10q10k10q10k.net

What changed in AMTECH SYSTEMS INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of AMTECH SYSTEMS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+283 added−295 removedSource: 10-K (2025-12-10) vs 10-K (2024-12-12)

Top changes in AMTECH SYSTEMS INC's 2025 10-K

283 paragraphs added · 295 removed · 218 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

112 edited+33 added−51 removed89 unchanged
Biggest changeAND SUBSIDIARIES Consolidated Statem ents of Cash Flows (in thousands) Years Ended September 30, 2024 2023 2022 Operating Activities Net (loss) income $ ( 8,486 ) $ ( 12,582 ) $ 17,367 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 3,029 5,012 1,729 Write-down of inventory 2,813 2,620 102 Non-cash intangible asset impairment 7,649 5,189 — Provision for allowance for doubtful accounts 18 14 ( 32 ) Deferred income taxes ( 84 ) ( 2,513 ) 592 Non-cash stock-based compensation expense 1,530 1,272 543 Gain on sale of fixed assets ( 2,197 ) — ( 12,465 ) Other, net — 196 — Changes in operating assets and liabilities: Accounts receivable 4,468 4,410 ( 2,479 ) Inventories 5,135 ( 6,294 ) ( 3,684 ) Contract and other assets 4,773 ( 529 ) ( 2,203 ) Accounts payable ( 4,942 ) 1,459 ( 1,080 ) Accrued income taxes 436 ( 2,897 ) 623 Accrued and other liabilities ( 5,248 ) ( 1,895 ) 584 Contract liabilities 948 ( 1,163 ) 5,607 Net cash provided by (used in) operating activities 9,842 ( 7,701 ) 5,204 Investing Activities Purchases of property, plant and equipment ( 4,878 ) ( 2,898 ) ( 1,135 ) Acquisitions, net of cash and cash equivalents acquired — ( 34,938 ) — Proceeds from sale of property, plant and equipment 2,700 6 19,908 Net cash (used in) provided by investing activities ( 2,178 ) ( 37,830 ) 18,773 Financing Activities Proceeds from the exercise of stock options 85 1,235 720 Repurchase of common stock — — ( 4,115 ) Payments on long-term debt ( 10,671 ) ( 1,497 ) ( 4,872 ) Borrowings on long-term debt 64 12,000 — Payment of payroll taxes on stock-based compensation through shares withheld ( 111 ) — — Net cash (used in) provided by financing activities ( 10,633 ) 11,738 ( 8,267 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents 922 52 ( 1,672 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 2,047 ) ( 33,741 ) 14,038 Cash and Cash Equivalents, Beginning of Year 13,133 46,874 32,836 Cash and Cash Equivalents, End of Year $ 11,086 $ 13,133 $ 46,874 Supplemental Cash Flow Information: Income tax payments, net $ 623 $ 2,818 $ 386 Interest paid $ 558 $ 461 $ 164 Supplemental Non-cash Operating, Financing and Investing Activities: Transfer of inventory to property, plant, and equipment $ 50 $ — $ 169 Transfer of property, plant, and equipment to inventory $ ( 20 ) $ — $ — Payables due for fixed asset additions $ 116 $ 633 $ 152 Return of fixed assets resulting in loan payoff $ — $ 184 $ — Modification of leased assets resulting in a reduction of lease liabilities $ — $ 2,254 $ — Leased assets obtained in exchange for new operating lease liabilities $ 8,160 $ 57 $ 3,686 Leased assets obtained in exchange for new finance lease liabilities $ 207 $ 46 $ 42 The accompanying notes are an integral part of these consolidated financial statements. 56 Notes to Consolidated Financial Statements For the Years Ended September 30, 2024, 2023 and 2022 1.
Biggest changeAND SUBSIDIARIES Consolidated Statem ents of Cash Flows (in thousands) Years Ended September 30, 2025 2024 Operating Activities Net loss $ ( 30,326 ) $ ( 8,486 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 2,742 3,029 Write-down of inventory 6,550 2,813 Goodwill impairment 20,353 6,370 Intangible asset impairment 2,569 1,279 Provision for allowance for doubtful accounts 30 18 Deferred income taxes ( 838 ) ( 84 ) Non-cash stock-based compensation expense 1,229 1,530 Loss (gain) on sale of fixed assets 248 ( 2,197 ) Changes in operating assets and liabilities: Accounts receivable 2,081 4,468 Inventories 1,675 5,135 Contract and other assets 3,470 4,773 Accounts payable 2,238 ( 4,942 ) Accrued income taxes 733 436 Accrued and other liabilities ( 2,373 ) ( 5,248 ) Contract liabilities ( 2,504 ) 948 Net cash provided by operating activities 7,877 9,842 Investing Activities Purchases of property, plant and equipment ( 950 ) ( 4,878 ) Proceeds from sale of property, plant and equipment 38 2,700 Net cash used in investing activities ( 912 ) ( 2,178 ) Financing Activities Proceeds from the exercise of stock options 363 85 Repurchase of common stock — — Payments on long-term debt ( 93 ) ( 10,671 ) Borrowings on long-term debt — 64 Payment of payroll taxes on stock-based compensation through shares withheld — ( 111 ) Net cash provided by (used in) financing activities 270 ( 10,633 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 417 ) 922 Net Increase (Decrease) in Cash and Cash Equivalents 6,818 ( 2,047 ) Cash and Cash Equivalents, Beginning of Year 11,086 13,133 Cash and Cash Equivalents, End of Year $ 17,904 $ 11,086 Supplemental Cash Flow Information: Income tax payments, net $ 1,472 $ 623 Interest paid $ 25 $ 558 Supplemental Non-cash Operating, Financing and Investing Activities: Transfer of inventory to property, plant, and equipment $ — $ 50 Transfer of property, plant, and equipment to inventory $ ( 101 ) $ ( 20 ) Payables due for fixed asset additions $ 257 $ 116 Leased assets obtained in exchange for new operating lease liabilities $ 4,706 $ 8,160 Leased assets obtained in exchange for new finance lease liabilities $ 105 $ 207 The accompanying notes are an integral part of these consolidated financial statements. 53 Notes to Consolidated Financial Statements For the Years Ended September 30, 2025 and 2024 1.
The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.
The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent we believe these assets are more likely than not to be realized.
Determining the fair value of those asset groups involves the use of significant estimates and assumptions, including projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends, and estimated discount rates based on the asset group's weighted average return on assets, as derived from various methods.
Determining the fair value of those asset groups involves the use of significant estimates and assumptions, including projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends, and estimated discount rates based on the asset group's weighted average return on assets, as derived from various methods.
To record revenue properly, we apply the following five steps: 1) Identify the contract with the customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods and services that will be transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2) Identify the performance obligations in the contract Performance obligations are identified based on the goods and services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and (ii) are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises to the customer in the contract.
To record revenue properly, we apply the following five steps: 1) Identify the contract with the customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract 56 has commercial substance, and (iii) we determine that collection of substantially all consideration for goods and services that will be transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2) Identify the performance obligations in the contract Performance obligations are identified based on the goods and services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and (ii) are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises to the customer in the contract.
Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by our performance, (ii) our performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) our performance does not create an asset with an alternative use to the entity and we have an enforceable right to payment for performance completed to date.
Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by our performance, (ii) our performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) our performance 57 does not create an asset with an alternative use to the entity and we have an enforceable right to payment for performance completed to date.
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 80 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.
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.
Under the purchase method of accounting, the purchase price for the acquisition was allocated to the tangible 71 and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired of approximately $ 16.5 million was recorded as goodwill in the Semiconductor Fabrication Solutions segment.
Under the purchase method of accounting, the purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired of approximately $ 16.5 million was recorded as goodwill in the Semiconductor Fabrication Solutions segment.
To determine whether the transfer of the property should be accounted for as a sale, we evaluated whether we transferred control to the third party in accordance with the revenue recognition guidance set forth in ASC 606. The transfer was 58 deemed to be a sale at market terms.
To determine whether the transfer of the property should be accounted for as a sale, we evaluated whether we transferred control to the third party in accordance with the revenue recognition guidance set forth in ASC 606. The transfer was deemed to be a sale at market terms.
Foreign Currency Transactions and Translation – We use the U.S. dollar as our reporting currency. Our operations in the UK, China and other countries are primarily conducted in their functional currencies, the Euro, Renminbi, or the local country currency, respectively.
Foreign Currency Transactions and Translation – We use the U.S. dollar as our reporting currency. Our operations in the UK, China and other countries are primarily conducted in their functional currencies, the Euro, Renminbi, or 59 the local country currency, respectively.
Under this method, we determine deferred tax assets and deferred tax liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to 62 reverse.
Under this method, we determine deferred tax assets and deferred tax liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
The fair value of the intangible assets were estimated using various valuation methodologies, including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy.
The fair value of the intangible assets were estimated using various valuation methodologies, 65 including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy.
Our two reportable segments are as follows: Thermal Processing Solutions (formerly 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.
Our two reportable segments are as follows: Thermal Processing Solutions – 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.
We also utilize the as-invoiced practical expedient in certain 60 cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value provided to the customer.
We also utilize the as-invoiced practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value provided to the customer.
Income Taxes – We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore and the UK, where separate returns are filed.
Income Taxes – We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore, Malaysia and the UK, where separate returns are filed.
Therefore, U.S. federal returns for tax years ending on or a fter September 30, 2021 remain open for examination. In addition, the IRS may adjust attribute c arryforwards utilized in an open year even though the year the attributes originated may be closed. State and foreign statutes are generally 3 to 5 years but vary by jurisdiction.
Therefore, U.S. federal returns for tax years ending on or a fter September 30, 2022 remain open for examination. In addition, the IRS may adjust attribute c arryforwards utilized in an open year even though the year the attributes originated may be closed. State and foreign statutes are generally 3 to 5 years but vary by jurisdiction.
These consumables have a much shorter production period than equipment produced by our other reportable segment. Due to these variations between reportable segments, management determined that disaggregated revenue by reportable segment sufficiently depicts how economic factors affect the nature, amount, timing and uncertainty of our revenue and cash flows. See Note 16 for additional information on our reportable segments.
These consumables have a much shorter production period than equipment produced by our other reportable segment. Due to these variations between reportable segments, management determined that disaggregated revenue by reportable segment sufficiently depicts how economic factors affect the nature, amount, timing and uncertainty of our revenue and cash flows. See Note 15 for additional information on our reportable segments.
The primary driver for this acquisition was to add CMP and wafer cleaning equipment to our existing substrate polishing and wet process chemical offerings. We review goodwill for impairment when events or circumstances indicate the carrying value may not be recoverable. We performed our annual test of goodwill impairment as of September 30.
The primary driver for this acquisition was to add CMP and wafer cleaning equipment to our existing substrate polishing and wet process chemical offerings. We review goodwill for impairment when events or circumstances indicate the carrying value may not be recoverable. We performed our annual test of goodwill impairment as of September 30, 2025 and 2024.
Sale and Lea seback of Real Estate On June 23, 2022, BTU completed the sale and leaseback of its building in 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.
Sale and Leaseback of Real Estate On June 23, 2022, BTU completed the sale and leaseback of its building in 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.
Our remaining performance obligations as of September 30, 2024, have an original duration o f one year or less. Our customers generally have payment terms of 30 - 90 days . We do not have any payment terms that exceed one year from the point we have satisfied the related performance obligations.
Our remaining performance obligations as of September 30, 2025, have an original duration o f one year or less. Our customers generally have payment terms of 30 - 90 days . We do not have any payment terms that exceed one year from the point we have satisfied the related performance obligations.
If we determine that we are not be able to realize our deferred tax assets, we make an adjustment to the deferred tax asset to recognize only the portion of the asset that is more likely than not to be realized by recording a valuation allowance.
If we determine that we are unable to realize our deferred tax assets, we make an adjustment to the deferred tax asset to recognize only the portion of the asset that is more likely than not to be realized by recording a valuation allowance.
The fair value of the intangible assets were estimated using various valuation methodologies, including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy.
The fair value of the intangible assets was estimated using various valuation methodologies, including the multi-period excess earnings method and the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy.
This ASU is effective for our annual periods beginning October 1, 2027, and requires either prospective or retrospective application. We are currently evaluating the impact of this ASU on our disclosures.
This ASU is effective for our annual periods beginning October 1, 2027, and interim periods beginning October 1, 2028, and requires either prospective or retrospective application. We are currently evaluating the impact of this ASU on our disclosures.
Multiples are then selected based on a comparison of the reviewed data to that of the reporting unit and applied to relevant historical and forecasted financial parameters such as levels of revenues, EBITDA, EBIT or other metrics. The calculation of fair value falls under Level 3 of the fair value hierarchy. 11.
Multiples are then selected based on a comparison of the reviewed data to that of the reporting unit and applied to relevant historical and forecasted financial parameters such as levels of revenues, EBITDA, EBIT or other metrics. The calculation of fair value falls under Level 3 of the fair value hierarchy. 67 10.
Changes in demand for our products could result in further write-downs. Other Current Assets – Other current assets consist of vendor deposits and prepaid expenses. No item included in other current assets makes up more than 5 % of total current assets. Property, Plant and Equipment – Property, plant and equipment are recorded at cost upon acquisition.
Changes in demand for our products could result in further write-downs. Other Current Assets – Other current assets consist of vendor deposits and prepaid expenses. No ite m included in other current assets makes up more than 5 % of total current assets. Property, Plant and Equipment – Property, plant and equipment are recorded at cost upon acquisition.
Unless otherwise stated, references to the years 2024, 2023 and 2022 relate to the fiscal years ended September 30, 2024, 2023 and 2022 , respectively. Principles of Consolidation – The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Unless otherwise stated, references to the years 2025 and 2024 relate to the fiscal years ended September 30, 2025 and 2024, respectively. Principles of Consolidation – The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of Amtech and our subsidiaries. 75 12.
These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of Amtech and our subsidiaries. 11.
Bene fit Plans We have retirement plans covering substantially all our employees. The principal plans are our defined contribution plan that covers substantially all of our employees in the United States and the multi-employer pension plan for hourly union employees in Pennsylvania.
Benefit Plans We have retirement plans covering substantially all our employees. The principal plans are our defined contribution plan that covers substantially all of our employees in the United States and the multi-employer pension plan for hourly union employees in Pennsylvania.
We maintain our cash and cash equivalents in multiple financial institutions. Balances in the United States, which account for approximately 66 % and 56 % of total cash balances as of September 30, 2024 and 2023, respectively, are primarily invested in financial institutions insured by the FDIC as well as a money market account.
We maintain our cash and cash equivalents in multiple financial institutions. Balances in the United States, which account for approximately 75 % and 66 % of total cash balances as of September 30, 2025 and 2024, respectively, are primarily invested in financial institutions insured by the FDIC as well as a money market account.
