UNITED STATES SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, 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, 2008                                               
|           |  | 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                                                              
|(State or
      other jurisdiction ofincorporation or organization)  
|                                                                     
|131 South Clark Drive, Tempe,
      Arizona                          
|(Address of
      principal executive offices)                       
|                                                                     
|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, $0.01 Par Value                                        
|(Title of Class)                                                     

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [   ] No [X]

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Act. Yes [   ] No [X]

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 (§ 229.405) 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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting company.
See definition of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [   ]
Accelerated filer [X] Non-accelerated filer [   ]

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

As of March 31, 2008, the aggregate
market value of the voting stock held by non-affiliates of the registrant was
approximately $109,255,000, based upon the closing sales price reported by the
NASDAQ Global Market on that date.

As of December 5, 2008, the
registrant had outstanding 9,096,048 shares of Common Stock, $0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Definitive Proxy Statement related to the registrants 2008 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, 2008, are incorporated by reference into Items
10-14 of Part III of this Form 10-K.

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AMTECH SYSTEMS, INC. AND
SUBSIDIARIESTable of Contents

|Part I      
|------------
|Item 1.     
|Item 1A.    
|Item 1B.    
|Item 2.     
|Item 3.     
|Item 4.     
|            
|**Part II** 
|Item 5.     
|            
|Item 6.     
|Item 7.     
|            
|Item 7A.    
|Item 8.     
|Item 9.     
|            
|Item 9A.    
|Item 9B.    
|            
|**Part III**
|Item 10.    
|            
|Item 11.    
|Item 12.    
|            
|Item 13.    
|            
|Item 14.    
|            
|**Part IV** 
|Item 15.    
|Signatures  

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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 (the Company or Amtech), other than statements of historical
fact, are hereby identified as forward-looking statements (as such term is
defined in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended). Examples of
forward-looking statements include statements regarding Amtechs future
financial results, operating results, business strategies, projected costs,
products under development, competitive positions and plans and objectives of
the Company and its management for future operations. In some cases,
forward-looking statements can be identified by terminology such as may,
will, should, would, expects, plans, anticipates, intends,
believes, estimates, predicts, potential, continue, or the negative of
these terms or other comparable terminology. 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 1A.
RISK FACTORS. 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.

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

PART I

ITEM 1. BUSINESS

Amtech (www.amtechsystems.com) was
incorporated in Arizona in October 1981, under the name Quartz Engineering &
Materials, Inc. We changed to our present name in 1987. We conduct operations
through four wholly-owned subsidiaries: Tempress Systems, Inc., a Texas
corporation with all of its operations in The Netherlands, acquired in 1994,
also referred to herein as Tempress Systems or Tempress; P.R. Hoffman Machine
Products, Inc. (PR Hoffman), an Arizona corporation based in Carlisle,
Pennsylvania, acquired in July 1997, or PR Hoffman; Bruce Technologies, Inc.
(Bruce Technologies), a Massachusetts corporation based in Billerica,
Massachusetts, acquired in July 2004, or Bruce Technologies; and R2D Ingenierie
SAS (R2D), a French corporation located near Montpellier, France, acquired in
October 2007. See Exhibit 21 Subsidiaries for a complete list of our
subsidiaries.

We are a leading supplier of horizontal
diffusion furnace systems used for solar (photovoltaic) cell and semiconductor
manufacturing, and are recognized in the markets we serve for our technology and
our brands. We operate in two business segments: (i) solar and semiconductor
equipment and (ii) polishing supplies. Our solar and semiconductor equipment is
sold under the well-known and respected brand names of Tempress Systems and
Bruce Technologies, which have customers in both the solar industry and the
semiconductor industry. Within the solar industry, we provide diffusion and
automation equipment to solar cell manufacturers. Within the semiconductor
industry, we provide equipment to manufacturers of analog, power, automotive and
microcontroller chips with geometries greater than 0.3 micron, denoted as μ, a
strategy we believe minimizes direct competition with significantly larger
suppliers of semiconductor equipment. Under the PR Hoffman brand, we believe we
are also a leading supplier of insert carriers to manufacturers of silicon
wafers, and we provide lapping and polishing consumable products as well as
equipment used in various industries.

We have been providing manufacturing
solutions to the semiconductor industry for over 30 years and are leveraging our
semiconductor technology and industry presence in an effort to capitalize on
growth opportunities in the solar industry. Our customers use our furnaces to
manufacture solar cells, semiconductors, silicon wafers and
microelectromechanical systems(MEMS), which are used in end markets such as
telecommunications, consumer electronics, computers, automotive, hand-held
devices and solar industry products. To complement our research and development
efforts, we also sell our furnaces to research institutes and universities.

For fiscal 2008, we recognized net
revenue of $80.3 million, which included $50.1 million of solar revenue or
approximately 62% of our total revenue. These results compare to $46.0 million
of net revenue for fiscal 2007, which included $12.5 million of solar revenue or
approximately 27% of our total revenue. Our order backlog as of

3

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September 30, 2008 and 2007 was $46.7
million and $22.9 million, respectively, a 104% increase. Our backlog as of
September 30, 2008 included approximately $36.7 million of orders from our solar
industry customers compared to $17.4 million of orders from our solar industry
customers as of September 30, 2007. Because our orders are typically subject to
cancellation or delay by the customer, our backlog at any particular point in
time is not necessarily representative of actual sales in subsequent periods,
nor is backlog any assurance that we will realize revenue or profit from
completing these orders.

Orders from the solar industry totaled
$72.1 million during fiscal 2008, compared to $21.4 million and $8.0 million in
fiscal 2007 and 2006, respectively.

For information regarding net revenue,
operating income and identifiable assets attributable to each of our two
business segments, see Note 10 of the Notes to Consolidated Financial Statements
included herein and ITEM 7, MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION of this Annual Report. For information on
the products of each segment, see Solar and Semiconductor Equipment Segment
Products and Polishing Supplies Segment Products within this ITEM 1.
BUSINESS section. For information regarding the impact of the worldwide
economic downturn and other risks to our business, see ITEM 1A. RISK
FACTORS.

COMPETITIVE STRENGTHS

We believe that we are a leader in the
markets we serve as a result of the following competitive strengths:

Leading Market Share and
Recognized Brand Names.The Tempress, Bruce Technologies and PR
Hoffman brands have long been recognized in our industry and identified with
high-quality products, innovative solutions and dependable service. We believe
that our brand recognition and experience will continue to allow us to
capitalize on current and future market opportunities in the solar
industry.

We have been providing horizontal
diffusion furnaces and polishing supplies and equipment to our customers for
over 30 years. We have sold and installed over 900 horizontal furnaces worldwide
and benefit from what we believe to be the largest installed customer base in
the semiconductor industry, which we believe offers an opportunity for
replacement and expansion demand. Customers that have purchased our furnaces can
leverage their investment in training, spare parts inventory and other costs by
acquiring additional equipment from us. We also have an extensive retrofit,
parts and service business, which typically generates higher margins than our
equipment business.

Experienced Management
Team.We are led by a highly experienced management team. Our chief executive
officer (CEO) has over 35 years of industry experience, including 27 years with
our company. Our four general managers have an average of over 20 years of solar
and semiconductor industry experience and an average of 18 years with our
company (including our predecessor companies).

Established, Diversified Customer
Base.We have long-standing relationships with many of our top customers, which
we believe remain strong. We maintain a broad base of customers, including
leading solar cell manufacturing companies, as well as semiconductor and wafer
manufacturing companies. During fiscal 2008, our largest customer accounted for
approximately 20% of our net revenue and our top 10 customers collectively
represented approximately 62% of our net revenue. In fiscal 2007, our largest
customer accounted for approximately 13% of our net revenue, and our top 10
customers collectively represented approximately 52% of our net revenue. In
fiscal 2006, our largest customer accounted for approximately 17% of our net
revenue, and our top 10 customers collectively represented approximately 58% of
our net revenue. Our largest customer has been different in each of the last
three fiscal years.

Proven Acquisition Track
Record.Over the last thirteen years we have developed an acquisition program
that has resulted in the acquisition of four significant businesses. In October
2007, we acquired R2D, a solar and semiconductor automation company located near
Montpellier, France. We believe the acquisition of the technology and business
of R2D enhances our growth strategy by allowing us to increase our sales by
offering an integrated system under the Tempress brand to the solar industry. In
July 2004, we acquired the Bruce Technologies line of semiconductor horizontal
furnace operations, product lines and other assets from Kokusai, a wholly-owned

4

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subsidiary of Hitachi, Japan and its
affiliate, Kokusai Electric Europe, GmbH. We continue to market the horizontal
furnace product line under the name Bruce Technologies. Bruce Technologies has a
large installed base, including several large semiconductor manufacturers. In
July 1997, we acquired substantially all of the assets of PR Hoffman. This
acquisition enabled us to offer new consumable products, including lapping and
polishing carriers, polishing templates, lapping and polishing machines and
related consumable and spare parts to our existing customer base as well as to
target new customers. In 1994, we acquired certain assets of Tempress and hired
Tempresss engineers to develop our first models of the Tempress horizontal
diffusion furnaces for production in The Netherlands.

Technical
Expertise.We have highly trained and experienced mechanical, chemical,
environmental, electronic, hardware and software engineers and support
personnel. Our engineering group possesses core competencies in product
applications and support systems, automation, sophisticated controls, chemical
vapor deposition, diffusion and pyrogenic processes, robotics, vacuum systems,
ultra clean applications and software driven control packages. We believe this
expertise enables us to design, develop and deliver high-quality,
technically-advanced integrated product solutions for solar cell and
semiconductor manufacturing customers.

Leading Technology Solutions and
New Product Development.We pursue a partnering-based approach, in
which our engineering and development teams work closely with our customers to
ensure our products are tailored to meet our customers specific requirements.
We believe this approach enables us to more closely align ourselves with our
customers and provide them with superior systems. We believe our line of
horizontal diffusion furnaces, which allow high wafer-per-hour throughput, is
more technologically advanced and reliable than most of our competitors
equipment. In addition, the processing and temperature control systems within
the furnace provide diverse and proven process capabilities, which enable the
application of high-quality films onto silicon wafers. We believe our recently
acquired R2D solar automation technology will provide efficiencies in the
manufacturing process that will allow our customers to be more competitive in
their respective markets. We developed a small batch vertical furnace jointly
with a major European customer and are currently developing five different thin
film processes for use with this furnace. We retain full ownership of this
technology. We shipped two of these systems in fiscal 2005 and one in 2006. In
addition, in 2007, we shipped a small batch vertical furnace utilizing DSG
Technologies (DSG) microwave technology to DSG. In 2007, we also began
selling precision thickness wafer carriers. This is an internally developed
product that we expect will increase our sales to the wafer carrier market.

Geographically Diverse Customer
Base.We believe that our geographically diverse revenue stream helps to
minimize our exposure to fluctuations in any one market, and to maximize our
access to potential customers relative to our competitors with geographically
concentrated operations. The geographic distribution of our net revenues from
fiscal 2006 through 2008 is as follows:

|                    | 2008 |  | 2007 |  | 2006
|------------------- | ---- |  | ---- |  | ----
|Asia - Pacific      | 68%  |  | 52%  |  | 41% 
|North
      America | 16%  |  | 28%  |  | 35% 
|Europe              | 16%  |  | 20%  |  | 24% 

The figures set forth in the above
table represent percentages of the net revenues for each of the last three
fiscal years as such net revenues are reported in our financial statements at
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

GROWTH STRATEGY

We intend to leverage our competitive
strengths through a combination of internal and external growth strategies.

Internal Growth.Our strategy for internal growth
includes: capitalizing on growth opportunities in the solar industry and the
Asia-Pacific market; accelerating new product and technology development;
enhancing our sales and marketing capabilities; and leveraging our installed
base.

Capitalizing on Growth Opportunities
in the Solar Industry.We have had recent
success in increasing our sales to the solar industry. Our fiscal 2008 solar
orders totaled $72.1 million compared to $21.4 million and $8.0 million in
fiscal 2007 and 2006, respectively. We believe the increase in orders from solar
cell manufacturers is due to our focused product development and marketing
efforts, as well as to

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growing overall demand from the solar
industry. We believe that long-term growth in the solar industry will be driven
by rising energy demand, the increasing scarcity of traditional energy resources
coupled with rising prices, the growing adoption of government incentives for
solar energy due to increasing environmental awareness and concern about energy
independence, the gradually decreasing cost of solar energy and the changing
consumer preferences toward renewable energy sources.

Capitalizing on Growth Opportunities
in the Asia-Pacific Market.With our
extensive global knowledge and experience, particularly in Asia, we intend to
further leverage our established sales channels in the Asia-Pacific market for
current and future products. The Asia-Pacific region continues to be an
important and expanding market for us, particularly because of the continuing
migration of solar cell and semiconductor manufacturing to countries in that
region. According toSolar
Plaza, an independent solar energy
information service, total solar cell production in China is expected to
grow from 600 MWp in 2005 to 2,200 MWp in 2010 for a CAGR of 30%.

Accelerating New Product and
Technology Development.We are focused on
developing new products across our business in response to customer needs in
various markets.

Small Batch Vertical Furnace.The vertical furnace market is much larger
than the horizontal furnace market that we have served historically. Our entry
product into the vertical furnace market is a two-tube small batch vertical
furnace for wafer sizes of up to 200mm, with each tube having a small flat zone
capable of processing 25-50 wafers per run. We are targeting small batch niche
applications in the vertical furnace market first, since the competition in the
large batch vertical furnace market is intense and our competitors are much
larger and have substantially greater financial resources, processing knowledge
and advanced technology. We believe our large installed customer base increases
the market to which we can sell our small batch vertical furnaces and other new
products.

Precision Thickness Wafer Carrier.Wafer carriers are work holders into which
silicon wafers or other materials are inserted for the purpose of holding them
securely in place during the lapping and polishing processes. Many customers
thin their wafer carriers to precise tolerances to meet their various
applications. We internally developed and began selling precision thickness
wafer carriers in 2007.

Enhancing our Sales and Marketing
Capabilities.In order to increase sales and
improve customer service globally, we intend to continue integrating our Bruce
Technologies and Tempress sales and marketing teams and transitioning them from
being product oriented to being regionally focused. We also intend to hire
additional senior management to expand our existing solar sales and marketing
efforts.

