UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
  (Mark One)

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

                  For the fiscal year ended: September 30, 2002

                                       OR

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

             For the transition period from __________ to __________

                         Commission File Number: 0-11412

                              AMTECH SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

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

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

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

        Securities registered pursuant to Section 12(b) of the Act: None

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

                          Common Stock, $.01 Par Value
                                (Title of Class)

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of  registrant's  knowledge in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12(b)(2). [ ] Yes [X] No

     As of December 13, 2002, the aggregate market value of voting stock held by
non-affiliates  of the  registrant  was  approximately  $8,500,000  based on the
average of the high and low  prices of Common  Stock as  reported  on the NASDAQ
National Market on such date. Shares of Common Stock held by officers, directors
and holders of more than 5% of the  outstanding  Common stock have been excluded
from this calculation because such persons may be deemed to be affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     As of December 13, 2002, the registrant had outstanding 2,689,571 shares of
Common Stock, $.01 par value.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  registrant's  proxy statement  related to the registrant's
2003 Annual Meeting of  Shareholders,  which Proxy Statement will be filed under
the Securities  Exchange Act of 1934, as amended,  within 120 days of the end of
the  registrant's  fiscal year ended  September 30, 2002,  are  incorporated  by
reference into Part III of this Form 10-K.
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
                                     PART 1
ITEM 1    BUSINESS.............................................................3
ITEM 2    PROPERTIES..........................................................12
ITEM 3    LEGAL PROCEEDINGS...................................................13
ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................13

                                     PART II
ITEM 5    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDERS' MATTERS.............................................13
ITEM 6    SELECTED CONSOLIDATED FINANCIAL DATA................................14
ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS.............................................15
ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........28
ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.........................29
ITEM 9    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE..........................................49

                                    PART III
ITEM 10   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................49
ITEM 11   EXECUTIVE COMPENSATION..............................................49
ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          AND RELATED STOCKHOLDER MATTERS.....................................49
ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................49
ITEM 14   CONTROLS AND PROCEDURES.............................................49

                                     PART IV
ITEM 15   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K....50

          SIGNATURES..........................................................52
          POWER OF ATTORNEY...................................................52

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<PAGE>
FORWARD-LOOKING STATEMENTS

     Certain  information  contained or incorporated by reference in this Annual
Report on Form 10-K is  forward-looking  in nature.  All statements  included or
incorporated  by  reference  in  this  Annual  Report  on  Form  10-K or made by
management of Amtech Systems, Inc. and its subsidiaries  ("Amtech"),  other than
statements  of  historical  fact,  are  hereby  identified  as  "forward-looking
statements" (as such term is defined in the Private Securities Litigation Reform
Act  of  1995).  Examples  of  forward-looking   statements  include  statements
regarding  Amtech's  future  financial  results,   operating  results,  business
strategies,  projected costs, products under development,  competitive positions
and plans and  objectives of management  for future  operations.  In some cases,
forward-looking  statements  can be  identified  by  terminology  such as "may,"
"will,"  "should,"  "would,"  "expects,"  "plans,"  "anticipates,"   "believes,"
"estimates," "predicts," "potential," "continue," or the negative of these terms
or other comparable terminology. Any expectations based on these forward-looking
statements are subject to risks and uncertainties  and other important  factors,
including  those  discussed  in  the  section  entitled  "Item  7:  Management's
Discussion and Analysis - Trends, Risks and Uncertainties." These and many other
factors could affect Amtech's future operating results and financial  condition,
and could cause actual results to differ materially from  expectations  based on
forward-looking  statements  made in this  document or elsewhere by Amtech or on
its behalf.  Unless noted otherwise,  all references to a year apply to Amtech's
fiscal year, which ends on September 30th.

     All references to "we," "our," "us," or "Amtech"  refer to Amtech  Systems,
Inc. and its subsidiaries.

                                     PART I

ITEM 1. BUSINESS

     Amtech  Systems,  Inc.  ("Amtech" or the  "Company")  was  incorporated  in
Arizona in October 1981,  under the name Quartz  Engineering & Materials,  Inc.,
and changed to its present name in 1987. Amtech also conducts operations through
two wholly owned subsidiaries,  Tempress Systems, Inc., a Texas corporation with
all its operations in the Netherlands  ("Tempress  Systems"),  and P.R.  Hoffman
Machine Products,  Inc., an Arizona corporation based in Carlisle,  Pennsylvania
("P.R. Hoffman").

     Amtech develops, manufactures, markets and services wafer and semiconductor
fabrication  equipment and related  spare parts for the worldwide  semiconductor
industry.  Customers for our products include  semiconductor wafer manufacturers
and semiconductor integrated circuit (or chip) manufacturers, who either use the
chips they  manufacture  in their own products or sell them to other  companies.
These   chips   are   key   components   in   most   electronic   products   for
telecommunications (especially wireless communications),  computers and consumer
electronics and are also used to add functionality or improve the performance of
a wide range of existing products, such as automobiles.  Other customers include
manufacturers of optical components and solar cells and research and development
facilities.

     The  Company's  business  is  divided  into  two  segments,   semiconductor
equipment  and  polishing   supplies.   The   semiconductor   equipment  segment
manufactures  and  sells  horizontal   diffusion  furnaces,   processing/robotic
equipment for such  diffusion  furnaces and related spare parts and  consumables
used in certain  processes of  fabricating  integrated  circuits,  or chips,  on
silicon  wafers.  In addition,  the  semiconductor  equipment  segment  provides
manufacturing  support services,  wet and dry cleaning of semiconductor  machine
processing parts, to one of its Texas-based  customers.  The polishing  supplies
segment produces and sells carriers and templates that are consumed in the final
steps of fabricating  silicon wafers, the raw material used in the production of
semiconductors,  double-sided  precision  lapping  and  polishing  machines  and
related spare parts. For information regarding revenue, operating profit or loss
and identifiable  assets  attributable to each of Amtech's industry segments see
Note 9 of the Notes to  Consolidated  Financial  Statements  included herein and
Item 7 of this annual report.

GROWTH STRATEGY

     Amtech's  strategy for growing  revenue and operating  profit is to develop
new products and services that serve the Company's targeted markets,  to further
penetrate  these and new markets with existing and new products,  and to acquire
additional products through strategic  acquisitions.  We categorize these growth
strategies as internal growth and acquisition growth.

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<PAGE>
     ACQUISITION  GROWTH. In fiscal 1995, Amtech conducted a secondary  offering
of its  common  stock to raise  $3.6  million  for  acquisitions.  That year the
Company acquired certain assets of the former Tempress, B.V. and hired Tempress,
B.V.'s former engineers to develop the Company's first models of the Tempress(R)
horizontal  diffusion  furnaces and  production in The  Netherlands.  On July 1,
1997,  the  Company  acquired  substantially  all of the assets of P.R.  Hoffman
Machine Products Corporation,  enabling Amtech to offer new products,  including
lapping and polishing  carriers,  polishing  templates and lapping and polishing
machines and related  consumable  and spare parts,  to its existing and targeted
new  customers.  In September  2000,  Amtech raised net proceeds of $4.6 million
through a private  placement  of common  stock in order to fund its  acquisition
strategy.  While the Company has had difficulty identifying suitable acquisition
candidates  that  are  not  over-valued  based  on the  Company's  analysis,  it
continues  to pursue  acquisition  candidates  that  will  either  increase  its
existing market share or expand the number of front-end  semiconductor processes
addressed by its products.

     INTERNAL GROWTH. Amtech's strategy for internal growth,  sometimes referred
to as  organic  growth,  includes  adding  new  markets,  new  products  and new
services.  The Company  began  providing a new service,  contract  semiconductor
manufacturing support, in the fourth quarter of fiscal 1997. In fiscal 2000, the
Company   obtained   orders  for   semiconductor   production   equipment   from
manufacturers of optical components, which proved to be a significant new market
in fiscal years 2000 and 2001.  In addition,  one of the first new markets added
by the Company's  semiconductor  equipment  segment was  manufacturers  of solar
cells, which continues to be a source of potential growth for the Company.

     New  products  have  included the July 2000  introduction  of the S-300 and
E-300 models of  automation,  which have been a  significant  source of sales in
fiscal 2001 and 2002. Other new products,  which Amtech began shipping in fiscal
2002,  include 300mm diffusion  furnaces and related automation and S-300 models
with  cassette-to-cassette  capability,  a SECS II Gem (semiconductor  equipment
communications  standard  with  level II  documentation  and  incorporating  the
general equipment model) interface to the customer's  factory  automation and an
interface to third party SMIF (standard  mechanical  interface) pod openers. The
introduction  of  new  products  in  2002  helped  the  Company's  semiconductor
equipment  segment avoid the severe revenue  decline  experienced by most of its
peers in 2002.  The Company  expects  these new  products to generate  increased
sales and profits during the next industry upturn.

INDUSTRY

     The  semiconductor  industry has experienced  significant  growth since the
early 1990s.  This growth is  primarily  attributable  to  increased  demand for
personal  computers  and  the  growth  of the  Internet,  the  expansion  of the
telecommunications  industry  (especially  wireless  communications),   and  the
emergence of new  applications  in consumer  electronics.  Further  fueling this
growth is the rapidly expanding end-user demand for smaller,  less-expensive and
better-performing   electronic  products  and  traditional  products  with  more
"intelligence," which has led to an increased number of semiconductor devices in
electronic and other consumer products, such as automobiles.

     While   experiencing   significant   growth  over  the  past  decade,   the
semiconductor market is cyclical by nature,  characterized by short-term periods
of   either   under  or  over   supply   for  most   semiconductors,   including
microprocessors, memory, power management chips, DSP (digital signal processing)
chips,   and  other  logic  devices.   When  demand   decreases,   semiconductor
manufacturers typically slow their purchasing of capital equipment.  Conversely,
when demand increases,  so does capital spending.  Starting in the first half of
fiscal 2001 and  continuing  through  2002,  the  semiconductor  industry  began
experiencing  a downturn,  which has resulted in a severe decline in revenue for
both chip fabricators and most semiconductor equipment manufacturers.

     Semiconductors  control  and amplify  electrical  signals and are used in a
broad range of electronic  products,  including  consumer  electronic  products,
computers,   wireless  telecommunication   devices,   communications  equipment,
automotive electronic products, major home appliances, industrial automation and
control systems,  robotics,  aircraft,  space vehicles,  automatic  controls and
high-speed  switches  for  broadband  fiber  optic  telecommunication  networks.
Semiconductors,  or semiconductor "chips," and optical components are fabricated
on a  silicon  wafer  substrate  and are  part of the  circuitry  or  electronic
components of many of the aforementioned products.

     Most  semiconductor  chips are built on a base of silicon,  called a wafer,
and  include  multiple  layers of wiring  that  connect  a  variety  of  circuit
components,  such as  transistors  and other  structures.  To build a chip,  the

                                       4
<PAGE>
transistors,  capacitors  and other circuit  components are first created on the
surface of the wafer by  performing  a series of processes to deposit and remove
selected film layers,  including insulators.  Similar processes are then used to
build the layers of wiring structures on the wafer. These are all referred to as
"front-end"   processes.  A  simplified  sequence  of  front-end  processes  for
fabricating  typical chips involves (1) pulling molten silicon to form an ingot;
(2) slicing the silicon ingot into wafers of uniform  thickness with a wire saw;
(3) lapping  and  polishing  the  silicon  wafer to a  mirror-like  finish;  (4)
cleaning  the wafer;  (5)  forming a thin film  layer of silicon  dioxide on the
wafers in a diffusion furnace where oxygen or water vapor is introduced to cause
a chemical reaction, oxidation, with the silicon wafer's surface; (6) insulating
or conducting  layers are  deposited on the wafer  surface,  which  sometimes is
accomplished  in a diffusion  furnace via a chemical  reaction  called  chemical
vapor deposition ("CVD"); (7) a photosensitive material, called photoresist,  is
spread over and then baked on the wafer;  (8) the wafer is then exposed to light
directed through a mask with circuit patterns; (9) the wafer is then placed in a
chemical  solution that removes the soluble portion of the photoresist,  leaving
only the desired  pattern;  (10) reactive gases then etch away the exposed areas
to create a dimensional pattern on the wafer surface;  (11) ions are driven into
the  exposed  areas  of the  patterned  wafer  to  create  electrically  charged
conductive  regions;  and (12) the wafer  then goes  through a high  temperature
annealing process to relieve stress and drive the implanted ions deeper into the
wafer.

     The   silicon   wafer   may  be  cycled   several   times   through   these
wafer-processing  steps,  starting each time at step (5) or (6) to form a number
of chips on the wafer.  The front-end  process steps are followed by a number of
back-end  steps in which the wafers are sliced  into  individual  chips that are
then packaged to add connectors  that are  compatible  with whatever end product
the chip is going into.  Depending on the device,  Amtech's  polishing  supplies
products  may be used  in step  (3)  and  its  semiconductor  equipment  segment
products may be used in steps (5), (6) and (12).

     SEMICONDUCTOR EQUIPMENT SEGMENT PRODUCTS

     The semiconductor  manufacturing equipment products, used in the oxidation,
CVD,  POLC3 and annealing  steps of fabricating  integrated  circuits on silicon
wafers,  are  manufactured at Amtech's Arizona and Netherlands  operations.  The
following  paragraphs  describe the  products  that  comprise the  semiconductor
equipment segment:

     DIFFUSION FURNACES

     Through Tempress Systems, Amtech produces and sells horizontal and conveyor
diffusion  furnace systems,  which generally include a Tempress(R) load station.
Amtech's  diffusion  furnaces  currently address several deposition steps in the
semiconductor   manufacturing   process,   including   oxidation/diffusion   and
low-pressure  chemical vapor deposition  ("LPCVD"),  POLC3 doping and annealing.
The LPCVD step consists of performing CVD under high  temperature,  low-pressure
conditions to deposit insulating or conductive layers, primarily on wafers up to
200mm in size.  Diffusion  furnaces also are used in certain high and ultra-high
temperature  processes in the  manufacture  of optical  components of high-speed
switches used in broadband fiber optic telecommunications networks.

     Amtech's  diffusion  furnaces  generally consist of three large modules ---
the load station where the loading of the wafers  occurs;  the furnace  section,
which is  comprised of one to four reactor  chambers;  and the gas  distribution
cabinet where the flow of gases into the reactor  chambers is controlled and are
often customized to meet the requirements of a customers'  particular processes.
The horizontal  diffusion furnaces utilize existing industry  technology and are
sold  primarily to customers who do not require the advanced  automation  of, or
can not justify the significantly higher expense of, vertical diffusion furnaces
for some or all of their  diffusion  processes.  In fiscal  2002,  Amtech  began
shipping models of the Tempress(R) diffusion furnace capable of processing 300mm
wafers, with the initial customer being a semiconductor wafer manufacturer,  and
now has models capable of processing all currently existing wafer sizes.

     Tempress Systems also produces  conveyor  diffusion furnace systems used to
produce  thick films for the  electronics  industry.  Conveyor  furnace  systems
provide for precision  thermal  processing  of  electronic  parts for thick film
applications, anneal, sealing, soldering, silvering, curling, brazing, alloying,
gloss-metal sealing and component packaging.

                                       5
<PAGE>
     PROCESSING/ROBOTIC EQUIPMENT

     Our  processing  and robotic  equipment  consists of several  products that
either  automate  the loading of  horizontal  diffusion  furnaces or improve the
processing   characteristics  of  such  furnaces.   Wherever  possible  Amtech's
processing  and  robotic  products  are sold in  various  combinations  with the
Company's  Tempress(R) diffusion furnaces in order to expand the market for such
furnaces.  These  products also are sold to customers  that have chosen  another
brand of diffusion  furnace and as  retrofits  to most all brands of  horizontal
diffusion furnaces.

     AUTOMATION PRODUCTS

     Use of Amtech's  automation products reduces human handling and, therefore,
reduces  exposure of wafers to contaminants  during the loading and unloading of
the process tubes.  Since the top reactor chamber of a horizontal  furnace is as
much as nine  feet from the floor on which the  operator  stands  when  manually
loading  wafer boats,  and typical  boats of 200mm or 300mm wafers weigh four to
six pounds,  automating  the wafer loading and unloading of a diffusion  furnace
improves  employee  safety  and  ergonomics  in  semiconductor  and  solar  cell
manufacturing facilities.

     E-300.  Amtech's most cost  effective  robotic  product is the E-300.  This
product is most suitable for lower cost  semiconductor  devices,  such as diodes
and power management chips. The E-300 operates like an elevator and generally is
used to raise boats loaded with up to 300 wafers to one or both of the upper two
reactor  chambers of a diffusion  furnace.  There the operator  uses a hand held
tool to lift the wafer boat off the E-300 and to either place them directly on a
cantilever paddle system, into an Amtech  Atmoscan(R),  or onto an IBAL Trolley,
which then places the wafers on the paddle or Atmoscan(R). The E-300 can be used
in conjunction with all wafer sizes including 300mm wafers.

     S-300.  The S-300 model provides a very efficient  method of  automatically
transporting a full batch of up to 300 wafers to the  designated  tube level and
automatically  placing them directly onto the  cantilever  loader of a diffusion
furnace at one time.  This product is suitable for the  production of nearly all
semiconductors  fabricated in a horizontal  furnace,  but is not compatible with
furnace  reactor  chambers  where the process  requires an  Atmoscan(R).  During
fiscal  2002,  Amtech  began  shipping  S-300  models for 300mm wafers and other
models with  cassette-to-cassette  capability,  a SECS II Gem  interface  to the
customer's  factory automation and an interface to third party SMIF pod openers.
Amtech  believes  that  customers  will view the SECS II Gem  interface to their
factory  automation  as a means to reduce scrap that is  sometimes  caused by an
operator  loading  wafers into the wrong process  chamber.  The S-300 can now be
used in conjunction with all wafer sizes including 300mm wafers.

     IBAL.  IBAL is an acronym for  "Individual  Boats with Automated  Loading."
Amtech's  IBAL  automation  system is a patented  integrated  automation  system
composed of four modules  comprised of hardware and  software.  The IBAL Shuttle
transfers wafers between wafer transfer  machines  manufactured by third parties
and  the  IBAL  Queue,   providing   customers   with  the  option  of  complete
cassette-to-cassette  wafer  handling.  The IBAL  Queue  provides  a  convenient
staging area for the operator,  IBAL  Shuttle,  to place boats on a load station
and automates  the loading of those boats onto the IBAL Butler.  The IBAL Butler
automatically  transfers wafer carriers onto the IBAL Trolley of the appropriate
furnace tube level for loading. The IBAL Trolley automatically places the quartz
trays that hold silicon wafers  ("boats") on a cantilever  paddle system or into
an Amtech  Atmoscan(R)  that then are inserted in the  diffusion  furnace.  This
sequence is reversed for unloading the furnace after the particular process step
has been completed.

     The IBAL automation products described above are offered and sometimes sold
as a complete  system,  mounted on a device called a "load  station," which also
includes  an  ultra-clean   environment  for  wafer  loading  by  filtering  and
controlling the flow of air. Selling the IBAL in conjunction with a load station
makes the retrofitting of existing furnaces with such automation more efficient,
since no further modifications are required at the customer's site.

     ATMOSCAN(R) AND OTHER CANTILEVERED PROCESSING SYSTEMS

     Atmoscan(R) is a patented  controlled  environment  wafer processing system
that  includes a cantilever  tube used to load silicon  wafers into a horizontal
diffusion furnace and through which a purging inert gas flows during the process

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of  loading  and  unloading  the  reactor  chamber.  Among the major  advantages
afforded by the Atmoscan(R)  product are increased control of the environment of
the wafers during the gaseous and heating process, thereby increasing yields and
decreasing  manufacturing  costs; a decreased need for the cleaning of diffusion
furnace tubes, which ordinarily involves  substantial expense and equipment down
time; and significant economies in the manufacturing process.

     Amtech also has designed and sells an open  cantilever  paddle system,  the
type of  loader  which  remains  the  most  commonly  used in the  semiconductor
industry for loading wafers into horizontal furnaces.  Similar systems have been
used  by the  industry  since  prior  to the  introduction  of the  Atmoscan(R),
Amtech's alternative to the open cantilevered processing system.

     POLISHING SUPPLIES SEGMENT PRODUCTS

     The products of the Company's polishing supplies segment are used primarily
for lapping and polishing raw silicon wafers to a mirror-like finish.  Depending
on the cycle of the semiconductor industry, between approximately 55% and 65% of
this segment's products are sold to either  semiconductor wafer manufacturers or
semiconductor  fabricators.  Most of the products of Amtech's polishing supplies
segment  are also sold to  fabricators  of optics,  quartz,  ceramics  and metal
parts, and to manufacturers of components  medical equipment and computer disks.
These  products are  manufactured  at the Company's P.R.  Hoffman  operations in
Pennsylvania and are described below.

     CARRIERS

     Carriers are work holders into which silicon wafers or other  materials are
inserted  for the purpose of holding them  securely in place during  lapping and
polishing  processes.  Amtech  produces  carriers  for its line of  lapping  and
polishing  machines and those sold by its competitors.  Substantially all of the
carriers  produced by the Company are  customized for specific  applications.  A
very  significant  category of Amtech's  steel  carriers,  referred to as insert
carriers,  contain plastic inserts molded onto the inside edge of the work-holes
of the  carrier,  which hold the  wafers in place  during  processing.  Although
standard  steel  carriers are  preferred in many  applications  because of their
durability,  rigidity and precise dimensions,  they are typically not suited for
applications involving softer materials or when metal contamination is an issue.
Insert  carriers,  however,  are well suited for such  materials,  because  they
provide the advantages of steel carriers while reducing the potential for damage
to the edges of sensitive  materials such as large semiconductor  wafers,  which
are becoming more standard in the industry.