This sale-leaseback transaction resulted in a net cash inflow of approximately $ 14.9 million in 2022, after repayment of the existing mortgage and settlement of related sale expenses. The leaseback ended in the third quarter of 2024. 68 8.
This sale-leaseback transaction resulted in a net cash inflow of approximately $ 14.9 million in 2022, after repayment of the existing mortgage and settlement of related sale expenses. The leaseback ended in the third quarter of 2024. 63 7 .
These amounts generally arise from variances between the contractual payment terms and the transaction price assigned to the open performance obligations (e.g., we have recognized revenue in an amount greater than the amount that is billable under the contract). There wer e no co ntract assets at September 30, 2024 and 2023 .
These amounts generally arise from variances between the contractual payment terms and the transaction price assigned to the open performance obligations (e.g., we have recognized revenue in an amount greater than the amount that is billable under the contract). There wer e no contrac t assets at September 30, 2025 and 2024 .
Go odwill The changes in the carrying amount of goodwill, by reportable segment, are as follows, in thousands: Thermal Processing Solutions Semiconductor Fabrication Solutions Total Goodwill Goodwill $ 5,905 $ 21,726 $ 27,631 Accumulated impairment losses — — — Balance at September 30, 2023 5,905 21,726 27,631 Goodwill acquired — — — Impairment of goodwill — ( 6,370 ) ( 6,370 ) Balance at September 30, 2024 $ 5,905 $ 15,356 $ 21,261 Goodwill $ 5,905 $ 21,726 $ 27,631 Accumulated impairment losses — ( 6,370 ) ( 6,370 ) Balance at September 30, 2024 $ 5,905 $ 15,356 $ 21,261 On January 17, 2023, we acquired Entrepix, which has been integrated into our Semiconductor Fabrication Solutions segment.
Goodwill The changes in the carrying amount of goodwill, by reportable segment, are as follows, in thousands: Thermal Processing Solutions Semiconductor Fabrication Solutions Total Goodwill Goodwill $ 5,905 $ 21,726 $ 27,631 Accumulated impairment losses — ( 6,370 ) ( 6,370 ) Balance at September 30, 2024 5,905 15,356 21,261 Goodwill acquired — — — Impairment of goodwill ( 4,997 ) ( 15,356 ) ( 20,353 ) Balance at September 30, 2025 $ 908 $ — $ 908 Goodwill $ 5,905 $ 15,356 $ 21,261 Accumulated impairment losses ( 4,997 ) ( 15,356 ) ( 20,353 ) Balance at September 30, 2025 $ 908 $ — $ 908 On January 17, 2023, we acquired Entrepix, which has been integrated into our Semiconductor Fabrication Solutions segment.
Level 2 – Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 2 – Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. 60 Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market.
In the first quarter of the year ended September 30, 2024 and the fourth quarter of the year ended September 30, 2023, we recorded an impairment of definite lived intangible assets in our Semiconductor Fabrication Solutions segment. See Note 9 for a description of the facts and circumstances leading to the intangible asset impairment.
In the second quarter of the year ended September 30, 2025 and first quarter of the year ended September 30, 2024, we recorded an impairment of definite lived intangible assets in our Semiconductor Fabrication Solutions segment. See Note 8 for a description of the facts and circumstances leading to the intangible asset impairment.
Geograph ic Regions We have operations in the United States and China, as well as satellite offices in Europe and Asia.
Geographic Regions We have operations in the United States and China, as well as satellite offices in Europe and Asia.
Except as discussed below, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of intangible assets below their carrying value.
Except as discussed below, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of intangible assets below their carrying value. At the end of December 2023, we identified a triggering event.
As of September 30, 2024, one Thermal Processing Solutions customer individually represe nted 12 % of accounts receivable. As of September 30, 2023 , two Thermal Processing Solutions customers individually represented 17 % and 17 % of accounts receivable. Refer to Note 18 for information regarding revenue and assets in other countries subject to fluctuation in foreign currency exchange rates.
As of September 30, 2025, two Thermal Processing Solutions customers individually represented 15 % and 13 % of accounts receivable. As of September 30, 2024 , one Thermal Processing Solutions customer represented 12 % of accounts receivable. Refer to Note 17 for information regarding revenue and assets in other countries subject to fluctuation in foreign currency exchange rates.
This test indicted that the undiscounted cash flows were not sufficient to recover the carrying value of certain asset groups. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to determine if impairment existed.
This test indicated that the undiscounted cash flows were not sufficient to recover the carrying value of certain asset groups within our Semiconductor Fabrication Solutions segment. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to determine if impairment existed.
Finance Lease Obligations Our finance lease obligations totaled $ 0.3 million and $ 0.1 million as of September 30, 2024 and September 30, 2023, respectively.
Finance Lease Obligations Our finance lease obligations totaled $ 0.3 million as of September 30, 2025 and September 30, 2024, respectively.
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 Consolidated Balance Sheets as of September 30, 2024 and 2023. 77 13.
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 Consolidated Balance Sheets as of September 30, 2025 and 2024. 12.
The remainder of our cash is maintained with financial institutions with reputable credit in China, Singapore, the UK and Malaysia. We maintain cash in bank accounts in amounts which at times may exceed federally insured limits. At September 30, 2024 and 2023, account balances exceeded insured limits by approximatel y $ 5.7 million and $ 6.0 million, respectively.
The remainder of our cash is maintained with financial institutions with reputable credit in China, Singapore, the UK and Malaysia. We maintain cash in bank accounts in amounts which at times may exceed federally insured limits. At September 30, 2025 and 2024, account balances exceeded insured limits by approximately $ 12.0 million a nd $ 5.7 million, respectively.
Intangible Assets – Intangible assets acquired in business combinations are capitalized and subsequently amortized on a straight-line basis over their estimated useful life. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable.
We then accounted for the leaseback in accordance with our lease accounting policy. Intangible Assets – Intangible assets acquired in business combinations are capitalized and subsequently amortized on a straight-line basis over their estimated useful life. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable.
(2) The aggregate fair value of the nonvested RSU's and represents the total pre-tax fair value, based on our closing stock price of $ 5.80 as of September 30, 2024, the last trading day of our fiscal year, which would have been received by holders of RSU's had all such holders sold their underlying shares on that date. 14.
(2) The aggregate fair value of the nonvested RSU's and represents the total pre-tax fair value, based on our closing stock price o f $ 9.26 as of September 30, 2025, the last trading day of our fiscal year, which would have been received by holders of RSU's had all such holders sold their underlying shares on that date. 13.
Our customer relationship and trade name intangible assets are amortized over weighted-average amortization periods of 4.6 and 3.4 years, respectively. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable.
Our customer relationship and trade name intangible assets are amortized over weighted-average amortization periods of 2.0 and 4.5 y ears, respectively. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable.
If it is concluded that there is 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).
If it is concluded that there is 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). We have determined that our reporting units are the same as our reporting segments.
The fair value for the Loan Agreement was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and is therefore classified as Level 2 in the fair value hierarchy.
The carrying value of debt under our Loan Agreement was based on fixed interest rates. The fair value for the Loan Agreement was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and is therefore classified as Level 2 in the fair value hierarchy.
Intangib le Assets Intangible assets consist of the following, in thousands: September 30, Amortization Period 2024 2023 Backlog 1 year $ 2,100 $ 2,100 Customer relationships 6 - 10 years 4,409 4,409 Developed technology 1.75 years 6,700 6,700 Noncompetition agreements 5 years 200 200 Trade names 3 - 15 years 2,679 2,679 16,088 16,088 Accumulated amortization ( 5,616 ) ( 4,785 ) Less asset impairments: Backlog ( 425 ) ( 425 ) Customer relationships ( 339 ) ( 119 ) Developed technology ( 5,494 ) ( 4,645 ) Noncompetition agreements ( 160 ) — Trade names ( 50 ) — Intangible assets, net $ 4,004 $ 6,114 Intangible assets are amortized over a weighted-average amortization period of 8.0 years.
Intangible Assets Intangible assets consist of the following, in thousands: September 30, Amortization Period 2025 2024 Backlog 1 year $ — $ 2,100 Customer relationships 6 - 10 years 4,409 4,409 Developed technology 1.75 years — 6,700 Noncompetition agreements 5 years — 200 Trade names 3 - 15 years 2,679 2,679 7,088 16,088 Accumulated amortization ( 3,039 ) ( 5,616 ) Less asset impairments: Backlog — ( 425 ) Customer relationships ( 2,111 ) ( 339 ) Developed technology — ( 5,494 ) Noncompetition agreements — ( 160 ) Trade names ( 847 ) ( 50 ) Intangible assets, net $ 1,091 $ 4,004 Intangible assets are amortized over a weighted-average amortization period of 6.5 years.
It is not practicable to estimate the amount of tax that might be payable on the undistributed amounts. 74 Net Operating Losses As of September 30, 2024, we ha ve federal net operating loss carryforwards of approximately $ 10.0 million that expire at various times between 2032 and 2035 .
It is not practicable to estimate the amount of tax that might be payable on the undistributed amounts. 69 Net Operating Losses As of September 30, 2025, w e have federal net operating loss carryforwards of approximately $ 10.0 million that expire at various times between 2032 and 2035 .
The plan was also amended in 2020 to extend the term of the plan. Upon the adoption of the 2022 Plan as stated above, no further awards will be granted from the Non-Employee Directors Stock Option Plan. Previously issued awards will remain outstanding in accordance with their terms.
The plan was also amended in 2020 to extend the term of the plan. Upon the adoption of the 2022 Plan as stated above, no further awards will be granted from the Non-Employee Directors Stock Option Plan.
This triggering event indicated we should test the related long-lived assets for impairment in our Semiconductor Fabrication Solutions segment. We tested each identified asset group within our Semiconductor Fabrication Solutions segment by first performing a recoverability test, comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value.
Prior to recognizing any impairment of goodwill, we tested the related long-lived assets for impairment in our Semiconductor Fabrication Solutions and Thermal Processing Solutions segments. We tested each identified asset group within each segment by first performing a recoverability test, comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value.
Annual maturities relating to our long-term debt as of September 30, 2024 are as follows, in thousands: Annual Maturities 2025 $ 101 2026 109 2027 75 2028 5 2029 — Thereafter — Total long-term debt $ 290 Loan and Security Agreement On January 17, 2023, we entered into a Loan and Security Agreement (the “Loan Agreement”) 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.
Annual maturities relating to our long-term debt as of September 30, 2025 are as follows, in thousands: Annual Maturities 2026 $ 126 2027 101 2028 27 2029 21 2030 19 Thereafter — Total long-term debt $ 294 70 Loan and Security Agreement On January 17, 2023, we entered into a Loan and Security Agreement (the “Loan Agreement”) among Amtech, its U.S. based wholly owned subsidiaries Bruce Technologies, Inc., BTU International, Inc., Intersurface Dynamics, Incorporated, P.R.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
We are currently evaluating the impact of this ASU on our disclosures. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
Advertising Expense – Advertising costs are expensed as incurred. Advertising expenses wer e $ 0.5 million, $ 0.6 million and $ 0.4 million for 2024, 2023 and 2022 , respectively, and are included in selling, general and administrative expenses. Stock-Based Compensation – We measure compensation costs relating to share-based payment transactions based upon the grant-date fair value of the award.
Advertising expense s were $ 0.4 million and $ 0.5 million for 2025 and 2024 , respectively, and are included in selling, general and administrative expenses. Stock-Based Compensation – We measure compensation costs relating to share-based payment transactions based upon the grant-date fair value of the award.
The utilization of those federal net operating losses is limited to approximately $ 0.8 million per year. Additionally, we have federal net operating loss carryforwards of approximately $ 69.4 million that have an indefi nite carryforward period. The utilization of those federal net operating losses is limited to 80 % of taxable income after 2021.
The utilization of those federal net operating losses is limited to approximately $ 0.8 million per year. Additionally, we have federal net operating loss carryforwards of approximately $ 74.3 million that have an indefinite carryforward period. The utilization of those federal net operating losses is limited to 80 % of taxable income.
Seve rance In 2024, we recorded severance expense of $ 0.4 million. This related primarily to staff reductions across our locations as we shifted more work to contract manufacturers and dealt with decreasing demand. We recorded severance expense of $ 0.7 million in 2023. This charge primarily relates to the retirement of our founder.
Severance In 2025 and 2024, we recorded severance expense of $ 0.7 million and $ 0.4 million, respectively. This related primarily to staff reductions across our locations as we shifted more work to contract manufacturers and dealt with decreasing demand.
Therefore, we recognized the transaction price for the sale based on the cash proceeds received, derecognized the carrying amount of the underlying assets and recognized a gain in the Consolidated Statements of Operations for the difference between the carrying value of the asset and the transaction price. We then accounted for the leaseback in accordance with our lease accounting policy.
Therefore, we recognized the transaction price for the sale based on the cash 55 proceeds received, derecognized the carrying amount of the underlying assets and recognized a gain in the Consolidated Statements of Operations for the difference between the carrying value of the asset and the transaction price.
The agreement was renewed in 2022 for a three-year term that expires September 30, 2025 . Every company participating in the plan pays a contribution per hour worked for each employee of the company that is eligible to participate in the NIGPP.
The agreement was renewed in 2025 for a three-year term that expires September 30, 2028 . Every company participating in the plan pays a contribution per hour worked for each employee of the company that is eligible to participate in the NIGPP. Our contributions to the NIGPP were $ 30,000 and $ 35,000 in 2025 and 2024, respectively. 14.
The following table summarizes our RSU activity during the year ended September 30, 2024: Number Weighted Average Grant Date Fair Value Fair Value Nonvested at beginning of year 75,977 $ 9.15 Granted 24,897 4.82 120,004 Vested, including shares withheld to cover taxes ( 75,977 ) 9.15 695,022 (1) Forfeited — — Nonvested at end of period 24,897 $ 4.82 $ 144,403 (2) (1) The aggregate fair value of vested RSU's represent the total pre-tax fair value, based on the closing stock price on the day of vesting, which would have been received by holders of RSU's had all such holders sold their underlying shares on that date.
The following table summarizes our RSU activity during the year ended September 30, 2025: Number Weighted Average Grant Date Fair Value Fair Value Nonvested at beginning of year 24,897 $ 4.82 Granted 207,524 4.98 1,033,470 Vested, including shares withheld to cover taxes ( 24,897 ) 4.82 120,004 (1) Forfeited ( 39,500 ) 4.99 197,105 Nonvested at end of period 168,024 $ 4.98 $ 1,555,902 (2) (1) The aggregate fair value of vested RSU's represent the total pre-tax fair value, based on the closing stock price on the day of vesting, which would have been received by holders of RSU's had all such holders sold their underlying shares on that date.
Our goodwill impairment test uses a weighting of the income approach and the market approach to estimate a reporting unit’s fair value.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. Our goodwill impairment test uses a weighting of the income approach and the market approach to estimate a reporting unit’s fair value.