Leveraging our Installed Base.We intend to continue leveraging our
relationships with our customers to maximize parts, system, service and retrofit
revenue from the large installed base of Bruce Technologies and Tempress brand
horizontal diffusion furnaces. We intend to accomplish this by meeting these
customers needs for replacement systems and additional capacity, including
equipment and services in connection with any of our customers relocation to,
or expansion efforts in, Asia.

External Growth.We intend to selectively seek strategic
growth opportunities through acquisitions, joint ventures, geographic expansion
and the development of additional manufacturing capacity.

Pursuing Strategic Acquisitions that
Complement our Strong Platform.Over the last
twelve years, we have developed an acquisition program and have completed the
acquisition of three significant businesses. Based on a disciplined acquisition
strategy, we continue to evaluate potential technology, product and business
acquisitions or joint ventures that are intended to increase our existing market
share in the solar industry and expand the number of front-end semiconductor
processes addressed by our products. In evaluating these opportunities, our
objectives include: enhancing our earnings and cash flows, adding complementary
product offerings, expanding our geographic footprint, improving our production
efficiency and growing our customer base.

SOLAR AND SEMICONDUCTOR INDUSTRIES

We provide products and services
primarily to two industries: the solar industry and the semiconductor industry.

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Solar Industry.Solar power has emerged as one of the
most rapidly growing renewable energy sources. To date, various technologies
have been developed to harness solar energy. The most significant technology is
the use of interconnected photovoltaic, or PV, cells to generate electricity
directly from sunlight. Most PV cells are constructed using specially processed
silicon, which, when exposed to sunlight, generates direct current electricity.
Solar energy has many advantages over other existing renewable energy sources
and traditional non-renewable energy sources in the areas of environmental
impact, delivery risk, distributed nature of generation and matching of peak
generation with demand.

Semiconductor Industry.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, solar
cells and optical components are manufactured primarily on a silicon wafer and
are part of the circuitry or electronic components of many of the products
listed above.

The semiconductor industry has
experienced significant growth since the early 1990s. This growth has been
primarily attributable to an increase in demand for personal computers, 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 as well as for traditional products with more intelligence. This
growing demand has led to an increased number of semiconductor devices in
electronic and other consumer products, including automobiles.

Although the semiconductor market has
experienced significant growth over the past fifteen years, it remains cyclical
by nature. The market is characterized by short-term periods of under or over
supply for most semiconductors, including microprocessors, memory, power
management 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.

Industry Manufacturing Processes

**Solar Cell Manufacturing Process
Flow Chart**



____________________

(*)    
Manufacturing process step which involves the use of our products.

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A part of our growth strategy involves
evaluating opportunities to increase the number of process steps we serve in
both the solar cell and semiconductor manufacturing processes by acquiring
additional product lines. The solar industry uses many of the same process steps
used in semiconductor manufacturing in the high-volume production of solar cells
including:

|(1)  | inspecting for resistivity and
      mechanical integrity and splitting wafers;                                                    
|---- | -----------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  | etching away saw damage with
      sodium hydroxide and rinsing the wafer with water and concentrated
      sulphuric acid;        
|    
|(3)  | diffusing oxygen and nitrogen to
      form a thin-film layer of phosphorous oxychloride on the
  wafer;                           
|    
|(4)  | etching the wafer with fluoric
      acid to remove the undiffused, phosphorus-silica-glass layer;                                 
|    
|(5)  | coating an antireflective layer
      through a chemical vapor deposition (CVD) or plasma enhanced CVD
      process;              
|    
|(6)  | printing rear side
      contacts;                                                                                                 
|    
|(7)  | drying to prevent condensation in
      the wafer area;                                                                            
|    
|(8)  | printing aluminum and silver
      paste on the back surface field to prevent recombination of generated
      electrons and holes;
|    
|(9)  | drying;                                                                                                                            
|    
|(10) | printing front side
      contacts;                                                                                                
|    
|(11) | drying and then sintering the
      contact to form electrical conductive contacts; and                                            
|    
|(12) | testing and sorting the solar
      cells into electrical efficiency categories.                                                   

Most solar cell manufacturers sell
their products to manufacturers of solar modules or solar panels. Others are
vertically integrated and use their cells in the production of solar modules and
panels. Solar cells are the critical component of solar modules and solar
panels, which are sold to the end user and used in residential homes, industrial
applications, remote pumping, lighting and heating uses and central power
stations.

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Semiconductor Front End Manufacturing
Process Flow Chart



____________________

(*)    
Manufacturing process steps which are performed using our products.

Most semiconductor chips are built on a
base of silicon, called a wafer, and include multiple layers of circuitry that
connect a variety of circuit components, such as transistors, capacitors and
other components. To build a chip, the 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) | forming an ingot by pulling
      molten silicon;                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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 wafer in a diffusion furnace where oxygen, hydrogen
      or a combination of the two is introduced to cause a chemical reaction
      (oxidation) with the silicon wafers surface;
|   
|(6) | diffusing impurities (doping) in
      order to change the wafers electrical properties.                                                                                                                                                     
|   
|(7) | depositing insulating or
      conducting layers on the wafer surface, which sometimes is accomplished in
      a diffusion furnace via a chemical reaction called chemical vapor
      deposition;                                           
|   
|(8) | coating and baking a
      photosensitive material, called photoresist, on the wafer;                                                                                                                                                         
|   
|(9) | creating circuit patterns by
      exposing the wafer to light directed through a mask with circuit
      patterns;                                                                                                                           

9

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|(10) | removing the soluble portion of
      the photoresist by placing the wafer in a chemical solution, leaving only
      the desired pattern;
|---- | ------------------------------------------------------------------------------------------------------------------------------------------
|    
|(11) | etching away the exposed areas to
      create a dimensional pattern on the wafer surface;                                                
|    
|(12) | creating electrically charged
      conductive regions by driving ions into the exposed areas of the patterned
      wafer; and           
|    
|(13) | annealing the wafer through a
      high temperature process to relieve stress and drive the implanted ions
      deeper into the wafer.  

The silicon wafer may be cycled ten to
twenty-five times through these wafer-processing steps, starting each time at
step (5) or (7) 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 the end product in which the chip will be used.

Depending on the device, our polishing
supplies segments products may be used in lapping and polishing (step 3) and
our solar and semiconductor equipment segments products may be used in forming
silicon dioxide films (step 5), doping (step 6), depositing insulating and
conducting layers (step 7) and the annealing processes (step 13).

SOLAR AND SEMICONDUCTOR EQUIPMENT
SEGMENT PRODUCTS

Our furnace and automation equipment is
manufactured in our facilities in The Netherlands, France, and Massachusetts.
The following paragraphs describe the products that comprise our solar and
semiconductor equipment segment:

Horizontal Diffusion Furnaces.Through our subsidiaries, Tempress and
Bruce Technologies, we produce and sell horizontal diffusion furnaces. Our
horizontal furnaces currently address several steps in the semiconductor
manufacturing process, including diffusion (step 5 in the semiconductor
manufacturing process previously described), phosphorus tetrachloride doping, or
POCl3(step 6),
low-pressure chemical vapor deposition, or LPCVD, (step 7), and annealing (step
13). Our horizontal furnaces also currently address diffusion and applying
antireflective coating in the solar cell manufacturing process (steps 3 and 5).

Our horizontal 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 often customized to meet the requirements of a
customers particular processes. The horizontal furnaces utilize existing
industry technology and are sold primarily to customers who do not require the
advanced automation of, or cannot justify the higher expense of, vertical
furnaces for some or all of their diffusion processes. Our models are capable of
processing all currently existing wafer sizes.

Automation Products  Solar.Our automation technology products are
used in several of the semiconductor manufacturing steps and the diffusion
processing step in solar cell manufacturing. Our automation equipment includes
mass wafer transfer systems, sorters, long-boat transfer systems, load station
elevators, buffers and conveyers. We use a vacuum technology for our solar wafer
transfer systems designed to ensure high throughput.

Automation Products 
Semiconductor.Use of our automation
products reduces human handling and, therefore, reduces exposure of wafers to
particle sources during the loading and unloading of the process tubes and
protects operators from heat and chemical fumes. Since the top reactor chamber
of a horizontal furnace is as much as eight feet from the floor on which the
operator stands when manually loading wafer boats, and typical boats of 150mm to
300mm wafers weigh three to six pounds, automating the wafer loading and
unloading of a diffusion furnace improves employee safety and ergonomics in
silicon wafer, solar cell and semiconductor manufacturing facilities.

E-300.Our most cost effective automation product is the E-300. This product is
most suitable for the lower cost semiconductor devices, such as diodes and power
management chips. The E-300 operates like an elevator and

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generally is used to raise wafer boats
loaded with up to 300 wafers to one or both of the upper two reactor chambers of
a diffusion furnace.

S-300.Our patented 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 manufactured using a horizontal furnace. The S-300 can
be used in conjunction with all current wafer sizes and is particularly well
suited for manufacturers of 300mm wafers.

Small Batch Vertical Furnace.Our small batch, two-tube vertical
furnace was developed internally with the active support from a large
semiconductor manufacturer and long-term customer. The specifications for this
furnace include a two-tube vertical furnace for wafer sizes of up to 200mm, with
each tube having a small flat zone capable of processing 25-50 wafers per run.
The market for vertical furnaces is much larger than the total of all the other
markets we currently serve. We are initially targeting niche applications,
including research and development, while we continue to develop additional
processes, since the competition in the large batch vertical furnace market is
intense and our competitors are much larger and have substantially greater
financial resources, processing knowledge and advanced
technology.

Conveyor Furnace.We produce conveyor furnaces used to
manufacture thick films for the electronics industry. Conveyor furnaces provide
for precision thermal processing of electronic parts for thick film
applications, including annealing, sealing, soldering, silvering, curling,
brazing, alloying, glass-metal sealing and component packaging.

POLISHING SUPPLIES SEGMENT PRODUCTS

The products of our 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,
approximately two-thirds of this segments products are sold to either
semiconductor wafer manufacturers or specialty semiconductor fabricators. The
products of our polishing supplies segment are also sold to fabricators of
optics, quartz, ceramics and metal parts, and to manufacturers of medical
equipment components and computer disks. We manufacture the products described
below in Pennsylvania and sell them under our PR Hoffman brand name.

Wafer
Carriers.Carriers are work holders into which silicon wafers or other materials
are inserted for the purpose of holding them securely in place during the
lapping and polishing processes. We produce carriers for our line of lapping and
polishing machines, as well as for those machines sold by our competitors.
Substantially all of the carriers we produce are customized for specific
applications. Insert carriers, our most significant category of 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 our 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 processing large semiconductor wafers, up
to 300mm in diameter, and other fragile materials or where contamination is an
issue, because they provide the advantages of steel carriers while reducing the
potential for damage to the edges of such sensitive materials. Our insert
carriers are used for double-sided lapping or polishing of semiconductor wafers
up to 300mm in diameter. We internally developed and began selling precision
thickness wafer carriers in 2007.

Semiconductor Polishing
Templates.Our polishing 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. We
manufacture polishing templates for most brands of tools and various processes.
In addition to silicon wafers, these products are used in polishing silicon
carbide wafers and sapphire crystals used in LEDs.

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, we believe that we offer our surface
processing systems at a lower price than systems offered by our competitors and
target the semiconductor, optics, quartz, ceramics, medical, computer

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disk and metal working markets. During
fiscal 2004, we introduced and delivered our first Model 5400 lapping and
polishing machine, capable of processing parts up to 19.5 inches in diameter,
including 300mm wafers and higher capacities of smaller parts. This machine is
our largest and is superior to our previous model, because it uses servo motors
rather than hydraulics and is equipped with a Windows touch-screen interface,
for better control of speeds and pressure, optional thickness control, and crash
protection. We believe our 5400 model is especially well-suited for thin and
fragile materials. We also produce and sell a wide assortment of plates, gears,
parts and wear items for our own machines and those sold by many of our
competitors.

MANUFACTURING, RAW MATERIALS AND
SUPPLIES

Our solar and semiconductor equipment
manufacturing activities consist primarily of engineering design, procurement
and assembly of various commercial and proprietary components into finished
diffusion furnace systems in Vaassen, The Netherlands, France, and Billerica,
Massachusetts.

Nearly all of our fabricated parts for
the solar and semiconductor equipment segment are purchased from local
suppliers. Our manufacturing activities in the polishing supplies and equipment
segment include laser-cutting and other fabrication steps in producing lapping
and polishing consumables, including carriers, templates, gears, wear items and
spare parts in Carlisle, Pennsylvania, from raw materials manufactured to our
specifications by our suppliers. Many items, such as proprietary components for
our solar and semiconductor equipment and lapping plates, are also purchased
from suppliers who manufacture these items to our specifications.

All final assembly and tests of our
equipment and machines are performed within our 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 much of our polishing supplies
segments know-how relates to the manufacture of its products, this segments
facility is equipped to perform a significantly higher percentage of the
fabrication steps required in the production of its products. However, injection
molding for our insert carriers and the manufacture of raw cast iron plates are
subcontracted out to various third parties. Our polishing supplies segment
relies on key suppliers for certain materials, including two steel mills in
Germany and Japan, an injection molder, a single-sourced pad supplier from Japan
and an adhesive manufacturer. Prior to the fourth quarter of fiscal 2004, we
subcontracted the laser-cutting of carriers to third parties. Since then we have
purchased an advanced laser-cutting tool which has increased our ability to
compete based upon price, delivery lead-times and quality. To minimize the risk
of production and service interruptions and/or shortages of key parts, we
maintain appropriate inventories of key raw materials and parts. If for any
reason we were unable to obtain a sufficient quantity of parts in a timely and
cost-effective manner to meet our production requirements, our results of
operations would be materially and adversely affected.

RESEARCH, DEVELOPMENT AND
ENGINEERING

The markets we serve are characterized
by evolving industry standards and rapid technological change. To compete
effectively in our markets, we must continually keep up with the pace of such
change by improving our products and our 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. We continue to obtain as much customer cooperation and input as
possible to increase the efficiency and effectiveness of our research and
development efforts. While there can be no assurance that such relationships
will continue or that others will be developed, such cooperative efforts are
expected to remain a significant element in our future product and technology
development projects.