     SEMICONDUCTOR POLISHING TEMPLATES

     Amtech's templates are used to securely hold silicon wafers in place during
single-sided  polishing  processes.   Polishing  templates  are  customized  for
specific applications and are manufactured to exacting tolerances.

     DOUBLE-SIDED PLANETARY LAPPING AND POLISHING MACHINES

     Double-sided  lapping and  polishing  machines are designed to process thin
and fragile materials,  such as semiconductor silicon wafers,  precision optics,
computer disk media and ceramic components for wireless  communication  devices,
to exact tolerances of thickness,  flatness,  parallelism and surface finish. On
average,  Amtech's  surface  processing  systems are priced lower than competing
systems offered by its competitors and target the semiconductor, optics, quartz,
ceramics, medical, computer disk and metal working markets.

     Lapping  machines  process  parts  using an  abrasive  slurry and cast iron
plates.  The material to be processed is positioned in carriers,  which are then
driven with a planetary motion between the top and bottom plates.  The planetary
action of the lapping machines  simultaneously removes equal amounts of material
from both sides of the material being  processed.  While polishing  machines are
similar to the  lapping  machines,  polishing  is achieved by using a finer free
abrasive slurry and plates equipped with a polishing pad material.  Depending on
the  process,  the  wafers are held in place in the  pockets  of a carrier,  for
double-sided  processing,  or templates  for or a wax mounting for  single-sided
processing.  The Company does not  manufacture  or sell  single-sided  polishing
machine  or wax  mountings.  The  polishing  process  is  used  to  improve  the
characteristics of the surfaces of silicon wafers and similar materials.  Amtech
also  manufactures  and sells repair parts for its line of lapping and polishing
machines.

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<PAGE>
     PLATES, GEARS, WEAR ITEMS AND OTHER PARTS

     Since lapping machinery involves abrasive slurries,  the plates,  gears and
carriers  are often  exposed to a high degree of abrasion  and wear.  Therefore,
Amtech produces a wide assortment of plates, gears, parts and wear items for its
own  machines  as well  as for  machines  manufactured  by its  competitors.  In
addition to producing standard  off-the-shelf  parts,  Amtech has the ability to
produce highly customized parts.

MANUFACTURING, RAW MATERIALS AND SUPPLIERS

     Amtech's  manufacturing  activities consist primarily of assembling various
commercial  and  proprietary  components  into finished  systems in Heerde,  The
Netherlands  (diffusion  furnaces),   Tempe,  Arizona  (processing  and  robotic
systems) and Carlisle,  Pennsylvania (lapping and polishing machines). Polishing
consumables,  including carriers,  templates, gears, wear items and spare parts,
are  fabricated  from  various  materials in  Carlisle,  Pennsylvania,  from raw
materials manufactured to Amtech's  specification by its suppliers.  Many of the
items, such as proprietary  components for systems and lapping plates,  are also
purchased from suppliers who manufacture these items to Amtech's specifications.
In addition,  certain parts for Amtech's  automation  products are fabricated in
Amtech's  machine shop. All final assembly and system tests are performed within
Amtech's  manufacturing  facilities.   Quality  control  is  maintained  through
inspection of incoming  materials and components,  in-process  inspection during
equipment  assembly,  testing  of  assemblies  and final  inspection  and,  when
practical,  operation of  manufactured  equipment  prior to shipment.  Since the
majority  of the  products in the  polishing  supplies  segment are  designed to
specific  customers'  specifications,  this  segment's  facility  is equipped to
perform a significantly higher percentage of the fabrication  processes required
in the manufacturer of its products and certain of the  manufacturing  processes
are subcontracted out to various third parties. In addition, this segment relies
on key suppliers for certain materials,  including two steel mills, an injection
molder,  pad supplier  (sole sourced from a Japanese  company),  and an adhesive
manufacturer.  To minimize  the risk of  production  and  service  interruptions
and/or shortages of key parts, Amtech maintains  appropriate  inventories of key
raw  materials  and parts.  If for any reason the Company  were unable  obtain a
sufficient  quantity of parts in a timely and cost-effective  manner to meet its
production  requirements,  its results of  operations  would be  materially  and
adversely affected.

BACKLOG

     Amtech's  order  backlog  decreased  to  approximately  $7.9  million as of
September  30, 2002,  from  approximately  $14.0 million at the same date of the
previous  year.  The orders  included in Amtech's  backlog are generally  credit
approved  customer  purchase orders usually scheduled to ship in the next twelve
months.  The backlog also includes revenue deferred pursuant to Amtech's revenue
recognition  policy  derived from orders that have already been shipped.  Amtech
schedules  production  of its  systems  based  on  order  backlog  and  customer
commitments.  However, customers may delay delivery of products or cancel orders
suddenly  and  without  sufficient  notice,  subject  to  possible  cancellation
penalties.   Due  to  possible  customer  changes  in  delivery   schedules  and
cancellations  of  orders,  Amtech's  backlog  at  any  particular  date  is not
necessarily  indicative  of actual sales for any  succeeding  period.  Delays in
delivery schedules and/or a reduction of backlog during any particular reporting
period could have a material adverse effect on Amtech's  business and results of
operations.  In addition,  a backlog does not provide any assurance  that Amtech
will realize a profit from those orders or indicate in which period revenue will
be  recognized.  See the disclosure  under the caption  "Results of Operations -
Revenues" in Item 7 of this report for a breakdown of the backlog by segment.

RESEARCH, DEVELOPMENT AND ENGINEERING

     The markets served by the Company are  characterized  by evolving  industry
standards and rapid technological change. To compete effectively in its markets,
the Company must  continually  keep up with the pace of such change by improving
its products and its process  technologies  and developing new  technologies and
products that compete effectively on the basis of price and performance and that
adequately  address  current  and future  customer  requirements.  Historically,
Amtech's product development has been accomplished primarily through cooperative
efforts  with two key  customers.  While  there  can be no  assurance  that such
relationships  will continue or that others will be developed,  such cooperative
efforts are expected to continue to be a significant  element in Amtech's future
development  projects.  Generally,  Amtech's  relationships in such projects are
substantially  dependent on the personal relations established by its President,
Mr. Jong S. Whang.

                                       8
<PAGE>
     From time to time Amtech adds functionality to its products or develops 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 sales. Amtech  periodically  receives small
research  grants for research and  development  of products in The  Netherlands,
which are netted against research and development  costs. The Company's approach
to such  expenditures  has allowed it to produce a number of new products  while
spending  amounts that are  generally  modest in relation to most  semiconductor
equipment  manufacturers.  Amtech's expenditures that have been accounted for as
research and development  were  approximately  $.3 million or 1.7% of revenue in
2002, $.4 million or 1.7% of revenue in 2001, and $.5 million or 2.5% of revenue
in 2000.  However,  Amtech  estimates  that it  spends  approximately  3% of the
revenues on its total research and development efforts, including those incurred
in connection with customer orders or supported by government grants.

     During fiscal 1999, Amtech began investigating an alternative to the energy
sources  currently  used in the ashing process in  semiconductor  manufacturing.
Ashers use an energy source,  usually plasma,  to remove  photoresist  materials
from silicon wafers after each lithography step. While stripping the photoresist
material from the wafers,  plasma causes damage to the silicon substrate,  which
the  industry  does not believe  will be  acceptable  as the  line-width  of the
circuitry is reduced in future  generations of leading-edge  semiconductors.  In
fiscal 2000, Amtech reached an agreement with PSK Tech Inc., a South Korean firm
listed on the Korean stock  market,  regarding  the joint  development  of a new
ashing machine,  using Amtech's  damage-free  ashing technology (a "New Asher").
Amtech and PSK Tech believe that, if successful, the New Asher under development
will be damage  free and thus  will  receive  strong  demand  from the  high-end
semiconductor  manufacturers.  Ashing  equipment  manufactured by PSK Tech using
existing technology is currently being selected almost exclusively by two of the
world's top semiconductor memory chip producers for their ashing processes.

     Preparations for the feasibility stage of the New Asher development project
began in fiscal 2000.  Testing  during this stage started to produce  meaningful
results in fiscal  2001.  The results of the  feasibility  work on the New Asher
with PSK Tech are encouraging. The next step will be to develop a prototype of a
300mm asher, using Amtech's damage free technology,  and a similar machine for a
Beta site at one of Amtech's customers.  Amtech and PSK Tech have agreed to time
the  procurement,  assembly  and  testing of both  machines  in order to match a
customer's  advanced  technology  schedule,  which Amtech  understands calls for
testing to begin in approximately  November 2004. The combined cost of those two
machines  is  estimated  to be  approximately  $1.5  million,  but the  relative
contributions  of Amtech and PSK Tech to that stage of the project have not been
established.  However,  Amtech's  contribution  to the  project  could cause its
research and development expenses to increase significantly starting as early as
approximately November 2003. Already reflected in this schedule is the fact that
certain improvements to existing ashing processes have delayed the time frame in
which the semiconductor industry is expected to need Amtech's ashing technology.
There can be no assurances  that the  development of other new  technologies  or
process  improvements  by third  parties will not further delay this schedule or
provide competition to or make obsolete Amtech's ashing technology.

     The joint product development  agreement with PSK Tech provides that Amtech
will provide its patent pending,  damage-free ashing technology and know-how and
PSK Tech will provide its expertise in the design and  manufacture of ashers and
asher  processes.  The two companies will jointly own any resulting  technology.
Under the agreement,  Amtech will have exclusive selling and marketing rights to
the  resulting  New Asher for all of North  America and Europe and PSK Tech will
have exclusive  selling and marketing  rights for all of Asia.  Each company has
agreed to pay to the other a license fee of between two and five percent (2%-5%)
of its New  Asher  sales.  Amtech  has also  agreed  to sell the  energy  source
assemblies to PSK Tech for PSK's New Asher sales into Asia. Amtech will purchase
from PSK Tech ashers without the energy source assembly, for the platform of its
New Asher to be sold in the United States and Europe.  The assemblies  that each
company  sells to the other will be at a price to be mutually  agreed upon,  but
shall not exceed 1.334 times its cost of manufacturing.

                                       9
<PAGE>
PATENTS

     The  following  table shows the patents  granted  and the  expiration  date
thereof and the material  patents  pending for Amtech's  products in each of the
countries listed below:

                                                              EXPIRATION DATE OR
PRODUCT                          COUNTRY                      PENDING APPROVAL
-------                          -------                      ----------------
Atmoscan(R)                      United States                August 30, 2005
Atmoscan(R)                      United States                September 24, 2002
IBAL Cantilever Trolley          United States                July 10, 2015
IBAL Cantilever Trolley          United States                June 12, 2018
Photo CVD                        United States                June 1, 2010
Photo CVD                        United States                November 15, 2011
Proposed Damage-free Asher       United States                September 8, 2018
IBAL Model S-300                 United States                July 7, 2019
IBAL Model E-300                 France, Germany,             Pending Approval
                                 The Netherlands, Italy,
                                 United Kingdom
IBAL Model E-300                 United States                Pending Approval

     There can be no assurance that Amtech's pending patent applications will be
allowed  or that  the  issued  or  pending  patents  will not be  challenged  or
circumvented by competitors.  There can be no assurance that any of these rights
held by Amtech will not be challenged, invalidated or circumvented, or that such
rights will provide competitive advantages to Amtech.

     There are no pending lawsuits against Amtech regarding  infringement of any
existing patents or other intellectual  property rights or any unresolved claims
made by third parties that Amtech is infringing  intellectual property rights of
such third parties. There can be no assurance that third parties will not assert
infringement  claims in the future.  There also can be no assurance in the event
of successful claims of infringement that Amtech will be able to obtain licenses
on reasonable  terms, if at all.  Amtech's  involvement in any patent dispute or
other  intellectual  property  dispute of action  could have a material  adverse
effect on Amtech's business.  Adverse  determinations in any litigation relating
to   intellectual   property  could  possibly   subject  Amtech  to  significant
liabilities to third parties, require Amtech to seek licenses form third parties
and prevent Amtech from  manufacturing  and selling one or more of its products.
Any of these events could have a material adverse effect on Amtech.

SALES AND MARKETING

     Because of the highly  technical  nature of its products Amtech markets its
products by direct customer contact through Amtech sales personnel and through a
network of domestic and  international  independent  sales  representatives  and
distributors that specialize in semiconductor  equipment and supplies.  Amtech's
promotional  activities  include  direct sales  contacts,  an internet  website,
advertising in trade magazines and the distribution of product brochures. Amtech
also  participates  in trade shows,  including  Semicon  West,  Semicon  Europa,
Diskcon  and one  large  optics  show each  year.  Amtech'  sales and  marketing
activities in Asia are largely  dependent on its President,  Jong S. Whang,  and
its sales are  enhanced by his active  involvement  with the accounts of certain
other key customers.

     In fiscal 2002,  shipments  as a percent of total  shipments in each region
were:  North  America 47%,  Asia 20% and Europe 33%.  During  fiscal  2001,  one
customer  accounted for 14% or more of total sales; for fiscal 2000 and 2002, no
single  customer  accounted  for more  than 10% of  sales.  For a more  complete
analysis of significant  customers and sales to customers by geographic  region,
see Note 8 of the Notes to  Consolidated  Financial  Statements  included herein
(the "Financial  Statements") and Item 7 of this annual report.  For information
regarding revenue, operating profit or loss and identifiable assets attributable
to each of Amtech's  industry  segments and financial  information about foreign
and  domestic  operations,  see Note 9 of the  Notes to  Consolidated  Financial
Statements included herein and Item 7 of this annual report.

                                       10
<PAGE>
     The Company's  business is not seasonal in nature, but is cyclical based on
the capital equipment investment patterns of semiconductor manufacturers.  These
expenditure  patterns are based on many factors,  including  anticipated  market
demand for integrated  circuits,  the development of new technologies and global
and regional economic conditions.

     COMPETITION

     Amtech competes in several distinct  markets,  including the  semiconductor
devices equipment market,  the  semiconductor  wafer market,  the solar cell and
optical  component  equipment  markets,  and the market for  general  industrial
lapping and polishing machines and supplies. Each of the markets in which Amtech
competes  is highly  competitive.  Amtech's  ability to  compete  depends on its
ability to continually improve its products,  processes and services, as well as
its ability to develop  new  products  that meet  constantly  evolving  customer
requirements.   Significant   competitive   factors   for   succeeding   in  the
semiconductor  manufacturing  equipment market include the equipment's technical
capability,  productivity and cost-effectiveness,  overall reliability,  ease of
use  and  maintenance,  contamination  and  defect  control,  and the  level  of
technical service and support provided by the vendor.  The importance of each of
these factors varies  depending on the specific  customer's  needs and criteria,
including  considerations  such as the customer's process  application,  product
requirements,  timing  of  the  purchase  and  particular  circumstances  of the
purchasing decision.

     Amtech's diffusion furnaces,  robotic/processing  equipment and double-side
lapping and polishing  machines  primarily  compete with those produced by other
domestic  and foreign  original  equipment  manufacturers,  several of which are
well-established  firms that are larger and have greater  resources than Amtech.
To a much  lesser  extent  the  Company's  diffusion  furnaces  compete  against
vertical  furnaces on the high-end of the price spectrum.  Amtech's furnaces and
lapping and polishing  machines also face to a limited extent  competition  from
used equipment on the low-end of the price spectrum.  Amtech intends to maintain
or improve its  competitive  position for orders for its diffusion  furnaces and
automation  products by  focusing  its sales and  marketing  efforts on the very
large and growing middle market,  its willingness to design products to meet the
customer's  specific  process  requirements,  providing  competitive  prices and
product support services levels.

     The Company  believes its  automation  products are  generally  superior to
those of its  primary  competitors.  Amtech  believes  that  patents  on the key
features of its  automation  products  provide a competitive  advantage.  Amtech
expects its automation product competitors to improve the design and performance
of  their  products.   There  can  be  no  assurance  that  Amtech's  automation
competitors will not develop  enhancements or acquire new technologies that will
offer price or  performance  features  superior to those offered by the Company.
Amtech believes that its S-300 and E-300 automation products require less of the
expensive  clean room floor space,  are generally  less  expensive and easier to
operate than those of the  competition.  The target  market for IBAL  automation
products  includes those customers who do not require the  sophistication of the
more  complex  competing  systems  or do not have or are not  willing to provide
additional clean room space.  Amtech does not know of any products comparable to
its IBAL  automation  that are  capable of  loading  Atmoscan(R)  systems,  thus
providing it a competitive advantage.

     Amtech is not aware of any significant  product that directly competes with
the  Atmoscan(R);  however,  there are  several  processing  systems and various
configurations  of  existing  manufacturing  products  that  provide  advantages
similar to those that Amtech believes the Atmoscan(R)  provides to semiconductor
manufacturers.   Notwithstanding   this   competition,   Amtech   believes  that
Atmoscan(R)  provides better results in terms of more uniform wafer  temperature
and dispersion of heated gases in the semiconductor  manufacturing process, less
exposure of semiconductor wafers to contaminants, and other technical advantages
that afford to its users a higher yield.

     While the industry trend is toward the use of vertical  diffusion  furnaces
that are not compatible  with Amtech's  processing/robotic  products and compete
with  the  Company's  diffusion  furnaces,  Amtech  believes  that a  number  of
customers  are, and will  continue to be,  willing to buy  horizontal  diffusion
furnaces  and related  processing  and  robotic  equipment.  Vertical  diffusion
furnaces are more  efficient to use than the  horizontal  diffusion  furnaces in
certain manufacturing processes of smaller chips on larger wafers. However, such
furnaces are significantly more expensive to purchase than horizontal  diffusion
furnaces.  The products  comprising  Amtech's  semiconductor  equipment  segment
consist of, or are only useable with, horizontal diffusion furnaces.

                                       11
<PAGE>
     Despite this trend, Amtech believes there are a number of factors that will
allow it to maintain or even increase its revenue in the semiconductor  segment.
These factors include (i) the fact that the producers of vertical  furnaces used
to be the largest  competitors for Amtech's horizontal  diffusion furnaces,  but
are now beginning to exit from their horizontal  diffusion furnace production in
order to focus on their higher priced  products;  (ii) the fact that as the most
advanced  semiconductors  migrate  toward 300mm wafers,  other chip designs will
transition from 100mm - 150mm wafer sizes to larger wafers,  generally 200mm and
smaller,  served by Amtech's products;  (iii) concerns over scrap caused when an
operator either drops a boat load of wafers or loads them into the wrong process
chamber  may  significantly  increase  the demand for the  Company's  automation
products;  (iv) the trend  for  governmental  legislation  and  regulation  over
ergonomic  and  employee  safety  issues may also  contribute  to the demand for
Amtech's  automation  products;  (v) the potential for  significant  orders from
emerging markets, such as those secured from manufacturers of optical components
in calendar  year 2000,  (vi) some  semiconductor  fabricators  are finding that
rather than continuing to exclusively use the more expensive  vertical furnaces,
it can be more cost effective to use horizontal  diffusion  furnaces for some of
the less demanding  process steps,  such as producing thick oxide layers,  POCL3
doping and annealing;  and (vii) the fact that  horizontal  diffusion  furnaces,
with up to four  process  chambers,  are  often  much more  cost  efficient  for
fabricators of a large number of different chip designs than similarly or higher
priced verticals, which generally have only one process chamber.

     Amtech believes that it is much larger and  financially  stronger than most
of the other domestic  manufacturers  of lapping and polishing  carriers,  which
tend to be family  owned  businesses.  However,  the Company is  currently  also
experiencing price competition from carriers produced by foreign  manufacturers,
for which  there is very little  publicly  available  information.  As a result,
Amtech is  intensifying  its efforts to reduce the cost of its carriers and will
continue to compete with other manufacturers of carriers by continually updating
its  product  line to  keep  pace  with  the  rapid  changes  in its  customers'
requirements and providing a higher level of customer  service.  Amtech has been
able to  capture a small yet  meaningful  share of the  semiconductor  polishing
template  market,  which Rodel,  a division of Rohm and Haas,  dominates with an
estimated 90% market share.  Amtech's strategy for competing for template orders
is to seek out niche markets,  provide the highest  practical  level of customer
support  and by meeting the  industry's  perceived  need for a second  source to
avoid continued dependence upon the dominant industry leader.

EMPLOYEES

     At September 30, 2002, Amtech employed 111 people.  Of these employees,  25
are based at Amtech's  corporate  offices and  manufacturing  facility in Tempe,
Arizona, 31 are employed at its manufacturing  plant in Carlisle,  Pennsylvania,
44 at its  facility in Heerde,  The  Netherlands,  and 11 in  Amtech's  contract
semiconductor  manufacturing support services business located in Austin, Texas.
Of the 31 people employed at Amtech's Carlisle,  Pennsylvania  facility,  19 are
represented  by the United Auto  Workers  Union - Local  1443.  Amtech has never
experienced a work stoppage or strike.  Amtech considers its employee  relations
to be good.

ITEM 2. PROPERTIES

     Amtech's semiconductor  processing/robotic equipment business and corporate
offices are located in 15,700 square feet of office and  manufacturing  space at
its principal  address.  These facilities are leased at a current rate of $8,096
per  month,  on a triple net  basis,  for a term to expire on August  31,  2003.
Manufacturing support services are performed in customer facilities.