Stock-Based Compensation Expense Stock-based compensation expenses of $ 1.5 million, $ 1.3 million and $ 0.5 million for 2024, 2023 and 2022, respectively, are included in selling, general and administrative expenses.
Equity and Stock-Based Compensation Stock-Based Compensation Expense Stock-based compensation expenses of $ 1.2 million and $ 1.5 million for 2025 and 2024, respectively, are included in selling, general and administrative expenses.
As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $ 6.4 million impairment charge in fiscal 2024. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions.
As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $ 6.4 million impairment charge in fiscal 2024.
We h ave no foreign net operating loss carryforwards as of September 30, 2024. We have approximate ly $ 16.7 million of state net operating loss carryforwards, with various expiration dates and limitations on utilization, depending on the state.
We h ave no foreign net operating loss carryforwards as of September 30, 2025. We have approxi mately $ 19.1 million of state net operating loss carryforwards, with various expiration dates and limitations on utilization, depending on the state.
In the case of a net loss, diluted EPS is calculated in the same manner as basic EPS. For the years 2024, 2023 and 2022 , 798,000 , 327,000 and 189,000 weighted average shares, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive.
In the case of a net loss, diluted EPS is calculated in the same manner as basic EPS. For the years 2025 and 2024 , 939,000 and 798,000 weighted average shares, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive. These share-based awards could become dilutive in the future.
As of September 30, 2024, total compensation cost related to non-vested stock options not yet recognized is $ 1.3 million, which is expected to be recognized over the next 1.33 years on a weighted-average basis.
As of September 30, 2025, total compensation cost related to non-vested stock options not yet recognized i s $ 0.4 million, which is expected to be recognized over the next 1.07 y ears on a weighted-average basis.
The match expense w as $ 0.4 m illion, $ 0.5 million and $ 0.4 million in 2024, 2023 and 2022, respectively. Pension Plan – Our hourly union employees in Pennsylvania participate in a multi-employer pension plan, the NIGPP, in accordance with the union agreement between PR Hoffman and the United Automobile, Aerospace and Agriculture Implement Workers of America.
The matc h expense was $ 0.3 million a nd $ 0.4 million in 2025 and 2024, respectively. 73 Pension Plan – Our hourly union employees in Pennsylvania participate in a multi-employer pension plan, the NIGPP, in accordance with the union agreement between PR Hoffman and the United Automobile, Aerospace and Agriculture Implement Workers of America.
As of September 30, 2024, total compensation cost related to nonvested RSUs not yet recognized is $ 0.1 million, which is expected to be recognized over the next year.
As of September 30, 2025, total compensation cost related to nonvested RSUs not yet recognized i s $ 0.6 million, which is expected to be recognized over the next 2.08 years.
These share-based awards could become dilutive in the future. 66 A reconciliation of the denominators of the basic and diluted EPS calculations follows, in thousands, except per share amounts: Years Ended September 30, 2024 2023 2022 Numerator: Net (loss) income $ ( 8,486 ) $ ( 12,582 ) $ 17,367 Denominator: Weighted-average shares used to compute basic EPS 14,208 14,065 14,014 Dilutive potential common shares due to stock options (1) — — 170 Dilutive potential common shares due to RSUs (1) — — — Weighted-average shares used to compute diluted EPS 14,208 14,065 14,184 (Loss) Income per share: Net (loss) income per basic share $ ( 0.60 ) $ ( 0.89 ) $ 1.24 Net (loss) income per diluted share $ ( 0.60 ) $ ( 0.89 ) $ 1.22 (1) The number of common stock equivalents is calculated using the treasury stock method and the average market price during the period. 4.
A reconciliation of the denominators of the basic and diluted EPS calculations follows, in thousands, except per share amounts: Years Ended September 30, 2025 2024 Numerator: Net loss $ ( 30,326 ) $ ( 8,486 ) Denominator: Weighted-average shares used to compute basic EPS 14,302 14,208 Dilutive potential common shares due to stock options (1) — — Dilutive potential common shares due to RSUs (1) — — Weighted-average shares used to compute diluted EPS 14,302 14,208 Loss per share: Net loss per basic share $ ( 2.12 ) $ ( 0.60 ) Net loss per diluted share $ ( 2.12 ) $ ( 0.60 ) (1) The number of common stock equivalents is calculated using the treasury stock method and the average market price during the period. 3.
To the extent a contract includes multiple promised goods and services, we must apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract.
To the extent a contract includes multiple promised goods and services, we must apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.
AND SUBSIDIARIES Consolidated Statements of C omprehensive Income (Loss) (in thousands) Years Ended September 30, 2024 2023 2022 Net (loss) income $ ( 8,486 ) $ ( 12,582 ) $ 17,367 Foreign currency translation adjustment 975 72 ( 1,781 ) Comprehensive (loss) income $ ( 7,511 ) $ ( 12,510 ) $ 15,586 The accompanying notes are an integral part of these consolidated financial statements. 54 AMTECH SYSTEMS, INC.
AND SUBSIDIARIES Consolidated Statements of C omprehensive Income (Loss) (in thousands) Years Ended September 30, 2025 2024 Net loss $ ( 30,326 ) $ ( 8,486 ) Foreign currency translation adjustment ( 239 ) 975 Comprehensive loss $ ( 30,565 ) $ ( 7,511 ) The accompanying notes are an integral part of these consolidated financial statements. 51 AMTECH SYSTEMS, INC.
Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of discounted cash flow models and similar techniques. It is our policy to use observable inputs whenever reasonably practicable in order to minimize the use of unobservable inputs when developing fair value measurements.
Valuation techniques include use of discounted cash flow models and similar techniques. It is our policy to use observable inputs whenever reasonably practicable in order to minimize the use of unobservable inputs when developing fair value measurements. When available, we use quoted market prices to measure fair value.
Equity compensation plans as of September 30, 2024 are summarized in the table below: Name of Plan Shares Authorized Shares Available for Grant Options Outstanding Unvested RSUs Outstanding Plan Expiration 2022 Plan 1,000,000 22,871 851,250 24,897 Mar. 2032 2007 Plan 3,000,000 — 151,766 — Mar. 2024 Non-Employee Directors Stock Option Plan 500,000 — 84,000 — Mar. 2024 22,871 1,087,016 24,897 78 Stock Options Stock options issued under the terms of our equity compensation plans have, or will have, an exercise price equal to or greater than the fair market value of the common stock at the date of the option grant and expire no later than 10 years from the date of grant.
Previously issued awards will remain outstanding in accordance with their terms. 71 Equity compensation plans as of September 30, 2025 are summarized in the table below: Name of Plan Shares Authorized Shares Available for Grant Options Outstanding Unvested RSUs Outstanding Plan Expiration 2022 Plan 1,000,000 825,647 821,116 168,024 Mar. 2032 2007 Plan 3,000,000 — 44,625 — Mar. 2024 Non-Employee Directors Stock Option Plan 500,000 — 54,000 — Mar. 2024 825,647 919,741 168,024 Stock Options Stock options issued under the terms of our equity compensation plans have, or will have, an exercise price equal to or greater than the fair market value of the common stock at the date of the option grant and expire no later than 10 years from the date of grant.
The components of deferred tax assets and deferred tax liabilities are as follows, in thousands: September 30, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 17,699 $ 17,112 Accruals and reserves 1,983 2,865 Income tax credits 2,163 1,618 Operating lease liabilities 4,150 2,719 Research and development costs 1,531 1,011 Foreign service fee 1,579 1,579 Other assets 878 731 Total deferred tax assets 29,983 27,635 Valuation allowance ( 22,658 ) ( 21,506 ) Deferred tax assets, net of valuation allowance 7,325 6,129 Deferred tax liabilities: Goodwill and identifiable intangible assets ( 1,124 ) ( 1,616 ) Property and equipment, net ( 1,860 ) ( 1,356 ) Operating lease, right-of-use assets ( 3,987 ) ( 2,720 ) Prepaid assets ( 169 ) ( 336 ) Total deferred tax liabilities ( 7,140 ) ( 6,028 ) Total deferred tax assets, net $ 185 $ 101 Changes in the deferred tax valuation allowance are as follows, in thousands: Years Ended September 30, 2024 2023 Balance at the beginning of the year $ 21,506 $ 20,000 Additions to valuation allowance 1,152 1,506 Balance at the end of the year $ 22,658 $ 21,506 The deferred tax valuation allowance increased by $ 1.2 million and $ 1.5 million for the years ended September 30, 2024 and 2023, respectively.
The components of deferred tax assets and deferred tax liabilities are as follows, in thousands: September 30, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 18,785 $ 17,699 Accruals and reserves 2,653 1,983 Income tax credits 3,255 2,163 Operating lease liabilities 4,361 4,150 Research and development costs 1,427 1,531 Foreign service fee 745 1,579 Other assets 940 878 Total deferred tax assets 32,166 29,983 Valuation allowance (25,088 ) ( 22,658 ) Deferred tax assets, net of valuation allowance 7,078 7,325 Deferred tax liabilities: Goodwill and identifiable intangible assets ( 212 ) ( 1,124 ) Property and equipment, net ( 1,494 ) ( 1,860 ) Operating lease, right-of-use assets ( 4,136 ) ( 3,987 ) Prepaid assets ( 213 ) ( 169 ) Total deferred tax liabilities ( 6,055 ) ( 7,140 ) Total deferred tax assets, net $ 1,023 $ 185 Changes in the deferred tax valuation allowance are as follows, in thousands: Years Ended September 30, 2025 2024 Balance at the beginning of the year $ 22,658 $ 21,506 Additions to valuation allowance 2,430 1,152 Balance at the end of the year $ 25,088 $ 22,658 The deferred tax valuation allowance increased by $ 2.4 million and $ 1.2 million for the years ended September 30, 2025 and 2024, respectively.
Future amortization expense for the remaining unamortized balance as of September 30, 2024 is estimated as follows, in thousands: Years Ending September 30, Amortization Expense 2025 $ 511 2026 511 2027 511 2028 511 2029 511 Thereafter 1,449 Total $ 4,004 10.
Future amortization expense for the remaining unamortized balance as of September 30, 2025 is estimated as follows, in thousands: Years Ending September 30, Amortization Expense 2026 $ 177 2027 177 2028 177 2029 177 2030 138 Thereafter 245 Total $ 1,091 66 9 .
The following is a summary of the activity in our allowance for credit losses, in thousands: Years Ended September 30, 2024 2023 2022 Balance at beginning of year $ 146 $ 114 $ 188 Acquired allowance — 125 — Provision 18 14 ( 34 ) Write offs ( 48 ) ( 114 ) 6 Adjustment (1) ( 13 ) 7 ( 46 ) Balance at end of year $ 103 $ 146 $ 114 (1) Primarily foreign currency translation adjustments. 57 Our net accounts receivable as of September 30, 2024, 2023 and 2022 w as $ 22.0 m illion, $ 26.5 million and $ 25.0 million, respectively.
The following is a summary of the activity in our allowance for credit losses, in thousands: Years Ended September 30, 2025 2024 Balance at beginning of year $ 103 $ 146 Provision 30 18 Write offs 1 ( 48 ) Adjustment (1) ( 21 ) ( 13 ) Balance at end of year $ 113 $ 103 (1) Primarily foreign currency translation adjustments. 54 Our net accounts receivable as of September 30, 2025 and 2024 was $ 19.9 million and $ 22.0 million, respectively.
Hoffman Machine Products, Inc., an Arizona corporation, and Entrepix, Inc., an Arizona corporation (collectively the “Borrowers”) and UMB Bank, N.A., national banking association (the “Lender”).
Hoffman Machine Products, Inc., and Entrepix, Inc., and UMB Bank, N.A., national banking association.
The percentages of our net revenues were to customers in the following geographic regions: Years Ended September 30, 2024 2023 2022 United States 39 % 39 % 27 % Canada 1 % 6 % 3 % Mexico 1 % 1 % 2 % Other — % 2 % 4 % Total Americas 41 % 48 % 36 % China 20 % 14 % 17 % Malaysia 12 % 6 % 7 % Taiwan 8 % 5 % 14 % Other 3 % 6 % 6 % Total Asia 43 % 31 % 44 % Czech Republic 3 % 5 % — % Austria 1 % 4 % 10 % Germany 6 % 2 % 4 % Other 6 % 10 % 6 % Total Europe 16 % 21 % 20 % 100 % 100 % 100 % 82 18.
Major Customers and Sales by Country In 2025 and 2024 no customers accounted for 10% of net revenues. 76 The percentages of our net revenues were to customers in the following geographic regions: Years Ended September 30, 2025 2024 United States 27 % 39 % Canada 1 % 1 % Mexico 1 % 1 % Other 1 % — % Total Americas 30 % 41 % China 22 % 20 % Malaysia 7 % 12 % Taiwan 19 % 8 % Singapore 2 % 1 % Other 5 % 2 % Total Asia 55 % 43 % Czech Republic 2 % 3 % United Kingdom 2 % 1 % Hungary 2 % — % Austria — % 1 % Germany 2 % 6 % Other 7 % 5 % Total Europe 15 % 16 % 100 % 100 % 17.
Therefore, future profitability and growth depend on our ability to develop or acquire and market profitable new products and on our ability to adapt to cyclical trends. Our fiscal year is from October 1 to September 30.
We serve niche markets in industries that are experiencing technological advances, and which historically have been very cyclical. Therefore, future profitability and growth depend on our ability to develop or acquire and market profitable new products and on our ability to adapt to cyclical trends. Our fiscal year is from October 1 to September 30.
Property, Plan t and Equipment The following is a summary of property, plant and equipment, in thousands: September 30, 2024 2023 Land $ — $ 189 Buildings — 717 Building and leasehold improvements 5,985 2,881 Equipment and machinery 9,928 9,200 Furniture and fixtures 2,588 3,160 Software 1,986 1,970 20,487 18,117 Accumulated depreciation and amortization ( 8,840 ) ( 8,422 ) $ 11,647 $ 9,695 Depreciation wa s $ 2.1 mil lion, $ 1.9 million and $ 1.6 million in 2024, 2023 and 2022 , respectively. 7.
Property, Plant and Equipment The following is a summary of property, plant and equipment, in thousands: September 30, 2025 2024 Building and leasehold improvements $ 6,244 $ 5,985 Equipment and machinery 9,093 9,928 Furniture and fixtures 3,506 2,588 Software 1,986 1,986 20,829 20,487 Accumulated depreciation and amortization ( 10,602 ) ( 8,840 ) $ 10,227 $ 11,647 Depreciation wa s $ 2.3 million and $ 2.1 million in 2025 and 2024 , respectively. 6.
