UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~____________________~~

FORM 10-Q

(Mark One)



~~[X]~~ ☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~December 31, 2017~~

June 30, 2023



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

For the transition period from ________________ to ________________

Commission File Number: 0-11412

AMTECH SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

~~AMTECH SYSTEMS, INC.~~

~~(Exact name of registrant as specified in its charter)~~



Arizona		86-0411215
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

131 South Clark Drive, Tempe, Arizona	~~85281~~	85288
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: ~~480-967-5146~~

480-967-5146

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ASYS	NASDAQ Global Select Market

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~[X]~~ ☒ Yes ~~[ ]~~ ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ~~[ X ]~~ ☒ Yes ~~[ ]~~ ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one)~~:



Large ~~accelerated filer [ ]~~Accelerated Filer	☐	Accelerated ~~filer [X]~~Filer	☐
~~Non-accelerated filer [ ] (Do not check if a smaller reporting company)~~ Non-Accelerated Filer	☒	Smaller Reporting Company ~~[ ]~~	☒
		Emerging Growth Company ~~[ ]~~	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.~~[ ]~~

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No ~~[X]~~

~~Shares~~☒

At August 4, 2023, there were outstanding 14,167,351 shares of Common ~~Stock outstanding as of February 2, 2018: 14,894,129~~

Stock.

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS



	Page
Cautionary Statement Regarding Forward-Looking Statements	3
PART I. FINANCIAL INFORMATION	4
Item 1. Condensed Consolidated Financial Statements	4
Condensed Consolidated Balance Sheets ~~December 31, 2017~~ June 30, 2023 (Unaudited) and September 30, ~~2017~~2022	3 4
Condensed Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022	4 5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three and Nine Months Ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022	5 6
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)Three and Nine Months Ended June 30, 2023 and 2022	7
Condensed Consolidated Statements of Cash Flows (Unaudited) ~~Three~~ Nine Months Ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022	6 8
Notes to Condensed Consolidated Financial Statements (Unaudited)	7 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
~~Cautionary Statement Regarding Forward-Looking Statements~~Overview	13 23
~~Overview~~	14
Results of Operations	14 24
Liquidity and Capital Resources	17 28
Off-Balance Sheet Arrangements	17 29
Contractual Obligations	17 29
Critical Accounting ~~Policies~~Estimates	18 29
Impact of Recently Issued Accounting Pronouncements	18 30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	18 30
Item 4. Controls and Procedures	18 31
PART II. OTHER INFORMATION	32
Item 1. Legal Proceedings	19 32
Item 1A. Risk Factors	19 32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	19 32
Item 3. Defaults Upon Senior Securities	19 32
Item 4. Mine Safety Disclosures	19 32
Item 5. Other Information	19 32
Item 6. Exhibits	20 33
SIGNATURES	21 34

Cautionary Statement Regarding Forward-Looking Statements

Our discussion and analysis in this Quarterly Report on Form 10-Q ("Quarterly Report"), our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the “2022 Form 10-K”), our other reports that we file with the Securities and Exchange Commission (the “SEC”), our press releases and in public statements of our officers and corporate spokespersons contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our or our officers’ current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current events. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. We have tried, wherever possible, to identify such statements by using words such as “may,” “plan,” “anticipate,” “seek,” “will,” “expect,” “intend,” “estimate,” “believe,” “continue,” “predict,” “potential,” “project,” “should,” “would,” “could,” “likely,” “future,” “target,” “forecast,” “goal,” “observe,” and “strategy” or the negative thereof or variations thereon or similar terminology relating to the uncertainty of future events or outcomes. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors. 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 revenue and operating performance; difficulties in successfully executing our growth initiatives; difficulties in executing on our strategic initiatives with respect to our material and substrate business segment; our ability to effectively integrate our acquisition of Entrepix, Inc., which we acquired in January 2023; 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; the cyclical nature of the semiconductor industry; pricing and gross profit pressures; 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; business interruptions, including those related to the COVID-19 pandemic, the potential impacts of the COVID-19 pandemic, including ongoing logistical and supply chain challenges, and any future pandemic on our business operations, financial results and financial position; the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, including any future Chinese government mandated shutdown in Shanghai; risks of future cybersecurity incidents; adverse developments affecting financial institutions, including bank failures; and other circumstances and risks identified in this Quarterly Report or referenced from time to time in our filings with the SEC. The occurrence of the events described, and the achievement of expected results, depend on many events, some or all of which are not predictable or within our control. 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.

You should not place undue reliance on these forward-looking statements. We cannot guarantee that any forward-looking statement will be realized, although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Quarterly Report. Achievement of future results is subject to events out of our control, risks, uncertainties and potentially inaccurate assumptions. The 2022 Form 10-K listed various important factors that could affect Amtech’s future operating results and financial condition and could cause actual results to differ materially from historical results and expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf. These factors can be found under the heading “Item 1A. Risk Factors” in our 2022 Form 10-K and investors should refer to them as well as the additional risk factors identified in this Quarterly Report. Because it is not possible to predict or identify all such factors, any such list cannot be considered a complete set of all potential risks or uncertainties.

The Company undertakes no obligation to update or publicly revise any forward-looking statement whether as a result of new information, future developments or otherwise. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph. You are advised, however, to consult any further disclosures we make on related subjects in our subsequently filed Form 10-Q and Form 8-K reports and our other filings with the SEC. As noted above, we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our business under “Item 1A. Risk Factors” of our 2022 Form 10-K. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand it is not possible to predict or identify all such factors.

Unless the context indicates otherwise, the terms “Amtech,” the “Company,” “we,” “us” and “our” refer to Amtech Systems, Inc., an Arizona corporation, together with its subsidiaries.

PART I. FINANCIAL INFORMATION


~~Item 1.~~	~~Condensed Consolidated Financial Statements~~

Item 1. Condensed Consolidated Financial Statements

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share data)

December 31,
2017 September 30,
2017
Assets (Unaudited)
Current Assets
Cash and cash equivalents $ 52,696
$ 51,121
Restricted cash 9,913
24,640
Accounts receivable
Trade (less allowance for doubtful accounts of $1,473 and $866 at December 31, 2017, and September 30, 2017, respectively) 24,365
22,519
Unbilled and other 21,620
14,275
Inventories 22,762
30,210
Vendor deposits 5,180
11,806
Other 2,310
2,542
Total current assets 138,846
157,113
Property, Plant and Equipment - Net 15,637
15,792
Intangible Assets - Net 3,378
3,495
Goodwill - Net 11,484
11,405
Investments 2,588
2,615
Deferred Income Taxes - Long-Term 200
200
Other Assets - Long-Term 980
1,003
Total Assets $ 173,113
$ 191,623
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable $ 20,483
$ 21,555
Accrued compensation and related taxes 7,422
7,592
Accrued warranty expense 1,401
1,254
Other accrued liabilities 2,918
2,056
Customer deposits 19,328
48,784
Current maturities of long-term debt 365
361
Deferred profit 5,632
4,081
Income taxes payable 1,608
286
Total current liabilities 59,157
85,969
Long-Term Debt 8,225
8,134
Income Taxes Payable - Long-Term 6,802
7,037
Total Liabilities 74,184
101,140
Commitments and Contingencies

Stockholders’ Equity
Preferred stock; 100,000,000 shares authorized; none issued —
—
Common stock; $0.01 par value; 100,000,000 shares authorized;
shares issued and outstanding: 14,876,430 and 14,710,591 at December 31, 2017 and September 30, 2017, respectively 149
147
Additional paid-in capital 127,015
125,564
Accumulated other comprehensive loss (7,988 ) (8,529 )
Retained deficit (20,247 ) (26,699 )
Total stockholders’ equity 98,929
90,483
Total Liabilities and Stockholders’ Equity $ 173,113
$ 191,623


	June 30, 2023			September 30, 2022
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	14,305		$	46,874
Accounts receivable (less allowance for doubtful accounts of $357 and $114 at June 30, 2023 and September 30, 2022, respectively)		28,398			25,013
Inventories		34,661			25,488
Other current assets		5,600			5,561
Total current assets		82,964			102,936
Property, Plant and Equipment - Net		9,146			6,552
Right-of-Use Assets - Net		11,643			11,258
Intangible Assets - Net		12,313			758
Goodwill		29,022			11,168
Deferred Income Taxes - Net		162			79
Other Assets		1,112			783
Total Assets	$	146,362		$	133,534

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	7,466		$	7,301
Accrued compensation and related taxes		3,491			4,109
Other accrued liabilities		3,120			1,771
Current maturities of finance lease liabilities and long-term debt		2,244			107
Current portion of long-term operating lease liabilities		2,800			2,101
Contract liabilities		7,807			7,231
Income taxes payable		34			6
Total current liabilities		26,962			22,626
Finance Lease Liabilities and Long-Term Debt		8,987			220
Long-Term Operating Lease Liabilities		9,120			9,395
Income Taxes Payable		2,462			2,849
Other Long-Term Liabilities		124			76
Total Liabilities		47,655			35,166
Commitments and Contingencies (Note 11)
Shareholders’ Equity
Preferred stock; 100,000,000 shares authorized; none issued		—			—
Common stock; $0.01 par value; 100,000,000 shares authorized; shares issued and outstanding: 14,076,472 and 13,994,154 at June 30, 2023 and September 30, 2022, respectively		141			140
Additional paid-in capital		125,525			124,458
Accumulated other comprehensive loss		(1,929	)		(1,767	)
Retained deficit		(25,030	)		(24,463	)
Total Shareholders’ Equity		98,707			98,368
Total Liabilities and Shareholders’ Equity	$	146,362		$	133,534

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

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

Three Months Ended December 31,
2017 2016
Revenues, net of returns and allowances $ 73,611
$ 29,135

Cost of sales 53,274
20,692

Gross profit 20,337
8,443

Selling, general and administrative 10,580
6,996

Research, development and engineering 1,991
1,627

Operating income (loss) 7,766
(180 )
Loss from equity method investment (26 ) (143 )
Interest expense and other income, net (48 ) 81

Income (loss) before income taxes 7,692
(242 )
Income tax provision 1,240
90

Net income (loss) 6,452
(332 )

Add: net loss attributable to noncontrolling interest —
279

Net income (loss) attributable to Amtech Systems, Inc. $ 6,452
$ (53 )

Income (Loss) Per Share:

Basic income (loss) per share attributable to Amtech shareholders $ 0.44
$(0.00)
Weighted average shares outstanding 14,781
13,179

Diluted income (loss) per share attributable to Amtech shareholders $ 0.42
$(0.00)
Weighted average shares outstanding 15,298
13,179


	Three Months Ended June 30,						Nine Months Ended June 30,
	2023			2022			2023			2022
Revenues, net	$	30,740		$	19,964		$	85,608		$	73,983
Cost of sales		19,755			14,064			52,850			47,025
Gross profit		10,985			5,900			32,758			26,958

Selling, general and administrative		10,300			7,157			30,924			21,008
Research, development and engineering		1,804			1,646			4,714			5,018
Gain on sale of fixed assets		—			(12,465	)		—			(12,465	)
Severance expense		—			—			400			—
Operating (loss) income		(1,119	)		9,562			(3,280	)		13,397
Interest income (expense) and other, net		303			680			(26	)		627
(Loss) income before income tax provision		(816	)		10,242			(3,306	)		14,024
Income tax provision (benefit)		211			20			(2,739	)		840
Net (loss) income	$	(1,027	)	$	10,222		$	(567	)	$	13,184
(Loss) Income Per Share:
Net (loss) income per basic share	$	(0.07	)	$	0.74		$	(0.04	)	$	0.94
Net (loss) income per diluted share	$	(0.07	)	$	0.73		$	(0.04	)	$	0.93
Weighted average shares outstanding:
Basic		14,058			13,889			14,031			14,042
Diluted		14,058			14,026			14,031			14,220

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

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

(Unaudited)

(in thousands)

Three Months Ended December 31,
2017 2016
Net income (loss) $ 6,452
$ (332 )
Foreign currency translation adjustment 541
(941 )
Comprehensive income (loss) 6,993
(1,273 )

Comprehensive loss attributable to noncontrolling interest —
375

Comprehensive income (loss) attributable to Amtech Systems, Inc. $ 6,993
$ (898 )


	Three Months Ended June 30,						Nine Months Ended June 30,
	2023			2022			2023			2022
Net (loss) income	$	(1,027	)	$	10,222		$	(567	)	$	13,184
Foreign currency translation adjustment		(962	)		(916	)		(162	)		(577	)
Comprehensive (loss) income	$	(1,989	)	$	9,306		$	(729	)	$	12,607

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

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of ~~Cash Flows~~

Shareholders’ Equity

(Unaudited)

(in thousands)

Three Months Ended December 31,
2017 2016
Operating Activities
Net income (loss) $ 6,452
$ (332 )
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:

Depreciation and amortization 471
654
Write-down of inventory 41
33
Capitalized interest 143
190
Deferred income taxes (7 ) 31
Non-cash share based compensation expense 253
319
Loss from equity method investment 26
143
Provision for (reversal of) allowance for doubtful accounts, net 48
(1,178 )
Changes in operating assets and liabilities:
Restricted cash 14,885
(2,425 )
Accounts receivable (8,869 ) (3,600 )
Inventories 7,558
1,621
Accrued income taxes 1,087
239
Vendor deposits and other assets 6,974
725
Accounts payable (1,255 ) 78
Customer deposits and accrued liabilities (29,023 ) 584
Deferred profit 1,479
(619 )
Net cash provided by (used in) operating activities 263
(3,537 )
Investing Activities
Purchases of property, plant and equipment (93 ) (86 )
Proceeds from sale of property, plant and equipment —
1
Net cash used in investing activities (93 ) (85 )
Financing Activities
Proceeds from the exercise of stock options 1,199
1
Payments on long-term debt (89 ) (160 )
Borrowings on long-term debt —
21
Net cash provided by (used in) financing activities 1,110
(138 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents 295
(257 )
Net Increase (Decrease) in Cash and Cash Equivalents 1,575
(4,017 )
Cash and Cash Equivalents, Beginning of Period 51,121
27,655
Cash and Cash Equivalents, End of Period $ 52,696
$ 23,638