     Amtech's  diffusion  furnace  business is  conducted  primarily  in a 9,900
square  foot  building  it owns,  which is located in Heerde,  The  Netherlands.
Amtech also leases an additional 5,500 square feet of  manufacturing  space in a
location near the Heerde plant. These facilities are leased at a current rate of
approximately  $1,484 per month, for varying terms, the last of which expires on
August 1, 2006.

     Amtech  leases  a  21,740   square  foot  building   located  in  Carlisle,
Pennsylvania from John R. Krieger,  the former owner of the Company's  polishing
supplies business.  These facilities are leased at a current rate of $10,810 per
month, on a triple net basis,  for a term that expires on June 30, 2004.  Amtech
has the option to renew the lease for five successive terms of one year each.

     Amtech  considers  the above  facilities  suitable and adequate to meet its
current requirements.

                                       12
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

     On or about August 31, 2000, a "P.R.  Hoffman Machine  Products" was one of
11 companies named in a legal action being brought by North  Middleton  Township
in Carlisle,  Pennsylvania,  in the Court of Common  Pleas,  Cumberland  County,
Pennsylvania,  the owner of a landfill  allegedly found to be  contaminated.  No
detailed allegations have been filed as part of this legal action, which appears
to have been filed to preserve the right to file claims for contributions to the
clean up of the  landfill at a later date.  Amtech  acquired  the assets of P.R.
Hoffman Machine Products Corporation in an asset transaction consummated on July
1, 1997.  The  landfill was closed and has not been used by P.R.  Hoffman  since
sometime prior to completion of Amtech's acquisition. Therefore, Amtech believes
that the named  company is the prior  owner of the  acquired  assets.  Under the
terms of the Asset  Purchase  Agreement  governing  the  acquisition,  the prior
owner,  P.R.  Hoffman Machine  Products  Corporation,  is obligated to indemnify
Amtech for any  breaches  of its  representations  and  warranties  in the Asset
Purchase Agreement, including representations relating to environmental matters.
In  accordance  with the  terms of the  Asset  Purchase  Agreement,  Amtech  has
provided notice to the prior owner of P.R. Hoffman Machine Products  Corporation
of Amtech's intent to seek  indemnification  from such owner for any liabilities
resulting from this legal action. Based on information available to Amtech as of
the date of this report,  management believes Amtech's costs, if any, to resolve
this matter will not be material to the its results of  operations  or financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     NONE.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS' MATTERS

     MARKET INFORMATION

     Amtech's  common stock,  par value $.01 per share ("Common  Stock"),  began
trading on the Nasdaq National Market(R),  under the symbol "ASYS," on April 18,
2001.  Prior to that time,  the Company's  Common Stock was traded on the Nasdaq
SmallCap  Market.  The following  table sets forth the high and low bid price at
which the shares of  Amtech's  Common  Stock  traded for each  quarter of fiscal
years 2002 and 2001, as reported by the NASDAQ National Market.

          Quarter Ended                         High           Low
          -------------                        ------         ------
          Fiscal 2002:
               December 31, 2001               $ 8.90         $ 4.58
               March 31, 2002                    7.25           5.55
               June 30, 2002                     7.35           4.15
               September 30, 2002                6.05           3.11

          Fiscal 2001:
               December 31, 2000               $15.25         $ 4.44
               March 31, 2001                   12.63           5.13
               June 30, 2001                    14.50           4.06
               September 30, 2001               10.00           4.50

HOLDERS

     As of December 20, 2002,  there were  approximately  1,036  stockholders of
record of Amtech's Common Stock. Based upon preliminary  quantities of materials
requested by brokers for Amtech's 2003 Annual Meeting of Shareholder, there were
approximately  an additional  3,375  beneficial  stockholders who held shares in
brokerage or other investment accounts as of that date.

                                       13
<PAGE>
DIVIDENDS

     Amtech has never paid  dividends.  Its  present  policy is to apply cash to
investment in product development,  acquisition or expansion;  consequently,  it
does not expect to pay dividends within the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

     The  selected  financial  data should be read in  conjunction  with Item 7,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  and Amtech's  consolidated  financial  statements  (including  the
related notes thereto) contained elsewhere in this report.  Effective October 1,
2000, Amtech changed its revenue  recognition policy. See Note 2 in the Notes to
Consolidated  Financial Statements and the pro forma information contain herein.
As revenue is not reported on a consistent  basis  between  years,  certain data
contained in this report may not be comparable between years.

<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED SEPTEMBER 30,
                                                        --------------------------------------------------------
                                                          2002        2001        2000        1999        1998
                                                        --------    --------    --------    --------    --------
                                                                 (in thousands, except per share data)
<S>                                                     <C>         <C>         <C>         <C>         <C>
OPERATING DATA:
Net revenues                                            $ 20,533    $ 22,852    $ 19,027    $ 14,766    $ 16,214
Operating income (loss)                                       77       1,577       1,982         568        (904)
Income (loss) before cumulative effect of a change in
  accounting principle                                       118       1,153       1,325         362        (590)
Cumulative effect of a change in accounting
  principle, net of tax(2)                                    --        (690)         --          --          --
Net income (loss)                                       $    118    $    463    $  1,325    $    362    $   (590)

EARNINGS (LOSS) PER SHARE(1):
BASIC:
Income (loss) before cumulative effect of a
  change in accounting principle                        $    .04    $    .43    $    .61    $    .17    $   (.28)
Cumulative effect of a change in accounting
  principle, net of tax(2)                                    --        (.26)         --          --          --
Basic earnings (loss) per share                         $    .04    $    .17    $    .61    $    .17    $   (.28)
DILUTED:
Income (loss) before cumulative effect of a change in
  accounting principle                                  $    .04    $    .41    $    .56    $    .17    $   (.28)
Cumulative effect of a change in accounting
  principle, net of tax(2)                                    --        (.25)         --          --          --
Diluted earnings (loss) per share                       $    .04    $    .16    $    .56    $    .17    $   (.28)

PRO FORMA AMOUNTS WITH THE CHANGE IN ACCOUNTING
  PRINCIPLE APPLIED RETROACTIVELY (UNAUDITED):
Total revenue                                           $ 20,533    $ 22,852    $ 18,908    $ 15,678          **
Net income                                              $    118    $  1,153    $  1,061    $    481          **
Net income per share:
Basic:                                                  $    .04    $    .43    $    .49    $    .23          **
Diluted:                                                $    .04    $    .41    $    .45    $    .22          **

BALANCE SHEET DATA:
Cash and cash equivalents                               $  8,046    $  5,998    $  5,785    $  1,125    $  1,352
Working capital                                           12,166      11,668      10,934       5,374       4,993
Total assets                                              17,393      18,571      17,483       8,745       9,325
Total current liabilities                                  2,722       4,575       4,667       1,748       2,531
Long-term obligations                                        459         411         237         287         348
Retained earnings (accumulated deficit)                    1,505       1,387         923        (402)       (764)
Stockholders' equity                                      14,212      13,584      12,580       6,710       6,447
</TABLE>

(1)  The results  shown have been  restated to reflect the  one-for-two  reverse
     split of Common Stock that was effective March 15, 1999.

(2)  Amtech recorded a non-cash  charge of $690,211,  after reduction for income
     tax  benefits  of  $410,000,  or ($0.26)  per basic  share,  to reflect the
     cumulative effect of the accounting  change as of October 1, 2000,  related
     to the  adoption  of  Securities  and  Exchange  Commission  ("SEC")  Staff
     Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements."

** Data is not available to provide pro forma information for this year.

                                       14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

     Amtech   develops,   manufactures,   markets   and   services  a  range  of
semiconductor  wafer manufacturing and semiconductor  fabrication  equipment and
related parts,  supplies and services on a worldwide basis. The products offered
are grouped into two segments: the semiconductor equipment segment, which offers
horizontal  diffusion  furnaces,   processing/robotic  equipment  for  diffusion
furnaces and services to semiconductor manufacturers, and the polishing supplies
segment, which offers supplies,  including carriers and templates, and equipment
for lapping and polishing,  which are some of the last steps in the  manufacture
of silicon wafers.  Demand for Amtech's products can change  significantly  from
period to period as a result of numerous factors, including, but not limited to,
changes in: 1) global and regional economic conditions; 2) supply and demand for
semiconductors or, more specifically, capacity utilization and production volume
of  manufacturers  of  semiconductors,  silicon wafers,  solar cells and optical
components;  and 3) the profitability of semiconductor  manufacturers.  For this
and other reasons, Amtech's results of operations for fiscal 2002, 2001 and 2000
may not necessarily be indicative of future operating results.

     The following  discussion and analysis  should be read in conjunction  with
Amtech's consolidated  financial data and our Consolidated  Financial Statements
and notes appearing elsewhere in this report.

     REVENUES.  Amtech's  total revenue for the fiscal year ended  September 30,
2002 was $20.5  million,  compared  to $22.9  million  in fiscal  2001 and $19.0
million  in  fiscal  2000,  representing  a  decrease  of 10% in 2002  and a 20%
increase in 2001. The following table reflects the consolidated new orders,  net
of cancellations, shipments, revenues and backlog as of the beginning and end of
the three fiscal  years ended  September  30, 2002,  as well as for Amtech's two
business  segments.

<TABLE>
<CAPTION>
                              Backlog                                                     Backlog
                             at start                               Net                   at end
                                of         New                    SAB 101       Net         of
                              Year(1)    Orders(2)   Shipments   Adjustment   Revenue     Year(1)
                             --------    --------    ---------    --------    --------    --------
                                                   (IN THOUSANDS OF DOLLARS)
<S>                          <C>         <C>          <C>         <C>         <C>         <C>
2002:
  Semiconductor Equipment:   $ 13,119    $  9,404     $ 12,348    $  3,063    $ 15,411    $  7,112
  Polishing Supplies              836       5,086        5,122          --       5,122         800
                             --------    --------     --------    --------    --------    --------
     Consolidated              13,955      14,490       17,470       3,063      20,533       7,912
                             ========    ========     ========    ========    ========    ========

2001:
  Semiconductor Equipment:     16,553      12,012       16,296        (850)     15,446      13,119
  Polishing Supplies            1,572       6,670        7,406          --       7,406         836
                             --------    --------     --------    --------    --------    --------
     Consolidated              18,125      18,682       23,702        (850)     22,852      13,955
                             ========    ========     ========    ========    ========    ========

2000:
  Semiconductor Equipment:      2,282      21,504       10,859          --      10,859      12,927
  Polishing Supplies            1,477       8,263        8,168          --       8,168       1,572
                             --------    --------     --------    --------    --------    --------
     Consolidated            $  3,759    $ 29,767     $ 19,027    $     --    $ 19,027    $ 14,499
                             ========    ========     ========    ========    ========    ========
</TABLE>

----------
(1)  Backlogs  in 2001 and 2002  include  a  positive  adjustment  to  reinstate
     backlog for revenue that will be  recognized  in future  periods due to the
     implementation  of Staff  Accounting  Bulletin No. 101 (SAB 101),  "Revenue
     Recognition in Financial Statements." Amounts prior to fiscal 2001 have not
     been restated.  The deferred revenue  included in the cumulative  effect of
     the change in the revenue  recognition  accounting  policy as of October 1,
     2000 was $3.6  million,  which  accounts  for the  difference  between  the
     backlog as of the end of 2000 and the beginning of 2001. The backlogs as of
     September 30, 2001 and 2002 included  deferred  revenue of $4.5 million and
     $1.4 million, respectively.
(2)  New orders are net of cancellations.

     Amtech's  business was subject to cyclical  industry  conditions  in fiscal
2002,  2001 and 2000. As a result of these  conditions,  there were  significant
fluctuations  in Amtech 's quarterly  new orders and net sales,  both within and

                                       15
<PAGE>
across fiscal years.  Demand for semiconductor  and silicon wafer  manufacturing
equipment and related  consumable  products has historically  been volatile as a
result of sudden changes in semiconductor supply and demand and other factors in
both semiconductor  devices and wafer fabrication  processes.  The semiconductor
equipment  segment accounted for 75%, 68% and 57% of Amtech's revenues and 255%,
59% and 50% of Amtech's  operating income in 2002, 2001 and 2000,  respectively.
The semiconductor  and optical component  industries' cycle peaked during fiscal
2000. As a result of the rapid  decline in the demand in 2001 for  semiconductor
devices and due to inventory  buildups in  telecommunications  products,  slower
than expected personal computer sales and overall slower global economic growth,
many  semiconductor  manufacturers  reevaluated  their capital  spending  plans.
Accordingly,  Amtech experienced cancellation of existing orders by customers in
fiscal 2001 and rescheduled  deliveries and a significant  decline in new orders
during 2001 and 2002.

     During the fourth fiscal quarter of 2001, Amtech implemented the Securities
and Exchange  Commission's Staff Accounting Bulletin No. 101 (SAB 101), "Revenue
Recognition in Financial Statements,"  retroactively  effective to the beginning
of fiscal 2001. See Note 2 of the Notes to  Consolidated  Financial  Statements.
Amounts  prior to fiscal 2001 have not been  restated.  Pursuant to the guidance
provided  in SAB  101,  at  least  some  portion  of  each  system  sale  in the
semiconductor  equipment  segment  is  deferred.  Some of the  more  significant
factors  that can  affect  the  length of time  from  shipment  to full  revenue
recognition are customer delays in site  preparation,  the time it takes for the
customer to obtain local permits, delays by other vendors in the installation of
equipment with which Amtech's  products must interface and the  availability  of
our  technicians.  Because the selling price of systems  generally range between
$125,000 and $1.2  million,  these  factors  significantly  affect the timing of
revenue  recognition  from  customer  to  customer  and system to system,  which
increases the volatility of revenue. Revenues for the polishing supplies segment
generally  are not  subject to  deferral  as there is no  customer  holdback  or
post-shipment obligations, other than warranty.

     Revenue of the polishing  supplies segment reached a record $8.2 million in
fiscal  2000,  as the  semiconductor  industry  reached the peak of the business
cycle.  By March 2001,  orders in the polishing  supplies  segment began a steep
decline,  reflecting  excess supply  inventories  and capacity of that segment's
customers.  The  polishing  supplies  segment  suffered a dramatic  decrease  in
revenues, declining from $8.2 million in fiscal 2000 to $7.4 million in 2001 and
$5.1 million in 2002, representing a decrease of 9% in 2001 and 31% in 2002.

     During  fiscal  2000,  new  orders  reached  a record  $30  million  as the
semiconductor  industry  was  reaching  the peak of the cycle  that began in the
previous year. During fiscal 2001,  slowing worldwide demand for  semiconductors
resulted in a rapid decrease in demand for  manufacturing  equipment.  Inventory
buildups in telecommunication  products,  slower than expected personal computer
sales and slower  global  economic  growth  caused  semiconductor  companies  to
reevaluate their capital spending and reschedule or cancel existing orders. This
decline in demand  worsened  throughout  the  remainder of fiscal 2001 and 2002,
resulting  in a  severe  industry  downturn  due to  continued  weakness  in the
macro-economic  climate and consumption of electronic  goods,  which  translated
into further capital spending cutbacks by semiconductor manufacturers.

     Revenues of the  semiconductor  equipment  segment increased 42% in 2001 to
$15.4  million  from $10.9  million in 2000 and remained at that higher level in
2002. By January 2001,  Amtech began to see signs of the downturn,  resulting in
the first of several order cancellations in the semiconductor equipment segment.
During 2001 and 2002, new orders in the semiconductor equipment segment declined
by 44% and 22%, respectively,  due to the downturn in the industry. However, the
shipments,  like the revenues of the semiconductor equipment segment,  increased
in fiscal 2001 by 50% despite the decline in orders, as Amtech worked off a part
of the large  backlog  that had built up in 2000.  The $3.6  million  of revenue
deferred from prior periods as a part of the  cumulative  effect  adjustment for
the accounting change in revenue recognition further increased the backlog as of
October 1, 2000. In 2002, the  semiconductor  segment  experienced a decrease in
shipments  of  $3.9  million,  or  24%,  to  $12.3  million.   Revenues  of  the
semiconductor  equipment  segment  remained  at $15.4  million  in 2002,  as the
decline in shipments  was offset by the increase in the revenues  recognized  on
the completion or acceptance of systems,  which had previously been deferred due
to customer holdbacks or other contingencies.

     Due to the  continued  weakness in both the optical  component  market,  to
which  Amtech had  substantial  shipments  in fiscal 2000 and 2001,  but none in
2002, and the much larger semiconductor market, current outlook is for continued
lower  revenues in at least the first half of fiscal  2003.  However,  quarterly
consolidated  shipments  appear to have  stabilized and even recovered  slightly
from  the $4  million  level  of the  second  quarter  of  fiscal  2002  and the

                                       16
<PAGE>
semiconductor equipment segment continues to have a significant backlog, leading
management  to believe that revenue for fiscal 2003 may not be any lower than in
fiscal 2002.

     In 2002, 2001 and 2000, 53%, 45% and 39%,  respectively,  of Amtech's total
revenue was  attributable to sales outside of the United States.  Each region in
the global semiconductor  equipment market exhibits unique  characteristics that
can cause, and in the past have caused, capital equipment investment patterns to
vary  significantly from period to period. For a more complete analysis of sales
to  customers  by  geographic  region,  see Note 8 of the Notes to  Consolidated
Financial Statements included herein.

     The following table sets forth certain  operational data as a percentage of
net revenue for the three fiscal years ended September 30, 2002:

                                                    Fiscal Years Ended
                                                       September 30,
                                                --------------------------
                                                 2002      2001      2000
                                                ------    ------    ------
     Net revenue                                 100.0%    100.0%    100.0%
     Cost of sales                                76.5      69.9      65.2
                                                ------    ------    ------
          Gross margin                            23.5      30.1      34.8

     Selling, general and
       administrative expenses                    21.4      21.5      21.9
     Research and development                      1.7       1.7       2.5
                                                ------    ------    ------
          Operating income                          .4%      6.9%     10.4%
                                                ======    ======    ======

     GROSS  MARGINS.  Consolidated  gross  margin  for  the  fiscal  year  ended
September 30, 2002 was $4.8 million, compared to $6.9 million in fiscal 2001 and
$6.6 million in fiscal 2000, representing a decrease of $2.1 million, or 30%, in
2002, and an increase of $.3 million, or 5%, in fiscal 2001. In fiscal 2002, the
gross margin of the  semiconductor  equipment segment decreased by $1.1 million,
or 22%, primarily due to approximately $.5 million in inventory write-offs taken
in response to the continued decline in the semiconductor industry worldwide and
a  customer's  decision  to sell a plant  from  which  future  orders  had  been
expected. Other factors contributing to the 2002 decline in the gross margins of
the  semiconductor  equipment  segment  included  learning curve and development
costs incurred on customer orders for new products, i.e. 300mm diffusion furnace
and related automation and S-300 models with cassette-to-cassette capability and
interfaces to SMIF pod openers and factory  automation with SECS II Gem, and $.2
million in increased  labor costs.  The gross margin of the  polishing  supplies
segment declined by $1.0 million, or 49%, in fiscal 2002 due to the 31% decrease
in sales volume and the semi-fixed and fixed nature of labor and overhead costs,
which did not decline at the same rate as revenue.

     In fiscal 2001,  the gross margin of the  semiconductor  equipment  segment
increased 20%, due to increased sales volume.  However,  the gross margin of the
polishing supplies segment declined 22%, offsetting  approximately two-thirds of
the increase contributed by the semiconductor equipment segment.

     As a percentage of revenue, the consolidated gross margin was 23% in fiscal
2002, compared to 30% in fiscal 2001, and 35% in 2000.  Write-downs of excess or
obsolete  inventory of $.6 million in 2002,  compared to $.3 million in 2001 and
$.1 million in 2000  contributed to the decline in gross margins as a percentage
of revenue in 2002 and 2001. Other factors  contributing to the decline in gross
margin as a  percentage  of revenue  were product mix in both years and learning
curve costs in 2002 of the  semiconductor  segment,  underabsorption  of factory
expenses in the polishing  supplies segment and competitive  pricing pressure of
both segments.  Amtech's gross margin has  significantly  fluctuated in the past
and will continue to fluctuate based on several  factors  including the severity
and duration of the current industry  downturn,  revenue  recognition  under SAB
101, product mix and overhead absorption levels.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general
and administrative  expenses were $4.4 million in fiscal 2002,  compared to $4.9
million in 2001 and $4.2 million in 2000.  The provision  for doubtful  accounts
receivable  was  approximately  $.5 million higher in fiscal 2001 than in fiscal
2000 and $.1 million  higher than in 2002,  primarily due to a major customer in
the  optical  component  industry  filing for  bankruptcy  in 2001.  Commissions

                                       17
<PAGE>
expense decreased by $.2 million in 2002 due to the decrease in shipments in the
semiconductor  equipment  segment  and by $.1  million  in 2001 due to the lower
sales volume in polishing  supplies segment.  Costs associated with implementing
new data  processing  systems  also  contributed  to the increase in general and
administrative  expenses  in 2001 and the  decline in such  costs in 2001.  Cost
cutting  measures  reduced  selling  and   administrative   personnel  costs  by
approximately $.1 million in 2001 and 2002. Selling,  general and administrative
expenses as a percentage  of revenue  remained  relatively  constant  during the
three-year period, ranging 21.9% in 2000 and declining to 21.5% in fiscal 2002.