In come Taxes Income Tax (Benefit) Provision The components of (loss) income before (benefit) provision for income taxes are as follows, in thousands: Years Ended September 30, 2024 2023 2022 Domestic $ ( 9,563 ) $ ( 17,271 ) $ 15,275 Foreign 2,052 2,089 3,510 $ ( 7,511 ) $ ( 15,182 ) $ 18,785 72 The components of the (benefit) provision for income taxes are as follows, in thousands: Years Ended September 30, 2024 2023 2022 Current: Domestic federal $ ( 49 ) $ — $ — Foreign 793 ( 327 ) 711 Foreign withholding taxes 279 159 255 Domestic state 36 81 77 Total current 1,059 ( 87 ) 1,043 Deferred: Domestic federal — ( 2,207 ) ( 39 ) State — ( 284 ) — Foreign ( 84 ) ( 22 ) 414 Total deferred ( 84 ) ( 2,513 ) 375 Total provision (benefit) $ 975 $ ( 2,600 ) $ 1,418 A reconciliation of actual income taxes to income taxes at the expected U.S. federal corporate income tax rate is as follows, in thousands, except percentages: Years Ended September 30, 2024 2023 2022 Tax (benefit) expense at the federal statutory rate $ ( 1,577 ) 21.0 % $ ( 3,188 ) 21.0 % $ 3,945 21.0 % Effect of permanent book-tax differences 152 - 2.0 % 757 - 5.0 % 11 0.1 % State tax provision 18 - 0.3 % ( 395 ) 2.6 % 554 2.9 % Valuation allowance for net deferred tax assets 1,179 - 15.7 % 1,594 - 10.5 % ( 3,138 ) - 16.7 % Uncertain tax items — 0.0 % ( 1,004 ) 6.6 % 55 0.3 % Tax rate differential 580 - 7.7 % 358 - 2.4 % 535 2.8 % Goodwill impairment 1,334 - 17.8 % — 0.0 % — 0.0 % Other items ( 711 ) 9.5 % ( 722 ) 4.8 % ( 544 ) - 2.9 % $ 975 - 13.0 % $ ( 2,600 ) 17.1 % $ 1,418 7.5 % 73 Deferred Income Taxes and Valuation Allowance Deferred income taxes reflect the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to be realized.
Income Taxes Income Tax (Benefit) Provision The components of (loss) income before (benefit) provision for income taxes are as follows, in thousands: Years Ended September 30, 2025 2024 Domestic $ ( 32,790 ) $ ( 9,563 ) Foreign 4,798 2,052 $ ( 27,992 ) $ ( 7,511 ) The components of the provision for income taxes are as follows, in thousands: Years Ended September 30, 2025 2024 Current: Domestic federal $ 56 $ ( 49 ) Foreign 2,295 793 Foreign withholding taxes 814 279 Domestic state 19 36 Total current 3,184 1,059 Deferred: Domestic federal — — State — — Foreign ( 850 ) ( 84 ) Total deferred ( 850 ) ( 84 ) Total provision $ 2,334 $ 975 A reconciliation of actual income taxes to income taxes at the expected U.S. federal corporate income tax rate is as follows, in thousands, except percentages: Years Ended September 30, 2025 2024 Tax (benefit) expense at the federal statutory rate $ ( 5,878 ) 21.0 % $ ( 1,577 ) 21.0 % Effect of permanent book-tax differences 101 - 0.4 % 152 - 2.0 % State tax provision ( 168 ) 0.6 % 18 - 0.3 % Valuation allowance for net deferred tax assets 2,496 - 8.9 % 1,179 - 15.7 % Tax rate differential 279 - 1.0 % 301 - 4.0 % Goodwill impairment 4,089 - 14.6 % 1,334 - 17.8 % Withholding taxes 814 - 2.9 % 279 - 3.7 % Other items 601 - 2.1 % ( 711 ) 9.5 % $ 2,334 - 8.3 % $ 975 - 13.0 % 68 Deferred Income Taxes and Valuation Allowance Deferred income taxes reflect the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to be realized.
We estimated the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model using the following assumptions: Years Ended September 30, 2024 2023 2022 Risk free interest rate 4 % 4 % 2 % Expected life 5 years 5 years 5 years Dividend rate 0 % 0 % 0 % Volatility 60 % 56 % 57 % The following table summarizes our stock option activity : Years Ended September 30, 2024 2023 2022 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of period 672,924 $ 8.76 589,341 $ 8.06 608,269 $ 6.48 Granted 620,500 $ 5.66 322,500 $ 9.04 135,500 $ 12.80 Exercised ( 15,000 ) $ 5.67 ( 168,318 ) $ 6.01 ( 124,475 ) $ 5.78 Forfeited/expired ( 191,408 ) $ 9.12 ( 70,599 ) $ 10.73 ( 29,953 ) $ 6.92 Outstanding at end of period 1,087,016 $ 6.97 672,924 $ 8.76 589,341 $ 8.06 Exercisable at end of period 532,185 $ 7.64 374,728 $ 8.25 358,343 $ 6.92 Weighted average grant-date fair value of options granted during the period $ 2.50 $ 4.73 $ 6.39 The following table summarizes information for stock options outstanding and exercisable as of September 30, 2024: Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Remaining Contractual Life (in years) Weighted Average Exercise Price Per Share Number Exercisable Weighted Average Exercise Price Per Share $ 4.32 -$ 4.70 8,000 9.41 $ 4.51 — $ — $ 4.73 -$ 4.73 109,500 9.45 $ 4.73 — $ — $ 4.77 -$ 5.52 118,233 4.62 $ 5.15 88,233 $ 5.08 $ 5.67 -$ 5.91 93,541 5.88 $ 5.76 63,541 $ 5.69 $ 6.00 -$ 6.00 400,000 4.42 $ 6.00 133,334 $ 6.00 $ 6.58 -$ 8.82 81,750 6.87 $ 8.21 52,250 $ 8.06 $ 9.00 -$ 9.00 150,000 8.87 $ 9.00 100,001 $ 9.00 $ 9.27 -$ 10.22 76,000 7.26 $ 9.61 50,167 $ 9.78 $ 11.51 -$ 11.51 12,000 6.48 $ 11.51 12,000 $ 11.51 $ 15.43 -$ 15.43 37,992 5.90 $ 15.43 32,659 $ 15.43 $ 4.32 -$ 15.43 1,087,016 6.18 $ 6.97 532,185 $ 7.64 The aggregate intrinsic values of options outstanding and options exercisable as of September 30, 2024 were approximate ly $ 0.2 million and $ 0.1 milli on, respectively, which represents the total pre-tax intrinsic value, based on our closing stock price of $ 5.80 per s hare as of September 30, 2024, the last business day of our fiscal year, which would have been received by the option holders had all option holders exercised their options as of that date.
We estimated the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model using the following assumptions: Years Ended September 30, 2025 2024 Risk free interest rate 4 % 4 % Expected life 5 years 5 years Dividend rate 0 % 0 % Volatility 60 % 60 % The following table summarizes our stock option activity : Years Ended September 30, 2025 2024 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of period 1,087,016 $ 6.97 672,924 $ 8.76 Granted 120,000 $ 5.14 620,500 $ 5.66 Exercised ( 71,521 ) $ 5.11 ( 15,000 ) $ 5.67 Forfeited/expired ( 215,754 ) $ 7.86 ( 191,408 ) $ 9.12 Outstanding at end of period 919,741 $ 6.67 1,087,016 $ 6.97 Exercisable at end of period 741,727 $ 7.05 532,185 $ 7.64 Weighted average grant-date fair value of options granted during the period $ 2.66 $ 2.50 72 The following table summarizes information for stock options outstanding and exercisable as of September 30, 2025: Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Remaining Contractual Life (in years) Weighted Average Exercise Price Per Share Number Exercisable Weighted Average Exercise Price Per Share $ 4.32 -$ 5.07 80,666 7.52 $ 4.74 35,318 $ 4.77 $ 5.09 -$ 5.09 100,000 4.85 $ 5.09 — $ — $ 5.25 -$ 5.75 83,825 6.08 $ 5.42 53,825 $ 5.47 $ 6.00 -$ 6.00 400,000 3.42 $ 6.00 400,000 $ 6.00 $ 7.40 -$ 8.82 41,750 6.15 $ 8.12 41,750 $ 8.12 $ 9.00 -$ 9.00 150,000 7.87 $ 9.00 150,000 $ 9.00 $ 9.27 -$ 9.99 23,500 6.84 $ 9.45 20,834 $ 9.48 $ 10.22 -$ 10.22 18,000 6.42 $ 10.22 18,000 $ 10.22 $ 11.51 -$ 11.51 12,000 5.48 $ 11.51 12,000 $ 11.51 $ 15.43 -$ 15.43 10,000 6.13 $ 15.43 10,000 $ 15.43 $ 4.32 -$ 15.43 919,741 5.23 $ 6.67 741,727 $ 7.05 The aggregate intrinsic values of options outstanding and options exercisable as of September 30, 2025 were approxima tely $ 2.5 million and $ 1.8 million, respectively, which represents the total pre-tax intrinsic value, based on our closing stock price of $ 9.26 per share as of September 30, 2025, the last business day of our fiscal year, which would have been received by the option holders had all option holders exercised their options as of that date.
When available, we use quoted market prices to measure fair value. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including interest rate yield curves, option volatilities and currency rates.
If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including interest rate yield curves, option volatilities and currency rates. In certain cases, where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

… 116 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

32 edited+7 added−1 removed174 unchanged
Biggest changeRisks Related to Our Research and Development and Intellectual Property Activities We may not be able to keep pace with the rapid change in the technology needed to meet customer requirements. Success in the semiconductor equipment industry depends, in part, on continual improvement of existing technologies and rapid innovation of new solutions.
Biggest changeFurthermore, our efforts to comply with evolving laws and regulations related to cybersecurity may be costly and any failure to comply could result in investigations, proceedings, investor lawsuits and reputational damage. 26 Risks Related to Our Research and Development and Intellectual Property Activities We may not be able to keep pace with the rapid change in the technology needed to meet customer requirements.
Our amended and restated articles of incorporation and amended and restated bylaws contain provisions that: (a) authorize “blank check” preferred stock, which could be issued by our Board of Directors without shareholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; (b) specify that special meetings of our shareholders can be called only by our Board of Directors, the Chairperson of our Board of Directors, our Chief Executive Officer, or a majority of the Board of Directors; (c) provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, though not less than a quorum; (d) specify that only our Board of Directors may change the size of our Board of Directors; (e) establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our Board of Directors; and (f) expressly authorize our Board of Directors to modify, alter or repeal our bylaws.
Our amended and restated articles of incorporation and amended and restated bylaws contain provisions that: (a) authorize “blank check” preferred stock, which could be issued by our Board of Directors without shareholder approval and may contain voting, 28 liquidation, dividend and other rights superior to our common stock; (b) specify that special meetings of our shareholders can be called only by our Board of Directors, the Chairperson of our Board of Directors, our Chief Executive Officer, or a majority of the Board of Directors; (c) provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, though not less than a quorum; (d) specify that only our Board of Directors may change the size of our Board of Directors; (e) establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our Board of Directors; and (f) expressly authorize our Board of Directors to modify, alter or repeal our bylaws.
Additionally, the marketing and sale of our products to international markets expose us to a number of risks, including the following: (a) increased costs associated with maintaining the ability to understand the local markets and follow their trends and customs, as well as developing and maintaining an effective marketing and distributing presence; (b) limitations on our ability to require advance payments from our customers; (c) difficulty in providing customer service and support in local markets; (d) difficulty in staffing and managing overseas operations; (e) longer sales cycles and collection periods; (f) fewer or weaker legal protections for our intellectual property rights; (g) failure to develop appropriate risk management and internal control structures tailored to overseas operations; (h) difficulty and costs relating to compliance with the different or changing commercial and legal requirements of our overseas markets; (i) fluctuations 20 in foreign currency exchange and interest rates; (j) failure to obtain or maintain certifications for our products or services in these markets; and (k) international trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses.
Additionally, the marketing and sale of our products to international markets expose us to a number of risks, including the following: (a) increased costs associated with maintaining the ability to understand the local markets and follow their trends and customs, as well as developing and maintaining an effective marketing and distributing presence; (b) limitations on our ability to require advance payments from our customers; (c) difficulty in providing customer service and support in local markets; (d) difficulty in staffing and managing overseas operations; (e) longer sales cycles and collection periods; (f) fewer or weaker legal protections for our intellectual property rights; (g) failure to develop appropriate risk management and internal control structures tailored to overseas operations; (h) difficulty and costs relating to compliance with the different or changing commercial and legal requirements of our overseas markets; (i) fluctuations in foreign currency exchange and interest rates; (j) failure to obtain or maintain certifications for our products or 19 services in these markets; and (k) international trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses.
Intellectual property litigation, regardless of outcome, is expensive and time-consuming, and could divert management’s attention from our business. Our failure to successfully defend against infringement claims, or to develop non-infringing technologies or license the proprietary rights on a timely basis, could have a material negative effect on our business, operating results or financial condition.
Intellectual property litigation, regardless of outcome, is expensive and 27 time-consuming, and could divert management’s attention from our business. Our failure to successfully defend against infringement claims, or to develop non-infringing technologies or license the proprietary rights on a timely basis, could have a material negative effect on our business, operating results or financial condition.
If we are not able to effectively manage or efficiently implement these strategies and/or restructuring initiatives for reasons within or outside of our control, then our business operations could be materially adversely affected. In addition, implementation of a business strategy may lead to the disruption of our existing business operations.
If we are not able to effectively manage or efficiently implement these strategies and/or restructuring initiatives for reasons within or outside of our control, then our business operations could be materially adversely affected. In addition, implementation of a new business strategy may lead to the disruption of our existing business operations.
Other companies and individuals, including our larger competitors, may develop 27 technologies that are similar or superior to our technology or design around the patents we own or license.
Other companies and individuals, including our larger competitors, may develop technologies that are similar or superior to our technology or design around the patents we own or license.
Acquisitions involve numerous risks, including: (a) difficulties in integrating the operations, technologies, management information systems, products and personnel of the acquired companies; (b) diversion of management’s attention from normal daily operations of the business; (c) loss of key employees; (d) difficulties in entering markets in which we have no or limited prior experience and where our competitors in such markets have stronger market positions; (e) difficulties in complying with regulations, such as antitrust and environmental regulations, and managing risks related to an acquired business; (f) an inability to timely obtain financing, including any amendments required to our existing financing agreement; (g) an inability to implement uniform standards, controls, procedures and policies; (h) undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition; and (i) loss of key customers or suppliers.
Acquisitions involve numerous risks, including: (a) difficulties in integrating the operations, technologies, management information systems, products and personnel of the acquired companies; (b) diversion of management’s time and attention from normal daily operations of the business; (c) loss of key employees of an acquired business; (d) difficulties in entering markets in which we have no or limited prior experience and where our competitors in such markets have stronger market positions; (e) difficulties in complying with regulations, such as antitrust and environmental regulations, and managing risks related to an acquired business; (f) an inability to timely obtain any required financing; (g) an inability to implement uniform standards, controls, procedures and policies; (h) undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition; and (i) loss of key customers or suppliers.