	Common Stock						Treasury Stock									Accumulated Other						Total
	Shares			Par Value			Shares			Cost			Additional Paid- In Capital			Comprehensive Income (Loss)			Retained Deficit			Shareholders' Equity
Balance at September 30, 2021		14,304		$	143			—		$	—		$	126,380		$	14		$	(40,903	)	$	85,634
Net income		—			—			—			—			—			—			997			997
Translation adjustment		—			—			—			—			—			237			—			237
Stock compensation expense		—			—			—			—			103			—			—			103
Repurchase of treasury stock		—			—			(291	)		(2,713	)		—			—			—			(2,713	)
Retirement of treasury stock		(291	)		(3	)		291			2,713			(2,122	)		—			(588	)		—
Stock options exercised		12			—			—			—			69			—			—			69
Balance at December 31, 2021		14,025			140			—			—			124,430			251			(40,494	)		84,327
Net income		—			—			—			—			—			—			1,965			1,965
Translation adjustment		—			—			—			—			—			102			—			102
Stock compensation expense		—			—			—			—			137			—			—			137
Repurchase of treasury stock		—			—			(143	)		(1,402	)		—			—			—			(1,402	)
Retirement of treasury stock		(143	)		(1	)		143			1,402			(1,062	)		—			(339	)		—
Stock options exercised		5			—			—			—			29			—			—			29
Balance at March 31, 2022		13,887			139			—			—			123,534			353			(38,868	)		85,158
Net income		—			—			—			—			—			—			10,222			10,222
Translation adjustment		—			—			—			—			—			(916	)		—			(916	)
Stock compensation expense		—			—			—			—			146			—			—			146
Stock options exercised		3			—			—			—			13			—			—			13
Balance at June 30, 2022		13,890		$	139			—		$	—		$	123,693		$	(563	)	$	(28,646	)	$	94,623


Balance at September 30, 2022		13,994		$	140			—		$	—		$	124,458		$	(1,767	)	$	(24,463	)	$	98,368
Net loss		—			—			—			—			—			—			(2,744	)		(2,744	)
Translation adjustment		—			—			—			—			—			416			—			416
Stock compensation expense		—			—			—			—			164			—			—			164
Stock options exercised		9			—			—			—			34			—			—			34
Balance at December 31, 2022		14,003			140			—			—			124,656			(1,351	)		(27,207	)		96,238
Net income		—			—			—			—			—			—			3,204			3,204
Translation adjustment		—			—			—			—			—			384			—			384
Stock compensation expense		—			—			—			—			174			—			—			174
Stock options exercised		36			—			—			—			297			—			—			297
Balance at March 31, 2023		14,039			140			—			—			125,127			(967	)		(24,003	)		100,297
Net loss		—			—			—			—			—			—			(1,027	)		(1,027	)
Translation adjustment		—			—			—			—			—			(962	)		—			(962	)
Stock compensation expense		—			—			—			—			190			—			—			190
Stock options exercised		37			1			—			—			208			—			—			209
Balance at June 30, 2023		14,076		$	141			—		$	—		$	125,525		$	(1,929	)	$	(25,030	)	$	98,707

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

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended June 30,
	2023			2022
Operating Activities
Net (loss) income	$	(567	)	$	13,184
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		3,435			1,330
Write-down of inventory		1,233			235
Deferred income taxes		(3,430	)		—
Non-cash share-based compensation expense		528			386
Gain on sale of property, plant and equipment		—			(12,465	)
Provision for allowance for doubtful accounts		109			10
Changes in operating assets and liabilities:
Accounts receivable		2,391			1,714
Inventories		(4,724	)		(5,617	)
Other assets		1,775			(1,298	)
Accounts payable		(1,586	)		1,603
Accrued income taxes		(1,947	)		713
Accrued and other liabilities		(2,993	)		1,031
Contract liabilities		(1,374	)		4,264
Net cash (used in) provided by operating activities		(7,150	)		5,090
Investing Activities
Purchases of property, plant and equipment		(1,922	)		(325	)
Proceeds from the sale of property, plant and equipment		6			19,908
Acquisition, net of cash and cash equivalents acquired		(34,938	)		—
Net cash (used in) provided by investing activities		(36,854	)		19,583
Financing Activities
Proceeds from the exercise of stock options		539			111
Repurchase of common stock		—			(4,115	)
Payments on long-term debt		(949	)		(4,851	)
Borrowings on long-term debt		12,000			—
Net cash provided by (used in) financing activities		11,590			(8,855	)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash		(155	)		(441	)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash		(32,569	)		15,377
Cash and Cash Equivalents, Beginning of Period		46,874			32,836
Cash, Cash Equivalents and Restricted Cash, End of Period	$	14,305		$	48,213
Supplemental Cash Flow Information:
Income tax payments, net	$	2,559		$	30
Interest paid	$	283		$	166

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

AMTECH SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED ~~DECEMBER 31, 2017~~JUNE 30, 2023 AND ~~2016~~

2022

(UNAUDITED)

~~(UNAUDITED)~~

1. Basis of Presentation and Significant Accounting Policies

Nature of Operations and Basis of Presentation – Amtech Systems, Inc. (the ~~“Company”, “Amtech”, “we”,~~“Company,” “Amtech,” “we,” “our” or “us”) is a leading, global manufacturer of capital equipment, including thermal processing ~~silicon~~and wafer ~~handling automation,~~polishing, and related consumables used in fabricating ~~solar cells, LED~~semiconductor devices, such as silicon carbide (“SiC”) and ~~semiconductor devices.~~silicon power devices, analog and discrete devices, electronic assemblies, and light-emitting diodes (“LEDs”). We sell these products to ~~solar cell~~semiconductor device and ~~semiconductor~~module manufacturers worldwide, particularly in Asia, ~~the United States~~North America and Europe.

We serve niche markets in industries that are experiencing ~~rapid~~ technological advances, and which historically have been very cyclical. Therefore, our 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.~~America (“GAAP”). 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. The condensed consolidated balance sheet at September 30, 2022, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. 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.~~

2022.

Our fiscal year is from October 1 to September 30. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending or ended September 30, and the associated quarters, months, and periods of those fiscal years.

The consolidated results of operations for the three and nine months ended ~~December 31, 2017,~~June 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year.

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization, and the outbreak became increasingly widespread, including in all of the markets in which we operate. We continue to monitor the impact of COVID-19 on all aspects of our business. We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with federal guidelines and with foreign government, state and local orders to date, we have continued to operate across our footprint throughout the COVID-19 pandemic. There remain many unknowns and we continue to monitor the expected trends and related demand for our products and services and have and will continue to adjust our operations accordingly.

On March 28, 2022, the Chinese government issued a mandatory shutdown in Shanghai, the location of one of our manufacturing facilities. The factory was allowed to partially reopen in May 2022 and was fully reopened on June 1, 2022. Upon reopening on June 1, 2022, the factory was able to operate at near full capacity for the entire month of June. We were able to make up the shipments missed in the fourth quarter of fiscal 2022 and are now operating at normal capacity levels. Additionally, given the uncertainty surrounding the COVID-19 pandemic and the emergence of variations thereof, there can be no assurance that this facility will be allowed to remain open on a consistent basis in the future.

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling interest. We report non-controlling interests in consolidated entities as a component of equity separate from our equity. The equity method of accounting is used for investments over which we have a significant influence but not a controlling financial interest.subsidiaries. All ~~material~~ intercompany ~~accounts~~balances and transactions have been eliminated in consolidation. Effective July 1, 2017, we purchased the non-controlling interest in SoLayTec B.V. (“SoLayTec”), pursuant to which SoLayTec became a wholly-owned subsidiary of Amtech. Beginning July 1, 2017, the non-controlling interest will no longer be reported. Prior amounts have not been restated.

Use of Estimates – The preparation of consolidated financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

~~Revenue Recognition~~

Restricted Cash – Restricted cash includes collateral for bank guarantees required by certain customers from whom deposits have been received in advance of shipment. Our restricted cash at June 30, 2022 was $0.5 million. There was no restricted cash as of June 30, 2023.

Intangible Assets– Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), finite-lived intangible assets are stated at acquisition-date fair value. Intangible assets are amortized using the straight-line method over their estimated useful life. We ~~review product and service sales contracts with multiple deliverables~~regularly perform reviews to determine if ~~separate units~~facts and circumstances exist which indicate that the useful lives of ~~accounting~~our intangible assets are ~~present. Where separate units of accounting exist, revenue allocated to delivered items is the lower of the relative selling price of the delivered items in the sales arrangement~~shorter than originally estimated or the ~~portion~~carrying amount of ~~the selling price that is~~these assets may not ~~contingent upon performance of the service.~~

We recognize revenue when persuasive evidence of an arrangement exists; the product has been delivered and title has transferred, or services have been rendered; and the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. For us, this policy generally results in revenue recognition at the following points:

For our equipment business, transactions where legal title passes to the customer upon shipment, we recognize revenue upon shipment for those products where the customer’s defined specifications have been met with at least two similarly configured systems and processes for a comparably situated customer. Our selling prices may include both equipment and services, i.e., installation and start-up services performed by our service technicians. The equipment and services are multiple deliverables. Certain equipment that has a positive track record of successful installation and customer acceptance are considered to be routine systems. Our recognition of revenue upon delivery of such equipment that has been routinely installed and accepted is equal to the total selling price minus the relative selling price of the undelivered services.

Where the installation and acceptance of more than two similarly configured items of equipment have not become routine, recognition of revenue upon delivery of equipment is limited to the lesser of (i) the total selling price minus the relative selling price of the undelivered services or (ii) the non-contingent amount. Since we defer only those costs directly related to installation, or another unit of accounting not yet delivered, and the portion of the contract price is often considerably greater than the relative selling price of those items, our policy at times will result in deferral of profit that is disproportionate in relation to the deferred revenue. When this is the case, the gross margin recognized in one period will be ~~lower and the gross margin reported in a subsequent period will improve.~~

For products where the customer’s defined specifications have not been met with at least two similarly configured systems and processes, the revenue and directly related costs are deferred at the time of shipment and later recognized at the time of customer acceptance or when this criterion has been met. We have, on occasion, experienced longer than expected delays in receiving cash from certain customers pending final installation or system acceptance. If some customers refuse to pay the final payment, or otherwise delay final acceptance or installation, the deferred revenue would not be recognized, adversely affecting future cash flows and operating results.


3.	~~Sales of certain equipment, spare parts and consumables are recognized upon shipment, as there are no post shipment obligations other than standard warranties.~~


4.	Service revenue is recognized upon performance of the services requested by the customer. Service contract revenue is recognized as services are performed over the term of the contract, which generally results in ratable recognition over the period of the contract.

~~Deferred Profit~~ ~~– Revenue deferred pursuant to our revenue policy, net of the related deferred costs,~~recoverable. Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets. Patent costs consist primarily of legal and filing fees incurred to file patents on proprietary methods and technology we developed. Patent costs are expensed when incurred, as they are insignificant.

Goodwill – The Company accounts for goodwill under ASC 350. Goodwill represents the excess of the fair value of the consideration conveyed in an acquisition over the fair value of net assets acquired. Goodwill is not subject to amortization but is tested for impairment annually or when it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is concluded that there is a potential impairment, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss would not exceed the total amount of goodwill allocated to the reporting unit).

Long-lived assets – We review our long-lived assets 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 can be found in Notes 1 and 11 of our Annual Report on Form 10-K for the year ended September 30, 2022.

Contract Liabilities – Contract liabilities are reflected in current liabilities on the Condensed Consolidated Balance Sheets as all performance obligations are expected to be satisfied within the next 12 months. Contract liabilities relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations. Contract liabilities consist of customer deposits as of June 30, 2023 and September 30, 2022. Of the $7.2 million contract liabilities recorded at September 30, 2022, $1.0 million and $2.5 million was recorded as ~~deferred profit~~revenue for the three and nine months ended June 30, 2023, respectively. Of the $1.6 million contract liabilities recorded at September 30, 2021, $0 and $1.6 million was recorded as revenue for the three and nine months ended June 30, 2022, respectively.

Warranty – A limited warranty is provided free of charge, generally for periods of 12 to 36 months to all purchasers of our new products and systems. Accruals are recorded for estimated warranty costs at the time revenue is recognized, generally upon shipment or acceptance, as determined under our revenue recognition policy. On occasion, we have been required and may be required in ~~current liabilities. The~~the future to provide additional warranty coverage to ensure that the systems are ultimately accepted or to maintain customer goodwill. While our warranty costs have historically been within our expectations and we believe that the amounts accrued for warranty expenditures are sufficient for all systems sold through June 30, 2023, we cannot guarantee that we will continue to experience a similar level of predictability regarding warranty costs. In addition, technological changes or previously unknown defects in raw materials or components ~~of deferred profit are as follows,~~may result in ~~thousands:~~more extensive and frequent warranty service than anticipated, which could result in an increase in our warranty expense. Our accrued warranty expense is $1.0 million at June 30, 2023 and $0.9 million at September 30, 2022. Our accrued warranty expense is included in other accrued liabilities on the Condensed Consolidated Balance Sheets.