In April 2007, we entered into a
licensing and manufacturing agreement to develop and market an antireflective
coating system for solar cells with PST Co., LTD., a South Korean producer of
vertical thermal processing systems for high-end semiconductor applications.
This plasma-enhanced chemical vapor deposition (PECVD) system is used in
high-volume, solar cell manufacturing and is an important step in the solar cell
manufacturing process. The licensing agreement allows us to market PSTs
existing PECVD system, and for PST to develop and manufacture a new PECVD model
for us to market to high-volume solar cell manufacturers.

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The 10-year licensing agreement will
enable us to sell this product to our solar customer base through our extensive
global sales and marketing network on an exclusive basis, with the exception of
sales in Korea and to one existing customer of PST, for which PST retains
exclusive rights. Additionally, we believe this product will enable us develop
new customer relationships.

From time to time we add functionality
to our products or develop new products during engineering and manufacturing to
fulfill specifications in a customers order, in which case the cost of
development, along with other costs of the order, are charged to cost of sales.
We periodically receive small research grants for research and development of
products in The Netherlands, which are netted against our research and
development costs. Our approach to such expenditures has allowed us to produce a
number of new products while spending amounts that we believe are generally
modest in relation to most semiconductor equipment manufacturers. Our
expenditures that have been accounted for as research and development were $1.1
million (1.4% of net revenue) for fiscal 2008, $0.6 million (1.2% of net
revenue) for fiscal 2007 and $0.4 million (1.1% of net revenue) in fiscal 2006.
These amounts exclude those expenses incurred in connection with customer orders
or supported by government grants.

PATENTS

The following table shows our material
patents, the patents licensed by us, and the expiration date of each patent and
license:

|Product                                                 |               |                     | Country               |                         | Expiration Date or Pending Approval
|------------------------------------------------------- | ------------- | ------------------- | --------------------- | ----------------------- | -----------------------------------
|IBAL Model S-300                                        |               | France,             |                       | Pending                
|                                                        |               | Germany,            |                       | Pending                
|                                                        |               | Italy,              |                       | Pending                
|                                                        |               | The Netherlands,    |                       | Pending                
|                                                        |               | United Kingdom      |                       | Pending                
|Heating Element Wire Spacer                             |               | Europe              |                       | Pending                
|Photo CVD                                               |               | United States       |                       | November 15,
      2011
|Potential Damage-free Asher                             |               | United
      States |                       | September 8,
      2018
|IBAL Model S-300                                        |               | United
      States |                       | July 7,
      2019     
|IBAL
      Model S-300                                  |               | United States       |                       | July 26,
  2019        
|IBAL Model E-300                                        |               | United
      States |                       | July 13,
      2021    
|Fast,
      Safe, Pyrogenic External Torch Assembly (*) | United States |                     | December 17,
    2011

(*)     Patent
is licensed from the patent holder or co-owner on a non-exclusive basis.

To the best of our knowledge, there are
no pending lawsuits against us regarding infringement of any existing patents or
other intellectual property rights or any unresolved claims made by third
parties that we are infringing the intellectual property rights of such third
parties.

SALES AND MARKETING

Because of the highly technical nature
of our products, we market our products primarily by direct customer contact
through our sales personnel and through a network of domestic and international
independent sales representatives and distributors that specialize in
semiconductor equipment and supplies. Our promotional activities include direct
sales contacts, participation in trade shows, an Internet website, advertising
in trade magazines and the distribution of product brochures.

Sales to distributors of both segments
are generally on terms comparable to sales to end user customers, as our
distributors generally quote their customers after first obtaining a quote from
us and have an order from the end-user before placing an order with us. Our
sales to distributors are not contingent on their future sales and do not
include a general right of return. Historically, returns have been rare.
Distributors of our solar and semiconductor equipment segment products do not
stock a significant amount of our products, as the inventory they do hold is
primarily limited to parts needed to provide timely repairs to the customer.

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Payment terms of our parts, service and
retrofit sales, which usually comprise approximately 50-60% of consolidated net
revenue, are generally net 30 days, F.O.B. shipping point or equivalent terms.
The payment terms of equipment or systems sales vary depending on the size of
the order and the size, reputation and creditworthiness of the customer. As a
result, the financial terms of equipment sales can range from 80% due 30 days
after shipment and 20% due 30 days after acceptance, to requiring a 30% customer
deposit 30 days after order placement, 60% due 30 days after shipment and 10%
net due 30 days after acceptance. Letters of credit are required of certain
customers depending on the size of the order, creditworthiness of the customer
and the customers country of domicile.

During fiscal 2008, 84% of our net
revenue came from customers outside of North America. This group represented 72%
of revenues in fiscal 2007. In fiscal 2008, net revenue was distributed among
customers in different geographic regions as follows: North America 16% (15% of
which is in the United States), Asia 68% (including 46% to China and 14% to
Taiwan) and Europe 16%. During fiscal 2008, 2007 and 2006, one customer
accounted for approximately 20%, 13%, and 17% of our net revenue, respectively.
Our largest customer has been different in each of the last three fiscal years.
Our business is not seasonal in nature, but is cyclical based on the capital
equipment investment patterns of solar cell and semiconductor manufacturers.
These expenditure patterns are based on many factors, including anticipated
demand for integrated circuits, the development of new technologies and global
and regional economic conditions.

COMPETITION

We compete in several distinct markets
including semiconductor devices, semiconductor wafer, solar cell, MEMS and the
market for general industrial lapping and polishing machines and supplies. Each
of these markets is highly competitive. Our ability to compete depends on our
ability to continually improve our products, processes and services, as well as
our 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.

The Solar Cell Semiconductor
Devices, Semiconductor Wafer, and MEMS Markets.Our diffusion furnaces and
automation processing equipment primarily compete with those produced by other
domestic and foreign original equipment manufacturers, some of which are
well-established firms that are much larger and have substantially greater
financial resources than us. Some of our competitors have a diversified product
line, making it difficult to quantify their sales of products that compete
directly with our products. Competitors of our horizontal diffusion furnaces
include Centrotherm GmbH, Koyo Systems Co. Ltd., MRL Industries, Inc., a
subsidiary of Sandvik AB, CVD Equipment, Inc., Semco Engineering S.A.,
Expertech, Inc. and Tystar Corporation. Competitors of our lapping and polishing
machines and supplies include Lapmaster International, LLC, Hamai Co., Ltd.,
Speedfam Co., Ltd., Onse, Inc. and Eminess Technologies, Inc. Such competition
could intensify in the future if the industry trend to produce smaller chips on
larger wafers accelerates, or the newer technology represented by vertical
furnaces results in a material shift in the purchasing habits of our targeted
customers. Our furnaces and lapping and polishing machines also face, to a
limited, but increasing extent, competition from used equipment on the low-end
of the price spectrum.

General Industrial Lapping and
Polishing Machines and Supplies Market.We experience price competition for
wafer carriers produced by foreign manufacturers for which there is very little
publicly available information. As a result, we are intensifying our efforts to
reduce the cost of our carriers and will continue to compete with other
manufacturers of carriers by continuing to update our product line to keep pace
with the rapid changes in our customers requirements and by providing a high
level of quality and customer service. During September 2004, we completed the
installation and began producing steel carriers, including insert carriers, on a
newly acquired advanced laser-cutting tool, which has reduced the costs and lead
times of these products and increased our control over quality. Competitors of
our lapping and polishing machines and carriers, other than insert carriers,
include Speedfam-PW, a division of Novellus, among others. We have been able to
capture a small share of the semiconductor polishing template market, which we
believe to be dominated by Rodel, a division of Rohm and

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Haas. Our strategy to enhance our sales
of wafer carriers includes developing additional niche markets for templates and
providing a high level of customer support and products at a lower cost than our
competitors.

EMPLOYEES

As of September 30, 2008, we employed
approximately 210 people. Of these employees, approximately 10 were based at our
corporate offices in Tempe, Arizona, 35 at our manufacturing plant in Carlisle,
Pennsylvania, 20 at our manufacturing plant in Billerica, Massachusetts, 80 at
our facilities in The Netherlands, 40 at our facilities in France and 25 in our
contract semiconductor manufacturing support services business located in
Austin, Texas. Of the approximately 35 people employed at our Carlisle,
Pennsylvania facility, about 20 were represented by the United Auto Workers
Union - Local 1443. We have never experienced a work stoppage or strike. We
consider our employee relations to be good.

AVAILABLE INFORMATION

Our annual, quarterly and current
reports, proxy statements and other information, including the amendments to
those reports, are available, without charge, on our website,
www.amtechsystems.com, as soon as reasonably practicable after they are filed
electronically with the Securities and Exchange Commission (SEC). In addition,
our SEC filings are available over the internet at the SECs website at
http://www.sec.gov.

You may also read and copy any document
that we file at the SECs public reference room at:

Public Reference Room100 F Street,
N.E.Washington, D.C. 205491-800-SEC-0330

Please call the SEC at 1-800-SEC-0330
for more information on the public reference room and their copy charges. Copies
of our key governance documents, code of ethics, and charters of our audit,
compensation and corporate governance committees are also available on our
website.

Information contained on our website is
not part of this Annual Report and is not incorporated in this Annual Report by
reference.

ITEM 1A. RISK
FACTORS

Because of the following factors, as
well as other variables affecting our operating results and financial condition,
past performance may not be a reliable indicator of future performance, and
historical trends should not be used to anticipate results or trends in future
periods.

Risks Related to our Business and
Industry.

Recent deterioration in the
global economy and credit markets may materially and adversely affect our future
results of operations.

Our operations
may be adversely affected by the recent deterioration in the global economy
causing our customers to delay or cease spending on our products. The recent
tightening of the credit markets may negatively impact our operations by
affecting the liquidity and/or solvency of our customers and key suppliers and
the ability of our customers to obtain credit to finance purchases of our
products. If the global economy and credit markets continue to deteriorate, our
financial condition and results of operations will likely be adversely impacted.
We have no way of determining how long the global economic crisis, including the
tightening of credit markets, will last.

If demand declines for horizontal
diffusion furnaces and related equipment, or for solar industry products, our
financial position and results of operations could be materially and adversely
affected.

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The revenue of our solar and
semiconductor equipment segment, which accounted for approximately 90% of our
consolidated net revenue as of September 30, 2008, is comprised primarily of
sales of horizontal diffusion furnaces and our automation products. Our
automation products are useable only with horizontal diffusion furnaces. There
is a trend in the semiconductor industry, related to the trend to produce
smaller chips on larger wafers, towards the use in semiconductor manufacturing
facilities of newer technology, such as vertical diffusion furnaces. Vertical
diffusion furnaces are more efficient than the horizontal diffusion furnaces in
certain manufacturing processes for smaller chips on larger wafers. As early as
1994, we had expected that demand for our horizontal diffusion furnaces would
decline as a result of this trend. We believe this trend has not yet adversely
affected us to the extent originally expected. However, to the extent that the
trend to use vertical diffusion furnaces over horizontal diffusion furnaces
continues, our revenue may decline and our corresponding ability to generate
income may be adversely affected. A significant part of our growth strategy
involves expanding our sales to the solar industry. The solar industry is
subject to risks relating to industry shortages of polysilicon, (which we
discuss further below), the continuation of government incentives, the
availability of specialized capital equipment, global energy prices and rapidly
changing technologies offering alternative energy sources. If the demand for
solar industry products declines, the demand by the solar industry for our
products would also decline and our financial position and results of operations
would be harmed.

We may not be able to increase or
sustain our recent growth rate, and we may not be able to manage our future
growth effectively.

We may be unable to continue to expand
our business or manage future growth. Our recent expansion has placed, and our
planned expansion and any other future expansion will continue to place, a
significant strain on our management, personnel, systems and resources. We have
recently purchased additional equipment and real estate to significantly expand
our manufacturing capacity and expect to hire additional employees to support an
increase in manufacturing, research and development and sales and marketing
efforts. To successfully manage our growth, we believe we must effectively:

- hire, train, integrate and manage additional field
  service engineers, sales and marketing personnel, and financial and
  information technology personnel;
- retain key management and augment our management
  team, particularly if we lose key members;
- continue to enhance our customer resource
  management and manufacturing management systems;
- implement and improve additional and existing
  administrative, financial and operations systems, procedures and
  controls;
- expand and upgrade our technological capabilities;
  and
- manage multiple relationships with our customers,
  suppliers and other third parties.

We may encounter difficulties in
effectively managing the budgeting, forecasting and other process control issues
presented by rapid growth. If we are unable to manage our growth effectively, we
may not be able to take advantage of market opportunities, develop new solar
cells and other products, satisfy customer requirements, execute our business
plan or respond to competitive pressures.

The ongoing volatility of the
solar and semiconductor equipment industry may negatively impact our business
and results of operations and our corresponding ability to efficiently budget
our expenses.

The solar and semiconductor equipment
industries are highly cyclical. As such, demand for and the profitability of our
products can change significantly from period to period as a result of numerous
factors, including, but not limited to, changes in:

- global and regional economic
  conditions;
- changes in capacity utilization and production
  volume of manufacturers of semiconductors, silicon wafers, solar cells and
  MEMS;

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- the shift of semiconductor production to Asia,
  where there often is increased price competition; and
- the profitability and capital resources of those
  manufacturers.

For these and other reasons, our
results of operations for past periods may not necessarily be indicative of
future operating results.

Since our business has historically
been subject to cyclical industry conditions, we have experienced significant
fluctuations in our quarterly new orders and net revenue, both within and across
years. Demand for solar semiconductor and silicon wafer manufacturing equipment
and related consumable products has also been volatile as a result of sudden
changes in solar and semiconductor supply and demand and other factors in both
semiconductor devices and wafer fabrication processes. Our orders tend to be
more volatile than our revenue, as any change in demand is reflected immediately
in orders booked, which are net of cancellations, while revenue tends to be
recognized over multiple quarters as a result of procurement and production lead
times and the deferral of certain revenue under our revenue recognition
policies. Customer delivery schedules on large system orders can also add to
this volatility since we generally recognize revenue for new product sales on
the date of customer acceptance or the date the contractual customer acceptance
provisions lapse. As a result, the fiscal period in which we are able to
recognize new products revenue is typically subject to the length of time that
our customers require to evaluate the performance of our equipment after
shipment and installation, which could cause our quarterly operating results to
fluctuate.