We may not be able to accurately predict market demand to avoid inventory shortages or build inventories and issue purchase commitments in excess of our current requirements. 21 Supplier capacity constraints, supplier production disruptions, supplier quality issues or price increases could increase our operating costs and adversely impact the competitive positions of our products.
We may not be able to accurately predict market demand to avoid inventory shortages or build inventories and issue purchase commitments in excess of our current requirements. 20 Supplier capacity constraints, supplier production disruptions, supplier quality issues or price increases could increase our operating costs and adversely impact the competitive positions of our products.
Increasing regulatory burdens and corporate governance requirements could make it more difficult for us to attract and retain qualified members of our Board and qualified executive officers. 23 Risks Related to Regulations and Litigation We are subject to various laws and regulations, including recent pronouncements related to laws and regulations governing climate related disclosures, cybersecurity, privacy, anti-corruption and the environment.
Increasing regulatory burdens and corporate governance requirements could make it more difficult for us to attract and retain qualified members of our Board and qualified executive officers. 22 Risks Related to Regulations and Litigation We are subject to various laws and regulations, including recent pronouncements related to laws and regulations governing climate related disclosures, cybersecurity, privacy, anti-corruption and the environment.
If any one or more of our major customers were to seek to re-negotiate their agreements on more favorable terms, or not pay us or continue business with us, it could adversely affect our business, financial position and results of operations. 19 Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs.
If any one or more of our major customers were to seek to re-negotiate their agreements on more favorable terms, or not pay us or continue business with us, it could adversely affect our business, financial position and results of operations. 18 Manufacturing interruptions or delays could affect our ability to meet customer demand and lead to higher costs.
Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of a bank, or other adverse conditions in the financial 22 or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.
Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of a bank, or other adverse conditions in the financial 21 or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.
There is no assurance that we will be able to replace such facility or that any additional financing will be available if required, or, even if available, that it would not materially dilute the ownership 17 percentage of our then existing shareholders, result in increased expenses or result in covenants or special rights that would restrict our operations.
There is no assurance that we will be able to replace such facility or that any additional financing will be available if required, or, even if available, that it would not materially dilute the 16 ownership percentage of our then existing shareholders, result in increased expenses or result in covenants or special rights that would restrict our operations.
The following risk factors should be read in conjunction with all the other information in this Annual Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. Risks Related to the Semiconductor Industry 16 There is ongoing volatility in the semiconductor equipment industry.
The following risk factors should be read in conjunction with all the other information in this Annual Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. Risks Related to the Semiconductor Industry 15 There is ongoing volatility in the semiconductor equipment industry.
We may in the future be the target of securities litigation due to volatility in the market price of our common stock or for other reasons. Any securities litigation could result in substantial costs and could divert the attention and resources of our management. 26 Where appropriate, we intend to vigorously defend all claims.
We may in the future be the target of securities litigation due to volatility in the market price of our common stock or for other reasons. Any securities litigation could result in substantial costs and could divert the attention and resources of our management. 25 Where appropriate, we intend to vigorously defend all claims.
Risks Related to Our Business We may not be able to generate sufficient cash flows or obtain access to external financing necessary to fund existing operations and our growth plan. Our cash flows may be insufficient to provide adequate working capital in the future and we may require additional financing to fund existing operations as well as our growth plan.
Risks Related to Our Business We may not be able to generate sufficient cash flows or obtain access to external financing necessary to fund existing operations and our growth plan. Our cash flows may be insufficient to provide adequate working capital in the future and we may require additional financing to fund existing operations as well as any growth plans.
We are continuing to evaluate the impact of the announced and other proposed tariffs on products that we import from China, and we may experience a material 25 increase in the cost of our products, which may result in our products becoming less attractive relative to products offered by our competitors.
We are continuing to evaluate the impact of the announced and other proposed tariffs on products that we import from China, and we may experience a material 24 increase in the cost of our products, which may result in our products becoming less attractive relative to products offered by our competitors.
In addition, even if we fully execute and implement these activities, there may be other unforeseeable and unintended consequences that could 18 materially adversely impact our profitability and business, including unintended employee attrition or harm to our competitive position.
In addition, even if we fully execute and implement these activities, there may be other unforeseeable and unintended consequences that could 17 materially adversely impact our profitability and business, including unintended employee attrition or harm to our competitive position.
We continually evaluate potential acquisitions and consider acquisitions an important part of our future growth strategy. In the past, we have made acquisitions of, or significant investments in, other businesses with synergistic products, services and technologies and plan to continue to do so in the future.
We periodically evaluate potential acquisitions and consider acquisitions an important part of our future growth strategy. In the past, we have made acquisitions of, or significant investments in, other businesses with synergistic products, services and technologies and plan to continue to do so in the future.
Our directors, executive officers and holders of ten percent or more of our outstanding common stock and their affiliates represent a significant portion of our common stock held as of September 30, 2024, and, therefore, could 28 have significant influence over our management and corporate policies.
Our directors, executive officers and holders of ten percent or more of our outstanding common stock and their affiliates represent a significant portion of our common stock held as of September 30, 2025, and, therefore, could have significant influence over our management and corporate policies.
In the ordinary 24 course of business, we use and generate substances that are regulated or may be hazardous under environmental laws.
In the ordinary 23 course of business, we use and generate substances that are regulated or may be hazardous under environmental laws.
We have identified material weaknesses in our internal control over financial reporting which, if not remediated, could result in material misstatements in our financial statements.
In the past we have identified material weaknesses in our internal control over financial reporting which, if not remediated, could result in material misstatements in our financial statements.
Our success depends upon the continued contributions of our executive officers and certain other employees, many of whom have many years of experience with us and would be extremely difficult to replace. We must also attract and retain experienced and highly skilled engineering, sales and marketing and managerial personnel.
Our success depends upon the continued contributions of our executive officers, general managers, business unit directors and certain other employees, many of whom have many years of experience with us and would be extremely difficult to replace. We must also attract and retain experienced and highly skilled engineering, sales and marketing and managerial personnel.
Additionally, in the fourth quarter ended September 30, 2023, we identified a material weakness because we did not design and maintain adequate internal controls over non-routine and complex transactions, including the preparation and review of the third-party service provider valuation reports in the areas of goodwill and intangible assets.
Additionally, in fiscal 2023, we identified a material weakness because we did not design and maintain adequate internal controls over non-routine and complex transactions, including the preparation and review of the third-party service provider valuation reports in the areas of goodwill and intangible assets.
There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, as well as risks to moving production to different contract manufacturers, which could increase costs and reduce our operating results.
There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, as well as risks to moving production to different contract manufacturers, which could increase costs and reduce our operating results. We are currently working with contract manufacturer facilities in Canada.
For example, during the two-year period ended September 30, 2024, the price of our common stock has ranged from $11.98 to $3.37. If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.
For example, during the two-year period ended September 30, 2025, the price of our common stock has ranged from $10.25 to $3.20. If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.
As of September 30, 2024 and 2023, our accrued warranty costs amounted to $0.6 million and $1.0 million, respectively.
As of September 30, 2025 and 2024, our accrued warranty costs amounted to $0.4 million and $0.6 million, respectively.
As of September 30, 2024, one Thermal Processing Solutions customer represented 12% of our accounts receivable. A concentration of our receivables from one or a small number of customers places us at risk.
As of September 30, 2025, two Thermal Processing Solutions customer represented 15% and 13% of our accounts receivable. A concentration of our receivables from one or a small number of customers places us at risk.
Our future success depends on our ability to develop and introduce new products, or new uses for existing products, that successfully address changing customer needs and gain market acceptance. We also must manufacture these new products in a timely and cost-effective manner.
Technical innovations are inherently complex and require long development cycles and appropriate professional staffing. Our future success depends on our ability to develop and introduce new products, or new uses for existing products, that successfully address changing customer needs and gain market acceptance. We also must manufacture these new products in a timely and cost-effective manner.
During the fourth quarter ended September 30, 2023, we identified a material weakness in internal control related to ineffective information technology general controls in the areas of user access, segregation of duties, and program change-management over information technology systems that support substantially all of the Company’s financial reporting processes.
In fiscal 2023, we identified a material weakness in internal control related to ineffective information technology general controls in the areas of user access, segregation of duties, and program change-management over information technology systems that support substantially all of the Company’s financial reporting processes. This resulted in our inability to segregate user duties within the Company’s business processes.
This resulted in our inability to segregate user duties within the Company’s business processes. A substantial portion of the Company's controls are dependent upon the information derived from the information technology systems and therefore the dependent controls were concluded to be ineffective.
A substantial portion of the Company's controls are dependent upon the information derived from the information technology systems and therefore the dependent controls were concluded to be ineffective.
In 2024, 59% of our net revenue came from customers outside of North America as follows: Asia - 43% (including China - 20%, Malaysia - 12% and Taiwan - 8%); and Europe - 16% (including Germany - 6% and Czech Republic - 3%).
In 2025, 71% of our net revenue came from customers outside of North America as follows: Asia - 55% (including China - 22%, Taiwan - 19%, Malaysia - 7% and Singapore - 2%); and Europe - 15% (including Germany - 2%, United Kingdom - 2%, Hungary - 2% and Czech Republic - 2%).
For example, the semiconductor industry continues to shrink the size of semiconductor devices. This trend and other evolving customer needs require us to continually respond with new product developments. Technical innovations are inherently complex and require long development cycles and appropriate professional staffing.
Success in the semiconductor equipment industry depends, in part, on continual improvement of existing technologies and rapid innovation of new solutions. For example, the semiconductor industry continues to shrink the size of semiconductor devices. This trend and other evolving customer needs require us to continually respond with new product developments.
Removed
In the fourth quarter of fiscal 2023, we opened a new SiC consumables facility in Spartanburg, South Carolina to complement our manufacturing facility in Carlisle, Pennsylvania. We are also working with contract manufacturing facilities in Canada and Mexico.
Added
Disruptions or breaches of our information technology systems could irreparably damage our reputation and our business, expose us to liability and materially adversely affect our results of operations. We routinely collect and store sensitive data, including confidential and other proprietary information about our business and our employees, customers, suppliers and business partners.
Added
The secure processing, maintenance and transmission of this information is important to our operations and business strategy. We have experienced and expect to continue to experience disruptions, failures or breaches of our information technology environment, such as those caused by computer viruses, illegal hacking, criminal fraud or impersonation, acts of vandalism or terrorism or employee error.
Added
Our cybersecurity measures and/or those of our third-party service providers and/or customers may not detect or prevent such security breaches. We continue to devote resources to reduce the risk of or alleviate cybersecurity breaches and vulnerabilities and those costs could be significant.
Added
Although we maintain a cybersecurity program to manage cybersecurity risks, our efforts may not be successful and could result in interruptions and delays that may materially impede our sales, manufacturing operations, distribution or other critical functions.
Added
Any compromise of our information security could result in the misappropriation or unauthorized publication of our confidential business or proprietary information or that of other parties with which we do business, an interruption in our operations, the unauthorized transfer of cash or other of our assets, the unauthorized release of customer or employee data or a violation of privacy or other laws.
Added
In addition, computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products, or that otherwise exploit any security vulnerabilities, and any such attack, if successful, could expose us to liability to customer claims.
Added
Further, AI capabilities may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks. Any of the foregoing could irreparably damage our reputation and business, which could have a material adverse effect on our results of operations. We maintain cyber risk insurance, although an insufficiency of insurance coverage could adversely affect our cash flows and overall profitability.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeLease 37,000 sf Phoenix, Arizona Manufacturing Lease 8,200 sf Bethel, Connecticut Office & Mfg. Lease 18,830 sf Carlisle, Pennsylvania Office & Mfg. Lease 40,500 sf Spartanburg, South Carolina Manufacturing Lease 23,100 sf Singapore, Asia Office Lease 947 sf 31
Biggest changeLease 37,000 sf Bethel, Connecticut Office & Mfg. Lease 18,830 sf Carlisle, Pennsylvania Office & Mfg. Lease 40,500 sf Spartanburg, South Carolina Manufacturing Lease 23,100 sf

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeMINE SA FETY DISCLOSURES Not applicable. 32 PART II
Biggest changeMINE SA FETY DISCLOSURES Not applicable. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−7 removed2 unchanged
Biggest changeDuring the three months ended September 30, 2024, 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. As of September 30, 2024, there are no amounts authorized for repurchase.
Biggest changeISSUER PURCHASES OF EQUITY SECURITIES Share Repurchase Programs During the year ended September 30, 2025, 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. As of September 30, 2025, there are no amounts authorized for repurchase.
UNREGISTERED SALES OF EQUITY SECURITIES There were no unregistered sales of equity securities in fiscal 2024. 33 ITEM 6. R ESERVED
UNREGISTERED SALES OF EQUITY SECURITIES There were no unregistered sales of equity securities in fiscal 2025. ITEM 6. R ESERVED
HOLDERS As of November 29, 2024, there were 279 shareholders of record of our Common Stock. Based upon a recent survey of brokers, we estimate there were approximately an additional 911 beneficial shareholders who held shares in brokerage or other investment accounts as of that date. DIVIDENDS We have never paid dividends on our Common Stock.
HOLDERS As of December 3, 2025, there were 263 shareholders of record of our Common Stock. Based upon a recent survey of brokers, we estimate there were approximately an additional 1,077 beneficial shareholders who held shares in brokerage or other investment accounts as of that date. DIVIDENDS We have never paid dividends on our Common Stock.
Removed
ISSUER PURCHASES OF EQUITY SECURITIES Share Repurchase Programs On February 7, 2023, the Board approved a stock repurchase program, pursuant to which we may repurchase up to $5 million of our outstanding Common Stock over a one-year period, commencing on February 10, 2023.
Removed
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, we have 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 our stock price and other market conditions.
Removed
We 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 year ended September 30, 2023, did not repurchase any shares of our common stock.
Removed
On February 10, 2022, the Board approved a stock repurchase program, pursuant to which we may repurchase up to $5 million of our outstanding Common Stock over a one-year period, commencing on February 16, 2022.
Removed
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 SEC; however, we have 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 our stock price and other market conditions.
Removed
We 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.
