The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

We serve niche markets in industries that are experiencing rapid technological advances and which historically have been very cyclical. Therefore, future profitability and growth depend on our ability to develop or acquire and market profitable new products and on our ability to adapt to cyclical trends.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), and consequently do not include all disclosures normally required by accounting principles generally accepted in the United States of America. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments necessary, all of which are of a normal and recurring nature, to present fairly our financial position, results of operations and cash flows. Certain information and note disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K as amended, for the fiscal year ended September 30, 2017.2018.

The consolidated results of operations for the three months ended December 31, 2017,2018, are not necessarily indicative of the results to be expected for the full fiscal year.

of credit are required of certain customers depending on the size of the order, type of customer or its creditworthiness, and country of domicile.

As of December 31, 2017, two customers2018, one Semiconductor segment customer individually represented 36% and 12%16% of accounts receivable. As of September 30, 2017, two customers2018, one Solar segment customer individually represented 24% and 11%23% of accounts receivable.

We maintain our cash, cash equivalents and restricted cash in multiple financial institutions. Balances in the United States, which account for approximately 56%62% and 45%65% of total cash balances as of December 31, 20172018 and September 30, 2017,2018, respectively, are primarily invested in U.S. Treasuries or are in financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). The remainder of our cash is maintained with financial institutions with reputable credit ratings in The Netherlands, France, China, the United Kingdom, Singapore and Malaysia. We maintain cash in bank accounts in amounts which at times may exceed federally insured limits. We have not experienced any losses on such accounts.

Refer to Note 910 to Condensed Consolidated Financial Statements for information regarding major customers, foreign sales and revenue in other countries subject to fluctuation in foreign currency exchange rates.

In March 2016, theSee Note 2 for information on our adoption of Financial Accounting Standards Board (the “FASB”(“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), which amends the existing accounting standards for revenue recognition. The adoption of ASC 606 did not have a material effect on our results of operations.

In November 2016, the FASB issued Accounting StandardsStandard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718).” ASU 2016-09 identifies areas for simplification involving several aspects2016-18, “Statement of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows.Cash Flows: Restricted Cash.” The amendments address diversity in this ASU are effective for annual periods beginning after December 15, 2016 and for the interim periods therein. This new standard increases volatilitypractice that exists in the statementclassification and presentation of operations by requiring all excess tax benefitschanges in restricted cash and deficiencies to be recognized as discrete income tax benefits or expenses in the statement of operations in the period in which they occur. We adopted the new standard as of October 1, 2017, and prospectively applied the provisions in this guidance requiring recognition of excess tax benefits and deficits in the statement of operations. Also, asrequire that a result of the adoption of the new standard, we made an accounting policy election to recognize forfeitures as they occur and no longer estimate expected forfeitures. The provisions in this guidance requiring the use of a modified retrospective transition method would have required us to record a cumulative-effect adjustment in retained earnings as of October 1, 2017. On the basis of immateriality, we recorded such cumulative-effect adjustment as stock-based compensation in the first quarter of 2018 rather than adjusting retained earnings. Lastly, we applied the provisions of this guidance relating to classification on the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. We adopted this standard retrospectively witheffective October 1, 2018, and, accordingly, to conform to the current period presentation, we reclassified our restricted cash to be included in the total of cash and cash equivalents presented at the bottom of our consolidated statements of cash flows for both the beginning and ending periods for our three months ended December 31, 2018 and 2017. As a result, the amount of the change in our net cash provided by operating activities no material effect on ourlonger separately shows the change in restricted cash flows.for either period.

There have been no other material changes or additions to the recently issued accounting standards asother than those previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K as amended, for the year ended September 30, 20172018 that affect or may affect our financial statements.

Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued. In the case of a net loss, diluted earnings per share is calculated in the same manner as basic EPS.