December 31,
2017 September 30,
2017
Deferred revenues $ 8,370
$ 6,822
Deferred costs 2,738
2,741
Deferred profit $ 5,632
$ 4,081

Shipping Expense – Shipping ~~expenses of $1.2~~and handling fees associated with outbound freight are expensed as incurred and included in selling, general and administrative expenses. Shipping expense was $0.6 million and ~~$0.4~~$0.3 million for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, respectively, ~~are included in selling, general~~ and ~~administrative expenses.~~

~~Research, Development~~$2.0 million and ~~Engineering Expense~~ ~~– The table below shows gross research~~$2.1 million for the nine months ended June 30, 2023 and ~~development expenses and grants earned, in thousands:~~2022, respectively.

Three Months Ended
December 31,
2017 December 31,
2016
Research, development and engineering $ 2,290
$ 1,830

Grants earned (299 ) (203 )
Net research, development and engineering $ 1,991
$ 1,627

~~Foreign Currency Transactions and Translation~~ – We use the U.S. dollar as our reporting currency. Our operations in Europe, China and other countries are primarily conducted in their functional currencies, the Euro, Renminbi, or the local country currency, respectively. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet dates. Income and expense items are translated at the average exchange rate for each month within the year. The resulting translation adjustments are recorded directly in accumulated other comprehensive income (loss), net of tax - foreign currency translation adjustments as a separate component of stockholders’ equity. Net foreign currency transaction gains/losses, including transaction gains/losses on intercompany balances that are not of a long-term investment nature and non-functional currency cash balances, are reported as a separate component of non-operating (income) expense in our consolidated statements of operations.

Concentrations of Credit Risk – Our customers consist of ~~solar cell and~~ semiconductor manufacturers worldwide, as well as customers in the lapping and polishing marketplace. Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. Credit risk is managed by performing ongoing credit evaluations of the customers’ financial condition, by requiring significant deposits where appropriate, and by actively monitoring collections. Letters 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 customers~~June 30, 2023, one Semiconductor segment customer individually represented ~~36% and 12%~~20% of accounts receivable. As of September 30, ~~2017, two customers~~2022, one Semiconductor segment customer individually represented ~~24% and 11%~~12% of accounts receivable.

We maintain our cash and cash equivalents ~~and restricted cash~~ in multiple financial institutions. Balances in the United States, which account for approximately ~~56%~~64% and ~~45%~~84% of total cash balances as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~2022, respectively, are primarily invested ~~in U.S. Treasuries or are~~ in financial institutions insured by the ~~Federal Deposit Insurance Corporation (“FDIC”).~~FDIC as well as a money market account. 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 913 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.

Impact of Recently Issued Accounting Pronouncements

In ~~March 2016,~~October 2021, the Financial Accounting Standards Board ~~(the “FASB”~~issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) ~~issued~~, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards ~~Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718).”~~Codification Topic 606. ASU 2016-09 identifies areas for simplification involving several aspects 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. The amendments in this ASU are2021-08 is effective for ~~annual periods~~fiscal years beginning after December 15, ~~2016~~2022 and for the interim periods therein. This new standard increases volatility in the statement of operations by requiring all excess tax benefits and deficiencies to be recognized as discrete income tax benefits or expenses in the statement of operations in the period in which they occur.early adoption is permitted. We adopted the ~~new standard~~amendments in ASU 2021-08 as of October 1, ~~2017,~~2022, without a material impact on our unaudited condensed consolidated financial statements.

There were no other new accounting pronouncements issued or effective as of June 30, 2023 that had or are expected to have a material impact on our consolidated financial statements.

2. Long-Term Debt

Our finance lease liabilities and ~~prospectively applied~~long-term debt consists of the ~~provisions~~following, in ~~this guidance requiring recognition of excess tax benefits~~thousands:


	June 30, 2023			September 30, 2022
Senior revolving credit facility	$	—		$	—
Term loan		11,101			—
Finance leases		130			147
Equipment finance		—			180
Total		11,231			327
Less: current portion of finance lease liabilities and long-term debt		(2,244	)		(107	)
Finance Lease Liabilities and Long-Term Debt	$	8,987		$	220

Interest expense on finance lease liabilities and ~~deficits~~long-term debt was $0.2 million and less than $0.1 million for the three months ended June 30, 2023 and 2022, respectively, and $0.3 million and $0.2 million for the nine months ended June 30, 2023 and 2022, respectively.

Loan and Security Agreement

On January 17, 2023, we entered into a Loan and Security Agreement (the “LSA”) by and among Amtech, its U.S. based wholly owned subsidiaries Bruce Technologies, Inc., a Massachusetts corporation, BTU International, Inc., a Delaware corporation, Intersurface Dynamics, Incorporated, a Connecticut corporation, P.R. Hoffman Machine Products, Inc., an Arizona corporation, and Entrepix, Inc., (collectively the “Borrowers”) and UMB Bank, N.A., national banking association (the “Lender”). The LSA provides for (i) a term loan (the “Term Loan”) in the ~~statement~~amount of ~~operations. Also, as~~$12.0 million maturing January 17, 2028, and (ii) a ~~result~~revolving loan facility (the “Revolver”) with an availability of $8.0 million maturing January 17, 2024. The recorded amount of the ~~adoption~~Term Loan has an interest rate of 6.38%. The Revolver has a floating per annum rate of interest equal to the Prime Rate, adjusted daily. Under the LSA, we are required to pay a non-utilization fee equal to 0.125% of any unused portion of the ~~new standard, we made~~Revolver in excess of any letter of credit obligations. As of June 30, 2023, no amounts were borrowed against the Revolver.

The Term Loan and Revolver are secured by a first priority lien on substantially all of the Borrowers’ assets (other than certain customary excluded assets) and the LSA contains customary events of default, representations and warranties, and covenants that restrict the Borrowers’ ability to, among other things, incur additional indebtedness, other than permitted indebtedness, enter into mergers or acquisitions, sell or otherwise dispose of assets, or pay dividends, subject to customary exceptions.

The LSA additionally contains financial covenants such that, as of the end of each of their fiscal quarters, beginning March 31, 2023, the Borrowers must maintain (i) a ratio of consolidated debt owed to Lender to consolidated EBITDA (as defined in the LSA) for such fiscal quarter, of not greater than 1.50 to 1.00, through December 31, 2024, based on a building four quarters (as described in the LSA), and then 1.00 to 1.00 each fiscal quarter thereafter, (ii) a ratio of (a) the total for such fiscal quarter of EBITDAR (as defined in the LSA) minus the sum of all income taxes paid in cash plus cash dividends/distributions plus maintenance Capital Expenditures (as defined in the LSA) plus management fees paid in cash, to (b) the sum for such fiscal quarter of (1) Interest Charges (as defined in the LSA) plus (2) required payments of principal on Debt (as defined in the LSA) (including the Term Loan, but excluding the Revolver) plus (3) operating lease/rent expense, of not less than 1.30 to 1.00 based on a building four quarters (as described in the LSA), and (iii) a consolidated working capital of current assets (excluding related party receivables and prepaid expenses) minus current liabilities of at least $35.0 million.

Finance Lease Obligations

Our finance lease obligations totaled $0.1 million as of June 30, 2023 and September 30, 2022.

The current and long-term portions of our finance leases are included in the current and long-term portions of finance lease liabilities and long-term debt in the table above and in our Condensed Consolidated Balance Sheets as of June 30, 2023 and September 30, 2022. Further, see Note 7 for additional information.

3. Acquisition

Entrepix Merger

On January 17, 2023 (the “Closing Date”), the Company acquired 100% of the issued and outstanding shares of capital stock of Entrepix, Inc., an Arizona corporation (“Entrepix”), which primarily manufactures chemical mechanical polishing (“CMP”) technology, through a reverse triangular merger. Entrepix’s CMP technology portfolio and water cleaning equipment will complement our existing substrate polishing and wet process chemical offerings. Pursuant to the terms and conditions of the Agreement and Plan of Merger dated January 17, 2023 (the “Merger Agreement”), Emerald Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), merged with and into Entrepix (the “Merger”), resulting in Entrepix surviving the Merger and becoming a wholly-owned subsidiary of the Company (the “Acquisition” or “Transaction”).

On the Closing Date, in connection with the Merger Agreement and in contemplation of the Transaction, the Company entered into a Loan and Security Agreement with UMB Bank, N.A., under which the Lender provided the Company with (i) a $12.0 million term loan maturing January 17, 2028, and (ii) an $8.0 million revolving loan facility maturing January 17, 2024 (see Note 2). The proceeds of the Term Loan were used to partially fund the Transaction.

The Acquisition is accounted for using the acquisition method of accounting ~~policy election~~for business combinations under FASB Accounting Standard Codification Topic No. 805, Business Combinations (“ASC 805”), with Amtech representing the accounting acquirer under this guidance. The Company elected to ~~recognize forfeitures~~apply pushdown accounting per ASC 805-50-50-5.

Summary of Consideration Transferred

The total consideration for the Acquisition was $39.2 million, consisting of $35.2 million cash consideration to the sellers and $4.0 million cash paid for debt and Entrepix transaction costs.

Goodwill is calculated as ~~they occur~~the excess of the consideration transferred over the net assets recognized and ~~no longer estimate expected forfeitures.~~ represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Such assets include synergies the Company expects to achieve, such as deeper penetration into an overlapping customer base, complementary product offerings, and cost redundancy reductions. In accordance with the measurement principles in FASB Accounting Standard Codification Topic No. 820, Fair Value Measurement, the purchase consideration for the Acquisition has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including a residual amount of goodwill, none of which is deductible for tax purposes. Amtech’s acquisition costs incurred were $2.5 million for the nine months ended June 30, 2023, and were recorded as “Selling, general and administrative expenses” in the accompanying Condensed Consolidated Statements of Operations. The ~~provisions~~following table summarizes the provisional fair values assigned to identifiable assets acquired and liabilities assumed, in ~~this guidance requiring~~thousands:


	March 31, 2023		Measurement Period Adjustments			June 30, 2023
Fair value of total cash consideration transferred	$	39,787	$	(560	)	$	39,227
Estimated fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	4,289	$	—		$	4,289
Accounts receivable, net		5,681		203			5,884
Inventories		5,683		—			5,683
Other current assets		179		—			179
Property, plant, and equipment		2,051		(11	)		2,040
Right-of-use assets		2,246		—			2,246
Intangible assets		12,800		800			13,600
Goodwill		18,089		(235	)		17,854
Other assets		31		11			42
Total assets acquired		51,049		768			51,817
Accounts payable		1,574		—			1,574
Other accrued liabilities		1,170		837			2,007
Contract liabilities		1,662		167			1,829
Income taxes payable		1,447		142			1,589
Current portion of long-term operating lease liabilities		515		—			515
Long-term operating lease liabilities		1,730		—			1,730
Deferred tax liability		3,164		182			3,346
Total liabilities assumed		11,262		1,328			12,590
Net assets acquired	$	39,787	$	(560	)	$	39,227

The establishment of the allocation to goodwill requires the extensive use of accounting estimates and management judgement. In accordance with ASC 805, the Company has up to one year from the acquisition date (referred to as the measurement period) to account for changes in the fair values of the identifiable assets acquired and the liabilities

assumed in the acquired entity. As of the issuance of the condensed consolidated financial statements for the period ended June 30, 2023, the Company has not finalized its calculation of deferred tax assets or liabilities, income taxes payable, and the resulting adjustments to goodwill. The tax-related items will be finalized pending a ~~modified retrospective transition method~~consolidated analysis of the combined tax attributes of the Acquisition. If a change in any of these items is identified during the measurement period, the Company will record the cumulative impact of measurement period adjustments in the period the adjustment is identified. Certain measurement period adjustments were recorded during the quarter ended June 30, 2023, primarily arising from the Company's finalization of the valuation of acquired assets and updated assumptions underlying the tax provision. These adjustments were all offset against goodwill.

The fair value associated with acquired intangible assets and their associated weighted-average amortization periods consist of the following, in thousands:


	Classification of Amortization	Amount		Weighted-Average Amortization Period
Developed technology	Cost of sales	$	6,700	5.0 years
Customer relationships	Selling, general and administrative		2,800	10.0 years
Backlog	Selling, general and administrative		2,100	1.0 year
Trade names	Selling, general and administrative		1,800	10.0 years
Noncompetition agreements	Selling, general and administrative		200	5.0 years
Total intangible assets		$	13,600	6.1 years

Unaudited Pro Forma Financial Information

Entrepix is included in the Company’s consolidated results beginning January 17, 2023. Total revenues and net income attributable to Entrepix for the period from January 17, 2023 to June 30, 2023 were $13.6 million and $0.3 million, respectively.

The following unaudited pro forma financial information presents the combined results of operations of Amtech and Entrepix, in thousands, as if the acquisition occurred on October 1, 2021. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have ~~required us to record a cumulative-effect adjustment in retained earnings as~~been achieved if the acquisition had taken place on the date indicated or of ~~October 1, 2017. On the basis of immateriality, we recorded such cumulative-effect adjustment as stock-based compensation~~results that may occur in the ~~first quarter~~future.


	Three Months Ended June 30,					Nine Months Ended June 30,
	2023			2022		2023		2022
Revenues, Net	$	30,740		$	25,496	$	93,206	$	91,321
Net (Loss) Income	$	(580	)	$	9,694	$	883	$	9,670

The unaudited pro forma financial information presented above include the following adjustments:

3 Months Ended June 30, 2023 and June 30, 2022

•

reversal of ~~2018 rather than adjusting retained earnings. Lastly, we applied~~amortization expense on intangible assets acquired of $0.6 million and incremental amortization expense of $1.0 million for the ~~provisions of this guidance relating to classification~~three months ended June 30, 2023 and June 30, 2022, respectively; and

•

incremental interest expense on the ~~statement~~Term Loan of ~~cash flows retrospectively with no material effect~~$0.1 million and $0.2 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

9 Months Ended June 30, 2023 and June 30, 2022

•

reversal of amortization expense on ~~our cash flows.~~intangible assets acquired of $0.6 million and incremental amortization expense of $2.9 million for the nine months ended June 30, 2023 and June 30, 2022, respectively;

•

incremental interest expense on the Term Loan of $0.4 million and $0.5 million for the nine months ended June 30, 2023 and June 30, 2022, respectively; and

~~There have been no other material changes or additions~~•

non-recurring adjustments directly attributable to the ~~recently issued accounting standards as previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8~~business combination, including acquisition related costs of ~~our Annual Report on Form 10-K, as amended,~~$2.5 million for the ~~year~~nine months ended ~~September~~June 30, ~~2017 that affect or may affect~~2022.