Removed
During the year ended September 30, 2022, we repurchased 143,430 shares of our Common Stock on the open market at a total cost of approximately $1.4 million (an average price of $9.78 per share). All repurchased shares have been retired.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+25 added−18 removed46 unchanged
Biggest changeSelected Quarterly Data (Unaudited) The following table sets forth selected unaudited consolidated quarterly financial information, in thousands, except percentages and per share amounts: Fiscal Year 2024 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue, net $ 24,920 $ 25,433 $ 26,749 $ 24,112 Cost of sales 15,852 16,982 16,991 14,309 Intangible asset impairment 849 — — — Gross profit 8,219 8,451 9,758 9,803 Selling, general and administrative 8,567 8,252 8,209 8,786 Research, development and engineering 1,588 921 693 991 Gain on sale of fixed assets — (2,197 ) — — Goodwill impairment 6,370 — — — Intangible asset impairment 430 — — — Severance expense 198 112 40 — Operating (loss) income (8,934 ) 1,363 816 26 Interest income 19 14 2 22 Interest expense (198 ) (193 ) (107 ) (59 ) Foreign currency (loss) gain (187 ) — 182 (340 ) Other — 9 2 52 (Loss) income before income taxes (9,300 ) 1,193 895 (299 ) Income tax provision 58 223 457 237 Net (loss) income $ (9,358 ) $ 970 $ 438 $ (536 ) Gross margin 33.0 % 33.2 % 36.5 % 40.7 % Operating margin (35.9 )% 5.4 % 3.1 % 0.1 % (Loss) income Per Share: Net (loss) income per basic share $ (0.66 ) $ 0.07 $ 0.03 $ (0.04 ) Weighted average shares outstanding - basic 14,188 14,197 14,209 14,239 Net (loss) income per diluted share $ (0.66 ) $ 0.07 $ 0.03 $ (0.04 ) Weighted average shares outstanding - diluted 14,188 14,209 14,254 14,239 40 Fiscal Year 2023 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue, net $ 21,558 $ 33,310 $ 30,740 $ 27,707 Cost of sales 13,255 19,840 19,755 20,268 Intangible asset impairment — — — 4,645 Gross profit 8,303 13,470 10,985 2,794 Selling, general and administrative 9,190 11,434 10,300 11,078 Research, development and engineering 1,393 1,517 1,804 2,597 Intangible asset impairment — — — 544 Severance expense 400 — — 265 Operating (loss) income (2,680 ) 519 (1,119 ) (11,690 ) Interest income 290 49 17 10 Interest expense (2 ) (155 ) (185 ) (178 ) Foreign currency (loss) gain (347 ) (168 ) 456 (30 ) Other (9 ) 13 15 12 (Loss) income before income taxes (2,748 ) 258 (816 ) (11,876 ) Income tax (benefit) provision (4 ) (2,946 ) 211 139 Net (loss) income $ (2,744 ) $ 3,204 $ (1,027 ) $ (12,015 ) Gross margin 38.5 % 40.4 % 35.7 % 10.1 % Operating margin (12.4 )% 1.6 % (3.6 )% (42.2 )% (Loss) income Per Share: Net (loss) income per basic share $ (0.20 ) $ 0.23 $ (0.07 ) $ (0.85 ) Weighted average shares outstanding - basic 14,008 14,028 14,058 14,166 Net (loss) income per diluted share $ (0.20 ) $ 0.23 $ (0.07 ) $ (0.85 ) Weighted average shares outstanding - diluted 14,008 14,157 14,058 14,166 Liquidity and Capital Resources Liquidity We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our obligations through our industry cycles, under both normal and stressed conditions.
Biggest changeWe continue to monitor additional guidance issued relating to OBBBA and assess the impact to our financial statements. 38 Selected Quarterly Data (Unaudited) The following table sets forth selected unaudited consolidated quarterly financial information, in thousands, except percentages and per share amounts: Fiscal Year 2025 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue, net $ 24,385 $ 15,580 $ 19,557 $ 19,842 Cost of sales 15,022 15,905 10,425 11,029 Intangible asset impairment — — — — Gross profit (loss) 9,363 (325 ) 9,132 8,813 Selling, general and administrative 8,051 7,115 7,387 6,398 Research, development and engineering 876 832 364 577 Loss (gain) on sale of fixed assets 24 205 45 (26 ) Goodwill impairment — 20,353 — — Intangible asset impairment — 2,569 — — Severance expense 73 184 421 23 Operating income (loss) 339 (31,583 ) 915 1,841 Interest income 5 27 88 119 Interest expense (7 ) (6 ) (5 ) (8 ) Foreign currency gain (loss) 401 — (96 ) (106 ) Other 19 22 3 40 Income (loss) before income taxes 757 (31,540 ) 905 1,886 Income tax provision 445 272 799 818 Net income (loss) $ 312 $ (31,812 ) $ 106 $ 1,068 Gross margin 38.4 % (2.1 )% 46.7 % 44.4 % Operating margin 1.4 % (202.7 )% 4.7 % 9.3 % Income (loss) Per Share: Net income (loss) per basic share $ 0.02 $ (2.23 ) $ 0.01 $ 0.07 Weighted average shares outstanding - basic 14,272 14,296 14,314 14,325 Net income (loss) per diluted share $ 0.02 $ (2.23 ) $ 0.01 $ 0.07 Weighted average shares outstanding - diluted 14,300 14,296 14,314 14,398 39 Fiscal Year 2024 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue, net $ 24,920 $ 25,433 $ 26,749 $ 24,112 Cost of sales 15,852 16,982 16,991 14,309 Intangible asset impairment 849 — — — Gross profit 8,219 8,451 9,758 9,803 Selling, general and administrative 8,567 8,252 8,209 8,786 Research, development and engineering 1,588 921 693 991 Gain on sale of fixed assets — (2,197 ) — — Goodwill impairment 6,370 — — — Intangible asset impairment 430 — — — Severance expense 198 112 40 — Operating (loss) income (8,934 ) 1,363 816 26 Interest income 19 14 2 22 Interest expense (198 ) (193 ) (107 ) (59 ) Foreign currency (loss) gain (187 ) — 182 (340 ) Other — 9 2 52 (Loss) income before income taxes (9,300 ) 1,193 895 (299 ) Income tax provision 58 223 457 237 Net (loss) income $ (9,358 ) $ 970 $ 438 $ (536 ) Gross margin 33.0 % 33.2 % 36.5 % 40.7 % Operating margin (35.9 )% 5.4 % 3.1 % 0.1 % (Loss) income Per Share: Net (loss) income per basic share $ (0.66 ) $ 0.07 $ 0.03 $ (0.04 ) Weighted average shares outstanding - basic 14,188 14,197 14,209 14,239 Net (loss) income per diluted share $ (0.66 ) $ 0.07 $ 0.03 $ (0.04 ) Weighted average shares outstanding - diluted 14,188 14,209 14,254 14,239 Liquidity and Capital Resources Liquidity We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our obligations through our industry cycles, under both normal and stressed conditions.
And finally, we provide the return realized by the investments to our stockholders. These three priorities are detailed as follows: • Invest in R&D and capital expenditures to strengthen our competitive position. Historically, our R&D efforts have focused on upgrades to existing product platforms as well as new product designs.
And finally, we provide the return realized by our investments to our stockholders. These three priorities are detailed as follows: • Invest in R&D and capital expenditures to strengthen our competitive position. Historically, our R&D efforts have focused on upgrades to existing product platforms as well as new product designs.
We have never paid dividends on our common stock, and we do not expect to pay dividends on common stock in the foreseeable future. However, our Board has from time to time authorized annual stock repurchase plans.
We have never paid dividends on our common stock, and we do not expect to pay dividends on common stock in the foreseeable future. However, our Board from time to time has authorized annual stock repurchase plans.
Multiples are then selected based on a comparison of the reviewed data to that of the reporting unit and applied to relevant historical and 45 forecasted financial parameters such as levels of revenues, EBITDA, EBIT or other metrics. If actual results differ significantly from our projections, we may be required to record a material impairment charge.
Multiples are then selected based on a comparison of the reviewed data to that of the reporting unit and applied to relevant historical and forecasted financial parameters such as levels of revenues, EBITDA, EBIT or other metrics. If actual results differ significantly from our projections, we may be required to record a material impairment charge.
Refer to Note 1 to our consolidated financial statements included elsewhere in this report for a summary of each of the related accounting policies. Income Taxes. We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore and the UK, where separate returns are filed.
Refer to Note 1 to our consolidated financial statements included elsewhere in this report for a summary of each of the related accounting policies. Income Taxes. We file consolidated federal income tax returns in the United States for all subsidiaries except those in China, Singapore, Malaysia and the UK, where separate returns are filed.
ASC 740, "Income Taxes", states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be 39 sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
ASC 740, "Income Taxes", states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
If actual results differ significantly from our projections, we may be required to record a material impairment charge. As of September 30, 2024, the Company performed a qualitative impairment test on intangible assets and goodwill and concluded there was no further impairment.
If actual results differ significantly from our projections, we may be required to record a material impairment charge. As of September 30, 2025 and 2024, the Company performed a qualitative impairment test on intangible assets and goodwill and concluded there was no further impairment.
The write-down is primarily based on purchase history, historical inventory usage adjusted for expected changes in product demand, product offerings and production requirements. Our industry is characterized by customers in highly-cyclical industries, rapid technological changes, frequent new product developments and rapid product obsolescence.
The write-down is primarily based on purchase history, historical inventory usage 43 adjusted for expected changes in product demand, product offerings and production requirements. Our industry is characterized by customers in highly-cyclical industries, rapid technological changes, frequent new product developments and rapid product obsolescence.
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.
However, from time to time, we add functionality to our products or develop new products during 36 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.
During 2024, we decreased our accounts receivable, inventory, and contract asset balances as we completed shipments throughout the year, reducing our backlog. These cash inflows were partially offset by decreases in accounts payable and accrued liabilities as our purchasing activity decreased and the related liabilities were paid.
During 2024, we decreased our accounts receivable, inventory, and contract asset balances as we completed shipments throughout the year, also reducing our backlog. These cash inflows were partially offset by decreases in accounts payable and accrued liabilities as our purchasing activity decreased and the related liabilities were paid.
Gross Profit and Gross Margin Gross profit is the difference between net revenue and cost of goods sold and intangible asset impairment. 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 Profit and Gross Margin Gross profit is the difference between net revenue and cost of goods sold and intangible asset impairment. Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment and spare parts and the cost 35 of service and support to customers for installation, warranty and paid service calls.
Please refer to page 5 for further information regarding forward-looking statements and “Item 1A. Risk Factors” for a description of our risk factors. Overview We provide equipment, consumables and services for semiconductor wafer fabrication and device packaging.
Please refer to page 5 for further information regarding forward-looking statements and “Item 1A. Risk Factors” for a description of our risk factors. Overview We provide equipment, consumables and services for semiconductor device packaging, wafer production and device fabrication.
Cash Flows from Investing Activities Cash used in investing activities was $2.2 million in 2024, primarily consisting of $4.9 million in capital expenditures, partially offset by $2.7 million of proceeds from the sale of our real property in Arizona.
Cash used in investing activities was $2.2 million in 2024, primarily consisting of $4.9 million in capital expenditures, partially offset by $2.7 million of proceeds from the sale of our real property in Arizona.
The market approach is based on the application of appropriate market-derived multiples selected from (i) comparable publicly-traded companies and/or (ii) the implied transaction multiples derived from identified merger and acquisition activity in the market.
The market approach is based on the application 44 of appropriate market-derived multiples selected from (i) comparable publicly-traded companies and/or (ii) the implied transaction multiples derived from identified merger and acquisition activity in the market.
We believe that our principal sources of liquidity discussed above are sufficient to support operations for at least the next twelve months. 41 Capital Allocation Our capital allocation strategy focuses on building shareholder value. We do this by first investing in ourselves and growing our capabilities. We then look to supplement and strengthen our capabilities through acquisitions and strategic investments.
We believe that our principal sources of liquidity discussed above are sufficient to support operations for at least the next twelve months. 40 Capital Allocation Our capital allocation strategy focuses on building shareholder value. We do this by first investing in ourselves and growing our capabilities. We then look to supplement and strengthen our capabilities through acquisitions and strategic investments.
Off-Balance Sheet Arrangements As of September 30, 2024, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the 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.
Off-Balance Sheet Arrangements As of September 30, 2025, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the 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.
The impairment testing as of September 30, 2024, resulted in the fair value of our Thermal Processing Solutions segment exceeding its carrying value by approximately 44%, and the fair value of our Semiconductor Fabrication Solutions segment exceeding its carrying value by approximately 18%, resulting in no additional goodwill impairment. See Note 10 for additional information on goodwill by segment.
The impairment testing as of September 30, 2024, resulted in the fair value of our Thermal Processing Solutions segment exceeding its carrying value by approximately 44%, and the fair value of our Semiconductor Fabrication Solutions segment exceeding its carrying value by approximately 18%, resulting in no additional goodwill impairment. See Note 9 for additional information on goodwill by segment.
No other customer accounted for more than 10% of our backlog as of September 30, 2024. 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.
No other customer accounted for more than 10% of our backlog as of September 30, 2025. 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.
Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our operations and financial condition. For the years ended September 30, 2024 and 2023, we had no unrecognized tax benefit.
Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our operations and financial condition. For the years ended September 30, 2025 and 2024, we had no unrecognized tax benefit.
During the year ended September 30, 2024, we recorded provisions to reduce inventories to their lower of cost and net realizable value of approximately $2.8 million compared to $2.6 million during the year ended September 30, 2023. Business Combination.
During the year ended September 30, 2025, we recorded provisions to reduce inventories to their lower of cost and net realizable value of approximately $6.6 million compared to $2.8 million during the year ended September 30, 2024. Business Combination.
We maintain a portion of our cash and cash equivalents in Renminbis, a Chinese currency, at our operations in China; therefore, changes in the exchange rates have an impact on our cash balances. During periods of weakening demand, we typically generate cash from operating activities, which we may decide to reinvest in our business via strategic projects.
We maintain a portion of our cash and cash equivalents in Renminbis, a Chinese currency, at our operations in China. As a result, changes in the exchange rates have an impact on our cash balances. During periods of weakening demand, we typically generate cash from operating activities, which we may decide to reinvest in our business via strategic projects.
We are also continuing to explore additional 37 partnerships with contract manufacturers, who can leverage their buying power on a larger scale. Throughout fiscal 2024, we made targeted labor reductions as a result of the shift to contract manufacturing and the continuing slowdown in the broader semiconductor industry.
We are also continuing to explore additional partnerships with contract manufacturers, who can leverage their buying power on a larger scale. Throughout fiscal 2025, we made targeted labor reductions as a result of the shift to contract manufacturing and the continuing slowdown in the broader semiconductor industry.
See Note 9 for a description of the facts and circumstances leading to the intangible asset impairment events. Goodwill Impairment In the first quarter of fiscal year 2024, we recognized impairment of our goodwill of $6.4 million at our Semiconductor Fabrication Solutions segment as a result of a triggering event identified at the end of the first quarter.
In the first quarter of fiscal year 2024, we recognized impairment of our goodwill of $6.4 million at our Semiconductor Fabrication Solutions segment as a result of a triggering event identified at the end of the first quarter. See Note 9 for a description of the facts and circumstances leading to the goodwill impairment.
Inventory cost includes the purchase price of parts or finished goods and freight and/or other overhead costs incurred to receive the inventory into our manufacturing facilities. We regularly review inventory quantities and record a write-down to net realizable value for excess and obsolete inventory.