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

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, which may require additional liquidity. We can provide no assurance that
these objectives can be met in a timely manner in response to changes within the
industry cycles. If we fail to respond to these cyclical changes, our business
could be seriously harmed.

During the most recent down cycle,
beginning in the first half of 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 would result in
under-utilization of our manufacturing facilities and infrastructure and will
negatively affect our financial position and results of operations.

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 having
substantially 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 at often a lower price than ours, using innovative technology to
sell products into specialized markets. Loss of competitive

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position could impair our prices,
customer orders, revenue, gross margin and market share, any of which would
negatively affect our financial position and results of operations. Our failure
to compete successfully with these other companies would seriously harm our
business. There is a 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 revenue.

We are dependent on key personnel
for our business and product development and sales, and any loss of our key
personnel to competitors or other industries could dramatically impact our
ability to continue operations.

Historically, our product development
has been accomplished through cooperative efforts with key customers. Our
relationship with some customers is substantially dependent on personal
relations established by our President and Chief Executive Officer. Furthermore,
our relationship with a major European customer that has been instrumental in
the development of our small batch vertical furnace is substantially dependent
upon our European General Manager. We are also dependent upon our Technical
Director of R2D for the development of our automation technology. 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 thereby continuing our reliance on certain of our key personnel.

We are the beneficiary of life
insurance policies on the life of our President and Chief Executive Officer, Mr.
J. S. Whang, in the amount of $2,000,000, 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.

We also depend on the management
efforts of our officers and other key personnel and on our ability to attract
and retain key personnel. During times of strong economic growth, competition is
intense for highly skilled employees. There can be no assurance that we will be
successful in attracting and retaining 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 financial position and results of operations.

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 new 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 and continually find ways of reducing the cost to
produce them in response to changing market conditions or customer requirements,
our business could be seriously harmed.

Acquisitions can result in an
increase in our operating costs, divert managements attention away from other
operational matters and expose us to other risks associated with acquisitions.

We continually evaluate potential
acquisitions and consider acquisitions an important part of our future growth
strategy. In the past, we have made acquisitions of, or significant investments
in, other businesses with synergistic products, services and technologies and
plan to continue to do so in the future. Acquisitions, including our recent
acquisition of R2D, involve numerous risks, including, but not limited to:

- difficulties and increased costs in connection
  with integration of geographically diverse personnel, operations, technologies
  and products of acquired companies;

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- 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;
- the risk that the issuance of our common stock, if
  any, in an acquisition or merger could be dilutive to our shareholders, 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.

Our financial position and
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, to keep pace with competitive products and to satisfy customer demands
for improved performance, features and functionality. There can be no assurance
that revenue from future products or 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 are typically 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 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 markets in which
we operate.

If third parties violate our
proprietary rights, in which we have made significant investments, such events
could result in a loss of 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 or license. 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. Recently, the patent covering technology that we license and
use in our manufacture of insert carriers has expired, which may have the effect
of diminishing or eliminating any competitive advantage we may have with respect
to this manufacturing process.

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 confidentiality agreements
with our customers, suppliers, employees and consultants and through other
security measures. 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.

19

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We may face intellectual property
infringement claims that could be time-consuming and costly to defend and could
result in our loss of significant rights and the assessment of treble damages.

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. 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.

Some of these claims may lead to
litigation. We cannot assure you that we will prevail in these actions, or that
other actions alleging misappropriation or misuse by us of third-party trade
secrets, infringement by us of third-party patents and trademarks or the
validity of our patents, will not be asserted or prosecuted against us.
Intellectual property litigation, regardless of outcome, is expensive and
time-consuming, could divert managements attention from our business and have a
material negative effect on our business, operating results or financial
condition. If there is a successful claim of infringement against us, we may be
required to pay substantial damages (including treble damages if we were to be
found to have willfully infringed a third partys patent) to the party claiming
infringement, develop non-infringing technology, stop selling or using
technology that contains the allegedly infringing intellectual property or enter
into royalty or license agreements that may not be available on acceptable or
commercially practical terms, if at all. Our failure to develop non-infringing
technologies or license the proprietary rights on a timely basis could harm our
business. Parties making infringement claims on future issued patents may be
able to obtain an injunction that would prevent us from selling or using our
technology that contains the allegedly infringing intellectual property, which
could harm our business.

Our reliance on sales to a few
major customers and granting credit to those customers places us at financial
risk.

We currently sell to a relatively small
number of customers, and we expect our operating results will likely continue to
depend on sales to a relatively small number of customers for the foreseeable
future, as well as the ability of these customers to sell products that require
our products in their manufacture. During fiscal 2008 we had one customer that
individually represented 20% of revenue. Many of our customer relationships have
been developed over a short period of time and certain customers are in their
preliminary stages of development. The loss of sales to any of these customers
would have a significant negative impact on our business. Our agreements with
these customers may be cancelled if we fail to meet certain product
specifications, materially breach the agreement or in the event of bankruptcy,
and our customers may seek to renegotiate the terms of current agreements or
renewals. We cannot be certain that these customers will generate significant
revenue for us in the future nor that these customer relationships will continue
to develop. If our relationships with our other customers do not continue to
develop, we may not be able to expand our customer base or maintain or increase
our revenue.

As of September 30, 2008, accounts
receivable from two customers each exceeded 10% of accounts receivable; these
two customers accounted for 22% and 20% of total accounts receivable,
respectively. A concentration of our receivables from one or a small number of
customers places us at risk. If any one or more of our major customers does not
pay us it could adversely affect our financial position and results of
operations. We attempt to manage this credit risk by performing credit checks,
by requiring significant partial payments prior to shipment where appropriate
and by actively monitoring collections. We also require letters of credit of
certain customers depending on the size of the order, type of customer or its
creditworthiness and its country of domicile.

If any of our customers cancels
or fails to accept a large system order, our financial position and results of
operations could be materially and adversely affected.

Our backlog includes orders for large
systems, such as our diffusion furnaces, with system prices of up to and in
excess of $1.0 million depending on the system configuration, options included
and any special requirements of the customer. Because our orders are typically
subject to cancellation or delay by the customer, our backlog at any particular
point in time is not necessarily representative of actual sales for succeeding
periods, nor is backlog any assurance that we will realize revenue or profit
from completing these orders. Our financial position and results of operations
could be materially and adversely affected should any large systems order be
cancelled prior to shipment,

20

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or not be accepted by the customer. We
have experienced significant cancellations in the past, including $1.2 million
in fiscal 1999, $3.5 million in 2001, and $1.2 million in 2002. We have not
experienced any significant cancellations since 2002. Likewise, a significant
change in the liquidity or financial position of any of our customers that
purchase large systems could have a material impact on the collectability of our
accounts receivable and our future operating results. Our backlog does not
provide any assurance that we will realize revenue or profit from those orders
or indicate in which period net revenue will be recognized, if ever.

Our business might be adversely
affected by a decline in our sales to foreign customers.

During fiscal 2007, 72% of our net
revenue came from customers outside of North America. During fiscal 2008, 84% of
our net revenue came from customers outside of North America as follows:

- Asia  68% (includes 46% to China and 14% to
  Taiwan); and
- Europe  16%.

Because of our significant dependence
on revenue from international customers, our operating results could be
negatively affected by a 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 foreign currency
transaction losses of $0.01 million during fiscal 2008, 2007 and 2006. While our
business has not been materially affected in the past by currency fluctuations,
there is a risk that it may be materially adversely affected in the future. Such
risk includes possible losses due to 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 1995 and during 2005 we established a subsidiary in Germany to conduct the
European sales of our Bruce Technologies product line. In October 2007 we
completed our acquisition of R2D, a French company. 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.

If our critical suppliers fail to
deliver sufficient quantities of quality 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 of materials. We generally
do not have guaranteed supply arrangements with our suppliers. Because of the
variability and uniqueness of customer orders, we try to avoid maintaining an
extensive inventory of materials for manufacturing. Key suppliers include two
steel mills capable of producing the types of steel to the tolerances needed for
our wafer carriers, an injection molder that molds plastic inserts into our
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 certain machined parts, steel frames
and metal panels and other components used particularly in the assembly of
semiconductor production equipment.

Although we make what we believe are
reasonable efforts to ensure that parts are available from multiple suppliers,
this is not always practical or even possible; accordingly, some key parts are
being procured from a single supplier or a limited group of suppliers. During
the semiconductor industry peak years, increases in demand for capital equipment
resulted in longer lead-times for many important system components. Future
increases in demand could cause delays in meeting shipments to our customers.
Because the selling price of some of our systems exceeds $1.0

21

---

million, the delay in the shipment of
even a single system could cause significant variations in our quarterly
revenue. There can be no assurance that our financial position and 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 and
quality of parts to meet our production requirements.

The solar power industry is
currently experiencing an industry-wide shortage of polysilicon. This shortage
poses several risks to our business, including possible constraints on revenue
growth and possible decreases in our gross margins and profitability.

Many of our customers are solar cell
manufacturers. Polysilicon is an essential raw material in the production of
solar cells. There is currently an industry-wide shortage of polysilicon, which
has resulted in significant price increases. We expect that the average spot
price of polysilicon will continue to increase and we expect that polysilicon
demand will continue to outstrip supply throughout 2009 and potentially for a
longer period. The inability of our solar industry customers to obtain
sufficient polysilicon at commercially reasonable prices, or at all, would
adversely affect future customer demand for our products and could cause us to
make fewer shipments and generate lower than anticipated revenue, thereby
seriously harming our business, financial condition and results of operations.

We might require additional
financing to expand our operations.

We believe that current cash balances,
our existing line of credit, cash flows generated from our operations and
additional available financing will provide adequate working capital for at
least the next twelve months. However, we may require additional financing for
further implementation of our growth plans. 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, result in increased expenses or result in covenants
or special rights that would restrict our operations.

We are exposed to risks from
legislation requiring companies to evaluate their internal control over
financial reporting.

Section 404 of the Sarbanes-Oxley Act
of 2002 requires our management to report on the effectiveness of our internal
control over financial reporting beginning with this report. Our independent
registered public accounting firm is required to attest to the effectiveness of
our internal control over financial reporting beginning in fiscal 2008. We have
an ongoing program to perform the system and process evaluation and testing
necessary to comply with these requirements. We have incurred increased expense
and have devoted additional management resources to Section 404 compliance and
we expect that some increased expense and use of management resources will
continue in the future. If, in the future, our CEO, chief financial officer or
independent registered public accounting firm determine that our internal
control over financial reporting is not effective as defined under Section 404,
investor perceptions of our company may be adversely affected and could cause a
decline in the market price of our stock.

Terrorist attacks and threats or
actual war may negatively impact all aspects of our operations, revenue, costs
and stock price.

The 2001 terrorist attacks in the
United States, as well as events occurring in response or connection to them,
including 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, by causing delays or losses in the delivery of supplies or
finished goods 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 could also result in economic recession in the United States or
abroad. Any of these occurrences could have a significant adverse impact on our
financial position and results of operations.

We face the risk of product
liability claims or other litigation, which could be expensive and divert
management from running our business.

22

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The manufacture and sale of our
products, which in operation involve toxic materials, involve the risk of
product liability claims. In addition, a failure of one of our products at a
customer site could interrupt the business operations of our customer. Our
existing insurance coverage limits may not be adequate to protect us from all
liabilities that we might incur in connection with the manufacture and sale of
our products if a successful product liability claim or series of product
liability claims were brought against us. We may also be involved in other legal
proceedings or claims and experience threats of legal action from time to time
in the ordinary course of our business.

Where appropriate, we intend to
vigorously defend all claims. However, any actual or threatened claims, even if
not meritorious or material, could result in the expenditure of significant
financial and managerial resources. The continued defense of these claims and
other types of lawsuits could divert managements attention away from running
our business. In addition, required amounts to be paid in settlement of any
claims, and the legal fees and other costs associated with such settlement,
cannot be estimated and could, individually or in the aggregate, materially harm
our financial condition.

We are subject to environmental
regulations, and our inability or failure to comply with these regulations could
result in significant costs or the suspension of our ability to operate segments
of our business.

We are subject to environmental
regulations in connection with our business operations, including 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.
Our 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
position and results of operations.

ITEM 1B.
UNRESOLVED STAFF COMMENTS

None.

23

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ITEM 2. PROPERTIES

We believe that our properties are
adequate for our current needs. In addition, we believe that adequate space can
be obtained to meet our foreseeable business needs. The following chart
identifies the principal properties which we own or lease.

|Location                                  |  | Use                           |  | Size            |  | Monthly Rent |  | Lease Expiration
|----------------------------------------- |  | ----------------------------- |  | --------------- |  | ------------ |  | ----------------
|Solar and Semiconductor Equipment Segment |  |                               |  |                 |  |              |  |                 
|Tempe, AZ                                 |  | Corporate                     |  | 15,000
      sf |  | $
    12,000 |  | (1)             
|                                         
|Austin, TX                                |  | Mfg Support                   |  | (2)             |  | (2)          |  | (2)             
|                                         
|Billerica, MA                             |  | Office, Mfg. &Warehouse       |  | 30,000 sf       |  | $ 18,000     |  | 8/31/2011       
|                                         
|Heerde, The
      Netherlands             |  | Office & Mfg.                 |  | 10,000 sf       |  | Owned        |  | N/A             
|Vaassen, The
      Netherlands            |  | Office, Mfg.
      &Warehouse |  | 54,000
      sf |  | Owned        |  | N/A             
|Vaassen, The
      Netherlands            |  | Warehouse                     |  | 5,000 sf        |  | $ 4,000      |  | 12/31/2008      
|Vaassen, The
      Netherlands            |  | Warehouse                     |  | 11,000
      sf |  | $****5,000   |  | 10/31/2011      
|                                         
|                                         
|Clapiers,
      France                    |  | Office, Mfg. &Warehouse       |  | 12,000 sf       |  | $ 9,000      |  | 9/30/2016 (3)   
|Clapiers,
      France                    |  | Manufacturing                 |  | 3,000
    sf    |  | $
    3,000  |  | 3/30/2016       
|Le Cres, France                           |  | Warehouse                     |  | 3,000 sf        |  | $ 2,000      |  | 8/31/2009       
|                                         
|Polishing Supplies Segment                |  |                               |  |                 |  |              |  |                 
|Carlisle, PA                              |  | Office & Mfg.                 |  | 22,000 sf       |  | $ 13,000     |  | 6/30/2009       



|(1) |  | We are currently leasing
      this property on a month to month basis.                           
|--- |  | --------------------------------------------------------------------------------------------------
|    |  |                                                                                                   
|(2) |  | Services are performed in
      customer's facilities.                                            
|    |  |                                                                                                   
|(3) |  | This lease can be cancelled by the company with six months
      notice beginning October 1, 2010.