The unaudited pro forma financial information includes adjustments to align accounting policies, which were materially similar to the Company’s accounting policies. Any differences in accounting policies were adjusted to reflect the accounting policies of the Company in the unaudited pro forma financial information presented.

4. Sale and Leaseback of Real Estate

On June 23, 2022, our ~~financial statements.~~subsidiary, BTU International, Inc. (“BTU”), completed the sale and leaseback of BTU's building in Billerica, Massachusetts (the “Property”). The sale price was $20.6 million, of which $0.7 million was deducted at closing for commission and other closing expenses. Simultaneously with the closing, BTU entered into a two-year leaseback of the Property. The lease terms include annual base rent of $1.5 million in an absolute triple net lease. In connection with the sale, BTU recognized a pre-tax gain on sale of $12.5 million. This sale-leaseback transaction resulted in a net cash inflow of approximately $14.9 million, after repayment of the existing mortgage and settlement of related sale expenses.

5. Earnings Per Share

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. Dilutive potential common shares include outstanding restricted stock units (“RSUs”) and stock options. In the case of a net loss, diluted earnings per share is calculated in the same manner as basic EPS.

For the three and nine months ended ~~December 31, 2017~~,June 30, 2023, options for ~~120,000~~332,000 and 306,000 weighted average shares, ~~are~~respectively, were excluded from the diluted EPS calculations because they ~~are~~were anti-dilutive. For the three and nine months ended ~~December 31, 2016~~,June 30, 2022, options for ~~1,886,000~~204,000 and 176,000 weighted average shares, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive. These shares could bebecome dilutive in the future.

~~The following table outlines~~

A reconciliation of the components of the basic and diluted EPS calculations follows, in thousands, except per share amounts:


	Three Months Ended June 30,					Nine Months Ended June 30,
	2023			2022		2023			2022
Numerator:
Net (loss) income	$	(1,027	)	$	10,222	$	(567	)	$	13,184

Denominator:
Weighted-average shares used to compute basic EPS		14,058			13,889		14,031			14,042
Dilutive potential common shares due to stock options (1)		—			137		—			178
Dilutive potential common shares due to RSUs (1)		—			—		—			—
Weighted-average shares used to compute diluted EPS		14,058			14,026		14,031			14,220

(Loss) Income per share:
Net (loss) income per basic share	$	(0.07	)	$	0.74	$	(0.04	)	$	0.94
Net (loss) income per diluted share	$	(0.07	)	$	0.73	$	(0.04	)	$	0.93

(1)

Three Months Ended December 31,
2017 2016
Basic Income (Loss) Per Share Computation
Net income (loss) attributable to Amtech Systems, Inc. $ 6,452
$ (53 )
Weighted Average Shares Outstanding:
Common stock 14,781
13,179

Basic income (loss) per share attributable to Amtech shareholders $ 0.44
$(0.00)
Diluted Income (Loss) Per Share Computation
Net income (loss) attributable to Amtech Systems, Inc. $ 6,452
$ (53 )
Weighted Average Shares Outstanding:
Common stock 14,781
13,179

Common stock equivalents (1) 517
—

Diluted shares 15,298
13,179

Diluted income (loss) per share attributable to Amtech shareholders $ 0.42
$(0.00)

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

6. Inventories

~~3. Inventory~~

The components of inventories are as follows, in thousands:


	June 30, 2023		September 30, 2022
Purchased parts and raw materials	$	20,729	$	15,377
Work-in-process		7,948		6,146
Finished goods		5,984		3,965
	$	34,661	$	25,488

December 31,
2017 September 30,
2017
Purchased parts and raw materials $ 13,628
$ 14,789
Work-in-process 5,806
11,078
Finished goods 3,328
4,343
$ 22,762
$ 30,210

7. Leases

~~4. Equity and Stock-Based Compensation~~

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

The following table ~~summarizes~~provides information about the financial statement classification of our ~~stock option activity~~lease balances reported within the Condensed Consolidated Balance Sheets, in thousands:


	June 30, 2023		September 30, 2022
Assets
Right-of-use assets - operating	$	11,643	$	11,258
Right-of-use assets - finance		131		149
Total right-of-use assets	$	11,774	$	11,407
Liabilities
Current
Operating lease liabilities	$	2,800	$	2,101
Finance lease liabilities		78		71
Total current portion of long-term lease liabilities		2,878		2,172
Long-term
Operating lease liabilities		9,120		9,395
Finance lease liabilities		52		76
Total long-term lease liabilities		9,172		9,471
Total lease liabilities	$	12,050	$	11,643

The following table provides information about the financial statement classification of our lease expenses reported in the Condensed Consolidated Statements of Operations, in thousands:


		Three Months Ended June 30,				Nine Months Ended June 30,
Lease cost	Classification	2023		2022		2023		2022
Operating lease cost	Cost of sales	$	708	$	292	$	1,857	$	687
Operating lease cost	Selling, general and administrative		204		41		583		211
Operating lease cost	Research, development and engineering		3		10		10		10
Finance lease cost	Cost of sales		1		1		3		3
Finance lease cost	Selling, general and administrative		20		18		56		53
Short-term lease cost	Cost of sales		8		—		25		—
Total lease cost		$	944	$	362	$	2,534	$	964

Future minimum lease payments under non-cancelable leases as of June 30, 2023 are as follows, in thousands:


	Operating Leases		Finance Leases		Total
Remainder of 2023	$	822	$	21	$	843
2024		2,895		67		2,962
2025		1,728		19		1,747
2026		1,380		19		1,399
2027		765		11		776
Thereafter		7,828		1		7,829
Total lease payments		15,418		138		15,556
Less: Interest		3,498		8		3,506
Present value of lease liabilities	$	11,920	$	130	$	12,050

Operating lease payments include $6.2 million related to optional lease extension periods for multiple leases that are not yet exercisable but are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied:


	June 30, 2023			September 30, 2022
Weighted average remaining lease term
Operating leases	11.55 years			12.65 years
Finance leases	2.53 years			2.45 years
Weighted average discount rate
Operating leases		4.54	%		4.17	%
Finance leases		4.78	%		4.17	%

As of June 30, 2023, we have entered into a lease that has not yet commenced. We expect to record $2.5 million of ROU asset and lease liability upon the commencement of this new lease in the first quarter of fiscal 2024.

8. Goodwill and Intangible Assets

The Company accounts for goodwill at acquisition-date fair value and other intangible assets at acquisition-date fair value less accumulated amortization. See Note 1 for a summary of the Company’s policies relating to goodwill and intangible assets.

Intangible Assets

As of June 30, 2023, the Company’s intangible assets, net consists of the following, in thousands:


	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Noncompetition agreements	5.0 years	$	200	$	(20	)	$	180
Backlog	1.0 year		2,100		(1,050	)		1,050
Trade names	3.0-15.0 years		2,679		(585	)		2,094
Developed technology	5.0 years		6,700		(670	)		6,030
Customer relationships	6.0-10.0 years		4,409		(1,450	)		2,959
Total intangible assets	6.6 years	$	16,088	$	(3,775	)	$	12,313

As of September 30, 2022, the Company’s intangible assets, net consists of the following, in thousands:


	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	6.0-10.0 years	$	1,609	$	(1,280	)	$	329
Trade names	3.0-15.0 years		879		(450	)		429
Total intangible assets	9.8 years	$	2,488	$	(1,730	)	$	758

The estimated aggregate amortization expense for each of the five succeeding fiscal years as of June 30, 2023 is as follows, thousands:


Year ending September 30:	Amount
2023	$	1,010
2024		2,463
2025		1,937
2026		1,937
2027		1,937
Thereafter		3,029
Total	$	12,313

The aggregate amortization expense during the three months ended ~~December 31, 2017:~~

June 30, 2023 and 2022 were $1.0 million and less than $0.1 million, respectively. The aggregate amortization expense during the nine months ended June 30, 2023 and 2022 were $2.0 million and $0.1 million, respectively.

Goodwill

The Company evaluates goodwill at the reporting unit level, which, for the Company, is at the level of the reportable segments, semiconductor, material and substrate. The changes in carrying amount of goodwill allocated to each of the reporting units for the nine months ended June 30, 2023 is as follows, in thousands:


	Semiconductor		Material and Substrate		Total Goodwill
Goodwill	$	5,905	$	5,263	$	11,168
Accumulated impairment losses		—		—		—
Balance at September 30, 2022		5,905		5,263		11,168
Goodwill acquired during 2023		—		17,854		17,854
Impairment of goodwill during 2023		—		—		—
Balance at June 30, 2023	$	5,905	$	23,117	$	29,022
Goodwill	$	5,905	$	23,117	$	29,022
Accumulated impairment losses		—		—		—
Balance at June 30, 2023	$	5,905	$	23,117	$	29,022

Options
Weighted
Average
Exercise
Price
Outstanding at beginning of period 1,560,441
$ 7.95
Granted —
—
Exercised (165,839 ) 7.03
Forfeited (27,299 ) 20.04
Outstanding at end of period 1,367,303
$ 7.82

Exercisable at end of period 1,142,012
$ 8.06
Weighted average fair value of options
granted during the period
$ —

9. Income Taxes

Income Tax (Benefit) Provision

Our effective tax rate was 82.8% and 6.0% for the nine months ended June 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended June 30, 2023 differs from the U.S. statutory tax rate of 21% primarily due to the release of a portion of our valuation allowance in connection with a deferred tax liability related to the Entrepix acquisition resulting in recognition of previously recorded deferred tax assets. For the three months ended June 30, 2023 and 2022, we recorded income tax expense of $0.2 million and $20,000, respectively. For the nine months ended June 30, 2023 and 2022, we recorded an income tax benefit of $2.7 million and income tax expense of $0.8 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.~~

excluded from the determination of the estimated annual effective tax rate.

Deferred ~~tax assets~~Income Taxes 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 recordValuation Allowance

GAAP requires that a valuation allowance ~~if, based on the weight of available evidence,~~be established when it is ~~more~~“more likely than ~~not~~not” that ~~some~~all or a portion ~~or all~~ of a deferred tax ~~asset~~assets will not be realized. ~~Our expectations regarding realization~~A review of ~~our deferred tax assets~~all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates and the length of carryback and carryforward periods. According to those principles, it is ~~based upon~~difficult to conclude that a valuation allowance is not needed when the ~~weight~~negative evidence includes cumulative losses in recent years. Based on the considerations of all available evidence, ~~including such factors as our recent earnings history, expected future taxable income and available tax planning strategies. In prior periods,~~ we ~~established~~have concluded that we will maintain a full valuation ~~allowances on substantially~~allowance for all net deferred tax assets ~~after considering all~~related to the carryforwards of ~~the available objective evidence, both positive~~U.S. net operating losses and ~~negative, historical~~foreign tax credits. We will continue to monitor our cumulative income and ~~prospective, with greater weight given to historical evidence, and determined it is not more likely than not that these assets will be realized.~~

~~The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017, and permanently reduces~~loss positions in the U.S. ~~federal corporate tax rate from 35%~~and foreign jurisdictions to 21%, eliminated corporate Alternative Minimum Tax, modified rules for expensing capital investment, and limits the deduction of interest expense for certain companies. The Act is a fundamental change to the taxation of multinational companies, including a shift from a system of worldwide taxation with some deferral elements to a territorial system, current taxation of certain foreign income, a minimum tax on low-tax foreign earnings, and new measures to curtail base erosion and promote U.S. production.

As a result of the Act, the statutory rate applicable to our fiscal year ending September 30, 2018 will be 24.5%, based on a fiscal year blended rate calculation. Accounting Standard Codification (“ASC”) 740 requires filers to record the effect of tax law changes in the period enacted. However, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), that permits filers to record provisional amounts during a measurement period ending no later than one year from the date of enactment. In the first quarter of fiscal 2018, we re-measured the applicable deferred tax assets based on the rates at which they are expected to reverse. We adjusted our gross deferred tax assets and liabilities and recorded a corresponding offset to ourdetermine whether full valuation ~~allowance against our~~allowances on U.S. net deferred tax assets ~~which resulted in~~are appropriate.

We expect to pay minimal ~~net effect to our provision~~U.S federal cash taxes for ~~income taxes and effective tax rate. We have not made any other provisional adjustments~~the foreseeable future as a result of ~~the Act.~~

~~The Act includes a one-time mandatory repatriation transition tax on certain net accumulated earnings and profits of~~ our foreign subsidiaries. We are still in the process of analyzing the earnings and profits and tax pools of our foreign subsidiaries to reasonably estimate the effects of the one-time transition tax and, therefore, have not recorded a provisional impact. The tax expense impact of the one-time transition tax to be determined may be partially or fully offset by a release of valuation allowance for the utilization of existingU.S. net operating losses that are carried forward.

10. Equity and ~~tax credits that~~Stock-Based Compensation

Stock-based compensation expense was $0.2 million and $0.1 million in the three months ended June 30, 2023 and 2022, respectively, and $0.5 million and $0.4 million in the nine months ended June 30, 2023 and 2022, respectively. Stock-based compensation expense is included in selling, general and administrative expenses.