The following table outlinesA reconciliation of the denominators of the basic and diluted EPS incalculations follows (in thousands, except per share amounts:amounts):

(1) The number of common stock equivalents is calculated using the treasury method and the average market price during the period.

The components of inventories are as follows, in thousands:

Stock-based compensation expense was $0.2 million and $0.3 million in both the three months ended December 31, 2018 and 2017, respectively, and 2016, and iswas included in selling, general and administrative expenses.

The following table summarizes our stock option activity during the three months ended December 31, 2017:2018:

For the three months ended December 31, 2018 and 2017, we recorded income tax expense of $0.6 million and $1.2 million, respectively. The quarterly income tax provision is calculated using an estimated annual effective tax rate, based upon expected annual income, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which we operate. However, losses in certain jurisdictions and discrete items are treated separately.

Deferred tax assets and liabilities reflect the tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We record a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Our expectations regarding realization of our deferred tax assets is based upon the weight of all available evidence, including such factors as our recent earnings history, expected future taxable income and available tax planning strategies. In prior periods, weWe established valuation allowances on substantially all net deferred tax assets, after considering all of the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, and determined it is not more likely than not that these assets will be realized.

We classify all of our uncertain tax positions as income taxes payable long-term. At both December 31, 20172018 and September 30, 2017,2018, the total amount of unrecognized tax benefits was approximately $4.3 million and $4.2 million, respectively.$1.2 million. Income taxes payable long-term includes other items, primarily withholding taxes that are not due until the related intercompany service fees are paid.

We classify interest and penalties related to unrecognized tax benefits as income tax expense. As of both December 31, 20172018 and September 30, 2017,2018, we had an accrual for potential interest and penalties of approximately $2.7$0.7 million and $2.6 million, respectively, classified with income taxes payable long-term.

Amtech and one or more of our subsidiaries file income tax returns in The Netherlands, Germany, France, China and other foreign jurisdictions, as well as in the U.S. and various states in the U.S. We have not signed any agreements with the Internal Revenue Service, any state or foreign jurisdiction to the extend the statute of limitations for any fiscal year. As such, the number of open years is the number of years dictated by statute in each of the respective taxing jurisdictions, which generally is from 3 to 5 years.

Solar – We are a leading supplier of thermal processing systems, including related automation, parts and services, to the solar/photovoltaic industry and also offer PECVD (plasma-enhanced chemical vapor deposition) equipment to the global solar market.

Semiconductor – We design, manufacture, sell and service thermal processing equipment and related controls for use by leading semiconductor manufacturers, and in electronics, automotive and other industries.

Polishing – We produce consumables and machinery for lapping (fine abrading) and polishing of materials, such as sapphire substrates, optical components, silicon wafers, numerous types of crystal materials, ceramics and metal components. We also refer to our Polishing segment as “SiC/LED.”

Information concerning our business segments is as follows, in thousands:

* The financial statement of business units included in the Solar segment include some sales of equipment and parts to the semiconductor, silicon wafer and MEMSmicroelectromechanical (“MEMS”) industries, comprising lessnot more than 25%half of the Solar segment revenue.

*Non-segment related assets include cash, property and other assets.

We review our long-lived assets, including goodwill, for impairment at least annually in our fourth quarter or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Additional information on impairment testing of long-lived assets, intangible assets and goodwill can be found in NoteNotes 1 and 5 of our Annual Report on Form 10-K as amended, for the year ended September 30, 2017.2018.

 

Our net revenues were to customers in the following geographic regions:

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included in Item 1, “Condensed Consolidated Financial Statements” in Item 1 of this Quarterly Report on Form 10-Q (“Quarterly Report”) and our consolidated financial statements and related notes included in Item 8, “Financial Statements and Supplementary Data” in our Annual Report on Form 10-K as amended, for the fiscal year ended September 30, 2017.2018.