ITEM 3. LEGAL
PROCEEDINGS

None.

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

None.

PART II

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES

MARKET INFORMATION

Our common stock, par value $0.01 per
share (Common Stock), began trading on the NASDAQ Global Market (formerly the
NASDAQ National Market), under the symbol ASYS, on April 18, 2001. From 1983
to 2001, our Common Stock was traded on the NASDAQ SmallCap Market. On December
5, 2008, the closing price of our Common Stock as reported on the NASDAQ Global
Market was $3.48 per share. The following table sets forth the high and low bid
price at which the shares of our Common Stock traded for each quarter of fiscal
2008 and 2007, as reported by the NASDAQ Global Market.

Fiscal 2008
    
    Fiscal 2007High
    
    Low
    
    High
    
    LowFirst quarter
    
    $
    17.74
    
    $
    10.82
    
    $
    8.00
    
    $
    5.95Second
      quarter
    
    
    13.80
    
    
    8.75
    
    
    8.10
    
    
    6.65Third quarter
    
    
    13.29
    
    
    9.11
    
    
    9.21
    
    
    7.25Fourth
      quarter
    
    
    11.54
    
    
    8.69
    
    
    14.26
    
    
    8.48


24

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COMPARISON OF STOCK PERFORMANCE

The following line graph compares
cumulative total shareholder return, assuming reinvestment of dividends, for:
the Companys Common Stock, the NASDAQ Composite Index and the NASDAQ Industrial
Index. Because the Company did not pay dividends on its Common Stock during the
measurement period, the calculation of the cumulative total shareholder return
on the Companys Common Stock did not include dividends. The following graph
assumes that $100 was invested on October 1, 2003.



HOLDERS

As of December 4, 2008, there were 91
shareholders of record of our Common Stock. Based upon a recent survey of
brokers, we estimate there were approximately an additional 3,753
beneficial shareholders who held shares in brokerage or other investment
accounts as of that date.

DIVIDENDS

We have never paid dividends on our
Common Stock. Our present policy is to apply cash to investment in product
development, acquisition or expansion; consequently, we do not expect to pay
dividends on Common Stock in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS

The following table sets forth certain
information, as of September 30, 2008, concerning outstanding options and rights
to purchase Common Stock granted to participants in all of the Companys equity
compensation plans and the number of shares of Common Stock remaining available
for issuance under such equity compensation plans.

25

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|                            |  |                                  |  |                             |  | Number of
      securities     
|--------------------------- |  | -------------------------------- |  | --------------------------- |  | -------------------------------
|                            |  |                                  |  |                             |  | remaining
      available for  
|                            |  | Number of
      securities to be |  |                             |  | future
      issuance under    
|                            |  | issued upon
      exercise of    |  | Weighted-average exercise   |  | equity
      compensation plans
|                            |  | outstanding
      options,       |  | price of
      outstanding  |  | (excluding
      securities    
|                            |  | warrants and
      rights        |  | options,
      warrants and |  | reflected in
      column (a)) 
|                            |  | (a)                              |  | rights (b)                  |  | (c)                            
|Plan Category               |  |                                  |  |                             |  |                                
|Equity
      compensation   |  |                                  |  |                             |  |                                
|plans approved by           |  |                                  |  |                             |  |                                
|security
      holders (1)  |  | 487,053                          |  | 8.39                        |  | 440,787                        
|Equity compensation         |  |                                  |  |                             |  |                                
|plans not
      approved by |  |                                  |  |                             |  |                                
|security
      holders      |  | -                                |  |                             |  | -                              
|                           
|Total                       |  | 487,053                          |  |                             |  | 440,787                        

|(1) |  | Represents the 1998
      Employee Stock Option Plan, the 2007 Employee Stock Incentive Plan and the
      Non-Employee Director Stock Option Plan and any respective amendments
      thereto.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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ITEM 6. SELECTED
FINANCIAL DATA

This selected financial data should be
read in conjunction with Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations, and our consolidated financial
statements (including the related notes thereto) contained elsewhere in this
report.

|                                         | Years Ended September
      30,
|---------------------------------------- | -------------------------------
|                                         | 2008(1)                        
|Operating Data:                          |                                
|Net revenue                              | $                              
|Gross profit                             | $                              
|Gross profit %                           |                                
|Operating income (loss)                  | $                              
|Net income (loss)                        | $                              
|Dividends on convertible preferred stock | $                              
|Net income (loss) attributable to common | $                              
|Earnings (loss) per share:               |                                
|Basic earnings (loss) per share          | $                              
|Diluted earnings (loss) per share        | $                              
|Order
      backlog(3)                   | $                              
|Balance Sheet Data:                      |                                
|Cash and cash equivalents                | $                              
|Working capital                          | $                              
|Current ratio                            |                                
|Total assets                             | $                              
|Total current liabilities                | $                              
|Long-term obligations                    | $                              
|Convertible preferred stock              | $                              
|Total stockholders' equity               | $                              

|(1) |  | Effective October 1, 2007, the
      Company acquired 100% of the equity of R2D Ingenierie.                                                                                                                                                                    
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | On July 1, 2004, the Company
      acquired the Bruce Technologies horizontal furnace product line from
      Kokusai.                                                                                                                                         
|   
|(3) |  | The backlog as of September 30,
      2008, 2007, 2006, 2005 and 2004 includes $1.3 million, $0.9 million, $0.9
      million, $1.0 million, and $0.7 million, respectively, of open orders or
      deferred revenue on which we anticipate no gross
  margin.

ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion of our
financial condition and results of operations should be read in conjunction with
our Consolidated Financial Statements and the related notes included in Item 8,
Financial Statements and Supplementary Data in this Annual Report on Form
10-K. This discussion contains forward-looking statements, which involve risk
and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors
including, but not limited to, those discussed in Risk Factors and elsewhere
in this Annual Report on Form 10-K.

Introduction

Managements Discussion and Analysis
(MD&A) is intended to facilitate an understanding of our business and
results of operations. MD&A consists of the following sections:

- Overview: a summary of our business.
- Results of Operations: a discussion of operating
  results.
- Liquidity and Capital Resources: an analysis of cash flows,
  sources and uses of cash and financial position.
- Contractual Obligations and Commercial
Commitments

27

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- Critical Accounting Policies: a discussion of critical
  accounting policies that require the exercise of judgments and
  estimates.
- Impact of Recently Issued Accounting Pronouncements: a
  discussion of how we are affected by recent pronouncements.

Overview

We operate in two segments: solar and
semiconductor equipment and polishing supplies. Our solar and semiconductor
equipment segment is a leading supplier of thermal processing systems, including
related automation, parts and services, to the solar/photovoltaic,
semiconductor, silicon wafer and MEMS industries.

Our polishing supplies segment is a
leading supplier of wafer carriers to manufacturers of silicon wafers. The
polishing segment also manufacturers polishing templates, steel carriers and
double-sided polishing and lapping machines to fabricators of optics, quartz,
ceramics and metal parts, and to manufacturers of medical equipment components.

Our customers are primarily
manufacturers of solar cells and integrated circuits. The solar cell and
semiconductor industries are cyclical and historically have experienced
significant fluctuations. Our revenue is impacted by these broad industry
trends.

In October 2007, we acquired 100% of
the equity of R2D Ingenierie (R2D), a solar cell and semiconductor automation
equipment manufacturing company. The purpose of the acquisition was to expand
our automation products which are used in solar diffusion and semiconductor
manufacturing processes. The acquisition of the technology and business of R2D
enhances the growth strategy by allowing us to increase revenue by offering to
the solar industry an integrated system under the Tempress® brand.

In June 2008, we reorganized the Bruce
Technologies® operations to better position the company for profitability in
light of lower plant utilization resulting from a slowdown in the semiconductor
industry. As a result of this reorganization, we reduced the number of personnel
and recorded a charge of $0.4 million in the third quarter of fiscal 2008.

In June 2006, we adopted a plan to
consolidate the manufacturing of our automation product line into facilities
already used to manufacture diffusion furnaces. Our automation products are
often sold in conjunction with new diffusion furnaces. As a result of this
decision, we recorded approximately $0.2 million of restructuring charges in
fiscal 2006.

In July 2004, we completed the
acquisition of the Bruce Technologies® horizontal diffusion furnace product line
from Kokusai Semiconductor Equipment Corporation, which we believe makes us a
leading manufacturer of horizontal diffusion furnaces.

28

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Results of Operations

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

**Years Ended September
      30,****2008**
    
    **2007**
    
    **2006**Net revenue
    100.0
    %
    
    100.0
    %
    
    100.0
    %Cost of
      sales
    71.4
    %
    
    72.1
    %
    
    73.9
    %Gross margin
    28.6
    %
    
    27.9
    %
    
    26.1
    %Selling, general and administrative
    22.1
    %
    
    22.9
    %
    
    20.5
    %Restructuring charge
    0.4
    %
    
    0.0
    %
    
    0.5
    %Research and development
    1.4
    %
    
    1.2
    %
    
    1.1
    %Operating income
    4.7
    %
    
    3.8
    %
    
    4.0
    %Interest and other income (expense), net
    1.0
    %
    
    0.7
    %
    
    0.0
    %Income before
      income taxes
    5.7
    %
    
    4.5
    %
    
    4.0
    %Income tax provision (benefit)
    2.1
    %
    
    (0.8
    %)
    
    0.7
    %Net
      income
    3.6
    %
    
    5.3
    %
    
    3.3
    %


Fiscal 2008 compared to Fiscal 2007

Net Revenue

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

|                                          |  | Years Ended September 30,   
|----------------------------------------- |  | ----------------------------
|Segment                                   |  | 2008                        
|                                          |  | (dollars in
      thousands)
|Solar and Semiconductor Equipment Segment |  |                             
|Polishing
      Supplies Segment          |  |                             
|Total Net Revenue                         |  | $                           

Net revenue for the year ended
September 30, 2008 increased $34.3 million or 75% compared to the year ended
September 30, 2007. Overall growth in net revenue in fiscal 2008 was driven
primarily by our continued penetration of the solar market where revenue
increased $37.6 million or more than 300% compared to fiscal 2007. Within the
solar and semiconductor equipment segment, net revenue from the solar market was
$50.1 million and $12.5 million in fiscal 2008 and 2007, respectively, while net
revenue from the semiconductor market was $21.9 million in fiscal 2008 compared
to $25.2 million in fiscal 2007 a decrease of 14% due primarily to the downturn
in the semiconductor industry. R2D generated $3.2 million of semiconductor
equipment revenue in fiscal 2008 for which there were no comparable revenues in
fiscal 2007. Revenue in the polishing supplies segment was $8.3 million for the
fiscal years ended September 30, 2008 and 2007. Increased demand for our
polishing machines was offset by lower shipments of insert carriers caused by
increased competition in the insert carrier market as well as the downturn in
the semiconductor industry. The recent global credit crisis and related downturn
in the global economy has caused many of our customers to delay or suspend their
capacity expansion plans. Some of customers have and other may request delays in
the shipment of their orders. As a result, future revenues from both the solar
and semiconductor markets are likely to be negatively impacted by these recent
events.

Backlog

Our backlog as of September 30, 2008
and 2007 was $46.7 million and $22.9 million, respectively, a 104% increase. Our
backlog as of September 30, 2008 included approximately $36.7 million of orders
from our solar industry

29

---

customers compared to $17.4 million of
orders from solar industry customers as of September 30, 2007. The orders
included in our backlog are generally credit approved customer purchase orders
expected to ship within the next twelve months. Because our orders are typically
subject to cancellation or delay by the customer, our backlog at any particular
point in time is not necessarily representative of actual sales for succeeding
periods, nor is backlog any assurance that we will realize revenue or profit
from completing these orders. The recent global credit crisis and related
downturn in the global economy has caused many of our customers to delay or
suspend their capacity expansion plans. As a result, the delivery times of many
of the orders in our backlog may be delayed or even cancelled by our customers.
Our backlog also includes revenue deferred pursuant to our revenue recognition
policy, derived from orders that have already been shipped, but which have not
met the criteria for revenue recognition. The backlog as of September 30, 2008
and 2007 includes $1.3 million and $0.9 million, respectively, of open orders or
deferred revenue on which we anticipate no gross margin.

Gross Profit

Gross profit is the difference between
net revenue and cost of goods sold. Cost of goods sold consists of purchased
material, labor and overhead to manufacture equipment or spare parts and the
cost of service and support to customers for warranty, installation and paid
service calls. Gross margin is gross profit as a percentage of net revenue.

|                                          |  | Years Ended September 30,
|----------------------------------------- |  | -------------------------
|Segment                                   |  | 2008                     
|                                          |  | (dollars in thousands)   
|Solar and Semiconductor Equipment Segment |  |                          
|Polishing
      Supplies Segment          |  |                          
|Total Gross Profit                        |  | $                        
|                                         
|Gross Margin                              |  |                          

Gross profit increased in fiscal 2008
by $10.2 million, or 79%, over fiscal 2007. The increase was driven by higher
shipments during the year as well as improved margin percentage. Gross margin
improved to 29% in fiscal 2008 from 28% in fiscal 2007. Gross margin in the
solar and semiconductor equipment segment improved primarily due to realizing
economies of scale. Increased volume resulted in improved capacity utilization,
increased purchasing power and improved labor efficiencies in the solar and
semiconductor equipment segment. Increases in gross margin were partially offset
by higher warranty costs and higher deferred profit. We deferred $2.9 million of
profit in fiscal 2008, net of acceptances, compared to a net deferral of $1.0
million in fiscal 2007. Gross profit and gross margin in the polishing supplies
segment were lower in fiscal 2008 as compared to fiscal 2007 due mainly to
changes in product mix. We sold higher volumes of polishing machines at a
relatively low margin as compared to margins on insert carriers. Increased
competition in the insert carrier market resulted in lower volumes in this
market.