The following table summarizes our stock option activity during the nine months ended June 30, 2023:


	Options			Weighted Average Exercise Price
Outstanding at beginning of period		589,341		$	8.06
Granted		166,500			9.12
Exercised		(58,813	)		5.38
Forfeited		(43,850	)		11.10
Outstanding at end of period		653,178		$	8.37
Exercisable at end of period		412,192		$	7.55
Weighted average fair value of options granted during the period	$	4.74

The fair value of options was estimated at the applicable grant date using the Black-Scholes option pricing model with the following assumptions:


	Nine Months Ended June 30, 2023			Nine Months Ended June 30, 2022
Risk free interest rate		4	%		2	%
Expected term	5 years			5 years
Dividend rate		—	%		—	%
Volatility		56	%		57	%

The following table summarizes our RSU activity during the nine months ended June 30, 2023:


	Number			Weighted Average Grant Date Fair Value
Nonvested at beginning of year		—		$	—
Granted		23,421			9.56
Released		(3,000	)		9.61
Forfeited		—			—
Nonvested at end of period		20,421		$	9.55

2023 Stock Repurchase Plan

On February 7, 2023, our Board of Directors (the “Board”) approved a stock repurchase program, pursuant to which we may ~~reduce~~repurchase up to $5 million of our outstanding Common Stock over a one-year period, commencing on February 10, 2023. Repurchases under the ~~amount of related taxes payable. We expect~~program will be made in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in compliance with the ~~accounting for this aspect~~rules and regulations of the ~~Act~~Securities and Exchange Commission; however, we have no obligation to repurchase shares and the timing, actual number, and value of shares to be ~~complete by~~repurchased is subject to management’s discretion and will depend on our stock price and other market conditions. We may, in the end of fiscal 2018. As of December 31, 2017, consistent with historical conclusions, our cash balances held in foreign locations are expected to be permanently reinvested outside the United States as the impactsole discretion of the ~~Act on our current position~~Board, terminate the repurchase program at any time while it is ~~not yet fully understood and is still under evaluation.~~

~~We are assessing the applicability of the other provisions~~ in ~~the Act and expect to complete this analysis by the end of fiscal 2018.~~

~~For~~effect. Repurchased shares may be retired or kept in treasury for further issuance. There were no repurchases during the quarter ended ~~December 31, 2017,~~June 30, 2023.

2022 Stock Repurchase Plan

On February 10, 2022, the Board approved a new stock repurchase program, pursuant to which we ~~recorded income tax expense~~may repurchase up to $5 million of ~~$1.2 million. The difference~~our outstanding Common Stock over a one-year period, commencing on February 16, 2022. Repurchases under the program will be made in ~~our effective tax rate from~~open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in compliance with the ~~U.S. statutory rate primarily reflects the impact~~rules and regulations of the ~~mix of domestic and international pre-tax income and valuation allowance. In 2017~~SEC; however, we have no obligation to repurchase shares and the ~~first quarter~~timing, actual number, and value of ~~2018, we reversed a portion~~shares to be repurchased is subject to management’s discretion and will depend on our stock price and other market conditions. We may, in the sole discretion of the ~~valuation allowance related to net operating loss carryforwards which~~Board, terminate the repurchase program at any time while it is in effect. Repurchased shares may be retired or kept in treasury for further issuance. During the quarter ended March 31, 2022, we ~~have determined will be utilized against net operating income in the current year.~~

~~We classify all~~repurchased 143,430 shares of our ~~uncertain tax positions as income taxes payable long-term. At December 31, 2017 and September 30, 2017,~~Common Stock on the open market at a total amount of unrecognized tax benefits was approximately $4.3 million and $4.2 million, respectively. 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 December 31, 2017 and September 30, 2017, we had an accrual for potential interest and penalties~~cost of approximately ~~$2.7~~$1.4 million ~~and $2.6 million, respectively, classified with income taxes payable long-term.~~

~~Amtech and one or more~~(an average price of ~~our subsidiaries file income tax returns in~~$9.78 per share). All repurchased shares have been retired. The ~~Netherlands, Germany, France, China and other foreign jurisdictions, as well as in~~term of this repurchase program expired during 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.quarter ended March 31, 2023.

11. Commitments and Contingencies

Purchase Obligations – As of ~~December 31, 2017~~,June 30, 2023, we had unrecorded purchase obligations in the amount of ~~$26.4 million compared to~~ $~~34.4 million~~ ~~as of September 30, 2017.~~26.1 million. These purchase obligations consist of outstanding purchase orders for goods and services. While the amount represents purchase agreements, the actual amounts to be paid may be less in the event that any agreements are renegotiated, canceled or terminated.

~~Development Projects~~

Legal Proceedings and Other Claims – In fiscal 2014, our wholly owned subsidiary, Tempress Systems, Inc. (“Tempress”), entered into an agreement with the Energy Research Centre of the Netherlands (“ECN”), a Netherlands government-sponsored research institute, for a joint research and development project. Under the terms of the agreement, Tempress sold an ion implanter (“Equipment”) to ECN for $1.4 million. Both Tempress and ECN are performing research and development projects utilizing the Equipment at the ECN facilities. Each party to the agreement will have 100% rights to the results of the projects developed separately by the individual parties. Any results co-developed will be jointly owned. Tempress met its requirement to contribute $1.4 million to the project in the form of installation of the Equipment, acceptance testing, project meeting attendance, training, parts, and service, including keeping the Equipment in good condition and repair for the first two years of the agreement prior to fiscal 2017.

~~EPA Accrual~~ – As a result of the BTU International, Inc. (“BTU”) acquisition, we assumed BTU’s proportional responsibility for clean-up costs at a Superfund site. As an equipment manufacturer, BTU generated and disposed of small quantities of solid waste that were considered hazardous under Environment Protection Agency (“EPA”) regulations. Because BTU historically used a waste disposal firm that disposed of the solid waste at a site that the EPA designated as a Superfund site, BTU was named by the EPA as one of the entities responsible for a portion of the expected clean-up costs. Based on our proportional responsibility, as negotiated with and agreed to by the EPA, our liability related to this matter is less than $0.1 million, which is included in Other Accrued Liabilities in the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017. In accordance with the agreement, BTU established a letter of credit for $0.2 million to the benefit of the EPA for potential cash payments as settlements for our proportional liability, which is included in Restricted Cash in the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.

~~Legal Proceedings~~ ~~– We are defendants from~~From time to time, inwe are a party to claims and actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings and other claims in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although the outcome of claims and litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any ~~particular~~ period by the resolution of a claim or legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred.

Employment Contracts– We have employment contracts and change in control agreements with, and severance plans covering, certain officers and management employees under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control. If severance payments under the current employment ~~agreements~~contracts or ~~plan payments~~severance plans were to become payable, the severance payments would generally range from six totwelve ~~to thirty-six~~ months of salary.

~~7. Shareholder Rights Plan~~

12. Reportable Segments

Amtech has two operating segments that are structured around the types of product offerings provided to our customers. In December 2008, Amtech and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”), entered into an Amended and Restated Rights Agreement (the “Restated Rights Agreement”) which amended and restatedaddition, the terms governing the previously authorized shareholder rights (each a “Right”) to purchase fractional shares of our Series A Participating Preferred Stock (“Series A Preferred”) currently attached to each of our outstanding shares of common stock, par value $0.01 per share. As amended, each Right entitles the registered holder to purchase from us one one-thousandth of a share of Series A Preferred at an exercise price of $51.60 (the “Exercise Price”), subject to adjustment. The Rights will expire 10 years after issuance and willoperating segments may be exercisable if (a) a person or group becomes the beneficial owner of 15% or more of our common stock or (b) a person or group commences a tender or exchange offer that would result in the offeror beneficially owning 15% or more of our common stock. The Final Expiration Date (as defined in the Restated Rights Agreement) is December 14, 2018.

In October 2015, we entered into a Second Amended and Restated Rights Agreement (the “Second Restated Rights Agreement”) with the Rights Agent, which expands the definition of Exempted Person in the Restated Rights Agreement to include any person that our Board of Directors (the “Board”), in its sole and absolute discretion, exempts from becoming an Acquiring Person (as defined in the Restated Rights Agreement) under the Second Restated Rights Agreement. A person deemed an Exempted Person under the Second Restated Rights Agreement cannot trigger any of the Rights provided therein so long as such Exempted Person complies with the terms and conditions by which the Board approved such exemption from the Restated Rights Agreement.

As previously disclosed, in October 2015, we entered into a Letter Agreement (the “Agreement”) by and between Amtech and certain shareholders of Amtech who jointly file (the “Joint Filers”) under Section 13 of the Securities Exchange Act of 1934, as amended. One of the Joint Filers became a member of our Board after the Agreement was approvedfurther distinguished by the Board. The Agreement permits the Joint Filers, pursuant to the Second Restated Rights Agreement, to individually acquire shares of common stock of Amtech that would, in the aggregate, bring the Joint Filers’ collective ownership to no more than 19.9% ofCompany’s respective brands. These two operating segments comprise our issued and outstanding common stock at any time. In the event the Joint Filers’ collective ownership at any time exceeds 19.9% of our issued and outstanding shares of common stock, we are entitled to specific performance and all other remedies entitled to us at law or equity, among others.two reportable segments discussed below. Our ~~Board approved the Agreement and transactions contemplated thereunder, and has the sole authority to terminate the Agreement at any time.~~


8.	~~Business Segment Information~~

~~Our three~~two reportable segments are as follows:

~~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~~

Material and Substrate –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.

Our Material and Substrate segment includes the results of Entrepix from the date of acquisition (see Note 3).

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


	Three Months Ended June 30,						Nine Months Ended June 30,
	2023			2022			2023			2022
Net Revenues:
Semiconductor	$	19,841		$	15,135		$	58,775		$	61,484
Material and Substrate		10,899			4,829			26,833			12,499
	$	30,740		$	19,964		$	85,608		$	73,983
Operating income (loss):
Semiconductor	$	1,042		$	10,521		$	4,861		$	16,246
Material and Substrate		481			1,156			1,411			1,991
Non-segment related		(2,642	)		(2,115	)		(9,552	)		(4,840	)
	$	(1,119	)	$	9,562		$	(3,280	)	$	13,397


	June 30, 2023		September 30, 2022
Identifiable Assets:
Semiconductor	$	71,853	$	75,622
Material and Substrate		70,687		22,032
Non-segment related*		3,822		35,880
	$	146,362	$	133,534

Three Months Ended December 31,
2017 2016
Net Revenues:
Solar * $ 49,197
$ 11,424

Semiconductor 20,891
15,703

Polishing 3,523
2,008

$ 73,611
$ 29,135

Operating income (loss):
Solar * $ 5,352
$ (1,023 )
Semiconductor 3,004
2,361

Polishing 1,104
464

Non-segment related (1,694 ) (1,982 )
$ 7,766
$ (180 )

* The financial statement of business units included in the Solar segment include some sales of equipment and parts to the semiconductor, silicon wafer and MEMS industries, comprising less than 25% of the Solar segment revenue.

December 31,
2017 September 30,
2017
Identifiable Assets:
Solar $ 76,794
$ 97,999
Semiconductor 58,706
57,177
Polishing 5,912
5,078
Non-segment related 31,701
31,369
$ 173,113
$ 191,623

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

Goodwill and other long-lived 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 ~~Note~~Notes 1 and 11 of our Annual Report on Form 10-K ~~as amended,~~ for the year ended September 30, ~~2017.~~2022.

13. Major Customers and Foreign Sales

During the ~~three~~nine months ended ~~December 31, 2017~~,June 30, 2023, one Semiconductor segment customer individually represented ~~50%~~11% of our net revenues. ~~No other customer represented greater than 10% of net revenues.~~ During the ~~three~~nine months ended ~~December 31, 2016, there were no~~June 30, 2022, two Semiconductor segment customers ~~who~~ individually represented ~~greater than 10%~~17% and 10% of our net revenues.

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


	Nine Months Ended June 30,
	2023			2022
United States		34	%		24	%
Canada		8	%		2	%
Other		3	%		5	%
Total Americas		45	%		31	%
China		15	%		19	%
Malaysia		7	%		8	%
Taiwan		6	%		13	%
Other		7	%		6	%
Total Asia		35	%		46	%
Germany		2	%		5	%
Austria		5	%		11	%
Other		13	%		7	%
Total Europe		20	%		23	%
		100	%		100	%

Three Months Ended December 31,
2017 2016
United States 7 % 18 %
Other 2 % 2 %
Total North America 9 % 20 %
China 71 % 26 %
Malaysia 3 % 17 %
Taiwan 2 % 12 %
Other 3 % 6 %
Total Asia 79 % 61 %
Germany 6 % 5 %
Other 6 % 14 %
Total Europe 12 % 19 %
100 % 100 %


~~Item 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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~~“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.~~

~~Cautionary Statement Regarding Forward-Looking Statements~~

Certain information contained or incorporated by reference 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 subsidiaries2022 (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 with 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.