 

Certain information containedWe are a leading, global manufacturer of capital equipment, including thermal processing and wafer handling automation, and related consumables used in fabricating semiconductor devices, light-emitting diodes, or incorporated by referenceLEDs, silicon carbide (“SiC”) and silicon power chips and solar cells. We sell these products to semiconductor and solar cell manufacturers worldwide, particularly in this Quarterly Report is forward-looking in nature. All statements included or incorporated by reference in this Quarterly Report or made by management of Amtech Systems, Inc. and its subsidiaries (the “Company” or “Amtech”), other than statements of historical fact, are hereby identified as “forward-looking statements” (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The forward-looking statements in this Quarterly Report relate only to events or information as of the date on which the statements are made in this Quarterly Report. Examples of forward-looking statements include statements regarding Amtech’s future financial results, operating results, business strategies, projected costs, products under development, competitive positions and plans and objectives of the Company and its management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “would,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Some factors that could cause actual results to differ materially from those anticipated include, among others, future economic conditions, including changes in the markets in which we operate; changes in demand for our services and products; our ability to successfully complete the turnkey orders and the associated costs and risks related thereto; difficulties in successfully executing our growth initiatives; the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets; control of costs and expenses; risks associated with new technologies and the impact on our business; legislative, regulatory, and competitive developments in markets in which we operate; possible future claims, litigation or enforcement actions and the results of any such claim, litigation proceeding, or enforcement action; and other circumstances and risks identified in this Quarterly Report or referenced from time to time in our filings withAsia, the United States Securities and Exchange Commission. These and many other factors could affect Amtech’s future operating results and financial condition, and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf.

Our semiconductor customers are primarily manufacturers of integrated circuits, O-S-D (optoelectronic, sensors and discrete) components used in analog, power and radio frequency (RF) devices and photovoltaic solar cellscells. The semiconductor and integrated circuits. The solar cell and semiconductor industries are cyclical and historically have experienced significant fluctuations. Our revenue is impacted by these broad industry trends. TheAlthough semiconductor demand for our products may have reached its cyclical peak in our fiscal year ended September 30, 2018, we believe that continued technological advances and emerging industries, such as silicon carbide power devices, will sustain our long-term performance.

Since 2012, the solar cell industry has, at times, experienced asignificant structural imbalanceimbalances between supply and demand. This imbalance has increased competitive pressure on selling prices and negatively impacted our results of operations. Our high throughput equipment platforms, technologiesWe secured a large order for higher cell efficiency, greater knowledge of the complete cell manufacturing process and advanced automation have contributed significantly to our success in securing the large orders for the first two phases of a multi-phasesolar turnkey project announcedand delivered the equipment for both phases in Januaryfiscal 2017 and April2018. We achieved final acceptance for the first phase and have been waiting for end-customer readiness to begin installation of 2017the second phase. In December 2018, we were notified by our customer that the turnkey contract for Phase II has been terminated. As a result, we will not perform the final installation and integration of our equipment. Final settlement of the contract is under review. We have removed the value of this remaining work from a new solar cell manufacturer in China.our backlog and do not expect any future orders relating to this project or other turnkey projects. For equipment orders that are not part of turnkey projects,for other customer expansions, we compete with Chinese equipment manufacturers that offer lower prices, coupled with liberal payment terms. Weterms and have a more substantial local presence. As a result, we are finding it moreincreasingly difficult to participate in large capacity expansion opportunities in China. We believe we will need to continue to significantly restructure our Solar operations to achieve profitability. No assurance can be given as to the capacity expansionsoutcome or timing of those Chinese companiesany such further restructuring efforts, or that already have significant experience with all facetsany such efforts will result in any specific action. We are intensely reviewing available options to improve the solar business.