The timing of revenue recognition can
have a particularly significant effect on gross margin when the equipment
revenue of an order is recognized in one period and the remainder of the revenue
attributed to holdbacks is recognized in a later period. The portion of revenue
attributed to the holdbacks generally comprises 10-20% of an order and has a
significantly higher gross margin percentage.

Selling, General and
Administrative Expenses

Selling, general and administrative
expenses consist of the cost of employees, consultants and contractors, as well
as facility costs, sales commissions, legal and accounting fees and promotional
marketing expenses.

30

---

|                                          |  | Years Ended September
      30,
|----------------------------------------- |  | -------------------------------
|Segment                                   |  | 2008                           
|                                          |  | (dollars in thousands)         
|Solar and Semiconductor Equipment Segment |  | $                              
|Polishing
      Supplies Segment          |  |                                
|Total SG&A                                |  | $                              
|                                         
|Percent of net revenue                    |  |                                

Total selling, general and
administrative (SG&A) expenses increased $7.2 million or 69% in fiscal 2008
from fiscal 2007. SG&A expenses include $0.5 million and $0.3 million of
stock-based compensation expense for fiscal 2008 and 2007, respectively.
SG&A expenses for fiscal 2008 include $0.3 million of costs related to
compliance with the provisions of the Sarbanes-Oxley Act and a $0.5 million
provision was recorded in fiscal 2008 as an allowance for doubtful accounts for
which there were no comparable expenses in fiscal 2007. The increased SG&A
also reflects $1.4 million of costs incurred by R2D in fiscal 2008 for which
there were no comparable expenses in fiscal 2007. Commissions on sales increased
approximately $2.0 million due to increased revenue generated in geographic
regions, primarily Asia, where third-party sales representatives are utilized.
Other selling costs increased $1.2 million in fiscal 2008 due to increased
shipping volumes and increased marketing activities. The remainder of the
increase in SG&A expenses resulted from increased depreciation and operating
costs for the new building in The Netherlands and increased personnel, travel
and consulting costs. The increased personnel and consulting costs include
increased incentive compensation costs and administrative costs incurred to
improve internal financial and operational reporting and implement improvements
in operational efficiencies.

Restructuring
Charges

In June 2008, we recorded a charge of
$0.4 million resulting from the reorganization of the Bruce Technologies
operations. The charge consisted mainly of severance and placement costs for
personnel affected by the reduction in workforce. We incurred no comparable
costs in fiscal 2007.

Research and Development

Research and development expenses
consist of the cost of employees, consultants and contractors who design,
engineer and develop new products and processes; materials used in those
processes and producing prototypes.

|                                          |  | Years Ended September
      30,
|----------------------------------------- |  | -------------------------------
|Segment                                   |  | 2008                           
|                                          |  | (dollars in thousands)         
|Semiconductor and Solar Equipment Segment |  | $                              
|Polishing
      Supplies Segment          |  |                                
|Total Research and Development            |  | $                              
|                                         
|Percent of net revenue                    |  |                                

Increased investment in research and
development resulted mainly from activity in the development of products and
processes to meet the needs of the solar market. Reimbursements of research and
development costs in the form of governmental research and development grants
amounted to $0.1 million in fiscal 2008 and 2007, respectively, and are netted
against these expenses.

31

---

Income Tax Provision

Our effective tax rate was 37.1% in
fiscal 2008 and 17.5% in 2006. Between September 30, 2004 and September 30,
2006, we maintained a valuation allowance equal to the total of our deferred tax
assets. Our effective tax rate was reduced by sixteen percentage points in
fiscal 2007, as a result of the reduction in our valuation allowance. During
fiscal year 2008, 2007 and 2006, we recorded reductions in the valuation
allowance on deferred tax assets of $0.2 million, $1.2 million, and $0.2
million, respectively. The reduction in fiscal years 2008 and 2007 were based
upon the profitability in the three most recent fiscal years, as well as our
projected future profitability, strong cash position and strong order backlog.
Because of this, we determined that it is more likely than not that we would
realize the future tax benefit of a significant portion of our deferred tax
assets. In fiscal 2006, the reduction in our valuation allowance resulted from a
decline in our deferred tax assets. These changes in our valuation allowance had
a favorable effect on our effective tax rates.

Our future effective income tax rate
depends on various factors, such as the geographic composition of worldwide
earnings, tax regulations governing each region, non-tax deductible expenses
incurred and the effectiveness of our tax planning strategies.

Fiscal 2007 compared to Fiscal 2006

Net Revenue

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

|                                          |  | Years Ended September 30,  |        | Increase |   |           
|----------------------------------------- |  | -------------------------- | ------ | -------- | - | ----------
|**Net
      Revenue**                     |  | 2007                       |        | 2006     |   | (Decrease)
|                                          |  | (dollars in
    thousands) |        |          |   |           
|Semiconductor and Solar Equipment Segment |  | $                          | 37,657 |          | $ | 33,363    
|Polishing
      Supplies Segment          |  |                            | 8,327  |          |   | 7,082     
|Total                                     |  | $                          | 45,984 |          | $ | 40,445    

Overall growth in net revenue in fiscal
2007 was driven primarily by our increased penetration into the solar market
where revenue increased $9.7 million or more than 300% compared to fiscal 2006.
Within the solar and semiconductor equipment segment, net revenue from the solar
market was $12.5 million and $2.8 million in fiscal 2007 and 2006, respectively,
while net revenue from the semiconductor market was $25.2 million in fiscal 2007
compared to $30.6 million in fiscal 2006. Net revenue within the semiconductor
market in fiscal 2006 was positively impacted by the shipment of a $5.2 million
multi-furnace order for which there was no corresponding order of similar
magnitude in fiscal 2007. Revenue in the polishing supplies segment increased
$1.2 million or 18% due to increased demand for our polishing machines and
polishing templates.

Backlog

Our backlog as of September 30, 2007
and 2006 was $22.9 million and $13.6 million, respectively, a 68% increase. Our
backlog as of September 30, 2007 included approximately $17.4 million of orders
from our solar industry customers compared to $7.6 million of orders from solar
industry customers as of September 30, 2006. The orders included in our backlog
are generally credit approved customer purchase orders expected to ship within
the next twelve months. Because our orders are typically subject to cancellation
or delay by the customer, our backlog at any particular point in time is not
necessarily representative of actual sales for succeeding periods, nor is
backlog any assurance that we will realize revenue or profit from completing
these orders. Our backlog also includes revenue deferred pursuant to our revenue
recognition policy, derived from orders that have already been shipped, but
which

32

---

have not met the criteria for revenue
recognition. The backlog as of September 30, 2007 and 2006 includes $0.9 million
of open orders or deferred revenue on which we anticipate no gross
margin.

Gross Profit

Gross profit is the difference between
net revenue and cost of goods sold. Cost of goods sold consists of purchased
material, labor and overhead to manufacture equipment or spare parts and the
cost of service and support to customers for warranty, installation and paid
service calls. Gross margin is gross profit as a percentage of net revenue.

|                                          |  |                              | Years Ended September 30, |      |  | Increase   |        |   | 
|----------------------------------------- |  | ---------------------------- | ------------------------- | ---- |  | ---------- | ------ | - | 
|**Gross
      Profit**                    |  | 2007                         |                           | 2006 |  | (Decrease) |        | %
|                                          |  | (dollars in
      thousands) |                           |      |  |            |        |  
|Semiconductor and Solar Equipment Segment |  | $                            | 9,995                     |      |  | $          | 8,461  |   | 
|Polishing
      Supplies Segment          |  |                              | 2,815                     |      |  |            | 2,114  |   | 
|Total                                     |  | $                            | 12,810                    |      |  | $          | 10,575 |   | 
|Gross Margin                              |  |                              | 28                        | %    |  |            | 26     | % | 

Gross profit increased in fiscal 2007
by $2.2 million, or 21%, over fiscal 2006. The increase was driven by higher
shipments during the year as well as improved margin percentage. Gross margin
was 28% in fiscal 2007 compared to 26% in fiscal 2006. A major factor that
contributed to the increase in margin percentage was improved capacity
utilization in both segments. Additionally, in the solar and semiconductor
equipment segment, margins were negatively impacted in fiscal 2006 by
approximately $0.7 million of revenue and an equal amount of costs related to
customer acceptance of one of our first small batch vertical furnace systems and
lower margins on the multi-furnace order shipped during fiscal 2006.

The timing of revenue recognition can
have a particularly significant effect on gross margin when the equipment
revenue of an order is recognized in one period and the remainder of the revenue
attributed to holdbacks is recognized in a later period. The portion of revenue
attributed to the holdbacks generally comprises 10-20% of an order and has a
significantly higher gross margin percentage.

Selling, General and
Administrative Expenses

Selling, general and administrative
expenses consist of the cost of employees, consultants and contractors, as well
as facility costs, sales commissions, legal and accounting fees and promotional
marketing expenses.

|                                              |  | Years Ended September 30, |        | Increase |  |            |      
|--------------------------------------------- |  | ------------------------- | ------ | -------- |  | ---------- | -----
|**Selling, general and
      administrative** |  | **2007**                  |        | 2006     |  | (Decrease) |      
|                                              |  | (dollars in thousands)    |        |          |  |            |      
|Semiconductor and Solar Equipment Segment     |  | $                         | 9,091  |          |  | $          | 7,111
|Polishing
      Supplies Segment              |  |                           | 1,414  |          |  |            | 1,202
|Total                                         |  | $                         | 10,505 |          |  | $          | 8,313
|Percent of net revenue                        |  |                           | 23     | %        |  |            | 21   

Total selling, general and
administrative expenses increased $2.2 million or 26% in fiscal 2007 from fiscal
2006. Commissions on sales increased approximately $0.9 million due to increased
revenue generated in geographic regions, primarily Asia, where third-party sales
representatives are utilized. Other selling costs increased $0.2 million in
fiscal 2007 due to increased marketing activities. General and administrative
personnel and consulting costs increased in fiscal 2007 as a result of the need
to (i) improve internal financial and operational reporting, (ii) identify
potential improvements in operational efficiencies, (iii) assist in developing
and executing our growth

33

---

strategies and (iv) manage the
increasing compliance obligations of a growing multi-national public company.
Stock option expense increased $0.2 million in fiscal 2007.

Restructuring
Charges

In June 2006, we adopted a plan to
consolidate the manufacturing of our automation product line into facilities
already used to manufacture diffusion furnaces. Our automation products are
often sold in conjunction with the sale of new diffusion furnaces. As a result
of this decision, we recorded $0.2 million of restructuring charges in fiscal
2006. We incurred no comparable costs in fiscal 2007.

Research and
Development

Research and development expenses
consist of the cost of employees, consultants and contractors who design,
engineer and develop new products and processes; materials used in those
processes and producing prototypes.

|                                          |  | Years Ended September 30,  |     | **Increase** |  |            |    
|----------------------------------------- |  | -------------------------- | --- | ------------ |  | ---------- | ---
|**Research and
      Development**        |  | 2007                       |     | 2006         |  | (Decrease) |    
|                                          |  | (dollars in
    thousands) |     |              |  |            |    
|Semiconductor and Solar Equipment Segment |  | $                          | 564 |              |  | $          | 437
|Polishing
      Supplies Segment          |  |                            | -   |              |  |            | -  
|Total                                     |  | $                          | 564 |              |  | $          | 437
|Percent of net
    revenue                |  |                            | 1   | %            |  |            | 1  

Increased investment in research and
development resulted mainly from activity in the development of products and
processes to meet the needs of the solar market. Reimbursements of research and
development costs in the form of governmental research and development grants
amounted to $0.1 million in fiscal 2007 and 2006, respectively, and are netted
against these expenses.

Income Tax
Provision

In fiscal 2004 we recorded a valuation
allowance for the total of our deferred tax assets. The company, at that time,
had incurred substantial book and tax losses and was in a cumulative loss
position as defined under SFAS No. 109. During fiscal years 2004 through 2006,
we recorded additional tax provisions or benefits as deferred tax assets
increased or decreased so that the valuation allowance remained equal to total
deferred tax assets. During fiscal 2006, our deferred tax assets declined by
$0.2 million, resulting in a decline in our valuation allowance and an equal
amount of tax benefit. This resulted in an effective tax rate for fiscal 2006 of
17.5%.

Based upon profitability in fiscal
years 2006 and 2007, as well as our strong cash position and strong order
backlog, we believe it is more likely than not that we will realize the future
tax benefit of a significant portion of our deferred tax assets. Therefore,
during fiscal 2007 we recorded reductions in the valuation allowance on deferred
tax assets of $1.2 million. Our future effective income tax rate depends on
various factors, such as tax legislation, the geographic composition of our
pre-tax income, the level of expenses that are not deductible for tax purposes,
changes in our deferred tax assets and the effectiveness of our tax planning
strategies.

Liquidity and Capital
Resources

In November 2007 (fiscal 2008), we
completed the sale of 2.5 million shares of Common Stock in a public offering
for $14.41 per share. The net proceeds of the sale of Common Stock after
offering expenses and underwriting fees was approximately $33.6 million. In
February 2007 (fiscal 2007), we completed the sale of approximately 3 million
shares of Common Stock in a public offering for $7.05 per share. The net
proceeds of the sale of Common Stock after offering expenses and underwriting
fees was approximately $19.4 million.

34

---

As of September 30, 2008, and 2007,
cash, cash equivalents and restricted cash were $38.5 million and $18.8 million,
respectively. Our working capital increased $26.7 million to $57.2 million as of
September 30, 2008, compared to $30.5 million as of September 30, 2007. Our
ratio of current assets to current liabilities decreased to 3.2:1 as of
September 30, 2008 from 3.6:1 as of September 30, 2007. The increase in cash and
working capital resulted primarily from the $33.6 million raised from the public
offering of Common Stock in November 2007. We utilized approximately $7.4
million for the purchase of R2D and $3.1 million of capital expenditures,
primarily building improvements and machinery and equipment in The Netherlands
increasing the capacity of our solar and semiconductor equipment
segment.

As of September 30, 2008, our principal
sources of liquidity consisted of $37.5 million of cash and cash equivalents and
$1.0 million of restricted cash. Restricted cash consists of bank guarantees in
excess of our European overdraft facility. The bank guarantees are required by
certain customers from whom deposits have been received in advance of shipment.
Effective April 2007, our $2.0 million credit facility with Silicon Valley Bank
expired and was not renewed as it was no longer needed.