You should not place undue reliance on these forward-looking statements. We cannot guarantee that any forward-looking statement will be realized, although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Quarterly Report. Achievement of future results is subject to events out of our control, risks, uncertainties and potentially inaccurate assumptions. The Annual Report on“2022 Form 10-K, as amended, that we filed with the Securities and Exchange Commission for the year-ended September 30, 2017 listed various important factors that could affect Amtech’s future operating results and financial condition and could cause actual results to differ materially from historical results and expectations based on forward-looking statements made in this document or elsewhere by Amtech or on its behalf. These factors can be found under the heading “Item 1A. Risk Factors” in the Annual Report on Form 10-K, as amended, and investors should refer to them as well as the additional risk factors identified in this Quarterly Report. Because it is not possible to predict or identify all such factors, any such list cannot be considered a complete set of all potential risks or uncertainties. Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

~~Introduction~~

~~Management’s Discussion and Analysis (“MD&A”~~10-K”) ~~is intended to facilitate an understanding of our business and results of operations. MD&A consists of the following sections:~~

Overview

~~Results of Operations~~

~~Liquidity and Capital Resources~~

~~Off-Balance Sheet Arrangements~~

~~Contractual Obligations~~

~~Critical Accounting Policies~~

~~Impact of Recently Issued Accounting Pronouncements~~

~~Overview~~

We ~~operate in three reportable business segments: (i) Solar, (ii) Semiconductor and (iii) Polishing. In our Solar segment, we~~ are a leading, global ~~supplier~~manufacturer of capital equipment, including thermal processing ~~systems, including diffusion, plasma-enhanced chemical vapor deposition (“PECVD”), atomic layer deposition (“ALD”),~~and wafer polishing, and related ~~automation, parts~~consumables used in fabricating semiconductor devices, such as silicon carbide (“SiC”) and ~~services,~~silicon power, analog and discrete devices, and electronic assemblies and modules focusing on enabling technologies for electric vehicles (EV) and clean technology (CleanTech) applications. We sell these products to semiconductor device and module manufacturers worldwide, particularly in Asia, North America and Europe.

We operate in two reportable segments, based primarily on the ~~solar photovoltaic industry.~~industry they serve: (i) Semiconductor and (ii) Material and Substrate. In our Semiconductor segment, we supply thermal processing equipment, including solder reflow ~~equipment~~ovens, horizontal diffusion furnaces and ~~related controls and diffusion~~custom high-temp belt furnaces for use by ~~leading~~ semiconductor, electronics and electro/mechanical assembly manufacturers. Our semiconductor customers are primarily manufacturers of integrated circuits and optoelectronic sensors and discrete (“O-S-D”) components used in ~~electronics assembly for automotive~~analog, power and ~~other industries.~~radio frequency (“RF”). In our ~~Polishing~~Material and Substrate segment, we produce substrate consumables, chemicals and machinery for lapping (fine abrading) and polishing of materials, such as ~~sapphire substrates, optical components,~~ silicon wafers ~~numerous types of crystalline materials, ceramics~~for semiconductor products, sapphire wafers for LED applications, and ~~metal components.~~

~~Our customers are primarily manufacturers of solar cells and integrated circuits.~~ compound substrates, like silicon carbide wafers, for power device applications.

The ~~solar cell and~~ semiconductor ~~industries are~~industry is cyclical, but not seasonal, and historically ~~have~~has experienced ~~significant~~ fluctuations. Our revenue is impacted by these broad industry trends. ~~The solar cell~~

Strategy

We continue to focus on our plans to profitably grow our business and have developed a strategic growth plan and a capital allocation plan that we believe will support our growth objectives. Our power semiconductor strategic growth plan leverages our experience, products and capabilities in pursuit of growth, profitability and sustainability. Our core focus areas are:

•

Emerging opportunities in the SiC industry has experienced a structural imbalance 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, technologies 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-phase turnkey project announced in January and April of 2017 from a new solar cell manufacturer in China. For equipment orders that– We believe we are ~~not part of turnkey projects, we compete with Chinese equipment manufacturers that offer lower prices coupled with liberal payment terms. We are finding it more difficult~~well-positioned to participate in this significant growth area, specifically as it relates to silicon carbide wafer capacity expansion. We are working closely with our customers to understand their SiC growth plans, needs and opportunities. We are investing in our capacity, next generation product development, and in our people. During the ~~capacity expansions~~second quarter of ~~those Chinese companies that already~~2023, we completed the acquisition of Entrepix, Inc. (“Entrepix”), which added chemical mechanical polishing (“CMP”) and wafer cleaning equipment to our existing substrate polishing and wet process chemical offerings. During 2021, we completed the acquisition of Intersurface Dynamics, Inc. (“Intersurface Dynamics”), which added numerous coolants and chemical products to our existing consumable and machine product lines. We believe these investments will help fuel our growth in the emerging growth SiC industry.

•

300mm Horizontal Diffusion Furnace – We have ~~significant experience with all facets of producing solar cells~~a highly successful and ~~at least some prior experience working~~proven 300mm horizontal diffusion furnace solution used for power semiconductor device manufacturing applications. We have a strong foundation with the ~~local~~leading 300mm power chip manufacturer. We believe we have a strong opportunity to continue expanding our customer base and grow revenue with our 300mm solution.

•

As the largest revenue contributor to our organization, we expect our subsidiary, BTU International, Inc. (“BTU”), will continue to track semiconductor industry growth cycles for our advanced semi-packaging and surface-mount technology products, in addition to specialized custom belt furnaces used in automotive and other specialized industrial applications. We believe that our investments in product innovation will

provide BTU with opportunities to grow further, especially in high growth applications of consumer and industrial electronics, Internet of Things, electric vehicles and 5G communications.

We anticipate future investments will be required to meet the expected demand from the growing markets we serve to achieve our revenue growth targets, including investments in research and development as well as capital expenditures, which also includes additional investments in capacity expansion, talent, and management information systems. In June 2022, we completed the sale of the real property where our manufacturing facility in Massachusetts is located. In connection with this sale, we entered into a two-year leaseback of the facility. This sale-leaseback transaction resulted in a net cash inflow of approximately $14.9 million, after repayment of the existing mortgage and settlement of related sale expenses. During the two-year leaseback period, we are exploring various options, including negotiating with the landlord for an extension of the lease-back period and conducting a search for a new manufacturing facility more in line with the needs of our Semiconductor product lines. In addition, we are evaluating business continuity and resiliency within our operations, our management information systems, and our needs to allow for greater efficiencies and to ensure our infrastructure can support our future growth plans. As a capital equipment ~~vendors. While~~manufacturer, we will continue to ~~focus on developing advanced products and technologies, we~~invest in our business to drive future growth.

In addition to investments in our organic growth, another key aspect of our capital allocation policy is our plan to ~~seek further cost reductions~~grow through acquisitions. We have the expertise and track record to ~~address~~identify complimentary and synergistic acquisition targets in the ~~competition from~~Semiconductor and SiC growth environments and to execute transactions and integrations to provide for value creating, profitable growth in both the short-term and long-term. On March 3, 2021, we acquired Intersurface Dynamics, a Connecticut-based manufacturer of substrate process chemicals used in various manufacturing processes, including semiconductors, silicon and compound semiconductor wafers, and optics. On January 17, 2023, we acquired Entrepix, an Arizona-based expert in CMP and wafer cleaning. As of the date of the filing of this Quarterly Report, we do not have an agreement to acquire any additional acquisition target.

COVID-19 Update

On March 28, 2022, the Chinese ~~equipment vendors.~~

government issued a mandatory shutdown in Shanghai, the location of one of our manufacturing facilities. The ~~equipment~~factory was allowed to partially reopen in May 2022 and fully reopened on June 1, 2022. After such reopening, the factory was able to operate near full capacity for the ~~large follow-on turnkey order announced in April 2017 (“Phase II”) shipped~~entire month of June. We were able to make up the shipments missed in the ~~first~~fourth quarter of fiscal ~~2018. Our quarterly~~2022 and ~~annual~~are now operating ~~results have been and~~at normal capacity levels. Given the uncertainty surrounding the COVID-19 pandemic, there can be no assurance that our Shanghai facility will ~~continue~~be allowed to be impacted by the timing of large system orders. Further, the solar and semiconductor equipment industries are highly cyclical and the conditions of the industries we operate in are volatile. Therefore, our order flow fluctuates quarter to quarter. For additional information regarding the risks related to our business and industry, please refer to Item 1A. Risk Factors in our Annual Reportremain open on ~~Form 10-K, as amended, for the fiscal year ended September 30, 2017.~~

a consistent basis.

Results of Operations

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

Three Months Ended
December 31,
2017
December 31,
2016
Net revenue 100 % 100 %
Cost of sales 72 % 71 %
Gross margin 28 % 29 %
Selling, general and administrative 14 % 24 %
Research, development and engineering 3 % 6 %
Operating income (loss) 11 % (1 )%
Gain on sale of other assets 0 % 0 %
Income (loss) from equity method investment 0 % 0 %
Interest expense and other income, net 0 % 0 %
Income (loss) before income taxes 11 % (1 )%
Income taxes provision 2 % 0 %
Net income (loss) 9 % (1 )%
Add: net loss attributable to noncontrolling interest 0 % 1 %
Net income (loss) attributable to Amtech Systems, Inc. 9 % 0 %


	Three Months Ended June 30,						Nine Months Ended June 30,
	2023			2022			2023			2022
Net revenue		100	%		100	%		100	%		100	%
Cost of sales		64	%		70	%		62	%		64	%
Gross margin		36	%		30	%		38	%		36	%
Selling, general and administrative		34	%		36	%		36	%		28	%
Research, development and engineering		6	%		8	%		6	%		7	%
Gain on sale of fixed assets		—	%		(62	)%		—	%		(17	)%
Severance expense		—	%		—	%		—	%		—	%
Operating (loss) income		(4	)%		48	%		(4	)%		18	%
Interest income (expense) and other, net		1	%		3	%		—	%		1	%
(Loss) income before income taxes		(3	)%		51	%		(4	)%		19	%
Income tax provision (benefit)		—	%		—	%		(3	)%		1	%
Net (loss) income		(3	)%		51	%		(1	)%		18	%

Net Revenue

Net revenue consists of revenue recognized upon shipment or ~~installation~~delivery of ~~equipment, with the exception of products using new technology, for which revenue is recognized upon customer acceptance.~~equipment. 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, gross profit and operating income can be significantly impacted by the timing of system shipments, and recognition of revenue based on customer 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”) industries, comprising less than 25% of the Solar segment revenue. shipments.

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

Three Months Ended December 31,
Segment 2017 2016 Incr (Decr) % Change
Solar $ 49,197
$ 11,424
$ 37,773
331%
Semiconductor 20,891
15,703
5,188
33%
Polishing 3,523
2,008
1,515
75%
Total net revenue $ 73,611
$ 29,135
$ 44,476
153%

~~Net~~thousands:


	Three Months Ended June 30,									Nine Months Ended June 30,
Segment	2023		2022		Change		% Change			2023		2022		Change			% Change
Semiconductor		19,841	$	15,135	$	4,706		31	%		58,775	$	61,484	$	(2,709	)		(4	)%
Material and Substrate		10,899		4,829		6,070		126	%		26,833		12,499		14,334			115	%
Total net revenue	$	30,740	$	19,964	$	10,776		54	%	$	85,608	$	73,983	$	11,625			16	%

Total net revenue for the ~~quarters~~three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 was ~~$73.6~~$30.7 million and ~~$29.1~~$20.0 million, respectively, an increase of ~~$44.5~~approximately $10.8 million or ~~153%~~54%. Our Semiconductor results for the third quarter of fiscal 2023 reflect increases in our belt furnace, surface-mount technology (“SMT”), and packaging equipment production, partially offset by decreases in shipments of our horizontal diffusion furnaces. We continue to experience softness in shipments of our advanced packaging and SMT equipment, primarily related to a slowdown in global demand in the consumer markets. Our Semiconductor results for the third quarter of fiscal 2022 reflect the closure of our Shanghai manufacturing facility, which partially reopened in mid-May and fully reopened on June 1, 2022. Material and Substrate revenue increased due to the addition of Entrepix, effective January 17, 2023. Entrepix accounted for approximately $7.2 million of revenue in the Material and Substrate segment during the quarter ended June 30, 2023.

Total net revenue for the nine months ended June 30, 2023 and 2022 was $85.6 million and $74.0 million, respectively, an increase of approximately $11.6 million or 16%. Revenue from the ~~Solar~~Semiconductor segment ~~increased 331%~~decreased $2.7 million compared to the prior year ~~quarter due~~period. This decrease is primarily attributable to lower shipments ~~relating to Phase II~~ of ~~the turnkey order, previously announced in April 2017.~~our SMT, advanced packaging and horizontal diffusion furnace product lines, partially offset by increased shipments of high temperature belt furnaces and increased parts and services revenues. Revenue from ~~the Semiconductor~~our Material and Substrate segment increased ~~33% compared~~$14.3 million due to the ~~prior year quarter due primarily to strong customer demand for~~addition of Entrepix, effective January 17, 2023, and increased shipments of consumables resulting from capacity expansion and production increases by our ~~thermal processing systems~~customers.

Orders and diffusion furnaces. Revenue from the Polishing segment increased 75% compared to the prior year quarter due primarily to strong customer demand leading to increased sales of polishing templates and equipment.

Backlog ~~and Orders~~

Our backlog as of December 31, 2017 and 2016 was $65.9 million and $51.5 million, respectively, an increase of $14.4 million or 28%. Our backlog as of December 31, 2017 includes approximately $39.3 million of orders and deferred revenue from our Solar segment customers compared to $35.8 million at December 31, 2016.