In July 2018, we established a restructuring plan related to our operations in the Netherlands, which are part of producing solar cellsour Solar operating segment (the “Plan”). The goal of the Plan is to reduce operating costs and at least some prior experience workingbetter align our workforce with the local equipment vendors. Whilecurrent needs of our solar business and enhance our competitive position for long-term success. Once fully implemented, we expect the Plan to reduce operating costs by approximately $3.0 million on an annualized basis. Under the Plan, we will continuereduce our Solar workforce by approximately 35-40 employees (approximately 20%). The affected employees are covered by a collective bargaining agreement, which defines the notice period and amount due to focus on developing advanced products and technologies, we plan to seek further cost reductions to address the competition from Chinese equipment vendors.

The following table sets forth certain operational data as a percentage of net revenue for the periods indicated:

Net revenue consists of revenue recognized upon shipment or installation of equipment, with the exception of products using new technology, for which revenue is recognized upon customer acceptance. Spare parts sales are recognized upon shipment and service revenue is recognized upon completion of the service activity, which is generally ratable over the term of the service contract. Since the majority of our revenue is generated from large system sales, revenue and operating income can be significantly impacted by the timing of system shipments and recognition of revenue based on customersystem acceptances. The revenue of business units included in the Solar segment include some sales of equipment and parts to the semiconductor, silicon wafer and microelectromechanical (“MEMS”)MEMS industries, comprising lessnot more than 25%half of the Solar segment revenue.

Our net revenue by operating segment was as follows (dollars in thousands):

NetTotal net revenue for the quarters ended December 31, 2018 and 2017 was $29.5 million and 2016 was $73.6 million, and $29.1 million, respectively, an increasea decrease of $44.5approximately $44.2 million or 153%60%. Revenue from the Solar segment increased 331%decreased 85% compared to the prior year quarter. This change is primarily a result of shipments of the equipment for Phase II of the turnkey order during the prior year quarter, compared to no turnkey revenue in the most recent quarter. We are operating in a challenging, competitive environment due to lower prices and liberal payment terms that are offered from Chinese equipment manufacturers. These competitive pricing pressures are making it increasingly difficult for us to participate in our customers’ solar expansions. The termination of the turnkey contract described in the Overview section above further reduces our confidence in the likelihood of a rebound of our Solar segment. Revenue from our Semiconductor segment decreased 9% compared to the prior year quarter due primarily to shipments relating to Phase II ofmarket demand peaking in fiscal 2018 and weakness in the turnkey order, previously announced in April 2017.China consumer market. Revenue from the SemiconductorPolishing segment increased 33%decreased 15% compared to the prior year quarter due primarily to strong customer demand for our thermal processing systemsmore machine sales and diffusion furnaces. Revenue from the Polishing segment increased 75% compared to the prior year quarter due primarily to strong customer demand leading to increasedhigher initial sales of polishing templates and equipment.a new template design in the first quarter of fiscal 2018.

The backlog of business units included in the Solar segment include some sales of equipment and parts to the semiconductor, silicon wafer and MEMS industries, comprising lessnot more than 25%half of the Solar segment backlog.

As of December 31, 2017, two customers2018, one customer individually accounted for 19% and17% of our backlog. No other customer accounted for more than 10% of our backlog.backlog as of December 31, 2018. The orders included in our backlog are generally credit approved customer purchase orders believed to be firm and are generally expected to ship within the next twelve months. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. Our backlog also includes revenue deferred pursuant to our revenue recognition policy, derived from orders that have already been shipped, but which have not met the criteria for revenue recognition.

Gross profit is the difference between net revenue and cost of goods sold. Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment and spare parts and the cost of service and support to customers for installation, warranty and paid service calls. Gross margin is gross profit as a percent of net revenue. Our gross profit and gross margin by operating segment were as follows (dollars in thousands):

