien on our property; and
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renewals,
extensions, modifications, replacements, restatements and refundings of, or any indebtedness
or obligation issued in exchange for, any such indebtedness or obligation described in
the above clauses of this definition.
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“Senior
debt” means the principal of, premium, if any, and interest, including all interest accruing subsequent to the commencement
of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such
proceeding, and rent payable on or in connection with, and all fees and other amounts payable in connection with, our indebtedness.
However, senior debt shall not include:
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any
debt or obligation if its terms or the terms of the instrument under which or pursuant
to which it is issued expressly provide that it shall not be senior in right of payment
to the subordinated debt securities or expressly provide that such indebtedness is on
the same basis or “junior” to the subordinated debt securities; or
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debt
to any of our subsidiaries, a majority of the voting stock of which is owned, directly
or indirectly, by us.
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“Subsidiary”
means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by us or by one or
more of our other subsidiaries or by a combination of us and our other subsidiaries. For purposes of this definition, “voting
stock” means stock or other similar interests which ordinarily has or have voting power for the election of directors, or
persons performing similar functions, whether at all times or only so long as no senior class of stock or other interests has
or have such voting power by reason of any contingency.
DESCRIPTION
OF SUBSCRIPTION RIGHTS
We
may issue subscription rights to purchase our common stock, preferred stock or debt securities. These subscription rights may
be offered independently or together with any other security offered hereby and may or may not be transferable by the stockholder
receiving the subscription rights in such offering. In connection with any offering of subscription rights, we may enter into
a standby arrangement with one or more underwriters or other purchasers pursuant to which the underwriters or other purchasers
may be required to purchase any securities remaining unsubscribed for after such offering.
The
prospectus supplement relating to any subscription rights we offer, if any, will, to the extent applicable, include specific terms
relating to the offering, including some or all of the following:
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the
price, if any, for the subscription rights;
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the
exercise price payable for our common stock, preferred stock or debt securities upon
the exercise of the subscription rights;
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the
number of subscription rights to be issued to each stockholder;
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the
number and terms of our common stock, preferred stock or debt securities which may be
purchased per each subscription right;
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the
extent to which the subscription rights are transferable;
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any
other terms of the subscription rights, including the terms, procedures and limitations
relating to the exchange and exercise of the subscription rights;
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the
date on which the right to exercise the subscription rights shall commence, and the date
on which the subscription rights shall expire;
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the
extent to which the subscription rights may include an over-subscription privilege with
respect to unsubscribed securities or an over-allotment privilege to the extent the securities
are fully subscribed; and
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if
applicable, the material terms of any standby underwriting or purchase arrangement which
may be entered into by Aehr Test in connection with the offering of subscription rights.
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The
description in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will
be qualified in its entirety by reference to the applicable subscription rights certificate, which will be filed with the SEC
if we offer subscription rights. We urge you to read the applicable subscription rights certificate and any applicable prospectus
supplement in their entirety.
DESCRIPTION
OF UNITS
We
may issue units comprised of one or more of the other classes of securities described in this prospectus in any combination. Each
unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder
of a unit will have the rights and obligations of a holder of each included security. The units may be issued under unit agreements
to be entered into between us and a unit agent, as detailed in the prospectus supplement relating to the units being offered.
The prospectus supplement relating to any units we offer, if any, will, to the extent applicable, describe:
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the
designation and terms of the units and of the securities comprising the units, including
whether and under what circumstances the securities comprising the units may be held
or transferred separately;
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a
description of the terms of any unit agreement governing the units;
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a
description of the provisions for the payment, settlement, transfer or exchange of the
units;
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a
discussion of material federal income tax considerations, if applicable; and
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whether
the units if issued as a separate security will be issued in fully registered or global
form.
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The
descriptions of the units in this prospectus and in any prospectus supplement are summaries of the material provisions of the
applicable agreements. These descriptions do not restate those agreements in their entirety and may not contain all the information
that you may find useful. We urge you to read the applicable agreements because they, and not the summaries, define your rights
as holders of the units. For more information, please review the forms of the relevant agreements, which will be filed with the
SEC promptly after the offering of units and will be available as described in the section titled “Where You Can Find More
Information.”
PLAN
OF DISTRIBUTION
We
may sell the securities offered through this prospectus from time to time in one or more transactions (1) to or through underwriters
or dealers, (2) directly to purchasers, including our affiliates, (3) through agents or (4) through a combination
of any these methods. The securities may be distributed at a fixed price or prices, which may be changed, market prices prevailing
at the time of sale, prices related to the prevailing market prices, or negotiated prices. The prospectus supplement will include
the following information:
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the
terms of the offering;
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the
names of any underwriters or agents;
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the
name or names of any managing underwriter or underwriters;
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the
purchase price of the securities;
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the
net proceeds from the sale of the securities;
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any
delayed delivery arrangements;
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any
underwriting discounts, commissions and other items constituting underwriters’
compensation;
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any
initial public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers; and
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any
commissions paid to agents.