     RESEARCH AND DEVELOPMENT EXPENSES.  During fiscal years 2002, 2001 and 2000
Amtech's  expenditures  accounted  for as  research  and  development  were  $.3
million,  $.4 million and $.5  million,  respectively.  During all three  fiscal
years,  the most  significant  project  included  in  research  and  development
expenses has been the development of a new technology  asher pursuant to a joint
product  development  agreement  with PSK Tech.  The cause  for the  decline  in
research and  development  costs in fiscal 2001  compared to fiscal 2000 is that
most of our  equipment  contribution  to the  initial  stage of the joint  asher
development  project were made in fiscal 2000. The decline in 2002 is the result
of reduced  spending on new controls for the Tempress(R)  diffusion  furnace and
research  and  development  grants  in  the  Netherlands.  The  results  of  the
feasibility work on the new technology asher with PSK Tech are encouraging.  The
next step will be to develop a prototype of a 300mm asher, using Amtech's damage
free  technology,  and a  similar  machine  for a Beta  site at one of  Amtech's
customers. Amech and PSK Tech have agreed to time the procurement,  assembly and
testing of both  machines  in order to match a  customer's  advanced  technology
schedule,  which Amtech  understands calls for testing to begin in approximately
November  2004.  The  combined  cost of those two  machines is  estimated  to be
approximately  $1.5 million,  but the relative  contributions  of Amtech and PSK
Tech to that stage of the project have not been established.  However,  Amtech's
contribution to the project could cause its research and development expenses to
increase  significantly  starting  as  early  as  approximately  November  2003.
Significant  projects  completed  in 2000  included the  development  of two new
models of  automation,  which were the S-300 and  E-300.  In 2002,  the  Company
completed the  development of a 300mm diffusion  furnace and related  automation
and S-300 models with cassette-to-cassette capability and interfaces to SMIF pod
openers and factory  automation  with SECS II Gem.  However,  a portion of those
costs are incurred while completing customer orders and are charged,  along with
other costs of the order,  to cost of sales and  therefore  not  included in the
research and development expenses.

     OPERATING INCOME. Operating income for fiscal year 2002 was $.1 million, or
less than 1% of revenue,  compared to $1.6 million,  or 7% of revenue, in fiscal
2001, and $2.0 million, or 10% of revenue, in 2000. Operating income declined in
2002 due  primarily to the decline in revenues  and related  gross margin in the
polishing  supplies  segment  and the lower  gross  margin of the  semiconductor
equipment  segment,  as explained above. The decline in operating income in 2001
was due to increased selling, general and administrative expenses, primarily the
$.5 million increase in the provision for doubtful accounts. Operating income as
a percent  of revenue  declined  in 2002 and 2001  primarily  as a result of the
decline in gross margins as a percent of sales, discussed above.

     INTEREST  INCOME-NET.  Net interest  income was $.1 million in fiscal 2002,
compared  to $.2  million in fiscal  2001 and $.1  million in fiscal  2000.  The
decrease in net  interest  income in 2002 is the result of  substantially  lower
interest  rates,  while the increase in 2001 was a result of investing the funds
from the September 2000 private placement.

     INCOME TAX PROVISION.  During fiscal 2002,  2001 and 2000,  Amtech recorded
income tax provisions of $.1 million, $.7 million and $.8 million, respectively.
The  effective  rate stated as a percentage  of income  before  income taxes and
cumulative effect of the change in revenue recognition  accounting principle was
30%,  37% and 36% in  fiscal  years  2002,  2001  and  2000,  respectively.  The
significantly  lower  effective  tax in fiscal 2002 is a result of the fact that
more than all of the consolidated operating profit was earned in The Netherlands
where there is no state income tax rate. In addition, a state income tax benefit
arose from operating  losses in the United  States.  Amtech's  future  effective
income  tax rate  depends  on  various  factors,  such as tax  legislation,  the
geographic  composition of the pre-tax income,  non-tax deductible  expenses and
the effectiveness of its tax planning strategies.

     NET INCOME.  Net income for fiscal 2002, 2001 and 2000,  respectively,  was
$.1  million,  $.5 million and $1.3  million.  Net income per diluted  share was
$.04, $.16 and $.56 in fiscal 2002, 2001 and 2000, respectively.  On a pro forma

                                       18
<PAGE>
basis,  with the change in the revenue  recognition  accounting  principle being
applied  retroactively,  net income per diluted share was $.04, $.41 and $.45 in
fiscal 2002, 2001 and 2000, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     As of  September  30, 2002 and 2001,  cash and cash  equivalents  were $8.0
million and $6.0  million,  respectively.  Amtech's  ratio of current  assets to
current  liabilities  was  5.5:1  and  3.4:1 at  September  30,  2002 and  2001,
respectively.

     Amtech  generated  cash from  operations  in each of the last three  fiscal
years as  follows:  2002 - $2.4  million,  2001 - $0.4  million  and 2000 - $0.2
million.

     In each of these fiscal years,  investing activities consisted of software,
computers  and  equipment   purchases  and  building   improvements.   Financing
activities provided $-0- million, $.4 million and $4.7 million in 2002, 2001 and
2000,  respectively.  In 2001,  financing  activities  consisted  mainly  of the
proceeds from stock options  exercised  and in 2000,  the financing  income came
from a private placement of common stock.

     At September 30, 2002, Amtech's principal sources of liquidity consisted of
$8.0 million of cash and cash equivalents.  Since the only lien on the Company's
assets is a $.2 million  mortgage  loan,  management  believes that  significant
amounts of additional  liquidity is available  from various  financing  sources.
Amtech believes that it has sufficient  liquidity for current operations and for
at least certain elements of its growth  strategy.  One element of that strategy
is the  development of new products such as the proposed new  technology  asher.
Another is the  acquisition of product lines or businesses  that  complement the
company's  existing business.  Amtech's currently  available cash and short-term
investments  are  expected to be  sufficient  for existing  operations,  planned
research  and  development  and  possibly  an  acquisition,  depending  on size.
However,   significant   unplanned   development  of  new  products,  or  larger
acquisitions may require  additional  capital  resources that are expected to be
obtained from one or more sources of financing,  such as a private placement,  a
public  offering,  working  capital  loans  or term  loans  from  banks or other
financial  institutions,  equipment  leasing,  mortgage financing and internally
generated  cash  flow  from  operations.  There  can  be  no  assurance  of  the
availability  or  sufficiency  of these or any other source of funding for those
purposes.

COMMITMENTS

     Key suppliers include two steel mills, one domestic and one German, capable
of meeting the material  specification the Company requires. As of September 30,
2002,  the  Company had  unconditional  commitments  to purchase  $.5 million of
steel, with delivery dates to be determined in the future.  Due to minimum order
quantities  for this steel and long lead times,  the  Company has made  purchase
commitments  that may be in  excess of future  production  requirements,  and it
could take several  years to use all of the steel  commitments  in production of
the Company's products. These purchase commitments are not expected to result in
any significant losses.

     The Company leases buildings,  vehicles and equipment.  As of September 30,
2002,  minimum rental  commitments under  noncancellable  operating leases total
$447,000,  of which  $264,000,  $138,000 and $45,000 are payable in fiscal years
2003, 2004 and 2005, respectively.

CHANGE IN ACCOUNTING PRINCIPLE

     REVENUE RECOGNITION.  During the fourth quarter of fiscal 2001, the Company
changed its revenue  recognition policy retroactive to October 1, 2000, based on
guidance provided in Securities and Exchange Commission ("SEC") Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." The
Company  recognizes revenue when persuasive  evidence of an arrangement  exists;
title  transfers,  generally upon shipment or services have been  rendered;  the
seller's  price  is fixed  or  determinable  and  collectibility  is  reasonably
assured.   Certain  of  the  Company's   product  sales  are  accounted  for  as
multiple-element  arrangements.  For the semiconductor equipment segment, if the
Company  has  met  defined  customer   specifications  with  similarly  situated
customers  and  the  specific  equipment  and  process  involved,   the  Company
recognizes  equipment  revenue upon  shipment  and  transfer of title,  with the
remainder when it becomes due, generally upon acceptance. Product sales that are
shipped but do not meet these criteria are deferred and recognized upon customer
acceptance.

                                       19
<PAGE>
     Equipment sold by the polishing  supplies  segment does not involve process
guarantees  or  acceptance  criteria,  so the related  revenue is recorded  upon
shipment. For all segments,  sales of spare parts and consumables are recognized
upon  shipment.  Service  revenues are  recognized  as services  are  performed.
Revenue  related to service  contracts is  recognized  upon  performance  of the
services requested by the customer.

     In  accordance  with guidance  provided in SAB 101, the Company  recorded a
non-cash charge of $690,211 (after  reduction for income taxes of $410,000),  or
($0.26) per basic  share,  to reflect the  cumulative  effect of the  accounting
change as of the beginning of the 2001 fiscal year.

     The  deferred  profit  balance  as of the  beginning  of  fiscal  2001  was
$1,125,211. This amount is the deferred revenue net of the related cost of sales
for equipment that was shipped and previously recorded as sales but had not been
accepted or did not qualify for multiple-element  accounting as of September 30,
2000. Of the  $1,125,211 in deferred  profit as of the beginning of fiscal 2001,
$122,640 and $936,994 was  recognized  in 2002 and 2001,  respectively.  The pro
forma  amounts  presented on the  consolidated  statements  of  operations  were
calculated  assuming  the  accounting  change  was  retroactively  adopted as of
October 1, 1998.

     Prior to fiscal  2001,  the  Company's  revenue  recognition  policy was to
recognize  revenue and accrue the estimated  installation  costs at the time the
customer  took title to the product,  generally at the time of shipment  because
the Company  routinely met its installation  obligations and installation  costs
represented a small percentage of total costs (approximately 3% - 5%.)

CRITICAL ACCOUNTING POLICIES

     "Management's Discussion and Analysis of Financial Condition and Results of
Operations"  discusses  our  consolidated  financial  statements  that have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America. The preparation of these financial statements requires
us to make estimates and  assumptions  that affect the reported amount of assets
and  liabilities  at the date of the  financial  statements,  the  disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.

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

     The SEC suggests that all registrants list their most "critical  accounting
policies" in  Management's  Discussion  and Analysis of Financial  Condition and
Results  of  Operations.  A  critical  accounting  policy  is one  that  is both
important to the portrayal of the Company's  financial condition and results and
requires management's most difficult,  subjective or complex judgments, often as
a result of the need to make  estimates  about the  effect of  matters  that are
inherently  uncertain.  Management  believes the following  critical  accounting
policies affect its more significant  judgments and estimates in the preparation
of its consolidated financial statements.

     REVENUE  RECOGNITION.   The  Company  recognizes  revenue  when  persuasive
evidence of an arrangement exists; title transfers;  the seller's price is fixed
or  determinable  and  collectibility  is  reasonably  assured.  Certain  of the
Company's product sales are accounted for as multiple- element arrangements. For
the  semiconductor  equipment  segment,  if the Company has met defined customer
specifications with similarly situated customers,  equipment and processes,  the
Company  recognizes  equipment  revenue upon shipment and transfer of title, and
the holdback  portion of the revenue that is contingent  upon  installation  and
acceptance,  generally 10% - 20% of a system's  selling price, is deferred until
those  activities are  completed.  Revenues for products that are shipped but do
not meet this  criteria are  deferred  and  recognized  when the  equipment  and
processes  are proven,  generally  upon customer  acceptance  or upon  obtaining
customer acceptance on at least two similar systems.  Collection of the holdback
portion  of a  system  sale  is  often  based  on  system  acceptance  or  final
installation.  We have, on occasion,  experienced longer than expected delays in
receiving  cash  from  certain  customers  pending  system  acceptance  or final
installation.  If some of our  customers  were to  refuse  to pay the  remaining

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holdback,  or otherwise  delay final  acceptance or  installation,  the deferred
revenue would not be recognized, adversely affecting future operating results.

     Equipment sold by the polishing  supplies  segment does not include process
guarantees  or  acceptance  criteria,  so the related  revenue is recorded  upon
shipment. For all segments,  sales of spare parts and consumables are recognized
upon  shipment,  as there are no post shipment  obligations  other than standard
warranties.  Service  revenues are recognized  upon  performance of the services
requested by the customer. Revenue related to service contracts is recognized as
the services requested by the customer are performed.

     INVENTORY  VALUATION.  We value our  inventory  at the lower of cost or the
current estimated market value. We regularly review inventory quantities on hand
and record a write-down  for excess and  obsolete  inventory.  The  provision is
primarily  based on our  estimated  forecast  of product  demand and  production
requirements.  However,  our  industry is  characterized  by customers in highly
cyclical  industries,   rapid  technological   changes,   frequent  new  product
developments and rapid product  obsolescence.  During 2001 and 2002, there was a
significant   decrease  in  the  worldwide  demand  for  semiconductor   capital
equipment. Demand for our products has fluctuated significantly and may do so in
the future,  which could  result in an increase in the cost of  inventory  or an
increase  in  excess  inventory  quantities  on  hand.  The  Company's  ratio of
inventories to operating  levels is above,  and is expected to remain above, the
historic  norms of our business due to order  cancellations  and the deferral of
orders by customers. There can be no assurance that future developments will not
necessitate further write-downs.

     VALUATION  ALLOWANCE FOR ACCOUNTS  RECEIVABLE.  We maintain  allowances for
doubtful  accounts for  estimated  losses  resulting  from the  inability of our
customers to make required  payments.  These  allowances are based on historical
experience,  credit evaluations and specific customer  collection issues we have
identified. Since our accounts receivable are often concentrated in a relatively
few number of  customers,  a  significant  change in the  liquidity or financial
position of any one of these customers  could have a material  adverse impact on
the collectibility of our accounts receivable and our future operating results.

     WARRANTY.  The Company  provides a limited  warranty,  generally  twelve to
twenty-four  months,  to all  purchasers  of its new  products  and  systems.  A
provision for the estimated cost of providing warranty coverage is recorded upon
shipment of all systems. On occasion,  we have been required and may be required
in the future to provide additional warranty coverage to ensure that the systems
are ultimately  accepted or to maintain  customer  goodwill.  While our warranty
costs have  historically  been within our expectations  and management  believes
that the amounts  accrued  for  warranty  expenditures  are  sufficient  for all
systems  sold  through  September  30, 2002,  we cannot  guarantee  that we will
continue to experience a similar level of predictability with regard to warranty
costs we have in the past.  In  addition,  technological  changes or  previously
unknown  defects in raw materials or components may result in more extensive and
frequent warranty service than anticipated,  which could have a material adverse
impact on our operating  results for the periods in which such additional  costs
materialize.

     IMPAIRMENT  OF  LONG-LIVED   ASSETS.   We  evaluate   whether   events  and
circumstances  have  occurred  that  indicate  the  estimated  useful  lives  of
long-lived  assets  or  intangible  assets  may  warrant  revision  or that  the
remaining  balance may not be recoverable.  When factors  indicate that an asset
should be evaluated for possible  impairment,  we use an estimate of the related
undiscounted net cash flows generated by the asset over the remaining  estimated
life of the  asset  in  measuring  whether  the  asset is  recoverable.  We make
judgments and estimates used in establishing the carrying value of long-lived or
intangible  assets.  Those  judgments and estimates could be modified if adverse
changes occurred in the future resulting in an inability to recover the carrying
value of these  assets.  We have not  experienced  any  impairment to long-lived
assets during fiscal 2001 or fiscal 2002. Future adverse changes could be caused
by, among other factors, a continued downturn in the semiconductor  industry,  a
general economic slowdown,  reduced demand for our products in the market place,
poor operating results,  inability to protect intellectual  property or changing
technologies and product obsolescence.

ACCOUNTING PROUNOUNCEMENTS NOT YET ADOPTED

     In July 2001, the Financial Accounting Standards Board issued Statements of
Financial  Accounting  Standards  No. 141,  "Business  Combinations"  ("SFAS No.
141"),  and No. 142,  "Goodwill and Other  Intangible  Assets" ("SFAS No. 142").
SFAS No. 141  eliminates  pooling of  interest  as a method for  accounting  for
business  combinations.  SFAS  No.  142  requires  the  discontinuation  of  the
amortization  of goodwill and  intangible  assets with  indefinite  lives and at

                                       21
<PAGE>
least an annual  assessment  of  whether  there has been an  impairment  of such
assets that needs to be  recognized  as an  impairment  charge.  Effective as of
October 1, 2002, Amtech will adopt SFAS Nos. 141 and 142. Since  amortization of
goodwill is currently $74,000 per year, the discontinuation of such amortization
will not have a material  affect on Amtech's  results of operations or financial
condition.  Amtech does not expect to incur an impairment  charge related to the
$728,000 of goodwill included in its assets as of September 30, 2002.

     The FASB recently  issued SFAS No. 144,  "Accounting  for the Impairment or
Disposal of  Long-Lived  Assets,"  that is  applicable  to financial  statements
issued for fiscal  years  beginning  after  December 15,  2001.  This  statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to be Disposed  Of," and portions of APB Opinion No. 30,
"Reporting the Results of Operations." SFAS No. 144 provides a single accounting
model for  long-lived  assets to be  disposed of and  significantly  changes the
criteria   that  must  be  met  to   classify  an  asset  as  "held  for  sale."
Classification as "held for sale" is an important  distinction since such assets
are not  depreciated  and are  stated  at the lower of fair  value and  carrying
amount.  SFAS No.  144 also  requires  expected  future  operating  losses  from
discontinued operations to be displayed in the period(s) in which the losses are
incurred,  rather than as of the  measurement  date as presently  required.  The
provisions  of SFAS  No.  144 are not  expected  to have a  material  effect  on
Amtech's financial position or operating results.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections." This Statement rescinds the requirement to report gains and losses
from  extinguishment  of  debt  as an  extraordinary  item.  Additionally,  this
statement amends Statement 13 to require  sale-leaseback  accounting for certain
lease  modifications  that  have  economic  effects  similar  to  sale-leaseback
transactions.  The  provisions  of this  statement  relating to  Statement 4 are
applicable in fiscal years  beginning after May 15, 2002. The provisions of this
Statement related to Statement 13 are effective for transactions occurring after
May 15, 2002. All other provisions of this Statement are effective for financial
statements issued on or after May 15, 2002. The adoption of SFAS No. 145 did not
have an effect on Amtech's financial statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities". SFAS 146 nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3,  "Liability  Recognition for Certain  Employee
Termination  Benefits and Other Costs to Exit an Activity.  For purposes of this
Statement,  an exit activity includes,  but is not limited to a restructuring as
that  term  is  defined  in IAS 37,  "Provisions,  Contingent  Liabilities,  and
Contingent  Assets".  The Statement is effective for exit or disposal activities
initiated  after December 31, 2002. The adoption of SFAS No. 146 is not expected
to have an effect on Amtech's financial statements.

TRENDS, RISKS AND UNCERTAINTIES

     IF DEMAND FOR HORIZONTAL DIFFUSION FURNACES AND RELATED EQUIPMENT DECLINES,
OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY  ADVERSELY
AFFECTED.

     The revenue of our  semiconductor  equipment  segment,  which  accounts for
approximately three quarters of consolidated  revenues, is comprised of sales of
horizontal  diffusion  furnaces and our  processing/robotic  product  line.  Our
processing/robotic  product  line is  useable  only  with  horizontal  diffusion
furnaces.  There is a trend in the semiconductor industry,  related to the trend
to  produce  smaller  chips,  toward  the  use  in  semiconductor  manufacturing
facilities of newer technology,  such as vertical diffusion  furnaces.  Vertical
diffusion  furnaces  are more  efficient  to use than the  horizontal  diffusion
furnaces in certain  manufacturing  processes of smaller chips on larger wafers.
Because of this trend, we had expected that demand for our horizontal  diffusion
furnaces would decline.  We believe this trend has not adversely affected us yet
primarily because:

     *    we have experienced  increased demand from  manufacturers  that do not
          require  the  more   expensive   vertical   furnaces,   such  as  from
          manufacturers of wireless  communication  chips and  micro-controllers
          used in a number of consumer applications; and

     *    we believe that because of  improvements  in automation for horizontal
          diffusion  furnaces,  such as our  robotic  product  line,  horizontal
          diffusion furnaces may be becoming a more favorable alternative to the
          vertical furnaces than they previously had been; and

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<PAGE>
     *    we are pursuing alternative markets,  such as solar cell manufacturers
          and research and  development  facilities,  which  accounted  for $1.7
          million and $.5, respectively, of revenues in 2002.

     However,  to the extent that the trend to use vertical  diffusion  furnaces
over horizontal  diffusion furnaces continues,  our revenues may decline and our
corresponding ability to generate income may be adversely affected.

THE ONGOING  VOLATILITY OF THE SEMICONDUCTOR  EQUIPMENT  INDUSTRY MAY NEGATIVELY
IMPACT OUR BUSINESS AND RESULTS OF OPERATIONS AND OUR  CORRESPONDING  ABILITY TO
EFFICIENTLY BUDGET OUR EXPENSES.

     The  semiconductor  equipment  industry is highly cyclical.  The purchasing
decisions of our customers  are highly  dependent on the economies of both their
domestic markets and the semiconductor  industry worldwide.  The timing,  length
and severity of the up-and-down  cycles in the semiconductor  equipment industry
are difficult to predict.  This cyclical nature of our  marketplace  affects our
ability to accurately budget our expense levels,  which are based in part on our
projections of future revenues.

     When cyclical  fluctuations  result in lower than expected  revenue levels,
operating results may be adversely  affected and cost reduction  measures may be
necessary in order for us to remain competitive and financially sound.  During a
down cycle,  we must be able to make timely  adjustments to our cost and expense
structure to correspond to the prevailing market conditions. In addition, during
periods of rapid growth, we must be able to increase  manufacturing capacity and
personnel  to meet  customer  demand.  We can  provide no  assurance  that these
objectives can be met in a timely manner in response to industry  cycles.  If we
fail to respond to industry cycles, our business could be seriously harmed.

