Net revenue consists of revenue recognized upon shipment or installation of products using proven technology and upon acceptance of products using new technology. In addition, spare parts sales are recognized upon shipment. Service revenue is recognized upon completion of the service activity or ratably over the term of the service contract. The majority of our revenue is generated from large furnace systemssystem sales which, depending on the timing of shipment and installation, can have a significant impact on our revenue gross margins and earnings in any given period.

Net revenue for the quarters ended DecemberMarch 31, 2011 and 2010 and 2009 was $53.7$61.3 million and $15.5$16.1 million, respectively; an increase of $38.2$45.2 million or 247%281%. Revenue increased primarily due to significantly higher shipments of our equipment to the solar industry, partially offset by an increase in the amount of revenue deferred. Net revenue from the solar market was $45.9$53.4 million and $11.9$10.9 million for the three months ended DecemberMarch 31, 20102011 and 2009,2010, respectively; a $34.0$42.5 million or 286%390% increase.

Net revenue for the six months ended March 31, 2011 and 2010 was $115.0 million and $31.5 million, respectively; an increase of $83.4 million or 265%. Revenue increased primarily due to significantly higher shipments of our equipment to the solar industry, partially offset by an increase in the amount of revenue deferred. Net revenue from the solar market was $99.3 million and $22.8 million for the six months ended March 31, 2011 and 2010, respectively; a $76.5 million or 336% increase.

The orders included in our backlog are generally credit approved customer purchase orders expected to ship within the next 12twelve months. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. Our backlog also includes revenue deferred pursuant to our revenue recognition policy, derived from orders that have already been shipped, but which have not met the criteria for revenue recognition.

Gross profit for the quartersthree months ended DecemberMarch 31, 2011 and 2010 and 2009 was $19.6$24.7 million and $4.6$4.7 million, respectively; an increase of $15.0$20.0 million or 326%425%. Gross margins increased from 30%to 40% in the quarter ended DecemberMarch 31, 2009 to 36%2011 from 29% in the quarter ended DecemberMarch 31, 2010. Increased gross profit and gross margins were driven by higher volumes which resulted in significantly more efficient capacity utilization, partially offset by higher deferred profit. In the first fiscal quarter ended DecemberMarch 31, 2010,2011, we had a net profit deferral of $5.1$3.7 million compared to a net recognition of $0.2$0.3 million of profit in the quarter ended DecemberMarch 31, 2009.2010.

Research and development costs (net of grants earned) for the three and six months ended Decemberperiods ending March 31, 20102011 increased $0.4$0.7 million and $1.1 million, respectively, compared to the three months ended December 31, 2009, duesame periods in fiscal 2010. Increased research and development spending relates mainly to increases in research in the technology of solar (photovoltaic) cell manufacturing to increase cell efficiency. We receive reimbursements through governmentgovernmental research and development grants which are netted against these expenses. As we have increased our research and development activity, we have also increased our efforts to receive grants to fund this research. As a result, the amount of grants earned in the quarter ended December 31, 2010 increased approximately 40% compared to the quarter ended December 31, 2009. We expect the development of an ion implanter for the solar market to cause a significant increase in our research and development expenses over the next two years.

The decreaseincrease in cash andwas primarily provided by cash equivalents resulted primarily from cash used in operations andoperating activities of $11.2 million, discussed below. This was offset by purchases of property, plant and equipment partially offset by proceeds fromof $2.9 million and $1.1 million towards the exercisepurchase of stock options.our ownership interest in Kingstone. Our ratio of current assets to current liabilities was 2.1:decreased to 1.9:1 andas of March 31, 2011 from 2.3:1 as of December 31, 2010 and September 30, 2010, respectively. Due to the acquisition of Kingstone Semiconductor Technology2010. The decline in the second quarter of fiscal year 2011, we expect unrestricted ca sh to decline by approximately $9.4 millionour current ratio was due to the $1.4simultaneous increase in our current assets and current liabilities as we ramped up inventory purchases to meet the growing order backlog. Current assets increased $52.4 million of cash to be paid to the sellers at closing and an increase of $8.0 million in restricted cash to be placed into escrow. Also, thewhile current liabilities increased $37.8 million. The increase in customer orders is expected to result in higher operating levels which may result in certain periods where the net cash used for working capital items and potential capital expenditures will exceed net income. We have never paid dividends on our Common Stock. Our present policy is to apply cash to investmentinvestments in product development, acquisitionacquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future. We continueResearch and development expenses are expected to have minimal long-term debt obligations to service.increase over the next two years as a result of the solar tool development project described in footnote 7, “Acquisition.”

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 include common and preferred stock sold in private transactions and public offerings, capital leases and long-term debt. There can be no assurance that we can raise such additional capital resources on satisfactory terms. We believe that our principal sources of liquidity discussed above are sufficient to support operations.

Our investing activities for the threesix months ended DecemberMarch 31, 2011 and 2010 and 2009 used $0.6$3.9 million and $0.4$3.1 million respectively. ForIn the three months ended December 31, 2010 and 2009,second quarter of fiscal 2011 we acquired a 55% interest in Kingstone. The cash portion of the Kingstone investment in the second quarter of fiscal 2011 was $1.1 million. We also had capital expenditures in the first six months of $0.6fiscal 2011 of $2.9 million. The company purchased the existing corporate office building for $1.0 million in the second quarter. The remainder of the capital expenditures in fiscal 2011 were at our Netherlands operation to support their continued growth and $0.4expansion. In the first six months of fiscal 2010 the company invested $2.1 in capital expenditures including land in the Netherlands adjacent to our current manufacturing facilities for $1.0 million respectively, primarilyin the second quarter of 2010. The remainder of the capital expenditures was for machinery and equipment.equipment and infrastructure due to our capacity expansion, primarily at our Netherlands location. In the second quarter of fiscal 2010, we provided a $1.0 million short-term loan to one of our technology partners.