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We
may engage in at-the-market offerings into an existing trading market in accordance with Rule 415(a)(4). Any at-the-market offering
will be through an underwriter or underwriters acting as principal or agent for us.
We
may issue to the holders of our common stock, on a pro rata basis for no consideration, subscription rights to purchase shares
of our common stock or preferred stock. These subscription rights may or may not be transferable by stockholders. The applicable
prospectus supplement will describe the specific terms of any offering of our common or preferred stock through the issuance of
subscription rights, including the terms of the subscription rights offering, the terms, procedures and limitations relating to
the exchange and exercise of the subscription rights and, if applicable, the material terms of any standby underwriting or purchase
arrangement entered into by us in connection with the offering of common or preferred stock through the issuance of subscription
rights.
Sale
through Underwriters or Dealers
If
underwriters are used in the sale, the underwriters will acquire the securities for their own account, including through underwriting,
purchase, security lending or repurchase agreements with us. The underwriters may resell the securities from time to time in one
or more transactions, including negotiated transactions. Underwriters may sell the securities in order to facilitate transactions
in any of our other securities (described in this prospectus or otherwise), including other public or private transactions and
short sales. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters. Unless otherwise indicated in the prospectus supplement,
the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will
be obligated to purchase all the offered securities if they purchase any of them. The underwriters may change from time to time
any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers. The prospectus supplement
will include the names of the principal underwriters the respective amount of securities underwritten, the nature of the obligation
of the underwriters to take the securities and the nature of any material relationship between an underwriter and us.
Some
or all of the securities that we offer through this prospectus may be new issues of securities with no established trading market.
Any underwriters to whom we sell securities for public offering and sale may make a market in those securities, but they will
not be obligated to do so and they may discontinue any market making at any time without notice. Accordingly, we cannot assure
you of the liquidity of, or continued trading markets for, any securities offered pursuant to this prospectus.
If
dealers are used in the sale of securities offered through this prospectus, we will sell the securities to them as principals.
They may then resell those securities to the public at varying prices determined by the dealers at the time of resale. The prospectus
supplement will include the names of the dealers and the terms of the transaction.
Direct
Sales and Sales through Agents
We
may sell the securities offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such
securities may also be sold through agents designated from time to time. The prospectus supplement will name any agent involved
in the offer or sale of the offered securities and will describe any commissions payable to the agent by us. Unless otherwise
indicated in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period
of its appointment.
We
may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any sale of those securities. The terms of any such sales will be described in the prospectus
supplement.
Delayed
Delivery Contracts
If
the prospectus supplement indicates, we may authorize agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase securities at the public offering price under delayed delivery contracts. These contracts would provide
for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described
in the prospectus supplement. The applicable prospectus supplement will describe the commission payable for solicitation of those
contracts.
Market
Making, Stabilization and Other Transactions
Unless
the applicable prospectus supplement states otherwise, each series of offered securities will be a new issue and will have no
established trading market. We may elect to list any series of offered securities on an exchange. Any underwriters that we use
in the sale of offered securities may make a market in such securities, but may discontinue such market making at any time without
notice. Accordingly, we cannot assure you that the securities will have a liquid trading market.
Any
underwriter may also engage in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104
under the Exchange Act. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose
of pegging, fixing or maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities
in the open market after the distribution has been completed in order to cover syndicate short positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the
syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the securities to be higher than it would be in the absence
of the transactions. The underwriters may, if they commence these transactions, discontinue them at any time.
Derivative
Transactions and Hedging
We,
the underwriters or other agents may engage in derivative transactions involving the securities. These derivatives may consist
of short sale transactions and other hedging activities. The underwriters or agents may acquire a long or short position in the
securities, hold or resell securities acquired and purchase options or futures on the securities
and other derivative instruments
with returns linked to or related to changes in the price of the securities. In order to facilitate these derivative transactions,
we may enter into security lending or repurchase agreements with the underwriters or agents. The underwriters or agents may effect
the derivative transactions through sales of the securities to the public, including short sales, or by lending the securities
in order to facilitate short sale transactions by others. The underwriters or agents may also use the securities purchased or
borrowed from us or others (or, in the case of derivatives, securities received from us in settlement of those derivatives) to
directly or indirectly settle sales of the securities or close out any related open borrowings of the securities.
Electronic
Auctions
We
may also make sales through the Internet or through other electronic means. Since we may from time to time elect to offer securities
directly to the public, with or without the involvement of agents, underwriters or dealers, utilizing the Internet or other forms
of electronic bidding or ordering systems for the pricing and allocation of such securities, you should pay particular attention
to the description of that system we will provide in a prospectus supplement.