     During the most recent down  cycle,  beginning  in the first half of fiscal
2001, the semiconductor  industry  experienced  excess production  capacity that
caused semiconductor  manufacturers to decrease capital spending. We do not have
long-term volume  production  contracts with our customers and we do not control
the  timing or volume of orders  placed by our  customers.  Whether  and to what
extent our  customers  place  orders for any  specific  products and the mix and
quantities of products  included in those orders are factors beyond our control.
Insufficient  orders  will  result  in  under-utilization  of our  manufacturing
facilities  and  infrastructure  and  will  negatively  affect  our  results  of
operations and financial condition.

WE  ARE  DEPENDENT  ON KEY  PERSONNEL  FOR  OUR  BUSINESS  DEVELOPMENT,  PRODUCT
DEVELOPMENT AND SALES, AND ANY LOSS OF OUR KEY PERSONNEL TO COMPETITORS OR OTHER
INDUSTRIES COULD DRAMATICALLY IMPACT OUR ABILITY TO CONTINUE OPERATIONS.

     Amtech is the  beneficiary  of a life  insurance  policy on the life of Mr.
Whang in the amount of  $1,000,000,  but there is no assurance  that such amount
will be  sufficient  to  cover  the  cost  of  finding  and  hiring  a  suitable
replacement  for Mr. Whang. It may not be feasible for any successor to maintain
the same business  relationships  that Mr. Whang has established.  If we were to
lose the services of Mr. Whang for any reason,  it could have a material adverse
affect on our business.

     In addition,  historically,  our product  development has been accomplished
through cooperative efforts with two key customers. Our relationship with one of
these  customers  as well as with  our  joint  development  partner  for the new
technology  asher,  are  substantially   dependent  on  the  personal  relations
established   by  Mr.  Whang.   While  there  can  be  no  assurance  that  such
relationships  will continue,  such  cooperation is expected to continue to be a
significant element in our future development efforts.

     We also  depend on the  management  efforts of our  officers  and other key
personnel and on the ability to attract new key  personnel  and retain  existing
key personnel.  Most of our products,  other than the  Atmoscan(R)  and products
acquired in the P.R. Hoffman  acquisition,  were developed by our own personnel.
We presently employ three engineers,  including one with a Ph.D., and one in the
sales department at our Tempe, Arizona plant. We employ six engineers, including
one with a Ph.D.,  in our  Netherlands  operation.  These  employees  design and
support the  horizontal  diffusion  furnace and conveyor  furnace  product lines
manufactured  in  the  Netherlands  and  the  related  Process/Robotic  products
manufactured in Tempe. Two engineers are employed in our Carlisle,  Pennsylvania
operation.  They design wafer lapping  machines and carriers to meet  customers'
processing  requirements.  Competition is intense for highly skilled  employees.
There can be no assurance that we will be successful in attracting and retaining

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<PAGE>
such personnel or that we can avoid increased costs in order to do so. There can
be no assurance that employees will not leave Amtech or compete  against us. Our
failure to attract additional  qualified  employees or to retain the services of
key  personnel  could  negatively  impact our  operating  results and  financial
condition.

WE MAY NOT BE ABLE TO KEEP PACE WITH THE RAPID CHANGE IN THE  TECHNOLOGY  WE USE
IN OUR PRODUCTS.

     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. These and other evolving customer needs require us to
respond with continued development programs.

     Technical  innovations are inherently  complex and require long development
cycles  and  appropriate  professional  staffing.  Our future  business  success
depends  on our  ability to  develop  and  introduce  new  products  or uses for
existing products that successfully  address changing customer needs, win market
acceptance of these new products or uses and  manufacture  any new products in a
timely  and  cost-effective  manner.  If we do not  develop  and  introduce  new
products,  technologies  or uses for  existing  products  in a timely  manner in
response to changing market  conditions or customer  requirements,  our business
could be seriously harmed.

OUR RESULTS OF OPERATIONS  MAY BE  MATERIALLY  HARMED IF WE ARE UNABLE TO RECOUP
OUR INVESTMENT IN RESEARCH AND DEVELOPMENT.

     The rapid change in technology in our industry requires that we continue to
make investments in research and development in order to enhance the performance
and functionality of our products and to keep pace with competitive products and
satisfy customer demands for improved  performance,  features and functionality.
There  can be no  assurance  that  revenues  from  future  products  or  product
enhancements will be sufficient to recover the development costs associated with
such  products or  enhancements  or that we will be able to secure the financial
resources necessary to fund future  development.  Research and development costs
typically  are  incurred  before  we  confirm  the  technical   feasibility  and
commercial viability of a product, and not all development  activities result in
commercially viable products.  In addition, we cannot ensure that these products
or enhancements  will receive market  acceptance or that we will be able to sell
these  products  at prices  that are  favorable  to us.  Our  business  could be
seriously harmed if we are unable to sell our products at favorable prices or if
our products are not accepted by the market in which we operate.

OUR CURRENT CAPITALIZATION COULD DELAY, DEFER OR PREVENT A CHANGE OF CONTROL.

     We are authorized to issue up to 100,000,000  shares of common stock and up
to 100,000,000  shares of preferred  stock. As of December 13, 2002,  there were
2,689,571 shares outstanding. Authorized but unissued common stock may be issued
for such consideration as the board of directors determines to be adequate.  The
board of directors may issue preferred stock with such rights and preferences as
they determine, without shareholder vote. Although we do not currently intend to
issue any shares of our preferred  stock there can be no assurance  that we will
not do so in the future. Shareholders may or may not be given the opportunity to
vote thereon,  depending  upon the nature of any such  transactions,  applicable
law,  the rules and policies of the  national  securities  exchange on which the
common  stock  is  then  trading,  if any,  and the  judgment  of the  board  of
directors.  Shareholders have no preemptive rights to subscribe for newly issued
shares of our capital stock.

     On May 17, 1999, we declared a dividend distribution of one preferred share
purchase  right for each  outstanding  share of common  stock.  The dividend was
payable on June 9, 1999, to  stockholders  of record as of the close of business
on that  date.  Each  right  entitles  the  registered  holder to  purchase  one
one-hundredth of a share of Series A Participating  Preferred Stock,  subject to
adjustment,  at a price  $8.50  per one  one-hundredth  of a share of  Preferred
Stock,  subject to  adjustment.  The rights  issuance was adopted as  protection
against a takeover by a third party.

     Mr. Whang and certain other key employees have severance  arrangements that
require Amtech to make significant lump sum payments in the event of a change of
control in ownership.

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<PAGE>
     Having the outstanding  rights,  and a substantial number of authorized and
unreserved  shares of common stock,  preferred stock and severance  arrangements
with key employees could have the effect of making it more difficult for a third
party to acquire a majority of our outstanding  voting stock.  Management  could
use the additional  shares to resist a takeover  effort even if the terms of the
takeover offer are favored by a majority of the independent  shareholders.  This
could delay, defer, or prevent a change in control.

IF  THIRD  PARTIES  VIOLATE  OUR  PROPRIETARY  RIGHTS,  IN  WHICH  WE HAVE  MADE
SIGNIFICANT  INVESTMENT,  OR  ACCUSE US OF  INFRINGING  UPON  THEIR  PROPRIETARY
RIGHTS,  SUCH  EVENTS  COULD  RESULT  IN  LOSS  OF  THE  VALUE  OF  SOME  OF OUR
INTELLECTUAL PROPERTY OR COSTLY LITIGATION.

     Our success is dependent in part on our  technology  and other  proprietary
rights.  We own  various  United  States  and  international  patents  and  have
additional  pending  patent  applications  relating to some of our  products and
technologies. The process of seeking patent protection is lengthy and expensive,
and we cannot be certain  that  pending  or future  applications  will  actually
result in issued patents, or that, issued patents will be of sufficient scope or
strength to provide meaningful  protection or commercial  advantage to us. 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. We also maintain trademarks on certain of our products and claim
copyright   protection  for  certain  proprietary  software  and  documentation.
However,  we can give no assurance that our  trademarks  and copyrights  will be
upheld or successfully deter infringement by third parties.

     While  patent,  copyright  and trademark  protection  for our  intellectual
property is important,  we believe our future success in highly dynamic  markets
is most  dependent  upon the  technical  competence  and creative  skills of our
personnel.  We  attempt  to  protect  our trade  secrets  and other  proprietary
information  through  agreements  with our customers,  suppliers,  employees and
consultants  and through other security  measures.  We also rely on trade secret
protection for our technology,  in part through confidentiality  agreements with
our employees,  consultants  and third parties.  We also maintain  exclusive and
non-exclusive  licenses  with third parties for the  technology  used in certain
products.  However,  these  employees,  consultants and third parties may breach
these  agreements,  and we may not have  adequate  remedies for  wrongdoing.  In
addition,  the laws of certain  territories in which we develop,  manufacture or
sell our products may not protect our  intellectual  property rights to the same
extent as do the laws of the United States.

     From  time to  time we have  received  communications  from  other  parties
asserting the existence of patent rights or other  intellectual  property rights
that they believe  cover  certain of our products,  processes,  technologies  or
information.  In such cases, we evaluate our position and consider the available
alternatives,  which may  include  seeking  licenses  to use the  technology  in
question on commercially  reasonable  terms or defending our position.  Based on
industry  practice  and prior  experience,  we believe  that  licenses  or other
rights,  if necessary,  will be available on commercially  reasonable  terms for
existing or future claims.  Nevertheless,  we cannot ensure that licenses can be
obtained, or if obtained will be on acceptable terms or that litigation or other
administrative  proceedings will not occur.  Defending our intellectual property
rights through  litigation could be very costly. If we are not able to negotiate
the necessary licenses on commercially  reasonable terms or successfully  defend
our  position,  our  financial  condition  and  results of  operations  could be
materially and adversely affected.

OUR  RELIANCE ON SALES TO A FEW MAJOR  CUSTOMERS  AND  GRANTING  CREDIT TO THOSE
CUSTOMERS PLACES US AT FINANCIAL RISK.

     As of September 30, 2002,  receivables from two customers  comprised 34% of
accounts  receivable.  A concentration of our receivables from a small number of
customers places us at risk. If any one or more of our major customers is unable
to pay us it could  adversely  affect our  results of  operation  and  financial
condition.  Amtech  attempts to manage this  credit  risk by  performing  credit
checks,   requiring   significant  partial  payments  prior  to  shipment  where
appropriate, and actively monitoring collections.

OUR BUSINESS MIGHT BE ADVERSELY AFFECTED BY OUR DEPENDENCE ON FOREIGN BUSINESS.

     During the fiscal year ended September 30, 2002, 53% of our sales were made
to customers outside the United States as follows:

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<PAGE>
     *    Asia (including Singapore, Indonesia, Malaysia and India) - 20%
     *    Europe (including Israel and Africa) - 33%

     Because  of our  significant  dependence  on  international  revenues,  our
operating  results  could be  negatively  affected by a continued or  additional
decline  in the  economies  of any of the  countries  or  regions in which we do
business.  Each region in the global  semiconductor  equipment  market  exhibits
unique  characteristics  that can cause capital equipment investment patterns to
vary  significantly  from  period to  period.  Periodic  local or  international
economic downturns, trade balance issues, political instability and fluctuations
in interest and currency exchange rates could negatively affect our business and
results of operations.

     We recorded a gain of $.2 million and a charge of $.1 million during fiscal
2002  and  fiscal  2001,   respectively,   as  a  result  of  foreign   currency
transactions. While our business has not been materially affected in the past by
foreign  business  or  currency  fluctuations,  there  is a risk  that it may be
materially  adversely affected in the future. Such risk includes possible losses
on account of currency exchange rate fluctuations,  possible future prohibitions
against  repatriation of earnings,  or proceeds from disposition of investments,
and from possible  social and military  instability in the case of India,  South
Korea,  Taiwan and possibly  elsewhere.  Our wholly owned  subsidiary,  Tempress
Systems, has conducted its operations in the Netherlands since fiscal 1995. As a
result,  such  operations are subject to the taxation  policies,  employment and
labor  laws,  transportation  regulations,  import  and export  regulations  and
tariffs,   possible  foreign  exchange   restrictions,   international  monetary
fluctuations,  and other political,  economic and legal policies of that nation,
the European  Economic Union and the other European nations in which it conducts
business. Consequently, we might encounter unforeseen or unfamiliar difficulties
in conducting our European operations.  Changes in such laws and regulations may
have a material adverse effect on our revenue and costs.

THE SEMICONDUCTOR  EQUIPMENT INDUSTRY IS COMPETITIVE AND WE ARE RELATIVELY SMALL
IN SIZE AND HAVE FEWER RESOURCES IN COMPARISON WITH OUR COMPETITORS.

     Our industry  includes large  manufacturers  with substantial  resources to
support customers  worldwide.  Our future performance depends, in part, upon our
ability to continue to compete successfully  worldwide.  Some of our competitors
are diversified  companies with greater  financial  resources and more extensive
research, engineering, manufacturing, marketing and customer service and support
capabilities  than we can provide.  We face  competition  from  companies  whose
strategy is to provide a broad array of products, some of which compete with the
products and services that we offer. These competitors may bundle their products
in a manner that may  discourage  customers  from  purchasing  our products.  In
addition,  we face  competition from smaller  emerging  semiconductor  equipment
companies  whose  strategy is to provide a portion of the  products and services
that we offer,  using  innovative  technology to sell products into  specialized
markets. Loss of competitive position could impair our prices,  customer orders,
revenues,  gross margins, and market share, any of which would negatively affect
our  operating  results  and  financial   condition.   Our  failure  to  compete
successfully with these other companies would seriously harm our business. There
is risk that larger,  better-financed  competitors  will develop and market more
advanced  products than those that we currently  offer, or that competitors with
greater  financial  resources  may  decrease  prices  thereby  putting  us under
financial pressure.  The occurrence of any of these events could have a negative
impact on our revenues.

IF WE MAKE  ADDITIONAL  ACQUISITIONS IT COULD RESULT IN AN INCREASE IN OUR COSTS
OF  OPERATIONS,  DIVERT  MANAGEMENT'S  ATTENTION  AWAY  FROM  OTHER  OPERATIONAL
MATTERS, AND EXPOSE US TO OTHER RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS.

     We continually evaluate potential acquisitions.  We might make acquisitions
of, or significant  investments in, other businesses with synergistic  products,
services and technologies.  Acquisitions involve numerous risks, including,  but
not limited to:

     *    difficulties and increased costs in connection with integration of the
          personnel,   operations,   technologies   and   products  of  acquired
          companies;

     *    diversion of management's attention from other operational matters;

     *    the potential loss of key employees of acquired companies;

     *    lack of synergy, or inability to realize expected synergies, resulting
          from the acquisition;

                                       26
<PAGE>
     *    the risk that the issuance of Amtech common stock in an acquisition or
          merger  could  be  dilutive  to  Amtech  stockholders  if  anticipated
          synergies are not realized; and

     *    acquired  assets  becoming  impaired  as  a  result  of  technological
          advancements  or  worse-than-expected   performance  of  the  acquired
          company.

IF OUR CRITICAL SUPPLIERS FAIL TO DELIVER SUFFICIENT  QUANTITIES OF PRODUCT IN A
TIMELY AND COST-EFFECTIVE MANNER IT COULD NEGATIVELY AFFECT OUR BUSINESS.

     We use a wide range of  materials  and  services in the  production  of our
products  including  custom  electronic  and mechanical  components,  and we use
numerous  suppliers to supply  materials.  We  generally do not have  guaranteed
supply  arrangements  with  our  suppliers.   Because  of  the  variability  and
uniqueness of customers'  orders,  we do not maintain an extensive  inventory of
materials for  manufacturing.  Key suppliers  include two steel mills capable of
holding  the type and  tolerances  that we  require,  an  injection  molder that
provides  plastic  insets for steel  carriers,  an  adhesive  manufacturer  that
supplies the critical glue used in the production of the semiconductor polishing
templates,  and a pad supplier  that  produces a unique  material used to attach
semiconductor  wafers to the polishing  template.  We also rely on third parties
for laser  cutting,  machined  parts,  steel  frames and metal  panels and other
components  used  particularly  in  the  assembly  of  semiconductor  production
equipment.

     Although we make reasonable efforts to ensure that parts are available from
multiple suppliers, this is not always possible; accordingly, some key parts are
being  procured  from a single  supplier or a limited  group of  suppliers.  The
semiconductor  industry's  recent  increase in demand for capital  equipment has
resulted in longer lead-times for many important system components,  which could
cause delays in meeting shipments to our customers. Because the selling price of
some  systems  exceeds $1  million,  the delay in the  shipment of even a single
system could cause significant variation in quarterly revenue, operating results
and the market value of our stock. We have sought, and will continue to seek, to
minimize the risk of production and service  interruptions  and shortages of key
parts by:

     *    selecting and qualifying alternative suppliers for key parts;
     *    monitoring the financial stability of key suppliers; and
     *    maintaining appropriate inventories of key parts.

     There can be no assurance that results of operations will not be materially
and  adversely  affected  if, in the  future,  we do not receive in a timely and
cost-effective  manner a  sufficient  quantity  of parts to meet our  production
requirements.

WE MIGHT REQUIRE ADDITIONAL FINANCING TO EXPAND OUR OPERATIONS.

     On September  13,  2000,  we issued  383,000  shares of common  stock,  and
warrants to purchase an aggregate of up to 59,300 shares of common  stock,  in a
private  placement  pursuant  to a Stock and  Warrant  Purchase  Agreement.  Net
proceeds to the company,  after deducting placement agents',  legal,  accounting
and registration  fees, were  approximately  $4.6 million.  The proceeds will be
used to fund the company's  growth  initiatives.  While we believe that revenues
generated  from our  operations,  as well as the  proceeds  received  from  this
private  placement,  are sufficient to provide  adequate working capital for the
foreseeable  future and for a limited number of growth  initiatives,  additional
financing is expected to be required for further implementation of our plans for
expansion. There is no assurance that any additional financing will be available
if and when required, or, even if available, that it would not materially dilute
the ownership percentage of the then existing shareholders.

IF OUR SECURITIES BECOME INELIGIBLE FOR TRADING ON THE NASDAQ SYSTEM, THEY MIGHT
BE SUBJECT TO RULE 15G-9 OF THE SECURITIES  EXCHANGE ACT OF 1934,  WHICH IMPOSES
ADDITIONAL  SALES  PRACTICE   REQUIREMENTS  ON  BROKER-DEALERS   WHO  SELL  SUCH
SECURITIES TO PERSONS OTHER THAN ESTABLISHED CUSTOMERS AND ACCREDITED INVESTORS.

     While our  common  stock is now  included  on the Nasdaq  National  Market,
continued  inclusion  will  depend on our  ability to meet  certain  eligibility
requirements  established  for  the  Nasdaq  National  Market.  Loss  of  Nasdaq
eligibility  could  result if we  sustain  material  operating  losses or if the
market price of our common stock falls below $1.00 per share.  For  transactions
covered  by  the  rule,  the  broker-dealer  must  make  a  special  suitability
determination  for the purchaser and receive the purchaser's  written consent to

                                       27
<PAGE>
the transaction  prior to the sale. The rule may adversely affect the ability of
broker-dealers  to sell our securities,  and  consequently  may limit the public
market for and the trading price of our common stock.

TERRORIST ATTACKS AND THREATS OR ACTUAL WAR MAY NEGATIVELY IMPACT ALL ASPECTS OF
OUR OPERATIONS, REVENUES, COSTS AND STOCK PRICE.

     Recent  terrorist  attacks in the United  States,  as well as future events
occurring in response or  connection  to them,  including,  without  limitation,
future  terrorist  attacks against United States  targets,  rumors or threats of
war, actual  conflicts  involving the United States or its allies or military or
trade  disruptions  impacting  our  domestic  or  foreign  suppliers  of  parts,
components and subassemblies, may impact our operations,  including, among other
things, causing delays or losses in the delivery of supplies to us and decreased
sales of our products. More generally,  any of these events could cause consumer
confidence  and  spending to decrease or result in increased  volatility  in the
United  States and  worldwide  financial  markets and  economy.  They also could
result in  economic  recession  in the  United  States or  abroad.  Any of these
occurrences could have a significant impact on our operating  results,  revenues
and costs.

WE ARE SUBJECT TO  ENVIRONMENTAL  REGULATIONS  AND OUR  INABILITY  OR FAILURE TO
COMPLY WITH THESE REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.

     We are subject to environmental regulations in connection with our business
operations,  including but not limited to regulations  related to  manufacturing
and our  customers' use of our products.  From time to time, we receive  notices
regarding  these  regulations.  It is our  policy to respond  promptly  to these
notices and to take any  necessary  corrective  action.  Failure or inability to
comply  with  existing  or  future  environmental  regulations  could  result in
significant  remediation  liabilities,   the  imposition  of  fines  and/or  the
suspension or termination of development, manufacturing or use of certain of our
products,  each of which could  damage our  financial  condition  and results of
operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Amtech is exposed to financial market risks,  including  changes in foreign
currency  exchange rates and interest rates. Its operations in the United States
are conducted in United States dollars. Amtech's operation in The Netherlands, a
component of the semiconductor equipment segment, conducts business primarily in
the Euro and the United  States  dollar.  The  functional  currency  of Amtech's
Netherlands operation is Euro.