The table below provides selected
consolidated cash flow information for the periods indicated:

|                                                    |  | Fiscal Years Ended September 30,
|--------------------------------------------------- |  | --------------------------------
|                                                    |  | 2008                            
|                                                    |  | (dollars in
      thousands)    
|Net cash provided by (used in) operating activities |  | ($2,050                         
|Net cash used in
      investing activities         |  | ($12,196                        
|Net cash provided by financing activities           |  | $33,316                         

Cash Flows from Operating
Activities

Cash used in our operating activities
was $2.1 million and $2.3 million in fiscal 2008 and 2007, respectively,
compared to the $3.3 million of cash provided from such activities during fiscal
2006. During fiscal 2008 and 2007, cash was primarily used to finance business
growth, including increases in accounts receivable and inventory. This use of
cash was partially offset each fiscal year by increases in accrued liabilities
and customer deposits, deferred profit and accounts payable.

Cash Flows from Investing
Activities

Our investing activities for fiscal
2008, 2007 and 2006 used cash of $12.2 million, $4.9 million and $1.0 million,
respectively. During fiscal 2008 and 2007, the most significant investments were
the fiscal 2008 acquisition of R2D ($7.4 million), approximately $3.7 million in
fiscal 2007 for the purchase of and improvements to a 54,000 sq. ft.
manufacturing facility located in Vaassen, The Netherlands and $1.5 million for
additional improvements in fiscal 2008 to the manufacturing facility in The
Netherlands. Another significant investment in fiscal 2007 and 2008 was $0.3
million and $0.4 million, respectively, paid for a license to certain solar
PECVD technology from the licensor. Other investments in fiscal 2008, 2007 and
2006 consisted primarily of purchases of manufacturing equipment and research
and development equipment and upgrades to information systems.

Cash Flows from Financing
Activities

Cash provided by our financing
activities for fiscal 2008 and 2007 was $33.3 million and $19.6 million,
respectively, which primarily consists of the $33.6 million and $19.4 million
raised in our Common Stock offerings, net of expenses. Other financing
activities during fiscal 2008 and 2007 were mainly payments on debt of $0.8
million and $0.3 million, respectively. Fiscal 2006 cash provided from financing
activities consists primarily of $0.8 million from the exercise of warrants and
stock options, $0.1 million of net short-term bank borrowings and $0.1 million
excess tax benefit of stock options. This was partially offset by $0.1 million
of net payments on long-term obligations and $0.1 million in cash dividends paid
on preferred stock.

We currently anticipate that our
existing cash balances will be sufficient to meet our anticipated cash needs for
current operations for at least the next 12 months.

35

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Off-Balance Sheet
Arrangements

As of September 30, 2008, we had no
off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K
promulgated by the Securities and Exchange Commission.

Contractual Obligations and
Commercial Commitments

We had the following contractual
obligations and commercial commitments as of September 30, 2008:

|                                        |  |       |        |      | Less than 1            |           |  |           |       |       |   |     | More than 5
|--------------------------------------- |  | ----- | ------ | ---- | ---------------------- | --------- |  | --------- | ----- | ----- | - | --- | -----------
|Contractual obligations                 |  | Total |        | year |                        | 1-3 years |  | 3-5 years |       | years
|                                        |  |       |        |      | (dollars in thousands) |           |  |           |       |       |  
|Debt obligations                        |  | $     | 432    |      | $                      | 148       |  | $         | 248   |       | $ | 36  |            
|Operating lease
      obligations:      |  |       |        |      |                        |           |  |           |       |       |   |     |            
|Buildings                               |  |       | 1,556  |      |                        | 570       |  |           | 828   |       |   | 73  |            
|Office equipment                        |  |       | 104    |      |                        | 27        |  |           | 63    |       |   | 14  |            
|Vehicles                                |  |       | 265    |      |                        | 93        |  |           | 133   |       |   | 39  |            
|Total operating
      lease obligations |  |       | 1,925  |      |                        | 690       |  |           | 1,024 |       |   | 126 |            
|Purchase obligations                    |  |       | 8,505  |      |                        | 8,505     |  |           | -     |       |   | -   |            
|Total                                   |  | $     | 10,862 |      | $                      | 9,343     |  | $         | 1,272 |       | $ | 162 |            
|                                       
|Other commerical obligations:           |  |       |        |      |                        |           |  |           |       |       |   |     |            
|Bank guarantees                         |  | $     | 1,185  |      | $                      | 1,185     |  | $         | -     |       |   | -   |            

As of September 30, 2008, we had $8.5
million in purchase obligations compared to $7.2 million and $5.7 million as of
September 30, 2007 and 2006, respectively. The increase in purchase obligations
is mainly a result of increasing backlog which requires higher inventories and
purchase commitments due to higher volume. We have also increased our volume
purchasing to reduce costs, and experienced longer lead-times required by our
suppliers.

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 consolidated financial statements requires us to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the consolidated financial statements, the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenue and expenses during the reporting period.

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

A critical accounting policy is one
that is both important to the presentation of our financial position and results
of operations, and requires managements most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain. These uncertainties are discussed in
ITEM 1A. RISK FACTORS. We believe the following critical accounting policies
affect the more significant judgments and estimates used in the preparation of
our consolidated financial statements.

Revenue
Recognition.We review product and
service sales contracts with multiple deliverables to determine if separate
units of accounting are present in the arrangements. Where separate units of
accounting exist, revenue is allocated to delivered items equal to the total
sales price less the greater of (1) the relative fair value of the undelivered
items, and (2) all contingent portions of the sales arrangement.

36

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

| | (1) |  | For the solar and semiconductor
      equipment segment, transactions where legal title passes to the customer
      upon shipment, we recognize revenue upon shipment for those products where
      the customers defined specifications have been met with at least two
      similarly configured systems and processes for a comparably situated
      customer. However, a portion of the revenue associated with certain
      installation-related tasks, equal to the greater of the relative fair
      value of those tasks or the portion of the contract price contingent upon
      their completion, generally 10%-20% of the systems selling price (the
      holdback), and directly related costs, if any, are deferred and
      recognized into income when the tasks are completed. Since we defer only
      those costs directly related to installation or other unit of accounting
      not yet delivered and the portion of the contract price is often
      considerably greater than the fair market value of those items, our policy
      at times will result in deferral of profit that is disproportionate in
      relation to the deferred revenue. When this is the case, the gross margin
      recognized in one period will be lower and the gross margin reported in a
      subsequent period will improve.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | (2) |  | For products where the customers
      defined specifications have not been met with at least two similarly
      configured systems and processes, the revenue and directly related costs
      are deferred at the time of shipment and later recognized at the time of
      customer acceptance or when this criterion has been met. We have, on
      occasion, experienced longer than expected delays in receiving cash from
      certain customers pending final installation or system acceptance. If some
      of our customers refuse to pay the final payment, or otherwise delay final
      acceptance or installation, the deferred revenue would not be recognized,
      adversely affecting our future operating results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    
| | (3) |  | Equipment sold by the polishing
      supplies segment generally does not include process guarantees, acceptance
      criteria or holdbacks; therefore, the related revenue is generally
      recorded upon transfer of title which is generally at time of
      shipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    
| | (4) |  | For all segments, sales of spare
      parts and consumables are recognized upon shipment, as there are no post
      shipment obligations other than standard warranties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    
| | (5) |  | Service revenue is recognized
      upon performance of the services requested by the customer. Revenue
      related to service contracts is recognized ratably over the period of the
      contract or in accordance with the terms of the contract, which generally
      coincides with the performance of the services requested by the
      customer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Income taxes.The calculation of tax liabilities
involves significant judgment in estimating the impact of uncertainties in the
application of complex tax laws. Resolution of these uncertainties in a manner
inconsistent with our expectations could have a material impact on our
operations and financial condition.

We adopted the provisions of FIN 48,
Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109, (FIN 48) as of the beginning of fiscal 2008. FIN 48 requires
application of a more likely than not threshold to the recognition and
derecognition of uncertain tax positions. FIN 48 requires us to recognize the
amount of tax benefit that has a greater than 50 percent likelihood of being
ultimately realized upon settlement. It further requires that a change in
judgment related to the expected ultimate resolution of uncertain tax positions
be recognized in earnings in the quarter of such change. Prior to adoption, our
policy was to establish reserves that reflected the probable outcome of known
tax contingencies.

Inventory Valuation.We value our inventory at the lower of
cost or net realizable value. Costs for approximately 80% of inventory are
determined on an average cost basis with the remainder determined on a first-in,
first-out (FIFO) basis. We regularly review inventory quantities and record a
write-down for excess and obsolete inventory. The write-down is primarily based
on historical inventory usage adjusted for expected changes in 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. Changes in demand for our products
and product mix could result in further write-downs.

37

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Allowance for Doubtful Accounts.We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability or unwillingness of
our customers to make required payments. This allowance is based on historical
experience, credit evaluations, specific customer collection history and any
customer-specific issues we have identified. Since a significant portion of our
revenue is derived from the sale of high-value systems, 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 collectability of our accounts
receivable and our future operating results.

Warranty.We provide a limited warranty, generally for 12 to 24 months,
to our customers. A provision for the estimated cost of providing warranty
coverage is recorded upon acceptance 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 we believe that the amounts accrued for warranty expenditures
are sufficient for all systems sold through September 30, 2008, we cannot
guarantee that we will continue to experience a similar level of predictability
with regard to warranty costs. 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 result in an increase in
our warranty expense.

Impairment of Long-lived Assets.Goodwill and other intangibles not
subject to amortization are tested for impairment at least annually by comparing
the carrying value to the recognized measures of fair value. We periodically
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 that is being amortized or depreciated 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 2008 or 2007. Future adverse changes could be caused by,
among other factors, a downturn in the semiconductor industry, a general
economic slowdown, reduced demand for our products in the marketplace, poor
operating results, the inability to protect intellectual property or changing
technologies and product obsolescence.

Stock-Based
Compensation.On October 1, 2005, the Company adopted Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment (SFAS 123(R)) and Staff
Accounting Bulletin 107, Share-Based Payment. SFAS 123(R) requires the
recognition of compensation costs relating to share-based payment transactions
in the financial statements. Under the fair value method, the estimated fair
value of awards is charged to income on a straight-line basis over the requisite
service period, which is generally the vesting period. The Company has elected
the modified prospective application method of reporting; therefore, prior
periods were not restated. Under the modified prospective method, this statement
was applied to new awards granted after the time of adoption, as well as to the
unvested portion of previously granted awards for which the requisite service
had not been rendered as of October 1, 2005. SFAS 123(R) also requires the
benefits of tax deductions in excess of recognized compensation cost to be
reported as cash flow from financing activities rather than as cash flow from
operating activities.

Impact of Recently Issued Accounting
Pronouncements

For discussion of the impact of
recently issued accounting pronouncements, see Item 8: Financial Statements and
Supplementary Data under Footnote 1 Summary of Significant Accounting
Policies under Impact of Recently Issued Accounting Pronouncements.

38

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ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We are exposed to foreign currency
exchange rates to the extent sales contracts, purchase contracts, assets or
liabilities of our European operations are denominated in currencies other than
their functional currency, Our operations in Europe, a component of the solar
and semiconductor equipment segment, conduct business primarily in their
functional currency, the Euro, and the U.S. dollar. Nearly all of the
transactions, assets and liabilities of all other operating units are
denominated in the U.S. dollar, their functional currency. In fiscal 2008, the
U.S. dollar, on average, weakened relative to the Euro by 13.0% and, in fiscal
2007, weakened relative to the Euro by 8.1%. It is highly uncertain how currency
exchange rates will fluctuate in the future. Actual changes in foreign exchange
rates could adversely affect our operating results or financial
condition.

As of September 30, 2008, we did not
hold any stand-alone or separate derivative instruments. We incurred net foreign
currency transaction losses of $0.1 million in fiscal 2008 and fiscal 2007. As
of September 30, 2008, our foreign subsidiaries had $3.6 million of assets (cash
and receivables) denominated in U.S. dollars, rather than Euros, which is their
functional currency. A 10% change in the value of the functional currency
relative to the nonfunctional currency would result in a gain or loss of $0.4
million. As of the end of fiscal 2008, we had $3.4 million of accounts payable,
consisting primarily of amounts owed by foreign subsidiaries to our U.S.
companies, denominated in U.S. dollars. Even though the intercompany accounts
are eliminated in consolidation, a 10% change in the value of the Euro relative
to the U.S. dollar would result in a gain or loss of $0.3 million. Our net
investment in and long-term advances to our foreign operations totaled $35.0
million as of September 30, 2008. A 10% change in the value of the Euro relative
to the U.S. dollar would cause an approximately $3.5 million foreign currency
translation adjustment, a type of other comprehensive income (loss), which would
be a direct adjustment to our stockholders equity. In fiscal 2008, we incurred
a net other comprehensive loss of $0.8 million from translation adjustments.

During fiscal 2008 and 2007, U.S.
dollar denominated sales of our European operations were $4.1 million and $9.9
million, respectively. As of September 30, 2008, sales commitments denominated
in a currency other than the functional currency of our transacting operation
totaled $3.4 million. Our lead-times range between 16 and 24 weeks. A 10% change
in the relevant exchange rates between the time the order was taken and the time
of shipment would cause our gross profit on such orders to be approximately $0.1
million less than expected on the date the order was taken.

All operations become less competitive
relative to foreign suppliers when their functional currency strengthens
relative to that of the foreign supplier. Our European operations are
particularly affected when selling to customers in Asia when such customers
require a purchase price in U.S. dollars. If the value of the U.S. dollar has
strengthened or weakened relative to the Euro our gross margin will be reduced
or increased, respectively, relative to prior transactions unless we and our
customers agree to a commensurate increase or decrease, respectively, in our
selling price.

Interest Rate Risk

Our exposure to changes in interest
rates is limited to interest earned on cash and short-term investments of $38.5
million and interest expense on $0.3 million of long term obligations and
intermittent short-term borrowings. A one percentage point change in interest
rates would have a $0.4 million impact on interest income.