Gross profit for the three months ended December 31, 2018 and 2017 was $9.1 million (31% of net revenue) and 2016 was $20.3 million (28% of net revenue) and $8.4 million (29% of net revenue), respectively, an increasea decrease of $11.9$11.2 million. Gross margin on products from our Solar segment decreased compared to the three months ended December 31, 2017, due primarily to lower sales volumes and write-downs of inventory. Gross margin on products from our Semiconductor segment increased compared to the three months ended December 31, 2016, 2017,

due primarily to a higher sales volumes of higher-margin products compared to the first quarter of fiscal 2017. Gross profit on products from our Semiconductor segment increased due to increased sales volume in the first quarter of 2018, with gross margin decreasing due to product mix. Gross profit and gross margin on products from our Polishing segment increaseddecreased from the prior year period, primarily due to higher salesproduct mix. For the three months ended December 31, 2018, we recognized previously deferred gross profit of new products with higher margins.$0.5 million. For the three months ended December 31, 2017, we deferred gross profit of $2.1 million. For the three months ended December 31, 2016, we recognized previously-deferred gross profit of $0.3 million.

Selling, general and administrative expenses (“SG&A”) consists of the cost of employees, consultants and contractors, facility costs, sales commissions, shipping costs, promotional marketing expenses, legal and accounting expenses and bad debt expense.

SG&A expenses for the three months ended December 31, 2018 and 2017 and 2016 were $10.6$8.2 million and $7.0$10.6 million, respectively. SG&A increaseddecreased compared to the prior year quarter due primarily to $1.8 million of higherdecreased expenses in our Solar segment, including lower commissions and freight on lower sales, lower personnel and other sellingemployee-related expenses, and administrative expenses related to increased revenue. Also, for the three months ended December 31, 2016, SG&A expensesturnkey project that were reduced byincurred in the collectionsfirst quarter of previously reserved accounts receivablefiscal 2018.

We recorded restructuring charges of approximately $1.0 million.$0.9 million in the first quarter of fiscal 2019. This amount is primarily severance expense related to the departure of our former Chief Executive Officer.

Research, development and engineering (“RD&E”) expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials and supplies used in producing prototypes. We receive reimbursements through governmental research and development grants which are netted against these expenses when certain conditions have been met.

 

RD&E expense, net of grants earned, for the three months ended December 31, 2018 and 2017 were $1.9 million and 2016 were $2.0 million, and $1.6 million, respectively, an increasea decrease of $0.4 million, due primarily to increased R&D spending in our Solar segment.less than $100,000.

For the three months ended December 31, 2018 and 2017, we recorded income tax expense of $0.6 million and $1.2 million, resulting in an effective tax rate of 16.1%. For the three months ended December 31, 2016 we recorded income tax expense of $0.1 million, a 37.5% effective tax rate.respectively. The income tax provisions are based upon estimates of annual income, annual permanent differences and statutory tax rates in the various jurisdictions in which we operate, except that certain loss jurisdictions and discrete items are treated separately.

The decrease in cash, and cash equivalents were $52.7 million and $51.1 million, respectively, an increase of $1.6 million. Restricted cash decreased by $14.7 million to $9.9 million at December 31, 2017 from $24.6 million at September 30, 2017. Our working capital was $79.7 million as of December 31, 2017 and $71.1 million as of September 30, 2017.

The success of our growth strategy is dependent upon the availability of additional capital resources on terms satisfactory to management. Our sources of capital in the past have included the sale of equity securities, which includes common stock sold in private transactions and public offerings, long-term debt and customer deposits. There can be no assurance that we can raise such additional capital resources on satisfactory terms. We believe that our principal sources of liquidity discussed above are sufficient to support operations for at least the next twelve months. We have never paid dividends on our common stock.