     Amtech  estimates that more than 95% of its transactions are denominated in
one of its two  functional  currencies  or currencies  that have fixed  exchange
rates with one of its functional  currencies.  As of September 30, 2002,  Amtech
did not hold any stand alone or separate derivative instruments. Amtech incurred
a net foreign  currency  transaction gain of $.2 million in 2002 and loss of $.1
million  in  2001.  Amtech's  investment  in and  advances  to its  Netherlands'
operation totals $3.9 million. A 10% change in the value of the Euro relative to
the United States dollar would cause a $.4 million foreign currency  translation
adjustment, a type of other comprehensive income (loss), which would be a direct
adjustment to stockholders' equity.

     When the value of the Euro  declines  relative  to the value of the  United
States dollar, operations in The Netherlands can be more competitive against the
United States based equipment suppliers and the cost of purchases denominated in
United  States  dollars  become  more  expensive.  When  the  value  of the Euro
increases  relative to the value of the United States dollar,  operations in The
Netherlands must raise prices to those customers that normally make purchases in
United States dollars,  in order to maintain the same profit margins.  When this
occurs, this operation attempts to have transactions denominated in the Euro and
to increase its purchases denominated in United States dollars. Amtech estimates
that its fiscal 2002  purchases  and sales of this  foreign  operation  that are
denominated  in  currencies  not linked to its  functional  currency,  including
United  States  dollars,   were  approximately  $.8  million  and  $.2  million,
respectively.  Amtech estimates that its fiscal 2001 purchases and sales of this
foreign  operation  that  are  denominated  in  currencies  not  linked  to  its
functional  currency,  including United States dollars,  were approximately $6.5
million and $2.2 million, respectively.  Most of those purchases are denominated
in United States  dollars and provide a partial hedge  against  fluctuations  in
exchange rates on sales denominated in that currency. Because it is difficult to

                                       28
<PAGE>
predict  the  volume  of  dollar  denominated   transactions  arising  from  The
Netherlands  operations,  Amtech does not hedge  against the effects of exchange
rate  changes on future  transactions.  The Euro is at a  relatively  high value
relative to the United States dollar at the end of fiscal 2002,  giving Amtech's
operation  based  in The  Netherlands  a  competitive  disadvantage  over  other
suppliers based in the United States.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                            Page
                                                                            ----
(a)  The following documents are filed as part of this Annual Report
     on Form 10-K:

     (1)  Financial Statements:

          Independent Auditors' Reports.......................................30

          Consolidated Balance Sheets September 30, 2002 and 2001 ............32

          Consolidated Statements of Operations for the years ended
          September 30, 2002, 2001 and 2000...................................33

          Consolidated Statements of Stockholders' Equity for the
          years ended September 30, 2002, 2001 and 2000.......................34

          Consolidated Statements of Cash Flows for the years ended
          September 30, 2002, 2001 and 2000...................................35

          Notes to Consolidated Financial Statements September 30, 2002,
          2001 and 2000.......................................................36

                                       29
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
Amtech Systems, Inc.:

We have audited the accompanying  consolidated  balance sheet of AMTECH SYSTEMS,
INC. and  subsidiaries  as of September 30, 2002,  and the related  consolidated
statements of operations,  stockholders' equity and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements  and  financial  statement  schedule  of  Amtech  Systems,  Inc.  and
subsidiaries  as of  September  30,  2001 and 2000 for each of the  years in the
two-year  period  then ended  were  audited by other  auditors  who have  ceased
operations.   Those  auditors   expressed  an   unqualified   opinion  on  those
consolidated  financial  statements  and financial  statement  schedule in their
report dated January 9, 2002.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Amtech Systems, Inc.
and  subsidiaries  as of September 30, 2002 and the results of their  operations
and their cash flows for the year then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

Our audit was made for the  purpose of  forming  an opinion on the  consolidated
financial  statements  taken as a whole.  The  schedule  listed  in the index of
financial statements, required by the Securities and Exchange Commission's rules
is  presented  for  additional  analysis  and is not  part  of the  consolidated
financial  statements.   This  schedule  has  been  subjected  to  the  auditing
procedures applied in the audit of the consolidated financial statements and, in
our  opinion,  is fairly  stated in all  material  respects  in  relation to the
consolidated financial statements taken as a whole.

                                        /s/ KPMG LLP

Phoenix, Arizona
November 27, 2002

                                       30
<PAGE>
THE REPORT  PRESENTED  BELOW IS A COPY OF THE  INDEPENDENT  AUDITORS'  REPORT OF
ARTHUR  ANDERSEN  LLP, THE FORMER  AUDITOR FOR AMTECH  SYSTEMS  INC.,  ISSUED ON
JANUARY 9, 2002. ARTHUR ANDERSEN LLP HAS BEEN UNABLE TO ISSUE AN UPDATED REPORT.
ADDITIONALLY,  THE  OPINION  PRESENTED  BELOW  COVERS  THE  BALANCE  SHEET AS OF
SEPTEMBER 30, 2000 AND THE STATEMENTS OF OPERATIONS,  STOCKHOLDERS'  EQUITY, AND
CASH FLOWS FOR THE YEAR ENDED  SEPTEMBER  30,  1999,  WHICH  STATEMENTS  ARE NOT
INCLUDED IN THIS REPORT ON FORM 10-K.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Amtech Systems, Inc.:

We have audited the accompanying  consolidated balance sheets of AMTECH SYSTEMS,
INC. (an Arizona  corporation) and subsidiaries  (the "Company") as of September
30,  2001 and 2000,  and the  related  consolidated  statements  of  operations,
stockholders'  equity and cash flows for each of the three years ended September
30, 2001. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of the Company as of September 30,
2001 and 2000,  and the results of its operations and its cash flows for each of
the three  years  ended  September  30,  2001,  in  conformity  with  accounting
principles generally accepted in the United States.

As explained in Note 2 to the financial  statements,  effective October 1, 2000,
the Company changed its method of accounting for revenue recognition.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index of
financial  statements is presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and  is not  part  of  the  basic  financial
statements.  This schedule has been subjected to the auditing procedures applied
in the audits of the basic  financial  statements  and, in our  opinion,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic financial statements taken as a whole.


                                            /s/ ARTHUR ANDERSEN LLP

Phoenix, Arizona
January 9, 2002

                                       31
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 SEPTEMBER 30,
                                                                          ---------------------------
                                                                              2002           2001
                                                                          ------------   ------------
<S>                                                                       <C>            <C>
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                               $  8,045,663   $  5,998,120
  Accounts receivable (less allowance for doubtful accounts of $152,000      2,695,323      3,829,867
     and $630,000, at September 30, 2002 and 2001, respectively)
  Inventories                                                                3,020,890      4,804,457
  Deferred income taxes                                                      1,044,000      1,477,000
  Prepaid expenses                                                              82,291         85,643
                                                                          ------------   ------------
          Total current assets                                              14,888,167     16,195,087

PROPERTY, PLANT AND EQUIPMENT - net                                          1,642,084      1,484,437
DEFERRED INCOME TAXES                                                           88,000         48,000
GOODWILL AND OTHER ASSETS - net                                                774,849        843,046
                                                                          ------------   ------------
          TOTAL ASSETS                                                    $ 17,393,100   $ 18,570,570
                                                                          ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                        $    891,640   $    880,006
  Accrued compensation and related taxes                                       653,045        671,075
  Accrued warranty expense                                                     262,573        304,228
  Deferred profit                                                              479,964      1,612,013
  Customer deposits                                                             91,417        367,523
  Income taxes payable                                                          37,000        135,000
  Other accrued liabilities                                                    306,601        605,547
                                                                          ------------   ------------
          Total current liabilities                                          2,722,240      4,575,392
                                                                          ------------   ------------

DEFERRED PROFIT - LONG TERM                                                    199,966        165,160
LONG-TERM OBLIGATIONS                                                          259,217        246,184
                                                                          ------------   ------------

COMMITMENTS AND CONTINGENCIES (Notes 3, 7 and 10)

STOCKHOLDERS' EQUITY:
  Preferred stock; no specified terms;
    100,000,000 shares authorized; none issued                                      --             --
  Common stock; $0.01 par value; 100,000,000 shares authorized;
    2,688,571 (2,649,171 in 2001) shares issued and outstanding                 26,886         26,492
  Additional paid-in capital                                                12,859,715     12,539,040
  Accumulated other comprehensive (loss) -
    cumulative foreign currency translation adjustment                        (179,639)      (368,242)
  Retained earnings                                                          1,504,715      1,386,544
                                                                          ------------   ------------
          Total stockholders' equity                                        14,211,677     13,583,834
                                                                          ------------   ------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $ 17,393,100   $ 18,570,570
                                                                          ============   ============
</TABLE>

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

                                       32
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                         Year Ended September 30,
                                                                               --------------------------------------------
                                                                                   2002            2001            2000
                                                                               ------------    ------------    ------------
<S>                                                                            <C>             <C>             <C>
Net revenues                                                                   $ 20,532,768    $ 22,851,920    $ 19,027,446
Cost of sales                                                                    15,715,909      15,974,260      12,398,560
                                                                               ------------    ------------    ------------
  Gross margin                                                                    4,816,859       6,877,660       6,628,886
Selling, general and administrative                                               4,422,352       4,918,902       4,169,631
Research and development                                                            317,375         382,186         476,975
                                                                               ------------    ------------    ------------
  Operating income                                                                   77,132       1,576,572       1,982,280
Interest income, net                                                                 91,039         246,720          93,141
                                                                               ------------    ------------    ------------
  Income before income taxes and cumulative
    effect of change in accounting principle                                        168,171       1,823,292       2,075,421
Income tax provision                                                                 50,000         670,000         750,000
                                                                               ------------    ------------    ------------
  Income before cumulative effect of change in accounting principle                 118,171       1,153,292       1,325,421
Cumulative effect of change in accounting principle, net of tax
  benefit of $410,000                                                                    --        (690,211)             --
                                                                               ------------    ------------    ------------
  NET INCOME                                                                   $    118,171    $    463,081    $  1,325,421
                                                                               ============    ============    ============
EARNINGS PER SHARE:
  Basic
    Income before cumulative effect of change in accounting principle          $        .04    $        .43    $        .61
    Cumulative effect of change in accounting principle, net of tax                      --            (.26)             --
                                                                               ------------    ------------    ------------
    Basic earnings per share                                                   $        .04    $        .17    $        .61
                                                                               ============    ============    ============
  Diluted
    Income before cumulative effect of change in accounting principle          $        .04    $        .41    $        .56
    Cumulative effect of change in accounting principle, net of tax                      --           (0.25)             --
                                                                               ------------    ------------    ------------
    Diluted earnings per share                                                 $        .04    $        .16    $        .56
                                                                               ============    ============    ============
  Number of shares used in per share calculations:
    Basic                                                                         2,683,030       2,661,001       2,158,562
    Diluted                                                                       2,765,553       2,821,583       2,336,497

PRO FORMA AMOUNTS WITH THE CHANGE IN ACCOUNTING PRINCIPLE RELATED TO REVENUE
RECOGNITION APPLIED RETROACTIVELY (UNAUDITED):

  Net revenues                                                                 $ 20,532,768    $ 22,851,920    $ 18,908,378
  Net income                                                                   $    118,171    $  1,153,292    $  1,060,619
  Earnings per share:
    Basic                                                                      $        .04    $        .43    $        .49
    Diluted                                                                    $        .04    $        .41    $        .45
</TABLE>

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

                                       33
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED SEPTEMBER 30, 2002, 2001 AND 2000

<TABLE>
<CAPTION>
                                                    COMMON STOCK                        ACCUMULATED     RETAINED
                                              -------------------------   ADDITIONAL       OTHER        EARNINGS        TOTAL
                                                 NUMBER                     PAID-IN    COMPREHENSIVE  (ACCUMULATED   STOCKHOLDERS'
                                               OF SHARES       AMOUNT       CAPITAL       (LOSS)         DEFICIT)       EQUITY
                                              -----------   -----------   -----------   -----------    -----------    -----------
<S>                                           <C>           <C>           <C>           <C>            <C>            <C>
BALANCE AT SEPTEMBER 30, 1999                   2,108,679   $    21,087   $ 7,400,152   $  (309,064)   $  (401,958)   $ 6,710,217

  Net income                                           --            --            --            --      1,325,421      1,325,421
  Translation adjustment                               --            --            --      (193,292)            --       (193,292)
                                                                                                                      -----------
       Comprehensive income                                                                                             1,132,129
                                                                                                                      -----------
  Issuance of common
    stock, net of related expenses                383,000         3,830     4,612,117            --             --      4,615,947
  Stock options exercised and other
    including a $59,000 related tax benefit        80,129           801       120,789            --             --        121,590
                                              -----------   -----------   -----------   -----------    -----------    -----------
BALANCE AT SEPTEMBER 30, 2000                   2,571,808        25,718    12,133,058      (502,356)       923,463     12,579,883

  Net income                                           --            --            --            --        463,081        463,081
  Translation adjustment                               --            --            --       134,114             --        134,114
                                                                                                                      -----------
       Comprehensive income                                                                                               597,195
                                                                                                                      -----------
  Warrants and stock options exercised             77,363           774       405,982            --             --        406,756
                                              -----------   -----------   -----------   -----------    -----------    -----------
BALANCE AT SEPTEMBER 30, 2001                   2,649,171        26,492    12,539,040      (368,242)     1,386,544     13,583,834
                                              ===========   ===========   ===========   ===========    ===========    ===========

  Net income                                           --            --            --            --        118,171        118,171
  Translation adjustment                               --            --            --       188,603             --        188,603
                                                                                                                      -----------
       Comprehensive income                                                                                               306,774
                                                                                                                      -----------
  Common Stock issued persuant to
    P.R. Hoffman earn-out                          30,600           306       309,523            --             --        309,829
  Stock options exercised                           8,800            88        11,152            --             --         11,240
                                              -----------   -----------   -----------   -----------    -----------    -----------
BALANCE AT SEPTEMBER 30, 2002                   2,688,571   $    26,886   $12,859,715   $  (179,639)   $ 1,504,715    $14,211,677
                                              ===========   ===========   ===========   ===========    ===========    ===========
</TABLE>

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

                                       34
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED SEPTEMBER 30,
                                                                        --------------------------------------------
                                                                            2002            2001            2000
                                                                        ------------    ------------    ------------
<S>                                                                     <C>             <C>             <C>
OPERATING ACTIVITIES:
  Net income                                                            $    118,171    $    463,081    $  1,325,421
  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:
      Cumulative effect of change in accounting principle, net of tax             --         690,211              --
      Depreciation and amortization                                          447,321         376,308         294,122
      Provision for inventory valuation                                      528,153         336,806          65,272
      Provision for accounts receivable                                      372,058         496,548          11,579
      Loss on disposals of long-lived assets                                      --           1,660             431
      Deferred income taxes                                                  393,000        (538,000)       (156,000)
    (Increase) decrease in:
      Accounts receivable                                                    881,332         691,529      (1,973,716)
      Inventory                                                            1,382,943        (848,402)     (2,265,693)
      Prepaid expenses and other assets                                      (14,645)       (139,745)       (327,954)
    Increase (decrease) in:
      Accounts payable                                                       (24,675)     (1,293,612)      1,636,815
      Accrued liabilities and customer deposits                             (556,595)         59,015         846,877
      Deferred profit                                                       (973,010)        676,962              --
      Income taxes payable                                                  (114,629)       (532,273)        759,672
                                                                        ------------    ------------    ------------
      Net Cash Provided By Operating Activities                            2,439,424         440,088         216,826
                                                                        ------------    ------------    ------------
INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                                (464,322)       (664,733)       (322,292)
                                                                        ------------    ------------    ------------
      Net Cash Used In Investing Activities                                 (464,322)       (664,733)       (322,292)
                                                                        ------------    ------------    ------------
FINANCING ACTIVITIES:
  Common Stock issued                                                         11,240         406,757          62,590
  Net proceeds from private placement of common stock                             --              --       4,615,947
  Net payments and borrowings on mortgage loan                                    --             930         (10,605)
                                                                        ------------    ------------    ------------
      Net Cash Provided By Financing Activities                               11,240         407,687       4,667,932
                                                                        ------------    ------------    ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                       61,201          30,578          97,349
                                                                        ------------    ------------    ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                  2,047,543         213,620       4,659,815
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               5,998,120       5,784,500       1,124,685
                                                                        ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                  $  8,045,663    $  5,998,120    $  5,784,500
                                                                        ============    ============    ============
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the year for:
  Interest                                                              $     16,926    $     29,816    $     12,805
  Income taxes paid  (refunded)                                             (209,000)      1,743,000         143,000
NONCASH ITEMS:
  Common stock issued pursuant to PR Hoffman Acquisition                $    309,829    $         --    $         --
</TABLE>

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

                                       35
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED SEPTEMBER 30, 2002, 2001 AND 2000


(1)  NATURE OF OPERATIONS:

     Amtech  Systems,  Inc.  (an  Arizona  corporation),  and  its  wholly-owned
subsidiaries,  P. R. Hoffman Machine  Products,  Inc. ("P. R. Hoffman") based in
the  United  States,  and  Tempress  Systems,  Inc.  ("Tempress")  based  in The
Netherlands,  comprise the "Company." The Company designs,  assembles, sells and
installs  capital  equipment and related  consumables used in the manufacture of
wafers of various  materials,  primarily  silicon  wafers for the  semiconductor
industry, and in certain semiconductor fabrication processes. These products are
sold  to   manufacturers  of  silicon  wafers  and   semiconductors   worldwide,
particularly in the United States,  Asia and northern Europe.  In addition,  the
Company provides semiconductor manufacturing support services.

     The Company  serves a niche market in an industry which  experiences  rapid
technological advances and which in the past has been very cyclical.  Therefore,
the Company's future  profitability  and growth depend on its ability to develop
or acquire  and  market  profitable  new  products  and its  ability to adapt to
cyclical trends.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     BASIS OF PRESENTATION - The accompanying  consolidated financial statements
include the accounts of Amtech Systems, Inc. and its wholly-owned  subsidiaries,
P. R. Hoffman (see Note 3) and Tempress.  All significant  intercompany accounts
and transactions have been eliminated in consolidation.

     REVENUE RECOGNITION - During its fourth quarter of fiscal 2001, the Company
changed its revenue  recognition  policy  retroactively to effective  October 1,
2000, based on guidance provided in Securities and Exchange  Commission  ("SEC")
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements."  The Company  recognizes  revenue  when  persuasive  evidence of an
arrangement exists; title transfers, generally upon shipment; the seller's price
is fixed or determinable and  collectibility is reasonably  assured.  Certain of
the Company's product sales are accounted for as multiple-element  arrangements.
For the semiconductor equipment segment, if the Company has met defined customer
specifications  with similarly situated customers and the specific equipment and
process  involved,  the Company  recognizes  equipment revenue upon shipment and
transfer  of title,  and the  remainder  when it  becomes  due,  generally  upon
acceptance.  Product  sales that are shipped but do not meet this  criteria  are
deferred and recognized upon customer acceptance.

     Equipment sold by the polishing  supplies  segment does not involve process
guarantees  or  acceptance  criteria,  so the related  revenue is recorded  upon
shipment. For all segments,  sales of spare parts and consumables are recognized
upon  shipment,  as there are no post shipment  obligations  other than standard
warranties.  Service revenues are recognized as services are performed.  Revenue
related to service  contracts is  recognized  upon  performance  of the services
requested by the customer.

     In  accordance  with guidance  provided in SAB 101, the Company  recorded a
non-cash charge of $690,211 (after  reduction for income taxes of $410,000),  or
$0.26 per basic share, to reflect the cumulative effect of the accounting change
as of the beginning of the 2001 fiscal year.

     The  deferred  profit  balance  as of the  beginning  of  fiscal  2001  was
$1,125,211.  This amount represents the revenue net of the related cost of sales
for systems that were shipped and that had not been accepted and did not qualify

                                       36
<PAGE>
for  multiple-element  accounting as of September 30, 2000. Of the $1,125,211 in
deferred  profit as of the  beginning of fiscal 2001,  $122,640 and $936,994 was
recognized in 2002 and 2001,  respectively.  The pro forma amounts  presented on
the  consolidated   statements  of  operations  were  calculated   assuming  the
accounting change was retroactively adopted as of October 1, 1999.

     Prior to fiscal  2001,  the  Company's  revenue  recognition  policy was to
recognize  revenue and accrue the estimated  installation  costs at the time the
customer  took title to the product,  generally at the time of shipment  because
the Company  routinely met its installation  obligations and installation  costs
represented a small percentage of total costs.

     As revenue is not reported on a consistent  basis  between  years,  certain
data  contained in these  financial  statements  may not be  comparable  between
years.

     CASH EQUIVALENTS - Cash  equivalents  consist of money market mutual funds,
time  certificates  of deposit and U.S.  treasury bills.  The Company  considers
certificates  of deposit  and  treasury  bills to be cash  equivalents  if their
original maturity is 90 days or less.

     INVENTORIES  -  Inventories  are  stated  at the  lower of cost  (first-in,
first-out method) or market value. The components of inventory are as follows:

                                                      September 30,
                                              -----------------------------
                                                 2002               2001
                                              ----------         ----------
     Purchased parts                          $1,720,728         $2,487,470
     Work-in-progress                            534,057          1,255,676
     Finished goods                              766,105          1,061,311
                                              ----------         ----------
                                              $3,020,890         $4,804,457
                                              ==========         ==========

     PROPERTY,  PLANT AND  EQUIPMENT  -  Maintenance  and repairs are charged to
expense as incurred.  The costs of additions and  improvements  are capitalized.
The cost of property  retired or sold and the related  accumulated  depreciation
are removed from the applicable accounts when disposition occurs and any gain or
loss is recognized.  Depreciation  is computed using the  straight-line  method.
Useful lives for  equipment,  machinery  and leasehold  improvements  range from
three to seven years; for furniture and fixtures from five to ten years; and for
buildings twenty years.  Depreciation and amortization  expense for fiscal years
2002,  2001,  and  2000  was  approximately  $390,000,  $296,000,  and  $241,000
respectively.