For the threesix months ended DecemberMarch 31, 2011 and 2010, $1.9$2.0 million and $0.1 million of cash was provided by financing activities, due torespectively. The primary source of cash received from financing activities during the six months ended March 31, 2011 and 2010, was proceeds from the exerciseissuance of common stock options of $1.2 million and related excess tax benefit of $0.7 million. This compares to cash used in financing activities of less than $0.1 million for the three months ended December 31, 2009 for the payment of long-term debt and less than $0.1 million of cash received fromthrough the exercise of stock options.

As of DecemberMarch 31, 2010,2011, Amtech had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the Securities and Exchange Commission.

The only significant changes in contractual obligations since the end of fiscal 2010 have been purchase obligations (Seeobligations. See Note 6 of the Condensed Consolidated Financial Statements).Statements. Purchase obligations increased $17.9$40.2 million from $40.1 million as of September 30, 2010 to $58.0$80.3 million as of DecemberMarch 31, 2010.2011. The increase in purchase obligations relates to the continued increase in sales orders and backlog. To meet the increased demand, we accelerated our purchases of inventory. We also have a contractual obligation to fund the development of the solar tool discussed in Note 7 of the Condensed Consolidated Financial Statements. Refer to Amtech’s annual report on Form 10-K for the year ended September 30, 2010, for information on the Company’s other contractual obligations.

A critical accounting policy is one that is both important to the presentation of our financial position and results of operations, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These uncertainties are discussed in Part I, Item 1A of the Company’sour Annual Report on Form 10-K for the year ended September 30, 2010. We believe our critical accounting policies relate to the more significant judgments and estimates used in the preparation of our consolidated financial statements.

We believe the critical accounting policies discussed in the section entitled “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010 represent the most significant judgments and estimates used in the preparation of our consolidated financial statements. There have been no significant changes in our critical accounting policies during the threesix months ended DecemberMarch 31, 2010.2011.

We are exposed to financial market risks, including changes in foreign currency exchange rates and interest rates. Our operations in the United States are conducted in U.S. dollars. The functional currency of our European operation is the Euro, the currency primarily used in the conduct of those operations. Nearly all of the transactions, assets and liabilities of all other operating units are denominated in the U.S. dollar,dollars, their functional currency. The following disclosures about market risk should be read in conjunction with the more in depth discussion in Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010.

As of DecemberMarch 31, 2010,2011, we did not hold any stand-alone or separate derivative instruments. We incurred net foreign currency transaction gains or losses of less than $0.1 million and $0.2 million respectively during the threesix months ended DecemberMarch 31, 20102011 and 2009.2010. As of DecemberMarch 31, 2010,2011, our foreign subsidiaries had $4.4$6.2 million of assets (cash, receivables and receivables)prepaid assets) denominated in currencies other than thetheir functional currency. A 10% change in the value of the functional currency relative to the non-functional currency would result in a gain or loss of $0.4$0.6 million. As of DecemberMarch 31, 2010,2011, we had $3.6$2.1 million of accounts payable, consisting primarily of amounts owed by our foreign subsidiaries to our U.S. companies, denominated in U.S. dollars. Although the intercompany accounts are eliminated in consolidation, a 10% change in the value of the euroEuro relative to the U.S. dollar would result in a gain or loss of $0.4$0.2 million. The risk associated with foreign currency tr anslationtranslation gains and losses may increase with the recent acquisition in China.

We incurred foreign currency translation gains of $2.5 million and losses of $1.5 million and $0.6$2.8 million during the quarterssix months ended DecemberMarch 31, 2011 and 2010, and 2009, respectively.respectively, a type of other comprehensive income (loss), which is a direct adjustment to stockholders’ equity. Our net investment in and advances to our foreign operations totaled $63.3$81.7 million as of DecemberMarch 31, 2010. A 10% change in the value of the euroforeign currencies relative to the U.S. dollar would cause approximately an approximately $6.3$8.2 million foreign currency translation adjustment, a type of other comprehensive income (loss), which would be a direct adjustment to our stockholders’ equity. The risk associated with foreign currency translation adjustments is expected to increase with the recent acquisition in China.

During threesix months ended DecemberMarch 31, 20102011 and 2009,2010, our European operations transacted U.S. dollar denominated sales and purchases of $0.7$0.9 million and $0.4$2.7 million, respectively. As of DecemberMarch 31, 2010,2011, sales commitments denominated in a currency other than the functional currency of our transacting operation totaled $1.3$1.1 million. Our lead-times to fulfill these commitments generally range between 13 and 26 weeks. A 10% change in the relevant exchange rates between the time the order was taken and the time of shipment would cause our gross profit on such orders to be $0.1 million greater than or less than expected on the date the order was taken. During the three months ended December 31, 2010 and 2009, our European operations transacted U.S. dollar denominated purchases of $2.7 million and $0.6 million, respectively. As of DecemberMarch 31, 2010,2011, purchase commitments denominated in a currency other than the functional currency of our transacting opera tionoperation totaled $8.3$7.5 million. A 10% change in the relevant exchange rates between the time the purchase order was placed and the time the order is received would cause our cost of such items to be approximately $0.8 million greater than or less than expected on the date the purchase order was placed.

Our management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), has carried out an evaluation of the effectiveness of our disclosure controls and procedures as of DecemberMarch 31, 2010,2011, pursuant to Exchange Act Rules 13a-15(e) and 15(d)-15(e). Based upon that evaluation, our CEO and CFO have concluded that as of such date, our disclosure controls and procedures in place are effective.

There has been no change in Amtech’s internal control over financial reporting during the first quarter of fiscalthree months ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

*     Filed herewith.