New orders booked in the ~~quarter~~three and nine months ended ~~December 31, 2017~~June 30, 2023 and 2022 were ~~$37.3 million ($7.3 million Solar) compared to $34.7 million ($15.9 million Solar)~~as follows, dollars in thousands:


	Three Months Ended June 30,										Nine Months Ended June 30,
Segment	2023		2022		Change			% Change			2023		2022		Change			% Change
Semiconductor	$	18,293	$	24,144	$	(5,851	)		(24	)%	$	63,983	$	79,992	$	(16,009	)		(20	)%
Material and Substrate		7,924		6,001		1,923			32	%		21,729		15,485		6,244			40	%
Total new orders	$	26,217	$	30,145	$	(3,928	)		(13	)%	$	85,712	$	95,477	$	(9,765	)		(10	)%

Our backlog as of ~~customer orders~~June 30, 2023 and 2022 was as follows, dollars in the quarter ended December 31, 2016. 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 less than 25% of the Solar segment backlog.

thousands:


	June 30,
Segment	2023		2022		Change			% Change
Semiconductor	$	53,219	$	58,344	$	(5,125	)		(9	)%
Material and Substrate		8,096		4,387		3,709			85	%
Total backlog	$	61,315	$	62,731	$	(1,416	)		(2	)%

As of ~~December 31, 2017, two~~June 30, 2023, one customer of both our Semiconductor and Material and Substrate segments accounted for 19% of our backlog. Additionally, three Semiconductor segment customers individually accounted for ~~19%~~20%, 17% and

13% of our backlog. No other customer accounted for more than 10% of our ~~backlog.~~backlog as of June 30, 2023. 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~~future 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 and Gross Margin

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~~business segment were as follows, ~~(dollars~~dollars in ~~thousands):~~

Three Months Ended December 31,
Segment 2017 Gross Margin 2016 Gross Margin Incr (Decr)
Solar $ 11,313
23% $ 1,611
14% $ 9,702

Semiconductor 7,488
36% 6,095
39% 1,393

Polishing 1,536
44% 737
37% 799

Total gross profit $ 20,337
28% $ 8,443
29% $ 11,894

thousands:


	Three Months Ended June 30,												Nine Months Ended June 30,
Segment	2023		Gross Margin			2022		Gross Margin			Change		2023		Gross Margin			2022		Gross Margin			Change
Semiconductor	$	6,707		34	%	$	3,590		24	%	$	3,117	$	21,810		37	%	$	21,507		35	%	$	303
Material and Substrate		4,278		39	%		2,310		48	%		1,968		10,948		41	%		5,451		44	%		5,497
Total gross profit	$	10,985		36	%	$	5,900		30	%	$	5,085	$	32,758		38	%	$	26,958		36	%	$	5,800

Our gross margins can be affected by capacity utilization and the type and volume of machines and consumables sold each quarter. Gross profit for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 was ~~$20.3~~$11.0 million ~~(28%~~(36% of net revenue) and ~~$8.4~~$5.9 million ~~(29%~~(30% of net revenue), respectively, an increase of ~~$11.9~~$5.1 million. Gross margin on products from our Solar segment increased compared to the three months ended December 31, 2016, due primarily to 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~~changes in ~~the first quarter of 2018, with gross margin decreasing due to~~our product ~~mix.~~mix and improved capacity utilization in our Billerica and Shanghai facilities. Gross ~~profit and gross~~ margin on products from our ~~Polishing~~Semiconductor segment ~~increased from~~were lower in the prior year period ~~primarily~~ due to ~~higher sales~~the above-mentioned closure of ~~new~~our Shanghai manufacturing facility. Gross margin on products ~~with higher margins. For~~from our Material and Substrate segment decreased compared to the three months ended ~~December 31, 2017,~~June 30, 2022, due to higher equipment sales, primarily at Entrepix, which have lower margins than our consumables. We are experiencing increased material costs across all our segments. In response to such increased costs, we ~~deferred gross~~continually review our pricing plans and supplier agreements, with the objective of passing these increased costs to our customers where possible; however, we continue to experience pricing pressure from our customers. We are also exploring partnerships with contract manufacturers, who can leverage their buying power on a larger scale. Additionally, we have experienced rising labor costs across our divisions, and we expect this trend to continue, as the labor markets in which we operate remain competitive.

Gross profit ~~of $2.1 million. For~~for the ~~three~~nine months ended ~~December 31, 2016, we recognized previously-deferred gross profit~~June 30, 2023 and 2022 was $32.8 million (38% of ~~$0.3~~net revenue) and $27.0 million (36% of net revenue), respectively, an increase of $5.8 million.

Gross margin on products from our Semiconductor segment increased slightly compared to the nine months ended June 30, 2022. Gross margin on products from our Material and Substrate segment decreased between periods due to higher equipment sales, primarily at Entrepix, which have lower margins than our consumables.

Selling, General and Administrative

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, 2017~~June 30, 2023 and ~~2016~~2022 were ~~$10.6~~$10.3 million and ~~$7.0~~$7.2 million, respectively. SG&A increased compared to the prior year quarter due primarily to ~~$1.8~~$1.9 million of ~~higher commissions, freight~~added SG&A from our acquisition of Entrepix as well as increased consulting and ~~other selling~~ERP project expenses.

SG&A expenses for the nine months ended June 30, 2023 and 2022 were $30.9 million and $21.0 million, respectively. SG&A increased compared to the prior year period due primarily to $3.8 million of added SG&A from our acquisition of Entrepix, $3.2 million of transaction expenses related to ~~increased revenue. Also, for~~ the ~~three months ended December 31, 2016, SG&A expenses were reduced by the collections~~acquisition of ~~previously reserved accounts receivable~~Entrepix and $2.0 million of ~~approximately $1.0 million.~~

audit and consulting expenses.

Research, Development and Engineering

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. WeRD&E expenses may vary from period to period depending on the engineering projects in process. Expenses related to engineers working on strategic projects or sustaining engineering projects are recorded in RD&E. However, from time to time we add functionality to our products or develop new products during engineering and manufacturing to fulfill specifications in a customer’s order, in which case the cost of development, along with other costs of the order, are charged to cost of goods sold. Occasionally, 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, 2017~~June 30, 2023 and ~~2016~~2022 were ~~$2.0~~$1.8 million and $1.6 million, respectively, ~~an increase~~and $4.7 million and $5.0 million in the nine months ended June 30, 2023 and 2022, respectively. The decrease in RD&E in the nine-month period is due to the timing of purchases related to specific strategic-development projects at our Semiconductor segment. Grants earned are immaterial in all periods presented.

Severance Expense

We recorded severance expense of $0.4 million ~~due primarily~~in the nine months ended June 30, 2023. This one-time charge relates to ~~increased R&D spending~~the retirement of our founder, Mr. J.S. Whang. There was no severance expense recorded in ~~our Solar segment.~~

the three and nine months ended June 30, 2022.

Income Taxes

Our effective tax rate was 82.8% and 6.0% for the nine months ended June 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended June 30, 2023 differs from the U.S. statutory tax rate of 21% primarily due to the release of a portion of our valuation allowance in connection with a deferred tax liability related to the Entrepix acquisition resulting in recognition of previously recorded deferred tax assets. For the three months ended ~~December 31, 2017~~June 30, 2023 and 2022, we recorded income tax expense of ~~$1.2~~$0.2 million ~~resulting in an effective tax rate of 16.1%.~~and $20,000, respectively. For the ~~three~~nine months ended ~~December 31, 2016~~June 30, 2023 and 2022, we recorded income tax benefit of $2.7 million and income tax expense of ~~$0.1~~$0.8 million, ~~a 37.5%~~respectively. The quarterly income tax provision is calculated using an estimated annual effective tax ~~rate. The income tax provisions are~~rate, based upon ~~estimates of~~expected annual income, ~~annual~~ permanent ~~differences~~items, statutory rates and ~~statutory~~planned tax ~~rates~~strategies in the various jurisdictions in which we ~~operate, except that~~operate. However, losses in certain ~~loss~~ jurisdictions and discrete items are ~~treated separately.~~

excluded from the determination of the estimated annual effective tax rate.

Generally accepted accounting principles of the United States (“GAAP”) require that a valuation allowance be established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates and the length of carryback and carryforward periods. According to those principles, it is difficult to conclude that a valuation allowance is not needed when the negative evidence includes cumulative losses in recent years. ~~Therefore, in fiscal 2017, cumulative losses weighed heavily in~~

Based on the ~~overall assessment. As a result~~consideration of ~~the review, where cumulative losses had been incurred,~~all available evidence, we ~~continue to~~have concluded that we will maintain a full valuation allowance for ~~substantially~~ all net deferred tax assets ~~in the U.S. and foreign jurisdictions, including~~related to the carryforwards of U.S. net operating losses and foreign tax ~~credits, which were acquired~~credits. We will continue to monitor our cumulative income and loss positions in the ~~merger with BTU International, Inc.~~U.S. and foreign jurisdictions to determine whether full valuation allowances on U.S. net deferred tax assets are appropriate.

We expect to pay minimal U.S federal cash taxes for the foreseeable future as a result of our U.S. net operating losses that are carried forward.

Our future effective income tax rate depends on various factors, such as the amount of income (loss) in ~~Europe.~~

~~For the quarter ending December 31, 2017, we determined that a portion of the deferred~~each tax ~~asset previously covered by the valuation allowance would be realized in the current~~jurisdiction, tax ~~period. We realized $1.4 million of deferred tax assets~~regulations governing each region, non-tax deductible expenses incurred as a ~~discrete item in~~percent of pre-tax income and the ~~quarter.~~

effectiveness of our tax planning strategies.

Liquidity and Capital Resources

~~At December 31, 2017~~

The following table sets forth for the periods presented certain consolidated cash flow information, in thousands:


	Nine Months Ended June 30,
	2023			2022
Net cash (used in) provided by operating activities	$	(7,150	)	$	5,090
Net cash (used in) provided by investing activities		(36,854	)		19,583
Net cash provided by (used in) financing activities		11,590			(8,855	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(155	)		(441	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(32,569	)		15,377
Cash and cash equivalents, beginning of period		46,874			32,836
Cash, cash equivalents and restricted cash, end of period	$	14,305		$	48,213

Cash and ~~September 30, 2017,~~Cash Flow

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~~2022 of ~~December 31, 2017 and $71.1 million as of September 30, 2017.~~

~~The increase in cash during the first three months of fiscal 2018 of $1.6~~$32.6 million was primarily due to ~~proceeds from~~ the ~~exercise~~acquisition of ~~stock options.~~Entrepix, which was partially funded with cash on-hand as well as with a new term loan (see Note 2). We maintain a portion of our cash and cash equivalents in ~~Euros~~Renminbis, a Chinese currency, at our ~~Dutch and French~~ operations ~~and~~ in ~~RMB in our Chinese operations;~~China; therefore, changes in the exchange ~~rate~~rates have an impact on our cash balances. ~~Restricted cash decreased~~Our working capital was $56.0 million as of June 30, 2023 and $80.3 million as of September 30, 2022. The decrease in working capital was primarily due to the ~~shipments of Phase II of the Solar turnkey order, which released the restrictions on the downpayment.~~decrease in cash. Our ratio of current assets to current liabilities was ~~2.3:~~3.1:1 as of ~~December 31, 2017,~~June 30, 2023, and ~~1.8:~~4.5:1 as of September 30, ~~2017.~~

2022.

During periods of weakening demand, we typically generate cash from operating activities. Conversely, we are more likely to use operating cash flows for working capital requirements during periods of higher growth. 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, the incurrence of long-term debt and customer deposits. Additionally, in January 2023, we entered into a credit facility, which includes a revolving line of credit with availability up to $8.0 million. There can be no assurance that we can raise such additional capital resources when needed or 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 Flows from Operating Activities

Cash ~~provided by~~used in our operating activities was ~~$0.3~~approximately $7.2 million for the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2023, compared to ~~$3.5~~$5.1 million ~~used in operations~~provided by operating activities for the ~~three~~nine months ended ~~December 31, 2016, an improvement of $3.8 million.~~June 30, 2022. During the ~~three~~first nine months of fiscal 2023, we used cash to increase our inventory balances in preparation for shipments scheduled over the next four quarters and to pay the related accounts payable. During the nine months ended ~~December 31, 2017, cash was primarily generated through net income adjusted for non-cash items of $7.4 million, which was offset by other increases and decreases in operating assets,~~June 30, 2022, we received several large customer deposits, primarily related to orders of our horizontal diffusion and high temp furnaces, which were expected to ship over the ~~turnkey project. A significant portion of~~next two quarters. During the ~~revenue and related cash payments related~~2022 period, our accounts receivable collections exceeded new accounts receivable, primarily due to the ~~turnkey project are deferred and restricted, respectively, until completion~~shutdown of our Shanghai facility.

Cash Flows from Investing Activities

Cash used in investing activities was $36.9 million in the ~~integration of the equipment and transfer of the technology. During the three~~nine months ended ~~December 31, 2016,~~June 30, 2023, and cash provided by investing activities was ~~reduced by increases~~$19.6 million in ~~accounts receivable~~the nine months ended June 30, 2022. The fiscal 2023 amount consists primarily of cash paid for the acquisition of Entrepix. The fiscal 2022 amount consists of $19.9 million in proceeds from the sale of our real property in Billerica, Massachusetts as well as $0.3 million of capital expenditures. We expect capital expenditures to increase throughout fiscal 2023 as we make targeted investments in our IT systems and ~~restricted cash, offset by decreases in inventory.~~

additional capacity improvements.

Cash Flows from Financing Activities

For the ~~three~~nine months ended ~~December 31, 2017, $1.1 million of~~June 30, 2023, cash provided by financing activities was $11.6 million, comprised of ~~$1.2~~$12.0 million in borrowings on our term loan and $0.5 million of proceeds received from the exercise of stock options partially offset by $0.9 million in payments on long-term ~~debt of $0.1 million.~~debt. For the ~~three~~nine months ended ~~December 31, 2016, $0.1~~June 30, 2022, $8.9 million of cash used in financing activities was ~~primarily related to~~comprised of $4.1 million of cash used for the repurchase of common stock and payments on long-term debt of ~~$0.2~~$4.9 million, ~~net~~partially offset by $0.1 million of ~~borrowings~~proceeds received from the exercise of ~~less than $0.1 million.~~

stock options. Fiscal 2022 payments on long-term debt include the full repayment of the $4.5 million mortgage balance on the real property in Billerica, Massachusetts.