     Long-lived   assets  are  reviewed  for  impairment   whenever   events  or
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable. If the sum of the undiscounted expected cash flows from an asset to
be held and used in operations is less than the carrying value of the asset,  an
impairment loss is recognized.

     The following is a summary of property, plant and equipment:

                                                    September 30,
                                             ----------------------------
                                                 2002            2001
                                             ------------    ------------
     Building and leasehold improvements     $    732,739    $    691,405
     Equipment and machinery                    1,622,640       1,435,427
     Furniture and fixtures                     1,156,932         837,623
                                             ------------    ------------
                                                3,512,311       2,964,455
     Accumulated depreciation and
       amortization                            (1,870,227)     (1,480,018)
                                             ------------    ------------
                                             $  1,642,084    $  1,484,437
                                             ============    ============

                                       37
<PAGE>
     GOODWILL - The purchase  price in excess of net assets  acquired,  commonly
referred to as goodwill,  is $727,837  and  $789,250 at  September  30, 2002 and
2001,  respectively,  and is  being  amortized  over  fifteen  years  using  the
straight-line method.  Amortization expense was approximately  $74,000,  $67,000
and $37,000 for fiscal years 2002, 2001 and 2000 respectively.

     WARRANTY  - The  Company  provides  free  of  charge  a  limited  warranty,
generally  twelve to twenty-four  months,  to all purchasers of its new products
and  systems.  Warranty  expense for fiscal  2002,  2001,  and 2000  amounted to
approximately $210,000, $370,000 and $110,000, respectively. Management believes
these  amounts and the  amounts  accrued for future  warranty  expenditures  are
sufficient for all warranty costs on systems sold through September 30, 2002.

     RESEARCH  AND  DEVELOPMENT   EXPENSES  -  The  Company   expenses   product
development costs as they are incurred.

     FOREIGN  CURRENCY  TRANSACTIONS  AND  TRANSLATION  - Financial  information
relating to the Company's  foreign  subsidiary  is reported in  accordance  with
Statement of Financial  Accounting  Standards ("SFAS") No. 52, "Foreign Currency
Translation."  The  functional  currency  of  Tempress  is the Euro.  Net income
includes pretax gains from foreign currency transactions of $157,000 and $25,000
in 2002 and 2000 and a loss of $118,000 in 2001.  The gains or losses  resulting
from the  translation of Tempress'  financial  statements  have been included as
other comprehensive income (loss).

     INCOME TAXES - The Company files  consolidated  federal  income tax returns
and computes  deferred income tax assets and  liabilities  based upon cumulative
temporary   differences   between   financial   reporting  and  taxable  income,
carryforwards available and enacted tax law. (See Note 12).

     STOCK-BASED   COMPENSATION   -  The  Company   accounts  for  its  employee
stock-based  compensation plans under SFAS No. 123,  "Accounting for Stock-Based
Compensation."  SFAS No. 123 permits  companies to record  employee  stock-based
transactions  under  Accounting  Principles  Board Opinion ("APB") No. 25, under
which no  compensation  cost is recognized and the pro forma effects on earnings
and  earnings per share are  disclosed as if the fair market value  approach had
been adopted. (See Note 14).

     CONCENTRATION  OF CREDIT  RISK AND USE OF  ESTIMATES - The  preparation  of
financial statements in conformity with accounting principles generally accepted
in the United States requires  management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses  during the year.  Actual results
could differ from those estimates.

     As of September 30, 2002,  receivables from two customers comprised 23% and
12%, respectively, of accounts receivable. As of September 30, 2001, receivables
from  customers  in the  optical  component  industry  comprised  51%  of  total
receivables,  of  which  three  accounts  comprised  39% of  total  receivables,
representing  a  concentration  of  credit  risk as  defined  by SFAS  No.  105,
"Disclosure of Information  about Financial  Instruments with Off-Balance  Sheet
Risk and  Financial  Instruments  with  Concentration  of  Credit  Risk."  As of
September 30, 2002, receivables from customers in the optical component industry
comprised only 1% of total receivables.

     In July 2001, an optical component customer filed a petition for protection
from creditors under Chapter 11 of the U.S.  bankruptcy  code. The amount of the
sale was $1,609,000. The customer had made payments of $794,000 before filing in

                                       38
<PAGE>
bankruptcy court, leaving an unpaid balance of approximately  $815,000.  Through
increased  reserves at  September  30,  2001,  the Company had written down this
receivable to an estimated net realizable value of $225,000. As of September 30,
2002, the net realizable value of this receivable had been written down to $0.

     FAIR VALUE OF FINANCIAL  INSTRUMENTS - The carrying values of the Company's
current  financial  instruments  approximate fair value due to the short term in
which these  instruments  mature.  The carrying values of the Company's lines of
credit  (see Note 4) and  long-term  debt (see Note 5)  approximate  fair  value
because the variable  interest rates  approximate the prevailing  interest rates
for similar debt instruments.

     RECLASSIFICATION  - Certain  amounts in the 2001 financial  statements have
been reclassified to conform with the 2002 financial statement presentation.

     ACCOUNTING  PRONOUNCEMENTS  NOT YET ADOPTED - In July 2001,  the  Financial
Accounting  Standards Board issued Statements of Financial  Accounting Standards
No. 141,  "Business  Combinations"  ("SFAS No. 141"), and No. 142, "Goodwill and
Other Intangible  Assets" ("SFAS No. 142").  SFAS No. 141 eliminates  pooling of
interest as a method for  accounting  for  business  combinations.  SFAS No. 142
requires the  discontinuation  of the  amortization  of goodwill and  intangible
assets with indefinite lives and at least an annual  assessment of whether there
has  been an  impairment  of such  assets  that  needs  to be  recognized  as an
impairment  charge.  The Company  must adopt SFAS Nos. 141 and 142 no later than
October 1, 2002. Since  amortization of goodwill is currently  $74,000 per year,
the  discontinuation of such amortization will not have a material affect on the
Company's  results of  operations or financial  condition.  The Company does not
expect  to incur an  impairment  charge  related  to the  $728,000  of  goodwill
included in its assets as of September 30, 2002.

     The FASB recently  issued SFAS No. 144,  "Accounting  for the Impairment or
Disposal of  Long-Lived  Assets,"  that is  applicable  to financial  statements
issued for fiscal  years  beginning  after  December 15,  2001.  This  statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to be Disposed  Of," and portions of APB Opinion No. 30,
"Reporting the Results of Operations." SFAS No. 144 provides a single accounting
model for  long-lived  assets to be  disposed of and  significantly  changes the
criteria   that  must  be  met  to   classify  an  asset  as  "held  for  sale."
Classification as "held for sale" is an important  distinction since such assets
are not  depreciated  and are  stated  at the lower of fair  value and  carrying
amount.  SFAS No.  144 also  requires  expected  future  operating  losses  from
discontinued operations to be displayed in the period(s) in which the losses are
incurred,  rather than as of the  measurement  date as presently  required.  The
provisions  of SFAS No. 144 are not  expected  to have a material  effect on the
Company's financial position or operating results.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections". This Statement rescinds the requirement to report gains and losses
from  extinguishment  of  debt  as an  extraordinary  item.  Additionally,  this
statement amends Statement 13 to require  sale-leaseback  accounting for certain
lease  modifications  that  have  economic  effects  similar  to  sale-leaseback
transactions.  The  provisions  of this  statement  relating to  Statement 4 are
applicable in fiscal years  beginning after May 15, 2002. The provisions of this
Statement related to Statement 13 are effective for transactions occurring after
May 15, 2002. All other provisions of this Statement are effective for financial
statements issued on or after May 15, 2002. The adoption of SFAS No. 145 did not
have an effect on the Company's financial statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities". SFAS 146 nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3,  "Liability  Recognition for Certain  Employee
Termination  Benefits and Other Costs to Exit an Activity.  For purposes of this
Statement,  an exit activity includes,  but is not limited to a restructuring as
that  term  is  defined  in IAS 37,  "Provisions,  Contingent  Liabilities,  and
Contingent  Assets".  The Statement is effective for exit or disposal activities

                                       39
<PAGE>
initiated  after December 31, 2002. The adoption of SFAS No. 146 is not expected
to have an effect on the Company's financial statements.

(3)  PURCHASE OF P. R. HOFFMAN'S ASSETS:

     P.R. Hoffman  specializes in the development,  manufacture and marketing of
double-sided  lapping and polishing machines and related consumables used in the
manufacture of  semiconductor  silicon  wafers.  As a result of the July 1, 1997
acquisition of substantially all of the assets and operating liabilities of P.R.
Hoffman,  the Company is  obligated  to make  additional  payments to the former
owner  of P.R.  Hoffman  equal  to 50% of  pretax  income  of the P. R.  Hoffman
operation  in  excess  of  $800,000  per  year for a  period  of 5 years  ending
September 30, 2002,  limited to a maximum aggregate amount of $2 million of such
payments.  Those payments are payable in cash or the Company's  common stock, at
the  Company's  option,  with a minimum  of  thirty-five  percent  (35%) of such
payments being either cash or registered shares. No contingent consideration was
earned in fiscal  2002.  Contingent  consideration  of $120,000 and $313,000 was
earned in fiscal 2001 and 2000, respectively.  This additional consideration was
treated as part of the purchase price.

     As a part of the  transaction,  the Company  subleases a 21,740 square foot
building, located in Carlisle, Pennsylvania, from John R. Krieger, the Company's
Director  of  Corporate  Development  and  former  owner  of the P.  R.  Hoffman
operation. The lease requires monthly payments of $10,810 on a triple net basis,
expires  on June 30,  2004 and  includes  an  option to renew the lease for five
successive one-year terms. Monthly lease payments increase to $10,860 on July 1,
2003. The Company also entered into an employment  agreement  with Mr.  Krieger,
which required payments of $150,000 per year and expired on June 30, 2001.

(4)  LINE OF CREDIT:

     In June 2001,  the  Company  was  granted a line of credit in the amount of
Euro  283,613,  approximately  $249,610 as of September 30, 2002, at an interest
rate of 1.75% over a Netherlands  bank's basic interest rate,  which was 4.0% as
of  September  30, 2002.  The line of credit  declines by Euro 5,672 per quarter
until it  reaches  Euro  113,445  on January 1, 2009 and is secured by a lien of
approximately  $110,938 on the Company's  land and buildings in The  Netherlands
and certain accounts receivable,  which amounted to approximately  $1,167,752 as
of  September  30,  2002.  As of  September  30,  2002 and 2001,  there  were no
borrowings on this line of credit.

(5)  LONG-TERM OBLIGATIONS:

     Long-term  debt included in long-term  obligations  includes a fifteen-year
mortgage  secured by the Company's land and building located in The Netherlands.
The  principal  amount of the mortgage was $161,000 and $149,000 as of September
30, 2002 and 2001, respectively.  As of September 30, 2002, the collateral has a
carrying value of $440,000.  No principal  payments are due until June 30, 2016,
when the loan matures. Interest is paid monthly at a variable rate of 1.25% over
a Netherlands  bank's basic rate, which was 4.0% as of September 30, 2002. There
is no penalty for prepayment of the loan.

     Long-term  obligations  also  include  pension  liabilities  related to the
pension  plan for P.R.  Hoffman  hourly  employees  in the amount of $98,000 and
$97,000 at September 30, 2002 and 2001, respectively.

(6)  STOCKHOLDERS' EQUITY:

     On September 8, 2000, the Company issued 383,000 shares of common stock and
warrants to purchase an aggregate amount of up to 59,300 shares of common stock,

                                       40
<PAGE>
pursuant to a Stock and Warrant Purchase Agreement and related commitments.  One
share and one warrant for one-tenth of a share were sold at a combined  price of
$13.75. An additional  21,000 warrants were issued to the placement agents.  The
warrants are  exercisable at a price per share of $15.12 and expire on September
8, 2005.  The  Company  has  registered  the resale of the shares  issued in the
transaction,  including  those  issuable upon  exercise of the  warrants.  Gross
proceeds in the transaction  were  $5,266,000.  Net proceeds to the company were
approximately $4,616,000.

     The Company's  stockholder  rights plan authorizes the  distribution of one
right for each outstanding common share to purchase one one-hundredth of a share
of Series A Participating Preferred Stock, at a purchase price of $8.50, subject
to certain  antidilution  adjustments.  The rights  will  expire 10 years  after
issuance and will be exercisable if (a) a person or group becomes the beneficial
owner of 15% or more of the  Company's  common  stock  or (b) a person  or group
commences  a  tender  or  exchange  offer  that  would  result  in  the  offeror
beneficially  owning  15% or more of the  common  stock  (a  "Stock  Acquisition
Date"). If a Stock Acquisition Date occurs,  each right,  unless redeemed by the
Company at $.01 per right,  entitles  the holder to purchase an amount of common
stock of the Company,  or in certain  circumstances  a combination of securities
and/or assets or the common stock of the acquirer,  having an equivalent  market
value of $17.00  per right at a  purchase  price of  $8.50.  Rights  held by the
acquiring person or group will become void and will not be exercisable.

     In fiscal  2001,  67,050  warrants  were  exercised.  These are  related to
warrants  issued in the fiscal  1997  acquisition  of  substantially  all of the
assets and operating liabilities of P.R. Hoffman.

(7)  COMMITMENTS AND CONTINGENCIES:

     Key suppliers include two steel mills, one domestic and one German, capable
of meeting the material  specification the Company requires. As of September 30,
2002,  the  Company had  unconditional  commitments  to purchase  $.5 million of
steel, with delivery dates to be determined in the future.  Due to minimum order
quantities  for this steel and long lead times,  the  Company has made  purchase
commitments  that may be in  excess of future  production  requirements,  and it
could take several  years to use all of the steel  commitments  in production of
the Company's products. These purchase commitments are not expected to result in
any significant losses.

     On or about August 31, 2000, a "P.R.  Hoffman Machine  Products" was one of
11 companies named in a legal action being brought by North  Middleton  Township
in  Carlisle,  Pennsylvania,  the  owner  of a  landfill  allegedly  found to be
contaminated.  No  detailed  allegations  have been  filed as part of this legal
action,  which  appears to have been filed to preserve  the right to file claims
for  contributions  to the clean-up of the landfill at a later date. The Company
acquired  the  assets  of  P.R.  Hoffman  Machine  Products,  Inc.  in an  asset
transaction  consummated on July 1, 1997.  (See Note 3.) The landfill was closed
and has not been used by P.R.  Hoffman since sometime prior to completion of the
Company's acquisition. Therefore, the Company believes that the named company is
the prior owner of the acquired  assets.  Under the terms of the Asset  Purchase
Agreement  governing the  acquisition,  the prior owner,  P.R.  Hoffman  Machine
Products,  Inc. is obligated  to indemnify  the Company for any breaches of P.R.
Hoffman's  representations  and  warranties  in the  Asset  Purchase  Agreement,
including  representations relating to environmental matters. In accordance with
the terms of the Asset Purchase  Agreement,  the Company has provided  notice to
the prior owner of P.R. Hoffman Machine  Products,  Inc. of the Company's intent
to seek indemnification from such owner for any liabilities  resulting from this
legal action.  Based on  information  available to the Company as of the date of
this report,  management  believes the Company's  costs, if any, to resolve this
matter will not be material to its results of operations or financial position.

                                       41
<PAGE>
(8)  MAJOR CUSTOMERS AND FOREIGN SALES:

In fiscal 2002 and 2000, no customer  accounted for 10% or more of net revenues.
The Company had one customer that  represented  14% of sales for the fiscal year
ended September 30, 2001.

     The  Company's  shipments  were to  customers in the  following  geographic
regions:

                                                        Year Ended September 30,
                                                        ------------------------
                                                         2002     2001     2000
                                                        -----    -----    -----
North America                                              47%      55%      61%
Asia (Korea, People's Republic of China, Taiwan, Japan,
  Singapore, Indonesia, Malaysia, Australia and India)     20        8       19
Europe (including 1% or less to Israel and Africa)         33       37       20
                                                        -----    -----    -----

                                                          100%     100%     100%
                                                        =====    =====    =====

(9)  BUSINESS SEGMENT INFORMATION:

     The Company  classifies its products into two core business  segments.  The
semiconductor equipment segment designs,  manufactures and markets semiconductor
wafer  processing and handling  equipment used in the  fabrication of integrated
circuits.  Also  aggregated  in the  semiconductor  equipment  segment  are  the
manufacturing  support service  business and any difference  between the planned
corporate expenses, which are allocated to the segments based upon their revenue
and the  Company's  investment  in each,  and  actual  corporate  expenses.  The
polishing supplies segment designs, manufactures and markets carriers, templates
and  equipment  used in the  lapping  and  polishing  of wafer  thin  materials,
including silicon wafers used in the production of  semiconductors.  Information
concerning the Company's business segments is as follows:

<TABLE>
<CAPTION>
                                                       Year Ended September 30,
                                             --------------------------------------------
                                                 2002            2001            2000
                                             ------------    ------------    ------------
<S>                                          <C>             <C>             <C>
NET REVENUES:
Semiconductor equipment                      $ 15,410,513    $ 15,445,469    $ 10,859,625
Polishing supplies                              5,122,255       7,406,451       8,167,821
                                             ------------    ------------    ------------
                                             $ 20,532,768    $ 22,851,920    $ 19,027,446
                                             ============    ============    ============
OPERATING INCOME (LOSS):
Semiconductor equipment                      $    196,509    $    930,915    $    985,157
Polishing supplies                               (119,377)        645,657         997,123
                                             ------------    ------------    ------------
Total operating income                             77,132       1,576,572       1,982,280
Interest income, net                               91,039         246,720          93,141
                                             ------------    ------------    ------------
Income before income taxes and cumulative
  effect of change in accounting principle   $    168,171    $  1,823,292    $  2,075,421
                                             ============    ============    ============

CAPITAL EXPENDITURES:
Semiconductor equipment                      $    464,322    $    664,733    $    206,740
Polishing supplies                                     --              --         115,552
                                             ------------    ------------    ------------
                                             $    464,322    $    664,733    $    322,292
                                             ============    ============    ============
DEPRECIATION AND AMORTIZATION EXPENSE:
Semiconductor equipment                      $    286,696    $    218,903    $    176,526
Polishing supplies                                160,625         157,405         117,596
                                             ------------    ------------    ------------
                                             $    447,321    $    376,308    $    294,122
                                             ============    ============    ============
</TABLE>

                                       42
<PAGE>
                                                     September 30,
                                             ----------------------------
                                                 2002            2001
                                             ------------    ------------
IDENTIFIABLE ASSETS:
--------------------
Semiconductor equipment                      $ 15,030,365    $ 15,682,289
Polishing supplies                              2,817,735       2,888,281
                                             ------------    ------------
                                             $ 17,848,100    $ 18,570,570
                                             ============    ============

     The  Company  has  manufacturing  operations  in the United  States and The
Netherlands.  Revenues,  operating  income  (loss)  and  identifiable  assets by
geographic region of the locations are as follows:

                                              Year Ended September 30,
                                    --------------------------------------------
                                        2002            2001            2000
                                    ------------    ------------    ------------
NET REVENUES:
United States                       $  9,948,296    $ 11,148,373    $ 13,923,506
The Netherlands                       10,584,472      11,703,547       5,103,940
                                    ------------    ------------    ------------
                                    $ 20,532,768    $ 22,851,920    $ 19,027,446
                                    ============    ============    ============

OPERATING INCOME (LOSS):
United States                       $   (756,023)   $    (76,979)   $  1,474,950
The Netherlands                          833,155       1,653,551         507,330
                                    ------------    ------------    ------------
                                    $     77,132    $  1,576,572    $  1,982,280
                                    ============    ============    ============

IDENTIFIABLE ASSETS:
United States                       $ 13,400,689    $ 13,654,635
The Netherlands                        4,447,411       4,915,935
                                    ------------    ------------
                                    $ 17,848,100    $ 18,570,570
                                    ============    ============

(10) LEASES:

     The Company leases buildings,  vehicles and equipment.  As of September 30,
2002,  minimum rental  commitments under  noncancellable  operating leases total
$447,000,  of which  $264,000,  $138,000 and $45,000 are payable in fiscal years
2003, 2004 and 2005, respectively.

     Rental expense for 2002, 2001 and 2000 was approximately $308,000, $277,000
and $220,000, respectively.

                                       43
<PAGE>
(11) PROPRIETARY PRODUCT RIGHTS:

     Through the  acquisition  of the net assets of P. R.  Hoffman (see Note 3),
the  Company  acquired  the license  for the design of its steel  carriers  with
plastic inserts for abrasive machining of silicon wafers. In 1995, P. R. Hoffman
Machine Products, Inc. licensed the patent rights from the patent holder.

     Royalty expense for all licenses  included in cost of product sales totaled
approximately   $66,000,   $74,000  and   $108,000  in  2002,   2001  and  2000,
respectively.