Such
electronic system may allow bidders to directly participate, through electronic access to an auction site, by submitting conditional
offers to buy that are subject to acceptance by us, and which may directly affect the price or other terms and conditions at which
such securities are sold. These bidding or ordering systems may present to each bidder, on a so-called “real-time”
basis, relevant information to assist in making a bid, such as the clearing spread at which the offering would be sold, based
on the bids submitted, and whether a bidder’s individual bids would be accepted, prorated or rejected. For example, in the
case of a debt security, the clearing spread could be indicated as a number of “basis points” above an index treasury
note. Of course, many pricing methods can and may also be used.
Upon
completion of such an electronic auction process, securities will be allocated based on prices bid, terms of bid or other factors.
The final offering price at which securities would be sold and the allocation of securities among bidders would be based in whole
or in part on the results of the Internet or other electronic bidding process or auction.
General
Information
Agents,
underwriters and dealers may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities,
including liabilities under the Securities Act. Agents, underwriters and dealers may engage in transactions with or perform services
for us in the ordinary course of their businesses.
LEGAL
MATTERS
The
validity of the common stock offered by this prospectus will be passed upon by Wilson Sonsini Goodrich & Rosati, P.C.,
Palo Alto, California. Mario M. Rosati is a member of Wilson Sonsini Goodrich & Rosati, P.C. and a director of the Registrant.
Certain members of, and investment partnerships comprised of members of, and persons associated with, Wilson Sonsini Goodrich
& Rosati, P.C., own an aggregate of 227,685 shares of our common stock and options to purchase an additional 178,254 shares
of our common stock.
EXPERTS
The
consolidated financial statements of Aehr Test Systems as of May 31, 2016 and 2015 and for each of the three years in the period
ended May 31, 2016, incorporated in this Registration Statement on Form S-3 by reference to the Annual Report on Form 10-K for
the year ended May 31, 2016, have been so incorporated in reliance on the report of BPM LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and other reports, proxy statements and other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file
at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, including any amendments to those reports, and other information that we file with or furnish to the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act can also be accessed free of charge through the Internet. These filings
will be available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We
have filed with the SEC a registration statement under the Securities Act relating to the offering of these securities. The registration
statement, including the attached exhibits, contains additional relevant information about us and the securities. This prospectus
does not contain all of the information set forth in the registration statement. You can obtain a copy of the registration statement,
at prescribed rates, from the SEC at the address listed above. The registration statement and the documents referred to below
under “Information Incorporated by Reference” are also available on our Internet website, www.aehr.com. We have not
incorporated by reference into this prospectus the information on our website, and you should not consider it to be a part of
this prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus certain information we file with it, which means that we can disclose
important information by referring you to those documents. The information incorporated by reference is considered to be a part
of this prospectus, and information that we file later with the SEC will automatically update and supersede information contained
in this prospectus and any accompanying prospectus supplement. We incorporate by reference the documents listed below that we
have previously filed with the SEC (excluding any portions of any Form 8-K that are not deemed “filed” pursuant to
the General Instructions of Form 8-K):
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our
Annual Report on Form 10-K for the fiscal year ended May 31, 2016, filed with the SEC
on August 29, 2016, including the information specifically incorporated by reference
into the Annual Report from our definitive proxy statement on Schedule 14A, filed
with the SEC on September 26, 2016;
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our
Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 2016 (filed
with the SEC on October 14, 2016) and November 30, 2016 (filed with the SEC on January
13, 2017);
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our
Current Reports on Form 8-K filed with the SEC on August 24, 2016, September 28, 2016,
September 30, 2016, October 4, 2016 and October 20, 2016, respectively; and
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the
description of our common stock contained in our Registration Statement on Form 8-A as
filed with the SEC on July 29, 1997 pursuant to Section 12(b) of the Exchange Act.
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We
also incorporate by reference into this prospectus additional documents (other than current reports furnished under Item 2.02
or Item 7.01 of Form 8-K and exhibits on such form that are related to such items) that we may file with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the completion or termination of the offering, including all such documents
we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration
statement, but excluding any information deemed furnished and not filed with the SEC. Any statements contained in a previously
filed document incorporated by reference into this prospectus is deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in this prospectus, or in a subsequently filed document also incorporated by reference
herein, modifies or supersedes that statement.
This
prospectus may contain information that updates, modifies or is contrary to information in one or more of the documents incorporated
by reference in this prospectus. You should rely only on the information incorporated by reference or provided in this prospectus.
We have not authorized anyone else to provide you with different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date of this prospectus or the date of the documents incorporated by reference
in this prospectus.
We
will provide to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request,
at no cost to the requester, a copy of any and all of the information that is incorporated by reference in this prospectus.
Requests
for such documents should be directed to:
Aehr
Test Systems
400 Kato Terrace
Fremont, California 94539
Attention: Chief Financial Officer
You
may also access the documents incorporated by reference in this prospectus through our website at www.aehr.com. Except for the
specific incorporated documents listed above, no information available on or through our website shall be deemed to be incorporated
in this prospectus or the registration statement of which it forms a part.
3,846,154
Shares
PROSPECTUS
SUPPLEMENT
Craig-Hallum
Capital Group
The
date of this prospectus supplement is April 13, 2017
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