Inventory Valuation. We value our inventory at the lower of cost or net realizable value. Inventory cost includes the purchase price of parts or finished goods and freight and/or other overhead costs incurred to receive the inventory into our manufacturing facilities. We regularly review inventory quantities and record a write-down to net realizable value for excess and obsolete inventory.
Cash Flows from Financing Activities In 2024, cash used in financing activities was $10.6 million, comprised primarily of $10.7 million payments on long-term debt. Our UMB term loan and revolving credit agreement has been paid in full and our remaining debt is a small amount of financing leases.
In 2024, cash used in financing activities was $10.6 million, comprised primarily of $10.7 million payments on long-term debt. Our bank term loan and revolving credit agreement has been paid in full and our remaining debt is a small amount of financing leases.
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.
We expect to pay minimal U.S federal cash taxes for the foreseeable future as a result of our U.S. net operating losses and tax credits that are carried forward.
Our sources of capital in the past have included a loan and security agreement with UMB Bank, the sale of equity securities, which includes common stock sold in private transactions and public offerings, and cash generated from operations. There can be no assurance that we can raise such additional capital resources when needed or on satisfactory terms.
Our sources of capital in the past have included a credit facility with a regional bank, the sale of equity securities, which includes common stock sold in private transactions and public offerings, and cash generated from operations. There can be no assurance that we can raise such additional capital resources when needed or on satisfactory terms.
Financing for future transactions would result in the utilization of cash, incurrence of additional debt, issuance of stock or some combination of the foregoing. Critical Accounting Estimates See “Item 7.
Financing for future 42 transactions would result in the utilization of cash, incurrence of additional debt, issuance of equity securities or some combination of the foregoing. Critical Accounting Estimates See “Item 7.
As of December 31, 2023, we identified a triggering event due to the decline in our stock price driving our market value materially below our book value. As a result, we recorded a $1.3 million impairment charge in fiscal 2024 to the intangible assets in our Semiconductor Fabrication Solutions segment.
As of December 31, 2023, we identified a triggering event due to the decline in our stock price driving our market value materially below our book value. As a result, we recorded a $1.3 million impairment charge in fiscal 2024 to the intangible assets in our Semiconductor Fabrication Solutions segment. See Note 8 for additional information on intangible assets.
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. 42 Cash Flows from Operating Activities Cash provided by operating activities was $9.8 million in 2024 compared to cash used in operating activities of $7.7 million in 2023 and cash provided by operating activities of $5.2 million in 2022.
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. 41 Cash Flows from Operating Activities Cash provided by operating activities was $7.9 million in 2025 compared to cash provided by operating activities of $9.8 million in 2024.
Such objective negative evidence limits the ability to consider other subjective evidence, such as future projections. Based on the consideration of all available evidence, we have concluded that we will maintain a full valuation allowance for all net deferred tax assets related to the carryforwards of U.S. net operating losses and tax credits.
Such objective negative evidence limits the ability to consider other subjective evidence, such as future projections. Based on the consideration of all available evidence, we have concluded that we will maintain a full valuation allowance for the net deferred tax assets in the U.S.
In 2023, we recognized $1.0 million of previously unrecognized tax benefits, and as of September 30, 2024, we have no unrecognized tax benefits recorded within our financial statements. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available.
As of September 30, 2025, we have no unrecognized tax benefits recorded within our financial statements. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available.
We are experiencing moderate material costs increases across all our segments. In response to such increased costs, we 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 experienced moderate material costs increases across all our segments. In response to such increased costs, we reviewed our pricing plans and supplier agreements, with the objective of passing along these increased costs to our customers where possible; however, we continue to experience pricing pressure from our customers.
At the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $6.4 million impairment charge in fiscal 2024.
As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $6.4 million impairment charge in fiscal 2024.
Unless otherwise stated, references to the years 2024, 2023 and 2022 relate to the fiscal years ended September 30, 2024, 2023 and 2022, respectively. 35 Results of Operations The following table sets forth certain financial data as a percentage of net revenue for the periods indicated: Years Ended September 30, 2024 2023 Net revenue 100 % 100 % Cost of sales 63 % 65 % Intangible asset impairment 1 % 4 % Gross margin 36 % 31 % Selling, general and administrative 33 % 37 % Research, development and engineering 4 % 6 % Gain on sale of fixed assets (2 )% — % Goodwill impairment 6 % — % Intangible asset impairment 1 % — % Severance 1 % 1 % Operating loss (7 )% (13 )% Interest income — % — % Interest expense — % — % Foreign currency (loss) gain — % — % Other — % — % (Loss) income before income taxes (7 )% (13 )% Income tax provision (benefit) 1 % (2 )% Net loss (8 )% (11 )% Fiscal 2024 compared to Fiscal 2023 Net Revenue Net revenue consists of revenue recognized upon shipment or delivery of equipment.
Results of Operations The following table sets forth certain financial data as a percentage of net revenue for the periods indicated: Years Ended September 30, 2025 2024 Net revenue 100 % 100 % Cost of sales 66 % 63 % Intangible asset impairment — % 1 % Gross margin 34 % 36 % Selling, general and administrative 36 % 33 % Research, development and engineering 4 % 4 % Gain on sale of fixed assets — % (2 )% Goodwill impairment 26 % 6 % Intangible asset impairment 3 % 1 % Severance 1 % 1 % Operating loss (36 )% (7 )% Interest income 1 % — % Interest expense — % — % Foreign currency gain (loss) — % — % Other — % — % Loss before income taxes (35 )% (7 )% Income tax provision 3 % 1 % Net loss (38 )% (8 )% Fiscal 2025 compared to Fiscal 2024 Net Revenue Net revenue consists of revenue recognized upon shipment or delivery of equipment.
We perform the first step of the goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and we are not required to perform additional analysis.
If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and we are not required to perform additional analysis.
Revenue from the Thermal Processing Solutions segment decreased $8.4 million, or 11%, over the prior year period. Our Thermal Processing Solution results for 2024 reflect decreases in belt furnace shipments partially offset by increases in shipments of our horizontal diffusion furnaces.
Revenue from the Thermal Processing Solutions segment decreased $11.1 million, or 16%, over the prior year period. Our Thermal Processing Solution results for 2025 reflect decreases in belt furnace shipments and horizontal diffusion furnaces shipments, partially offset by increases in shipments of our parts and service business.
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 manufacturer, we will continue to invest in our business to drive future growth.
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.
For additional information regarding the risks related to our business and industry, please refer to “Item 1A. Risk Factors” within this Form 10-K. Fiscal Year Our fiscal year is from October 1 to September 30.
For additional information regarding the risks related to our business and industry, please refer to “Item 1A. Risk Factors” within this Form 10-K. Fiscal Year Our fiscal year is from October 1 to September 30. Unless otherwise stated, references to the years 2025 and 2024 relate to the fiscal years ended September 30, 2025 and 2024, respectively.
Our semiconductor fabrication solutions include consumables, equipment and services for wafer polishing, cleaning, slicing and dicing. The markets we serve are historically cyclical, but not seasonal, with constantly evolving technical requirements and can be subject to tariffs and sourcing restrictions driven by geopolitical tensions. Our revenue is impacted by these broad industry trends.
The markets we serve are historically cyclical, but not seasonal, with constantly evolving technical requirements and can be subject to tariffs and sourcing restrictions driven by geopolitical tensions. Our revenue is impacted by these broad industry trends.
As of September 30, 2024, we have significant U.S. deferred tax assets that have a full valuation allowance and foreign deferred tax assets that have a partial valuation allowance. Any changes to the judgments related 44 to our valuation allowance could have a material impact on our results of operations.
As of September 30, 2025, we have significant U.S. deferred tax assets that have a full valuation allowance. Any changes to the judgments related to our valuation allowance could have a material impact on our results of operations. For the years ended September 30, 2025 and 2024, we had net deferred tax assets of $1.0 million and $0.2 million.
Expenses related to engineers working on strategic projects or sustaining engineering projects are recorded in RD&E.
RD&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.
Income Taxes Our effective tax rate was (13.0)% and 17.1% in 2024 and 2023, respectively. The effective tax rate is the ratio of total income tax expense to pre-tax income. The effective tax rates for 2024 and 2023 were lower than the U.S. statutory rate of 21%.
The effective tax rate is the ratio of total income tax expense to pre-tax income. The effective tax rates for 2025 and 2024 were lower than the U.S. statutory rate of 21%.
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 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. During 2025, the improvement in lead times across all of our product lines favorably contributed to the decline in our backlog.
As we expand our use of contract manufacturers, we will continue to look for ways to reduce our real estate footprint. In March 2024, we completed the sale of our corporate headquarters real property in Arizona. The sale resulted in a net cash inflow of approximately $2.5 million, after settlement of related sale expenses.
In March 2024, we completed the sale of our corporate headquarters real property in Arizona. The sale resulted in a net cash inflow of approximately $2.5 million, after settlement of related sale expenses.
Our net research and development expense by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2024 2023 (Decrease) % Change Thermal Processing Solutions $ 2,840 $ 3,993 $ (1,153 ) (29 )% Semiconductor Fabrication Solutions 1,353 3,318 (1,965 ) (59 )% Total research, development and engineering expense $ 4,193 $ 7,311 $ (3,118 ) (43 )% RD&E expenses for the years ended September 30, 2024 and 2023 were $4.2 million and $7.3 million, respectively, a decrease of $3.1 million.
Our net research and development expense by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2025 2024 (Decrease) % Change Thermal Processing Solutions $ 2,133 $ 2,840 $ (707 ) (25 )% Semiconductor Fabrication Solutions 516 1,353 (837 ) (62 )% Total research, development and engineering expense $ 2,649 $ 4,193 $ (1,544 ) (37 )% RD&E expenses for the years ended September 30, 2025 and 2024 were $2.6 million and $4.2 million, respectively, a decrease of $1.5 million.
Our products intersect these markets in multiple ways: CMP consumables and wafer cleaning systems for the SiC substrates used in the EV power invertors; thermal processing systems for producing EV battery cooling systems and ceramic substrates for HEV power semiconductor packaging; and reflow ovens for ADAS, infotainment and telematics component assemblies. • Supply Chain Resiliency - There is a global trend of creating supply chain resiliency by expanding and/or relocating operations outside of mainland China.
Our products intersect these markets in multiple ways: CMP consumables and wafer cleaning systems for the SiC substrates used in the EV power inverters; thermal processing systems for producing EV battery cooling systems and ceramic substrates for HEV power semiconductor packaging; and reflow ovens for ADAS, infotainment and telematics component assemblies.
Our net SG&A expense by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2024 2023 (Decrease) % Change Thermal Processing Solutions $ 15,110 $ 18,284 $ (3,174 ) (17 )% Semiconductor Fabrication Solutions 8,498 11,210 (2,712 ) (24 )% Non-segment related 10,206 12,508 (2,302 ) (18 )% Total selling, general and administrative expense $ 33,814 $ 42,002 $ (8,188 ) (19 )% Total SG&A expenses for the years ended September 30, 2024 and 2023 were $33.8 million and $42.0 million, respectively, representing a decrease of $8.2 million or 19.4%.
Our net SG&A expense by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2025 2024 (Decrease) % Change Thermal Processing Solutions $ 12,429 $ 15,110 $ (2,681 ) (18 )% Semiconductor Fabrication Solutions 7,959 8,498 (539 ) (6 )% Non-segment related 8,563 10,206 (1,643 ) (16 )% Total selling, general and administrative expense $ 28,951 $ 33,814 $ (4,863 ) (14 )% Total SG&A expenses for the years ended September 30, 2025 and 2024 were $29.0 million and $33.8 million, respectively, representing a decrease of $4.9 million or 14%.
Intangible Asset Impairment In the first quarter of fiscal year 2024, we recognized impairment of our definite lived intangible assets of $1.3 million at our Semiconductor Fabrication Solutions segment. Of the $1.3 million, $0.8 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations.
Intangible Asset Impairment In the second quarter of fiscal year 2025, we recognized impairment of our definite lived intangible assets of $2.6 million at our Semiconductor Fabrication Solutions segment. As disclosed above, this impairment was recorded within operating expenses in the Condensed Consolidated Statement of Operations.
Cash and Cash Flow The following table sets forth for the periods presented certain consolidated cash flow information, in thousands: Years Ended September 30, 2024 2023 2022 Net cash provided by (used in) operating activities $ 9,842 $ (7,701 ) $ 5,204 Net cash (used in) provided by investing activities $ (2,178 ) $ (37,830 ) $ 18,773 Net cash (used in) provided by financing activities $ (10,633 ) $ 11,738 $ (8,267 ) Effect of exchange rate changes on cash $ 922 $ 52 $ (1,672 ) Net (decrease) increase in cash and cash equivalents $ (2,047 ) $ (33,741 ) $ 14,038 Cash and cash equivalents, beginning of year $ 13,133 $ 46,874 $ 32,836 Cash and cash equivalents, end of year $ 11,086 $ 13,133 $ 46,874 A summary of our cash position, is as follows, in thousands, except working capital ratio: September 30, 2024 2023 Cash and cash equivalents $ 11,086 $ 13,133 Restricted cash $ — $ — Working capital $ 44,777 $ 51,471 Current ratio (current assets to current liabilities) 3.3:1 2.7:1 The decrease in cash and cash equivalents from September 30, 2023 of $2.0 million was primarily due to the full repayment of our term loan and revolving credit agreement with UMB Bank, which was funded with cash generated in operations.
Cash and Cash Flow The following table sets forth for the periods presented certain consolidated cash flow information, in thousands: Years Ended September 30, 2025 2024 Net cash provided by operating activities $ 7,877 $ 9,842 Net cash used in investing activities $ (912 ) $ (2,178 ) Net cash provided by (used in) financing activities $ 270 $ (10,633 ) Effect of exchange rate changes on cash $ (417 ) $ 922 Net increase (decrease) in cash and cash equivalents $ 6,818 $ (2,047 ) Cash and cash equivalents, beginning of year $ 11,086 $ 13,133 Cash and cash equivalents, end of year $ 17,904 $ 11,086 A summary of our cash position, is as follows, in thousands, except working capital ratio: September 30, 2025 2024 Cash and cash equivalents $ 17,904 $ 11,086 Restricted cash $ — $ — Working capital $ 39,695 $ 44,497 Current ratio (current assets to current liabilities) 2.9:1 3.2:1 The increase in cash and cash equivalents from September 30, 2024 of $6.8 million was primarily due to cash generated in operations slightly offset by investing activities and the effect of exchange rates on cash.
Our gross profit and gross margin by reportable segment were as follows, dollars in thousands: Years Ended September 30, Segment 2024 Gross Margin 2023 Gross Margin Increase (Decrease) % Change Thermal Processing Solutions $ 24,269 35 % $ 29,184 38 % $ (4,915 ) (17 )% Semiconductor Fabrication Solutions 11,962 37 % 6,368 18 % 5,594 88 % Total gross profit $ 36,231 36 % $ 35,552 31 % $ 679 2 % Gross profit for the years ended September 30, 2024 and 2023 was $36.2 million and $35.6 million, respectively, representing an increase of $0.7 million, or 2%.