(12) INCOME TAXES:

     The provision for (benefit from) income taxes consists of:

                                            Year Ended September 30,
                                  ---------------------------------------------
                                     2002             2001             2000
                                  -----------      -----------      -----------
CURRENT:
Domestic federal                  $  (439,000)     $   494,000      $   705,000
Foreign                               117,000          606,000          125,000
Domestic state                        (21,000)         108,000           76,000
                                  -----------      -----------      -----------
                                     (343,000)       1,208,000          906,000
                                  -----------      -----------      -----------
DEFERRED:
Domestic federal                      210,000         (275,000)         (89,000)
Foreign                               175,000         (187,000)           3,000
Domestic state                          8,000          (76,000)         (70,000)
                                  -----------      -----------      -----------
                                      393,000         (538,000)        (156,000)
                                  -----------      -----------      -----------
Income tax provision              $    50,000      $   670,000      $   750,000
                                  ===========      ===========      ===========

     The provision for income taxes before the cumulative  effect of a change in
accounting  principle  is  different  from the amount  that would be computed by
applying  the  United  States  corporate  income  tax  rate to the  income  from
operations before income taxes. The differences are summarized as follows:

                                                  Year Ended September 30,
                                            -----------------------------------
                                              2002         2001         2000
                                            ---------    ---------    ---------
Provision at the federal rate               $  57,000    $ 620,000    $ 706,000
Effect of expenses not deductible for tax      22,000       13,000       32,000
State tax provision                           (29,000)      32,000      105,000
Change in valuation allowance                      --           --      (93,000)
Other items                                        --        5,000           --
                                            ---------    ---------    ---------
Income tax provision                        $  50,000    $ 670,000    $ 750,000
                                            =========    =========    =========

     The tax assets  (liabilities)  comprising the net deferred tax asset are as
follows:

                                                           September 30,
                                                     --------------------------
                                                        2002           2001
                                                     -----------    -----------
Allowance for doubtful accounts                      $    57,000    $   263,000
Uniform capitalization of inventory costs                100,000        102,000
Inventory write-downs not currently deductible           387,000        202,000
State net operating losses                                45,000             --
Book vs. tax depreciation                                  8,000        (18,000)
Unrealized currency losses (gains)                        (2,000)         2,000
Deferred profit                                          267,000        603,000
Liabilities not currently deductible                     270,000        371,000
                                                     -----------    -----------
Deferred income taxes                                $ 1,132,000    $ 1,525,000
                                                     ===========    ===========

                                       44
<PAGE>
     The Company has $640,000 Arizona state net operating loss  carryforwards at
September  30, 2002 that expire in 2007.  The Company  believes  that it is more
likely than not that all deferred tax assets will be realized.

(13) EARNINGS PER SHARE:

     EPS are calculated as follows:

<TABLE>
<CAPTION>
                                                       2002          2001          2000
                                                    -----------   -----------   -----------
<S>                                                 <C>           <C>           <C>
Net income                                          $   118,171   $   463,081   $ 1,325,421
Amortization of contingent consideration (Note 3)            --            --       (17,155)
                                                    -----------   -----------   -----------
                                                    $   118,171   $   463,081   $ 1,308,266
                                                    ===========   ===========   ===========
Weighted average shares outstanding:
Common stock                                          2,683,030     2,661,001     2,158,562
Common stock equivalents issuable upon exercise
  of warrants and stock options (1)                      82,523       160,582       144,053
Estimated common shares issuable as contingent
  consideration (Note 3)                                     --            --        33,882
                                                    -----------   -----------   -----------
Diluted shares                                        2,765,553     2,821,583     2,336,497
                                                    ===========   ===========   ===========
Earnings Per Share:
Basic                                               $       .04   $       .17   $       .61
Diluted                                             $       .04   $       .16   $       .56
</TABLE>

----------
(1)  Number of common stock  equivalents  calculated  using the  treasury  stock
     method and the average market price during the period. Options and warrants
     on 234,700  shares,  45,700 shares and 143,300 shares had an exercise price
     greater than the average market price during the years ended  September 30,
     2002, 2001 and 2000, respectively, and therefore did not enter into the EPS
     calculation.

(14) STOCK-BASED COMPENSATION:

     STOCK  WARRANTS - In connection  with the  acquisition of the net assets of
P.R.  Hoffman  Machine  Products,  Inc.  during fiscal 1997,  the Company issued
75,000  warrants to purchase  one share each of $.01 par value common stock at a
per share exercise price of $6.00.  These warrants expired July 1, 2002 and were
valued at  $167,000  using  the  Black-Scholes  valuation  method.  The  primary
assumptions  used in the  valuation of these  warrants were a risk free interest
rate of 6.29%,  expected  dividend  yield of 0%,  average  holding period of 2.5
years, and 69% volatility.  The value of these warrants has been included in the
acquisition  cost  associated  with the purchase of the P. R. Hoffman net assets
(see Note 3).

     On September  8, 2000 the Company  issued  59,300  warrants to purchase one
share each of $.01 par value  common  stock in  connection  with the issuance of
383,000  shares of common  stock.  The warrants are  exercisable  at a price per
share of $15.12 and expire on September 8, 2005.

     STOCK OPTION PLANS - The board of directors  has reserved  10,000 shares of
common stock for issuance upon exercise of the  outstanding  options  granted to
directors  under  Director  Stock  Purchase   Agreements   prior  to  1996.  The
Non-Employee  Directors  Stock Option Plan was approved by the  stockholders  in
1996 for the issuance of up to 100,000 shares of common stock to directors.  The
Amended and  Restated  1995 Stock Option Plan and the 1995 Stock Bonus Plan were
also approved by  stockholders  in 1996 under which a combined  total of 160,000
shares were authorized.  The 1998 Employee Stock Option Plan, under which 50,000

                                       45
<PAGE>
shares  could be granted,  was adopted by the board of  directors on January 31,
1998 and approved by  shareholders  on March 20, 1998. On October 13, 2000,  the
Board of  Directors  authorized  an increase in the number of options  available
under the 1998 Employee Stock Option Plan to 300,000. The amendment was approved
by the  shareholders  at the annual  meeting on March 15, 2001. All of the plans
expire in 2006. Qualified stock options issued under the terms of the 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, with the most recent grant expiring July 19, 2012.
Under the terms of the 1995 Stock Option Plan,  nonqualified  stock  options may
also be issued.  Options issued in fiscal years 2002,  2001 and 2000 vest at the
rate of 20% - 33% per year.  As of September  30, 2002,  the Company had 209,258
options  available for issuance under the plans.  The stock option  transactions
and the options outstanding are summarized as follows:

<TABLE>
<CAPTION>
                                                          Year Ended September 30,
                                    ---------------------------------------------------------------------
                                            2002                    2001                     2000
                                    -------------------     --------------------     --------------------
                                                Weighted                 Weighted                 Weighted
                                                 Average                  Average                  Average
                                                Exercise                 Exercise                 Exercise
                                     Options     Price      Options        Price     Options       Price
                                    --------     ------     --------      ------     --------      ------
<S>                                 <C>          <C>        <C>           <C>        <C>           <C>
Outstanding at beginning of year     386,617     $ 4.56      163,017      $ 1.74      227,292      $ 1.17
Granted                               60,000       5.64      258,750        5.88       25,000        4.75
Exercised                             (8,800)      1.28       (9,950)       1.32      (89,275)       1.14
Terminated                            (3,250)      5.10      (25,200)       1.13           --          --
                                    --------                --------                 --------
Outstanding at end of year           434,567       4.78      386,617        4.56      163,017        1.74
                                    ========                ========                 ========

Exercisable at end of year           147,568     $ 3.20       60,049      $ 1.58       59,544      $ 1.16

Weighted average fair value of
  options granted                                $ 3.27                   $ 4.64                   $ 3.08
</TABLE>

     No  compensation  expense has been  recognized,  as all  options  have been
granted with an exercise  price equal to the fair value of the common stock upon
date of grant.  No adjustment has been made for the  non-transferability  of the
options or for the risk of forfeiture at the time of issuance.  Forfeitures  are
instead  recorded  as  incurred.  The fair value of each  option  grant has been
estimated as of the date of grant using the  Black-Scholes  option pricing model
with the following weighted average assumptions:

                                           Year Ended September 30,
                             ---------------------------------------------------
                                  2002              2001               2000
                             --------------    ---------------    --------------
Risk free interest rate       4.6% to 5.3%       4.5% to 5.5%      6.1% to 6.7%
Expected life                 4 to 6 years       4 to 6 years      4 to 6 years
Dividend rate                      0%                 0%                0%
Expected volatility               61%          92.0% to 110.3%    64.6% to 76.0%

     Had the  effects of  stock-based  compensation  been  accounted  for in the
financial  statements  using the  Black-Scholes  option pricing method,  the net
income  and  the  basic  and  diluted   earnings   per  share  would  have  been
approximately as follows:

                                       46
<PAGE>
                                               Year Ended September 30,
                                       -----------------------------------------
                                          2002           2001           2000
                                       ----------     ----------     -----------
Net Income:
As reported........................    $  118,171     $  463,081     $ 1,325,421
Pro forma..........................       (78,000)       290,000       1,240,000

Basic Earnings per share:
As reported........................    $      .04     $      .17     $       .61
Pro forma..........................          (.03)           .11             .57

Diluted Earnings per share:
As reported........................    $      .04     $      .16     $       .56
Pro forma..........................          (.03)           .10             .52

The following table summarizes  information  about stock options  outstanding at
September 30, 2002:

               Options Outstanding                        Options Exercisable
----------------------------------------------------   -------------------------
                   Number                   Weighted       Number       Weighted
               Outstanding at   Remaining    Average   Exercisable at    Average
  Exercise      September 30,  Contractual  Exercise    September 30,   Exercise
    Price           2002           Life       Price         2002          Price
    -----         --------         ----       -----       --------        -----
$1.13 - 1.49        75,767         4.43       $1.13         70,767        $1.13
 1.50 - 1.99        19,500         6.41        1.50         12,500         1.50
 2.00 - 3.24         2,300         7.00        2.00            200         2.00
 3.25 - 4.24         5,000         7.63        3.25          2,000         3.25
 4.25 - 5.49        95,000         8.86        4.42         14,500         4.41
 5.50 - 6.49        48,000         8.41        5.83         11,601         5.84
 6.50 - 6.99       189,000         8.55        6.56         36,000         6.55
                  --------                                --------
                   434,567                                 147,568
                  ========                                ========

(15) SELECTED QUARTERLY DATA (UNAUDITED):

<TABLE>
<CAPTION>
                                    First         Second          Third         Fourth
                                   Quarter        Quarter        Quarter        Quarter
                                 -----------    -----------    -----------    -----------
<S>                              <C>            <C>            <C>            <C>
FISCAL YEAR 2002:
  Revenue                        $ 5,456,916    $ 5,577,314    $ 4,446,385    $ 5,052,153
  Gross margin                   $ 1,319,483    $ 1,359,671    $ 1,267,114    $   870,591
  Net income (loss)              $   166,862    $   (38,607)   $   134,441    $  (144,525)

  Net income (loss) per share:
    Basic                        $       .06    $      (.01)   $       .05    $      (.05)
    Diluted                      $       .06    $      (.01)   $       .05    $      (.05)

FISCAL YEAR 2001:
  Revenue                        $ 3,602,650    $ 6,802,822    $ 8,022,911    $ 4,423,537
  Gross margin                   $ 1,154,845    $ 2,469,904    $ 2,121,635    $ 1,131,276
  Net income (loss)              $  (717,094)   $   685,305    $   478,765    $    16,105

  Net income (loss) per share:
    Basic                        $      (.26)   $       .26    $       .18    $       .01
    Diluted                      $      (.26)   $       .25    $       .17    $       .00
</TABLE>

                                       47
<PAGE>
                      AMTECH SYSTEMS, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED SEPTEMBER 30, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                        For the Year     Balance at     Charged
                           Ended         Beginning     (credited)                   Balance at
                        September 30,     of Year      to Expense    Write-offs    End of Year
                        -------------    ----------    ----------    ----------    -----------
<S>                         <C>          <C>           <C>           <C>           <C>
1. ALLOWANCE FOR
   DOUBTFUL ACCOUNTS
                             2002        $  630,000    $  372,058    $  850,058    $  152,000
                             2001           149,000       496,548        15,548       630,000
                             2000           140,000        11,579         2,579       149,000

2. DEFERRED TAX
   VALUATION ALLOWANCE
                             2002        $       --    $       --    $       --    $       --
                             2001                --            --            --            --
                             2000            93,000       (93,000)           --            --

3. RESERVE FOR
   OBSOLETE INVENTORY
                             2002        $  515,363    $  528,153    $   36,686    $1,006,830
                             2001           370,125       336,806       191,568       515,363
                             2000           301,439        74,239         5,553       370,125
</TABLE>

                                       48
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     As previously reported in the Company's Current Report on Form 8-K filed on
July 11, 2002, on July 3, 2002 the Company  dismissed its  independent  auditor,
Arthur  Andersen LLP ("Arthur  Andersen") and appointed KPMG LLP ("KPMG") as its
new independent auditor,  effective immediately.  These actions were approved by
the Company's Board of Directors upon the recommendation of its Audit Committee.
KPMG audited the consolidated financial statements of the Company for the fiscal
year ending September 30, 2002.

                                    PART III

     Pursuant  to  Paragraph  G(3) of the  General  Instructions  to Form  10-K,
portions of the information  required by Part III of Form 10-K are  incorporated
by  reference  from  Amtech's  proxy  statement  to be  filed  with  the  SEC in
connection with the 2003 Annual Meeting of Stockholders.

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information  required by Item 10 is incorporated herein by reference to
the information  contained under the heading  "Information  Concerning Directors
and Executive Officers" as set forth in the Company's definitive proxy statement
for its 2003 Annual Meeting of Stockholders.

ITEM 11: EXECUTIVE COMPENSATION

     The information  required by Item 11 is incorporated herein by reference to
the information  contained  under the heading  "Executive  Compensation"  as set
forth in the Company's definitive proxy statement for its 2003 Annual Meeting of
Stockholders.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information  required by Item 12 is incorporated herein by reference to
the  information  contained  under the heading  "Security  Ownership  of Certain
Beneficial Owners and Management" as set forth in the Company's definitive proxy
statement for its 2003 Annual Meeting of Stockholders.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  required by Item 13 is incorporated herein by reference to
the information  contained  under the heading  "Executive  Compensation"  as set
forth in the Company's definitive proxy statement for its 2003 Annual Meeting of
Stockholders.

ITEM 14: CONTROLS AND PROCEDURES

     Within the 90 days prior to the date of this report,  Amtech carried out an
evaluation,  under  the  supervision  and with  the  participation  of  Amtech's
management,  including Amtech's President and Chief Executive Officer along with
Amtech's  Chief  Financial  Officer,  of the  effectiveness  of the  design  and
operation of Amtech's  disclosure  controls and procedures  pursuant to Exchange
Act Rule  13a-14.  Based  upon that  evaluation,  Amtech's  President  and Chief
Executive  Officer along with Amtech's Chief  Financial  Officer  concluded that
Amtech's  disclosure  controls and procedures  are effective in timely  alerting
them to material  information  relating to Amtech  (including  its  consolidated
subsidiaries)  required to be included in Amtech's  periodic SEC filings.  There
have been no  significant  changes in  Amtech's  internal  controls  or in other
factors that would significantly affect internal controls subsequent to the date
Amtech carried out its evaluation.

                                       49
<PAGE>
                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  (1)  The consolidated  financial  statements  required by this item are set
          forth on the pages indicated at Item 8.

     (2)  Financial  Statement  Schedule for the years ended September 30, 2002,
          2001 and 2000:

               Schedule II - Valuation and Qualifying Accounts

          All other schedules are omitted because they are not applicable or the
          required information is shown in the consolidated financial statements
          or notes thereto.

     (3)  Exhibits:

          The exhibits listed in the accompanying index to exhibits are filed or
          incorporated by reference as part of this Annual Report on Form 10-K.

(b)       Amtech  did not file a report on Form 8-K  during  its  fourth  fiscal
          quarter of 2002.

<TABLE>
<CAPTION>
EXHIBIT                                                                                             METHOD
  NO.     DESCRIPTION                                                                              OF FILING
  ---     -----------                                                                              ---------
<S>       <C>                                                                                      <C>
  3.1     Articles of Incorporation                                                                    A
  3.2     Articles of Amendment to Articles of Incorporation, dated April 27, 1983                     A
  3.3     Articles of Amendment to Articles of Incorporation, dated May 19, 1987                       B
  3.4     Articles of Amendment to Articles of Incorporation, dated May 2, 1988                        C
  3.5     Articles of Amendment to Articles of Incorporation, dated May 28, 1993                       F
  3.6     Articles of Amendment to Articles of Incorporation, dated March 14, 1999                     O
  3.7     Amended and Restated Bylaws                                                                  D
  4.1     Rights Agreement dated May 17, 1999                                                          M
  10.1    Amended and Restated 1995 Stock Option Plan                                                  H
  10.2    Non-Employee Director Stock Option Plan                                                      I
  10.3    Employment Agreement with Robert T. Hass, dated May 19, 1992                                 E
  10.4    Registration Rights Agreement with J.S. Whang, dated January 24, 1994                        F
  10.5    Asset Purchase Agreement, dated July 1, 1997, among the Registrant, P.R. Hoffman
          Machines Corporation and John R. Krieger                                                     J
  10.6    1998 Employee Stock Option Plan                                                              L
  10.7    Sublease Agreement, dated July 1, 1999, between the Registrant and John R. Krieger           Q
  10.8    Warrant to Purchase Common Stock, dated September 8, 2000                                    P
  10.9    Stock and Warrant Purchase Agreement, dated September 8, 2000                                P
 10.10    Employment Agreement, dated March 15, 2001, between the Registrant and Jong S. Whang         R
   21     Subsidiaries of the Registrant                                                               N
   23     Independent Auditors' Consent                                                                *
   24     Powers of Attorney                                                                          See
                                                                                                   Signature
                                                                                                     Page
  99.1    Certification of Principal Executive Officer pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002                                                                  99.1
  99.2    Certification  of Principal Financial Officer pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002                                                                  99.2
</TABLE>

----------
*    Filed herewith.

                                       50
<PAGE>
A    Incorporated by reference to Amtech's Form S-18 Registration  Statement No.
     2-83934-LA.

B    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1987.

C    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1988.

D    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1991.

E    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1993.

F    Incorporated by reference to Amtech's Form S-1  Registration  Statement No.
     33-77368.

G    Incorporated  by  reference  to Amtech's  Form S-8  Registration  Statement
     relating to the Amended and  Restated  1995 Stock  Option Plan and the 1995
     Stock  Bonus Plan filed with the  Securities  and  Exchange  Commission  on
     September 9, 1997.

H    Incorporated  by  reference  to Amtech's  Form S-8  Registration  Statement
     relating to the  Non-Employee  Directors  Stock  Option Plan filed with the
     Securities and Exchange Commission on August 8, 1996.

I    Incorporated by reference to Amtech's Current Report on Form 8-K dated July
     1, 1997.

J    Incorporated  by reference to Amtech's  Proxy  Statement  for  shareholders
     meeting held on March 20, 1998.

K    Incorporated by reference to Amtech's Current Report on Form 8-K, dated May
     17,1999.

L    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1997.

M    Incorporated  by  reference  to  Amtech's  Proxy  Statement  for the annual
     shareholders meeting held on February 26, 1999.

N    Incorporated  by  reference  to Amtech's  Current  Report on Form 8-K dated
     September 22, 2000.

O    Incorporated  by reference to Amtech's  Annual  Report on Form 10-K for the
     fiscal year ended September 30, 1999.

P    Incorporated by reference to Amtech's Quarterly Report on Form 10-Q for the
     quarter ended March 31, 2001.

                                       51
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                        AMTECH SYSTEMS, INC.


December 30, 2002                       By: /s/ Jong S. Whang
                                            ------------------------------------
                                            Jong S. Whang, President


                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes  and appoints  JONG S. WHANG and ROBERT T. HASS,  and each of
them,  his true and  lawful  attorneys-in-fact  and  agents,  with full power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all capacities,  to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto,  and other documents
in connection  therewith with the Securities and Exchange  Commission,  granting
unto  said  attorneys-in-fact  and  agents,  and each of them,  full  power  and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the  premises,  as fully and to all intents and purposes
as he might or could do in person hereby  ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes,  may lawfully do
or cause to be done by virtue hereof.

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report on Form 10-K has been signed below by the following  persons on behalf of
the registrant and in the capacities and on the dates indicated:

     SIGNATURE                        TITLE                          DATE
     ---------                        -----                          ----

/s/ Jong S. Whang        Chairman of the Board, President
---------------------    (Principal Executive Officer)         December 30, 2002
Jong S. Whang


/s/ Robert T. Hass       Vice President-Finance and Director   December 30, 2002
---------------------    (Chief Financial & Accounting
Robert T. Hass           Officer)


/s/ Alvin Katz           Director                              December 30, 2002
---------------------
Alvin Katz


/s/ Bruce R. Thaw        Director                              December 30, 2002
---------------------
Bruce R. Thaw

                                       52
<PAGE>
                                 CERTIFICATIONS


     I, Jong S. Whang, certify that:

     1. I have reviewed this annual report on Form 10-K of Amtech Systems, Inc.;

     2. Based on my  knowledge,  this annual  report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The  registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board of  directors  (or  persons  performing  the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's  other certifying  officer and I have indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

     December 30, 2002              By: /s/ Jong S. Whang
                                        ----------------------------------------
                                        Jong S. Whang, President
<PAGE>
                                 CERTIFICATIONS

     I, Robert T. Hass, certify that:

     1. I have reviewed this annual report on Form 10-K of Amtech Systems, Inc.;

     2. Based on my  knowledge,  this annual  report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The  registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board of  directors  (or  persons  performing  the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's  other certifying  officer and I have indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

     December 30, 2002              By: /s/ Robert T. Hass
                                        ----------------------------------------
                                        Robert T. Hass, Vice President - Finance