 

Cash provided byused in our operating activities was $0.3$0.6 million for the three months ended December 31, 2018, compared to $14.6 million for the three months ended December 31, 2017, compared to $3.5 million used in operations foran increase of $14.0 million. During the three months ended December 31, 2016, an improvement2018, $1.0 million was used in losses from operations adjusted for non-cash items, partially offset by $0.4 million of $3.8 million.cash provided by changes in operating assets and liabilities. During the three months ended December 31, 2017, cash was primarily generated through net income adjusted for non-cash items of $7.4 million which wasand increases in current liabilities, such as customer deposits and accounts payable. These increases were more than offset by other increases and decreasesan increase in operating assets, primarily relatedaccounts receivable due to the turnkey project. A significant portionhigh volumes of shipments during the revenuequarter and related cash payments relatedadvances made to the turnkey project are deferred and restricted, respectively, until completion of the integration of the equipment and transfer of the technology. Duringvendors. 

For the three months ended December 31, 2016,2018, cash used in investing activities was reduced by increases$0.2 million compared to $0.1 million in accounts receivable and restricted cash, offset by decreases in inventory. the prior year period.

For the three months ended December 31, 2018, $0.1 million of cash used in financing activities was comprised of approximately $37,000 of proceeds received from the exercise of stock options, fully offset by payments on long-term debt of $0.1 million. For the three months ended December 31, 2017, $1.1 million of cash provided by financing activities was primarily comprised of $1.2 million of proceeds received from the exercise of stock options, partially offset by payments on long-term debt of $0.1 million. For the three months ended December 31, 2016, $0.1 million of cash used in financing activities was primarily related to payments on long-term debt of $0.2 million net of borrowings of less than $0.1 million.

As of December 31, 2017,2018, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the Securities and Exchange CommissionSEC that have or are reasonably likely to have a current or future effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Unrecorded purchase obligations were $26.4$16.0 million as of December 31, 2017,2018, compared to $34.4$15.0 million as of September 30, 2017, a decrease2018, an increase of $8.0$1.0 million due primarily to reduced vendor commitments as we completeinventory builds related to expected shipments in the first two phases ofsecond quarter and a large capital expenditure in our Polishing segment.

There were no other material changes to the large solar project. Approximately $5.2 million of the December 31, 2017 and $11.8 million of the September 30, 2017 contractual obligations were prepaid asincluded in Part II, Item 7: “Management’s Discussion and Analysis of those dates in the formFinancial Condition and Results of advances to vendors.

“Management’sPart I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report discusses our condensed consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory valuation, accounts and notes receivable collectability, warranty and impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. The results of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A critical accounting policy is one that is both important to the presentation of our financial position and results of operations, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These uncertainties are discussed in Part I, Item 1A of our Annual Report on Form 10-K as amended, for the year ended September 30, 2017.2018. We believe our critical accounting policies relate to the more significant judgments and estimates used in the preparation of our consolidated financial statements.

We believe the critical accounting policies discussed in the section entitled “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K as amended, for the fiscal year ended September 30, 20172018 represent the most significant judgments and estimates used in the preparation of our consolidated financial statements. ThereOther than the Revenue Recognition policy change disclosed in Note 2 hereto, there have been no significant changes in our critical accounting policies during the three months ended December 31, 2017.2018.

There have been no material changesAs a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in our reported market risks, as described in “QuantitativeItem 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and, Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K, as amended, fortherefore, are not required to provide the year ended September 30, 2017.information requested by this Item.

 

 

Our management, including theour Chief Executive Officer (“CEO”) and theour Chief Financial Officer (“CFO”), has carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2017,2018, pursuant to Exchange Act Rules 13a-15(e) and 15(d)-15(e). Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the principal executive and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our CEO and CFO have concluded that as of such date, our disclosure controls and procedures in place were effective.

 

 

There were nohave not been any changes in Amtech’sthe Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2017first fiscal quarter to which this report relates that has materially affected, or isare reasonably likely to materially affect, itsthe internal control over financial reporting.reporting of the Company.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K, as amended, for the fiscal year ended September 30, 2017. There have been no material changes to the risk factors as previously disclosed in the section entitled “Risk Factors” of our Form 10-K as amended, for the fiscal year ended September 30, 2017, other than as described in the Overview above, and the supplemental risk factor set forth below:2018.