Financing Facilities

Our debt balance as of June 30, 2023 was $11.2 million, including our finance lease obligations. Our credit facility contains various covenants customary for transactions of this type, including complying with a minimum Debt to EBITDA ratio, a Fixed Charge Coverage ratio and a Working Capital ratio (as defined in the agreements) and meeting quarterly and annual reporting requirements. The credit facility agreement contains customary affirmative and negative covenants and events of default for facilities of this type. At June 30, 2023, we were in compliance with all such covenants.

Off-Balance Sheet Arrangements

As of ~~December 31, 2017,~~June 30, 2023, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the ~~Securities and Exchange Commission~~SEC 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.

Contractual Obligations

Unrecorded purchase obligations were ~~$26.4~~$26.1 million as of ~~December 31, 2017,~~June 30, 2023, compared to ~~$34.4~~$20.0 million as of September 30, ~~2017,~~2022, an increase of $6.1 million.

In January 2023, we entered into a ~~decrease~~Loan and Security Agreement with UMB Bank. See Note 2 “Long-Term Debt” of ~~$8.0 million due primarily~~our condensed consolidated financial statements for a description of this agreement. There were no other material changes to ~~reduced vendor commitments as we complete~~ the ~~first two phases of 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 as of those dates~~included in ~~the form of advances to vendors.~~

~~Refer to Amtech’s Annual Report on Form 10-K, as amended, for the year ended September 30, 2017 for additional information on our other contractual obligations.~~

~~Critical Accounting Policies~~

“"Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Form 10-K.

Critical Accounting Estimates

"Part 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.~~GAAP. 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, income taxes, inventory valuation, ~~accounts~~ and ~~notes receivable collectability, warranty and impairment of long-lived assets.~~goodwill. We base our estimates and judgments on historical experience, expectations regarding the future 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~~estimate 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~~2022 Form ~~10-K, as amended, for the year ended September 30, 2017.~~10-K. We believe our critical accounting ~~policies~~estimates relate to the more significant judgments and estimates used in the preparation of our consolidated financial statements.

We believe the critical accounting ~~policies~~estimates discussed in the section entitled “Item 7:7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our ~~Annual Report on~~2022 Form 10-K ~~as amended, for the fiscal year ended September 30, 2017~~ represent the most significant judgments and estimates used in the preparation of our consolidated financial statements. There have been no ~~significant~~material changes in our critical accounting ~~policies~~estimates during the ~~three~~nine months ended ~~December 31, 2017.~~

June 30, 2023, except as set forth below.

Business Combinations

We follow the acquisition method of accounting to record identifiable assets acquired and liabilities assumed in connection with acquired businesses at their estimated fair value as of the date of acquisition.

Identifiable intangible assets from business combinations are recognized at their estimated fair values as of the date of acquisition and consist of non-compete agreements, backlog, customer relationships, developed technology and tradenames. Determination of the estimated fair value of identifiable intangible assets requires judgment. The fair value of acquired identifiable intangible assets were estimated using various valuation methodologies. The multi-period excess earnings method was used to value the acquired developed technology and the distributor method for the acquired customer relationships. Both approaches are income-based methods, which required judgment in estimating appropriate discount rates, obsolescence, customer attrition, and remaining useful lives. The acquired intangible assets all had finite lives, ranging from one to ten years. The fair value of identifiable intangible assets acquired in connection with the Acquisition was $13.6 million. Goodwill represents the excess of the fair value of the consideration conveyed in an acquisition over the fair value of net assets acquired. See Note 3 “Acquisition” for additional information.

Impact of Recently Issued Accounting Pronouncements

For discussion of the impact of recently issued accounting pronouncements, see “Part I, Item 1:1. Financial Information” under “Impact of Recently Issued Accounting Pronouncements.”


~~Item 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~There have been no material changes~~

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in ~~our reported market risks, as described in “Quantitative~~Item 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, for~~therefore, are not required to provide the ~~year ended September~~ information requested by this Item.

30 ~~2017.~~


~~Item 4.~~	~~CONTROLS AND PROCEDURES~~

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, including ~~the~~our Chief Executive Officer (“CEO”) and ~~the~~our Chief Financial Officer (“CFO”), has carried out an evaluation of the effectiveness of our disclosure controls and procedures as of ~~December 31, 2017,~~June 30, 2023, 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’s~~SEC’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.

We completed the acquisition of Entrepix on January 17, 2023. As permitted under U.S. Securities and Exchange Commission guidance, management’s assessment as of June 30, 2023 did not include an assessment of controls and procedures of Entrepix, which is included in the consolidated financial statements as of June 30, 2023.

Changes in Internal Control Over Financial Reporting

~~There were no~~

Except as described below, there have not been any changes in ~~Amtech’s~~the 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, 2017~~third fiscal quarter to which this report relates that ~~has~~ materially affected, or isare reasonably likely to materially affect, ~~its~~the internal control over financial ~~reporting.~~

reporting of the Company.

As noted above, on January 17, 2023 we completed the acquisition of Entrepix. We are currently integrating Entrepix into our control environment. In executing this integration, we are analyzing, evaluating, and where necessary, making changes in controls and procedures related to the Entrepix business, which is expected to be completed in the year ended September 30, 2024.

PART II. OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1. Legal Proceedings

For discussion of legal proceedings, see Note 11 to our condensed consolidated financial statements under “Part I, Item 1:1. Financial Information” under “Commitments and ~~Contingencies.”~~

Contingencies” of this Quarterly Report.


~~Item 1A.~~	~~Risk Factors~~

~~In addition~~

Item 1A. Risk Factors

We refer you to documents filed by us with the SEC, specifically “Item 1A. Risk Factors” in our 2022 Form 10-K and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “March 2023 Quarterly Report”), which identify important risk factors that could materially affect our business, financial condition and future results. We also refer you to the ~~other information~~factors and cautionary language set forth in the section entitled “Cautionary Statements Regarding Forward-Looking Statements” immediately preceding “Item 1. Condensed Consolidated Financial Statements” of this Quarterly Report. This Quarterly Report, ~~you~~including the accompanying condensed consolidated financial statements and related notes, should ~~carefully consider the~~be read in conjunction with such risks and other factors ~~discussed in Part I, Item 1A “Risk Factors”~~for a full understanding of our ~~Annual Report on~~operations and financial condition. The risks described in our 2022 Form 10-K ~~as amended, for~~and March 2023 Quarterly Report and any described herein are not the ~~fiscal year ended September 30, 2017.~~only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results. There have been no material changes to the risk factors previously disclosed in our 2022 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:~~

~~Recent changes to U.S. tax laws may adversely affect our financial condition~~ or ~~results of operation and create the risk that we may need to adjust our accounting for these changes.~~

The Tax Cuts and Jobs Act (the “Act”), enacted on December 22, 2017, makes significant changes to U.S. tax laws and includes numerous provisions that affect businesses, including ours. For instance, as a result of lower corporate tax rates, the Act tends to reduce both the value of deferred tax assets and the amount of deferred tax liabilities. It also limits interest rate deductions and the amount of net operating losses that can be used each year and alters the expensing of capital expenditures. Other provisions have international tax consequences for businesses like ours that operate internationally. The Act is unclear in certain respects and will require interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities, and the Act could be subject to amendments and technical corrections, any of which could lessen or increase the adverse (and positive) impacts of the Act. The accounting treatment of these tax law changes is complex, and some of the changes may affect both current and future periods. Others will primarily affect future periods. As discussed elsewhere in thisMarch 2023 Quarterly Report on Form 10-Q, we believe our analysis and computations of the tax effects of the Act on us is partially, but not entirely, complete. For instance, we are still in the process of analyzing the earnings and profits and tax pools of our foreign subsidiaries to estimate the effects of the one-time repatriation transaction tax on certain net accumulated earnings and profits of our foreign subsidiaries. Consistent with guidance from the Securities and Exchange Commission, our financial statements reflect our estimates of the tax effects of the Act on us as of December 31, 2017, to the extent we have been able to make such preliminary determinations. Although we believe these estimates are reasonable, they are provisional and may be adjusted prior to the end of fiscal 2018. We intend to complete accounting for the Act by the end of fiscal 2018. Any adjustments to our provisional estimates or the effects of currently unknown impacts of the Act on us could affect our current or future financial statements, or both.

Report.


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

~~None.~~

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

Issuer Purchases of Equity Securities

On February 7, 2023, the Board approved a stock repurchase program, pursuant to which the Company may repurchase up to $5 million of its outstanding Common Stock over a one-year period, commencing on February 10, 2023. Repurchases under the program will be made in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in compliance with the rules and regulations of the Securities and Exchange Commission; however, the Company has no obligation to repurchase shares and the timing, actual number, and value of shares to be repurchased is subject to management’s discretion and will depend on the Company’s stock price and other market conditions. The Company may, in the sole discretion of the Board, terminate the repurchase program at any time while it is in effect. Repurchased shares may be retired or kept in treasury for further issuance.

During the three months ended June 30, 2023, we did not repurchase any of our equity securities nor did we sell any equity securities that were not registered under the Securities Act of 1933, as amended.


~~Item 3.~~	~~Defaults Upon Senior Securities~~

Item 3. Defaults Upon Senior Securities

None.


~~Item 4.~~	~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not applicable.


~~Item 5.~~	~~Other Information~~

~~None.~~

Item 5. Other Information

During the three months ended June 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Item 6. Exhibits

EXHIBIT

INCORPORATED BY REFERENCE

FILED

NO.

EXHIBIT DESCRIPTION

~~FORM~~

FORM

FILE NO.

EXHIBIT NO.

FILING DATE

HEREWITH

~~31.1~~

31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended

~~31.2~~

31.2

Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended

~~32.1~~

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~32.2~~

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101.INS~~

101.INS

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~~101.SCH~~

101.SCH

Inline XBRL Taxonomy Extension Schema Document

~~101.PRE~~

101.PRE

Inline Taxonomy Presentation Linkbase Document

~~101.CAL~~

101.CAL

Inline XBRL Taxonomy Calculation Linkbase Document

~~101.LAB~~

101.LAB

Inline XBRL Taxonomy Label Linkbase Document

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104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMTECH SYSTEMS, INC.



	December 31, 2017			September 30, 2017
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	52,696		$	51,121
Restricted cash	9,913			24,640
Accounts receivable
Trade (less allowance for doubtful accounts of $1,473 and $866 at December 31, 2017, and September 30, 2017, respectively)	24,365			22,519
Unbilled and other	21,620			14,275
Inventories	22,762			30,210
Vendor deposits	5,180			11,806
Other	2,310			2,542
Total current assets	138,846			157,113
Property, Plant and Equipment - Net	15,637			15,792
Intangible Assets - Net	3,378			3,495
Goodwill - Net	11,484			11,405
Investments	2,588			2,615
Deferred Income Taxes - Long-Term	200			200
Other Assets - Long-Term	980			1,003
Total Assets	$	173,113		$	191,623
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	20,483		$	21,555
Accrued compensation and related taxes	7,422			7,592
Accrued warranty expense	1,401			1,254
Other accrued liabilities	2,918			2,056
Customer deposits	19,328			48,784
Current maturities of long-term debt	365			361
Deferred profit	5,632			4,081
Income taxes payable	1,608			286
Total current liabilities	59,157			85,969
Long-Term Debt	8,225			8,134
Income Taxes Payable - Long-Term	6,802			7,037
Total Liabilities	74,184			101,140
Commitments and Contingencies
Stockholders’ Equity
Preferred stock; 100,000,000 shares authorized; none issued	—			—
Common stock; $0.01 par value; 100,000,000 shares authorized; shares issued and outstanding: 14,876,430 and 14,710,591 at December 31, 2017 and September 30, 2017, respectively	149			147
Additional paid-in capital	127,015			125,564
Accumulated other comprehensive loss	(7,988		)	(8,529		)
Retained deficit	(20,247		)	(26,699		)
Total stockholders’ equity	98,929			90,483
Total Liabilities and Stockholders’ Equity	$	173,113		$	191,623



	Three Months Ended December 31,
	2017			2016
Revenues, net of returns and allowances	$	73,611		$	29,135
Cost of sales	53,274			20,692
Gross profit	20,337			8,443

Selling, general and administrative	10,580			6,996
Research, development and engineering	1,991			1,627
Operating income (loss)	7,766			(180		)
Loss from equity method investment	(26		)	(143		)
Interest expense and other income, net	(48		)	81
Income (loss) before income taxes	7,692			(242		)
Income tax provision	1,240			90
Net income (loss)	6,452			(332		)

Add: net loss attributable to noncontrolling interest	—			279
Net income (loss) attributable to Amtech Systems, Inc.	$	6,452		$	(53	)

Income (Loss) Per Share:

Basic income (loss) per share attributable to Amtech shareholders	$	0.44		$(0.00)
Weighted average shares outstanding	14,781			13,179
Diluted income (loss) per share attributable to Amtech shareholders	$	0.42		$(0.00)
Weighted average shares outstanding	15,298			13,179



	December 31, 2017		September 30, 2017
Deferred revenues	$	8,370	$	6,822
Deferred costs	2,738		2,741
Deferred profit	$	5,632	$	4,081



	Three Months Ended
	December 31, 2017			December 31, 2016
Research, development and engineering	$	2,290		$	1,830
Grants earned	(299		)	(203		)
Net research, development and engineering	$	1,991		$	1,627



	Options			Weighted Average Exercise Price
Outstanding at beginning of period	1,560,441			$	7.95
Granted	—			—
Exercised	(165,839		)	7.03
Forfeited	(27,299		)	20.04
Outstanding at end of period	1,367,303			$	7.82

Exercisable at end of period	1,142,012			$	8.06
Weighted average fair value of options granted during the period	$	—

/s/ Lisa D. Gibbs

~~February 8, 2018~~

August 9, 2023

Lisa D. Gibbs

Vice President –and Chief ~~Accounting~~Financial Officer

(Principal ~~Accounting~~Financial Officer and Duly Authorized Officer)