Our gross profit and gross margin by reportable segment were as follows, dollars in thousands: Years Ended September 30, Segment 2025 Gross Margin 2024 Gross Margin Increase (Decrease) % Change Thermal Processing Solutions $ 20,566 35 % $ 24,269 35 % $ (3,703 ) (15 )% Semiconductor Fabrication Solutions 6,417 30 % 11,962 37 % (5,545 ) (46 )% Total gross profit $ 26,983 34 % $ 36,231 36 % $ (9,248 ) (26 )% Gross profit for the years ended September 30, 2025 and 2024 was $27.0 million and $36.2 million, respectively, representing a decrease of $9.2 million, or 26%.
The 2024 effective tax rate was negatively impacted by non-deductible expenses, including goodwill impairment, includible foreign income, foreign withholding tax and losses for which no tax benefit can be recognized. The 2023 effective tax rate was negatively impacted by non-deductible expenses, includible foreign income, foreign withholding tax and losses for which no tax benefit can be recognized.
The 2025 effective tax rate was negatively impacted by non-deductible expenses, including 37 goodwill impairment, foreign income taxed at different rates, foreign withholding tax and losses for which no tax benefit can be recognized. In 2025 and 2024, we recorded income tax expense of $2.3 million and $1.0 million, respectively.
There were no impairments on long-lived assets during the year ended September 30, 2022. See Note 9 for additional information on intangible assets. Impact of Recently Issued Accounting Pronouncements For discussion of recently issued accounting pronouncements, see “Recently Issued Accounting Pronouncements” within “Note 1. Summary of Operations and Significant Accounting Policies” in “Item 8. Financial Statements and Supplementary Data.”
Impact of Recently Issued Accounting Pronouncements For discussion of recently issued accounting pronouncements, see “Recently Issued Accounting Pronouncements” within “Note 1. Summary of Operations and Significant Accounting Policies” in “Item 8. Financial Statements and Supplementary Data.”
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.
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.
The decrease in RD&E expense is due to the timing of purchases related to specific strategic-development projects at our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments. Additionally, the prior year period included expenditures related to new product development projects at our Semiconductor Fabrication Solutions segment, which were terminated in the fourth quarter of 2023.
The decrease in RD&E expense is due to the timing of purchases related to specific strategic-development projects at our Thermal Processing Solutions and Semiconductor Fabrication Solutions segments. In addition we had lower overhead expenses due to cost saving initiatives and the ERC which reduced expenses.
We operate in two reportable segments, based primarily on the industries they serve: (i) Thermal Processing Solutions (formerly called Semiconductor) and (ii) Semiconductor Fabrication Solutions (formerly called Material and Substrate). Our thermal processing solutions include reflow equipment for chip packaging and electronic assembly, diffusion furnaces and furnaces used to produce ceramic based power semiconductor packages and passive electronic components.
Our thermal processing solutions include reflow equipment for chip packaging and electronic assembly, diffusion furnaces and furnaces used to produce ceramic based power semiconductor packages and passive electronic components. Our semiconductor fabrication solutions include consumables, equipment and services for wafer polishing, cleaning, slicing and dicing.
Additionally, we experienced declines in our wafer cleaning equipment, partially offset by increases in our consumables shipments. 36 Orders and Backlog New orders booked by reportable segment were as follows, dollars in thousands: Years Ended September 30, Segment 2024 2023 Increase (Decrease) % Change Thermal Processing Solutions $ 49,318 $ 74,817 $ (25,499 ) (34 )% Semiconductor Fabrication Solutions 29,959 29,080 879 3 % Total new orders $ 79,277 $ 103,897 $ (24,620 ) (24 )% Our backlog by reportable segment was as follows, dollars in thousands: September 30, Segment 2024 2023 Increase (Decrease) % Change Thermal Processing Solutions $ 20,845 $ 45,233 $ (24,388 ) (54 )% Semiconductor Fabrication Solutions 4,467 6,561 (2,094 ) (32 )% Total backlog $ 25,312 $ 51,794 $ (26,482 ) (51 )% At the end of 2024, two customers individually accounted for 25% and 20% of our total backlog.
Orders and Backlog New orders booked by reportable segment were as follows, dollars in thousands: Years Ended September 30, Segment 2025 2024 Increase (Decrease) % Change Thermal Processing Solutions $ 51,867 $ 49,318 $ 2,549 5 % Semiconductor Fabrication Solutions 22,074 29,959 (7,885 ) (26 )% Total new orders $ 73,941 $ 79,277 $ (5,336 ) (7 )% Our backlog by reportable segment was as follows, dollars in thousands: September 30, Segment 2025 2024 Increase (Decrease) % Change Thermal Processing Solutions $ 14,655 $ 20,845 $ (6,190 ) (30 )% Semiconductor Fabrication Solutions 5,234 4,467 767 17 % Total backlog $ 19,889 $ 25,312 $ (5,423 ) (21 )% At the end of 2025, two customers individually accounted for 29% and 11% of our total backlog.
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. RD&E expenses may vary from period to period depending on the engineering projects in process.
Non-segment related SG&A expense includes $1.2 million and $1.5 million of non-cash stock-based compensation expense for 2025 and 2024, respectively. 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.
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. In September 2023, we signed a lease for a new location with less square footage and completed the move to this location in June 2024.
In June 2022, we completed the sale of the real property where our manufacturing facility in Massachusetts is located and 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.
Contractual Obligations We had the following contractual obligations as of September 30, 2024, in thousands: Contractual obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Debt obligations $ 290 $ 101 $ 184 $ 5 $ — Lease obligations: Buildings 22,967 3,057 5,168 4,720 10,022 Office equipment — — — — — Vehicles 31 20 11 — — Total operating lease obligations 22,998 3,077 5,179 4,720 10,022 Purchase obligations 12,148 12,148 — — — Total $ 35,436 $ 15,326 $ 5,363 $ 4,725 $ 10,022 43 Acquisitions Our business strategy includes the possible acquisition of or investments in other businesses to expand or complement our operations.
Contractual Obligations We had the following contractual obligations as of September 30, 2025, in thousands: Contractual obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Debt obligations $ 294 $ 126 $ 128 $ 40 $ — Lease obligations: Buildings 24,948 3,167 6,627 6,591 8,563 Office equipment — — — — — Vehicles 11 8 3 — — Total operating lease obligations 24,959 3,175 6,630 6,591 8,563 Purchase obligations 4,039 4,039 — — — Total $ 29,292 $ 7,340 $ 6,758 $ 6,631 $ 8,563 Acquisitions Our business strategy includes the possible acquisition of or investments in other businesses to expand or complement our operations.
Our net revenue by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2024 2023 (Decrease) % Change Thermal Processing Solutions $ 69,161 $ 77,595 $ (8,434 ) (11 )% Semiconductor Fabrication Solutions 32,053 35,720 (3,667 ) (10 )% Total net revenue $ 101,214 $ 113,315 $ (12,101 ) (11 )% Net revenue for the years ended September 30, 2024 and 2023 were $101.2 million and $113.3 million, respectively, a decrease of $12.1 million or 11%.
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. 34 Our net revenue by reportable segment was as follows, dollars in thousands: Years Ended September 30, Increase Segment 2025 2024 (Decrease) % Change Thermal Processing Solutions $ 58,057 $ 69,161 $ (11,104 ) (16 )% Semiconductor Fabrication Solutions 21,307 32,053 (10,746 ) (34 )% Total net revenue $ 79,364 $ 101,214 $ (21,850 ) (22 )% Net revenue for the years ended September 30, 2025 and 2024 were $79.4 million and $101.2 million, respectively, a decrease of $21.9 million or 22%.
Growth and Investment Strategy We believe there are three key secular trends that are key to our future growth: • Advanced Mobility - Advanced Mobility encompasses both the development and adoption of electric vehicles and charging infrastructure, including both EV and HEV, as well as advanced automotive electronics including Advanced Driver Assistance Systems (ADAS), infotainment and telematics.
We believe these factories will create demand for new equipment and services in growing regions like Southeast Asia and Mexico. • Advanced Mobility - Advanced Mobility encompasses both the development and adoption of electric vehicles and charging infrastructure, including both electric vehicle (EV) and hybrid electric vehicles (HEV), as well as advanced automotive electronics including Advanced Driver Assistance Systems (ADAS), infotainment and telematics.
Gross margin for 2024 and 2023 was 36% and 31%, respectively. Gross margin for the Thermal Processing Solutions segment decreased to 35% in 2024, compared to 38% in 2023, due primarily from product mix with decreases in shipments of our high-temperature furnaces, surface-mount technology (“SMT”) and packaging equipment, partially offset by increases in shipments of our horizontal diffusion furnaces.
Gross margin for the Thermal Processing Solutions segment stayed consistent at 35% in 2025 and 2024, due primarily to inventory obsolescence expense and unfavorable product mix with decreases in shipments of our lower margin profile high-temperature furnaces and BDF equipment partially offset by the employee retention credit (ERC) which reduced expenses.
Investing activities in 2024, 2023 and 2022 included capital expenditures of $4.9 million, $2.9 million and $1.1 million, respectively. We expect capital expenditures to decrease slightly in 2025, as we have completed our relocation projects but begain projects to implement new technology across our divisions.
We expect capital expenditures to decrease slightly in 2026, as we have completed our relocation projects and continue to pursue optimization projects to implement new technology across our divisions to improve our business. Cash Flows from Financing Activities In 2025, cash provided by financing activities was $0.3 million, comprised primarily of $0.4 million proceeds from the exercise of stock options.
Segment Reporting Changes We evaluated our organizational structure and concluded that we have two reportable segments; Thermal Processing Solutions (formerly called Semiconductor) and Semiconductor Fabrication Solutions (formerly called Material & Substrate). Our Semiconductor Fabrication Solutions segment includes Entrepix beginning at the date of acquisition.
As a capital equipment manufacturer, we will continue to invest in our business to drive future growth. 33 Segment Reporting Changes We evaluated our organizational structure and concluded that we have two reportable segments; Thermal Processing Solutions and Semiconductor Fabrication Solutions.
Our products are used in fabricating semiconductor devices, such as silicon carbide (SiC) and silicon (Si) power devices, digital and analog devices, power electronic packages, advanced semiconductor packages and electronic assemblies. We sell these products to semiconductor device and module manufacturers worldwide, particularly in Asia, North America and Europe.
Our products are used to fabricate and package semiconductor devices, such as graphic processing units (GPU’s) used in AI applications, silicon carbide (SiC) and silicon (Si) power devices and other optical, analog and digital devices.
This decrease was primarily due to staff reductions across all of our locations during 2024, resulting in lower employee expenses and employee-related expenses, such as travel, commissions and bonuses. Non-segment related SG&A expense includes $1.5 million and $1.3 million of non-cash stock-based compensation expense for 2024 and 2023, respectively.
This decrease was primarily due to planned cost reduction efforts around overhead expenses and staff reductions during 2025, resulting in lower insurance expenses, professional fees, salaries and employee-related expenses, such as travel, commissions and bonuses. In addition, the ERC reduced expenses contributing to the lower SG&A.
Additionally, during the year ended September 30, 2023, we recognized impairment of our definite lived intangible assets of $5.2 million at our Semiconductor Fabrication Solutions segment. Of the $5.2 million, $4.6 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations.
Of the $1.3 million, $0.8 million of this impairment was recorded in cost of goods sold, and the remainder was recorded within operating expenses in our Consolidated Statement of Operations. See Note 8 for a description of the facts and circumstances leading to the intangible asset impairment events.
Removed
These new facilities will create demand for new equipment and services in growing regions like Mexico and Southeast Asia. • Artificial Intelligence - With Artificial Intelligence (AI), our reflow oven systems are the favored choice for Outsourced Semiconductor Assembly and Test Services (OSATS) providers who perform advanced packaging of the AI chips.
Added
We sell these products to semiconductor device packaging, electronic assembly and device fabrication companies worldwide. 32 We operate in two reportable segments, based primarily on the industries they serve: (i) Thermal Processing Solutions and (ii) Semiconductor Fabrication Solutions.
Removed
We continue to invest in research and development, including the introduction of our next-generation reflow platform, Aurora, in 2023. Historically, we have grown our business primarily through acquisitions, including the businesses that currently comprise our two reportable segments in the Thermal Processing Solutions and Semiconductor Fabrication Solutions industries: BTU, PR Hoffman, Intersurface Dynamics and Entrepix.
Added
Growth and Investment Strategy We believe there are three key secular trends that are key to our future growth: • Artificial Intelligence - With Artificial Intelligence (AI), we believe our reflow oven systems have leading market share with Outsourced Semiconductor Assembly and Test Services (OSATS) providers who perform advanced packaging of the AI chips. • Supply Chain Resiliency - There is a global trend of creating supply chain resiliency by expanding and/or relocating operations outside of mainland China.
Removed
Our 2023 acquisition of Entrepix bolstered our offerings in the CMP technology space and incorporated wafer cleaning into our existing capital 34 equipment product lines.
Added
Customer-centric product development in R&D : We continue to invest in research and development to expand our Thermal Processing Solutions reflow equipment product-line for AI applications. Our goal is to expand our addressable market by enabling mass production of higher density packages.
Removed
We continue to believe this inorganic growth strategy is the backbone of who Amtech is as a company, we also have a complimentary strategy of pursuing organic growth, particularly during times when we lacked sufficient capital resources to pursue growth through acquisitions.
Added
We are also investing in application development and R&D resources to accelerate growth of our Semiconductor Fabrications Solutions business by expanding our consumables product portfolio and providing exceptional technical support and service to customers.
Removed
We will continue to pursue acquisitions to supplement organic growth and have added market development resources globally to accelerate organic growth. 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.
Added
Semi-Fabless Manufacturing Model: We have migrated to a semi-fabless manufacturing model for the majority of our capital equipment business to improve our ability to scale production and reduce fixed costs. Our manufacturing partners provide a cost-effective alternative to in-house production and help mitigate the financial impact of variable demand that is inherent to the capital equipment business.
Removed
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. Revenue from our Semiconductor Fabrication Solutions segment decreased $3.7 million, or 10%, due to decreases in shipments of our polishing equipment, which was eliminated at the end of 2023, with final shipments in 2024.
Added
In September 2023, we signed a lease for a new location with less square footage and completed the move to this new location in June 2024. As we expand our use of contract manufacturers, we will continue to look for ways to reduce our real estate footprint.

… 31 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and, therefore, are not required to provide the information requested by this Item. 46
Biggest changeITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and, therefore, are not required to provide the information requested by this Item. 45

Other ASYS 10-K year-over-year comparisons