39

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ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

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

|Financial Statements                                                                      
|------------------------------------------------------------------------------------------
|Report of Independent Registered
      Public Accounting Firm                             
|                                                                                          
|Consolidated Balance Sheets:
      September 30, 2008 and 2007                            
|                                                                                          
|Consolidated Statements of
      Operations: Years ended September 30, 2008, 2007 and 2006
|                                                                                          
|Consolidated Statements of
      Stockholders Equity and Comprehensive Income            
|(Loss): Years ended September 30,
      2008, 2007 and 2006                               
|                                                                                          
|Consolidated Statements of Cash
      Flows: Years ended September 30, 2008, 2007 and 2006
|                                                                                          
|Notes to Consolidated Financial
      Statements                                          

40

---

Report of
Independent Registered Public Accounting Firm

To the Stockholders ofAmtech
Systems, Inc.:

We have audited the accompanying
consolidated balance sheets of Amtech Systems, Inc. as of September 30, 2008 and
2007, and the related consolidated statements of operations, stockholders
equity and comprehensive income and cash flows for each of the years in the
three year period ended September 30, 2008. 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 the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 consolidated
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Amtech Systems, Inc. as of September 30,
2008 and 2007, and the results of their operations and their cash flows for each
of the three years ended September 30, 2008, in conformity with accounting
principles generally accepted in the United States of America.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the effectiveness of Amtech Systems, Inc. internal control over
financial reporting as of September 30, 2008, based on criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated December
10, 2008 expressed an unqualified opinion thereon.



/s/ Mayer Hoffman McCann
P.C.

Phoenix, ArizonaDecember 10,
2008

41

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PART I FINANCIAL
INFORMATION

ITEM 1.
Consolidated Financial Statements

AMTECH SYSTEMS, INC. AND
SUBSIDIARIESConsolidated Balance Sheets(in thousands except share
data)

|                                                                      |  | September 30, |         | September 30,
|--------------------------------------------------------------------- |  | ------------- | ------- | -------------
|                                                                      |  | 2008          |         | 2007         
|Assets                                                                |  |               |         |              
|Current
      Assets                                                  |  |               |         |              
|Cash and cash
      equivalents                                       |  | $             | 37,501  |              
|Restricted
      cash                                                 |  |               | 970     |              
|Accounts
      receivable                                             |  |               |         |              
|Trade (less allowance for doubtful accounts of $588 and
      $126 at |  |               | 17,639  |              
|September 30, 2008 and September 30, 2007,
      respectively)        |  |               |         |              
|Unbilled and other                                                    |  |               | 5,376   |              
|Inventories                                                           |  |               | 15,902  |              
|Deferred
      income taxes                                           |  |               | 4,500   |              
|Other                                                                 |  |               | 1,511   |              
|Total current assets                                                  |  |               | 83,399  |              
|                                                                     
|Property, Plant and Equipment - Net                                   |  |               | 8,409   |              
|Deferred
      Income Taxes - Long Term                               |  |               | -       |              
|Intangible Assets - Net                                               |  |               | 4,384   |              
|Goodwill                                                              |  |               | 4,450   |              
|Restricted cash - non-current                                         |  |               | 1,713   |              
|Total
      Assets                                                    |  | $             | 102,355 |              
|                                                                     
|Liabilities and
      Stockholders' Equity                            |  |               |         |              
|Current
      Liabilities                                             |  |               |         |              
|Accounts
      payable                                                |  | $             | 6,529   |              
|Bank loans
      and current maturities of long-term debt             |  |               | 148     |              
|Accrued
      compensation and related taxes                          |  |               | 4,553   |              
|Accrued
      warranty expense                                        |  |               | 1,155   |              
|Deferred
      profit                                                 |  |               | 5,352   |              
|Customer
      deposits                                               |  |               | 4,859   |              
|Other accrued
      liabilities                                       |  |               | 2,503   |              
|Income taxes
      payable                                            |  |               | 1,060   |              
|Total current liabilities                                             |  |               | 26,159  |              
|                                                                     
|Income Taxes Payable Long-term                                        |  |               | 440     |              
|Deferred
      Income Taxes Long-term                                 |  |               | 940     |              
|Other Long-Term Obligations                                           |  |               | 283     |              
|Total liabilities                                                     |  |               | 27,822  |              
|                                                                     
|Commitments and Contingencies                                         |  |               |         |              
|                                                                     
|Stockholders' Equity                                                  |  |               |         |              
|Preferred stock; 100,000,000 shares authorized; none
    issued       |  |               | -       |              
|Common stock; $0.01 par value; 100,000,000
      shares authorized;   |  |               |         |              
|shares issued and outstanding:
      9,096,048 and 6,517,923          |  |               |         |              
|at September 30, 2008 and
      September 30, 2007, respectively      |  |               | 91      |              
|Additional paid-in capital                                            |  |               | 70,135  |              
|Accumulated other comprehensive
    income                            |  |               | 67      |              
|Retained earnings                                                     |  |               | 4,240   |              
|Total stockholders'
      equity                                      |  |               | 74,533  |              
|Total Liabilities and Stockholders' Equity                            |  | $             | 102,355 |              

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

42

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AMTECH SYSTEMS,
INC. AND SUBSIDIARIESConsolidated Statements of Operations(in thousands,
except per share data)

|                                               | Years Ended September
    30,
|---------------------------------------------- | -----------------------------
|                                               | **2008**                     
|Revenues, net of returns and allowances        | $                            
|Cost of
      sales                            |                              
|Gross profit                                   |                              
|Selling, general
      and administrative      |                              
|Restructuring charge                           |                              
|Research and
      development                 |                              
|Operating
      income                         |                              
|Interest and
      other income (expense), net |                              
|Income before income taxes                     |                              
|Income tax
      provision (benefit)           |                              
|**Net
      income**                           | $                            
|                                               |                              
|Income Per Share:                              |                              
|Basic income per
      share                   | $                            
|Weighted average shares outstanding            |                              
|                                               |                              
|Diluted income per share                       | $                            
|Weighted average
      shares outstanding      |                              

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

43

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AMTECH SYSTEMS,
INC. AND SUBSIDIARIESConsolidated Statements Of Stockholders' EquityAnd
Comprehensive Income (Loss)

|                                              |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              | Accumulated |               | Retained |  |  
|--------------------------------------------- |  | ---------------- |  | ------------------- | -- | ---------- | --------- | --------- |  | ------------ | ------ | ----------------- | ------- | ------------ | ------------- | ---------- | ------------ | ----------- | ------------- | -------- |  | -
|                                              |  | **Common Stock** |  | **Preferred Stock** |    | Additional |           | **Other** |  | **Earnings** |        | **Total**        
|                                              |  | Number
      of  |  |                     |    |            | Number of |           |  |              |        |                   | Paid-In |              | Comprehensive |            | (Accumulated |             | Stockholders'
|**(in
      thousands)**                      |  | Shares           |  | Amount              |    | Shares     |           | Amount    |  | Capital      |        | **Income (Loss)** |         | **Deficit)** |               | **Equity**
|Balance at September 30, 2005                 |  | 2,705            |  | $                   | 27 |            | 540       |           |  | $            | 1,935  |                   |         | $            | 12,861        |            |              | $           | 404           |          |  |  
|Net income                                    |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Translation
      adjustment                  |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             | 97            |          |  |  
|Comprehensive income                          |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Conversion of
      preferred stock           |  | 540              |  | $                   | 5  |            | (540      | )         |  |              | (1,859 | )                 |         |              | 1,854         |            |              |             |               |          |  |  
|Dividends on
      preferred stock            |  |                  |  |                     |    |            |           |           |  |              | 81     |                   |         |              | (81           | )          |              |             |               |          |  |  
|Preferred
      cash dividend paid            |  |                  |  |                     |    |            |           |           |  |              | (83    | )                 |         |              |               |            |              |             |               |          |  |  
|Preferred dividend paid in
      common stock |  | 9                |  |                     | -  |            |           |           |  |              | (74    | )                 |         |              | 74            |            |              |             |               |          |  |  
|Warrants
      exercised                      |  | 60               |  |                     | 1  |            |           |           |  |              |        |                   |         |              | 252           |            |              |             |               |          |  |  
|Tax benefit
      of stock options            |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              | 134           |            |              |             |               |          |  |  
|Stock options
      expense                   |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              | 176           |            |              |             |               |          |  |  
|Stock options
      exercised                 |  | 162              |  |                     | 2  |            |           |           |  |              |        |                   |         |              | 504           |            |              |             |               |          |  |  
|Balance at September 30, 2006                 |  | 3,476            |  | $                   | 35 |            | -         |           |  | $            | -      |                   |         | $            | 15,774        |            |              | $           | 501           |          |  |  
|Net income                                    |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Translation
      adjustment                  |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             | 312           |          |  |  
|Comprehensive income                          |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Issuance of
      common stock                |  | 3,019            |  |                     | 30 |            |           |           |  |              |        |                   |         |              | 19,380        |            |              |             |               |          |  |  
|Stock options
      expense                   |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              | 347           |            |              |             |               |          |  |  
|Stock options
      exercised                 |  | 23               |  |                     | -  |            |           |           |  |              |        |                   |         |              | 109           |            |              |             |               |          |  |  
|Balance at
      September 30, 2007           |  | 6,518            |  | $                   | 65 |            | -         |           |  | $            | -      |                   |         | $            | 35,610        |            |              | $           | 813           |          |  | $
|Net income                                    |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Effect of the
      adoption of FIN 48        |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Translation
      adjustment                  |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             | (746          | )        |  |  
|Comprehensive income                          |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              |               |            |              |             |               |          |  |  
|Issuance of
      common stock                |  | 2,500            |  |                     | 25 |            |           |           |  |              |        |                   |         |              | 33,549        |            |              |             |               |          |  |  
|Tax benefit
      of stock options            |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              | 84            |            |              |             |               |          |  |  
|Stock options
      expense                   |  |                  |  |                     |    |            |           |           |  |              |        |                   |         |              | 473           |            |              |             |               |          |  |  
|Stock options
      exercised                 |  | 78               |  |                     | 1  |            |           |           |  |              |        |                   |         |              | 419           |            |              |             |               |          |  |  
|**Balance at September 30,
      2008**       |  | 9,096            |  | $                   | 91 |            | -         |           |  | $            | -      |                   |         | $            | 70,135        |            |              | $           | 67            |          |  | $

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

44

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AMTECH SYSTEMS,
INC. AND SUBSIDIARIESConsolidated Statements Of Cash Flows(in
thousands)

|                                                                  |  | Year Ended September 30,
|----------------------------------------------------------------- |  | ------------------------
|                                                                  |  | 2008                    
|Operating Activities                                              |  |                         
|Net income                                                        |  | $                       
|Adjustments to reconcile
      net income to net                  |  |                         
|cash provided by operating activities:                            |  |                         
|Depreciation and amortization                                     |  |                         
|Write-down of inventory                                           |  |                         
|Provision for (reversal of) allowance for doubtful
      accounts |  |                         
|Deferred income taxes                                             |  |                         
|Non-cash share based compensation
expense                         |  |                         
|Other                                                             |  |                         
|Changes in operating
      assets and liabilities:                |  |                         
|Accounts receivable                                               |  |                         
|Inventories                                                       |  |                         
|Accrued income taxes                                              |  |                         
|Prepaid expenses and other assets                                 |  |                         
|Accounts payable                                                  |  |                         
|Accrued liabilities and customer deposits                         |  |                         
|Deferred profit                                                   |  |                         
|Net cash provided by (used
      in) operating activities         |  |                         
|                                                                 
|Investing Activities                                              |  |                         
|Purchases of
      property, plant and equipment                  |  |                         
|Proceeds from the sale of
      property, plant and equiment      |  |                         
|Increase in
      restricted cash                                 |  |                         
|Increase in restricted
      cash - non-current                   |  |                         
|Investment in
      R2D                                           |  |                         
|Payment for licensing
      agreement                             |  |                         
|Net cash used
      in investing activities                       |  |                         
|                                                                 
|Financing Activities                                              |  |                         
|Proceeds from
      issuance of common stock, net                 |  |                         
|Preferred stock cash
      dividends paid                         |  |                         
|Payments on
      long-term obligations                           |  |                         
|Borrowings on long-term
      obligations                         |  |                         
|Net
      short-term borrowings (payments)                        |  |                         
|Excess tax benefit of
      stock options                         |  |                         
|Net cash provided by
      financing activities                   |  |                         
|                                                                 
|Effect of Exchange Rate Changes on Cash                           |  |                         
|                                                                 
|Net Increase in Cash and Cash Equivalents                         |  |                         
|Cash and Cash
      Equivalents, Beginning of Year                |  |                         
|Cash and Cash Equivalents, End of Year                            |  | $                       
|                                                                 
|Supplemental Cash Flow Information:                               |  |                         
|Interest
      paid                                               |  | $                       
|Income tax
      refunds                                          |  |                         
|Income tax
      payments                                         |  |                         
|Supplemental Non-cash Financing Activities:                       |  |                         
|Stock issued
      for preferred stock dividend                   |  |                         
|Preferred stock dividend
      accrual                            |  |                         
|Preferred
      stock converted to common stock                   |  |                         

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

45

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Notes to
Consolidated Financial StatementsFor
the Years Ended September 30, 2008, 2007 and 2006

1.Summary of
Significant Accounting Policies

Nature of Operations and Basis of
Presentation Amtech Systems, Inc. (the
Company) designs, assembles, sells and installs capital equipment and related
consumables used in the manufacture of wafers, primarily for the solar and
semiconductor industries. The Company sells these products to manufacturers of
solar cells, silicon wafers, and semiconductors worldwide, particularly in the
Asia, United States and northern Europe. In addition, the Company provides
semiconductor manufacturing support services.

The Company serves niche markets in
industries that are experiencing rapid technological advances, and which
historically have been very cyclical. Therefore, future profitability and growth
depend on the Companys ability to develop or acquire and market profitable new
products, and on its ability to adapt to cyclical trends.

Principles of Consolidation The consolidated financial statements include
the accounts of Amtech and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.

Use of Estimates The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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
revenue and expenses during the reporting period. Actual results could differ
from those estimates.

Revenue RecognitionRevenue is recognized upon
shipment of the Companys proven technology equal to the sales price less the
greater of (i) the fair value of undelivered services or (ii) the contingent
portion of the sales price, which is generally 10-20% of the total contract
price. The entire cost of the equipment relating to proven technology is
recorded upon shipment. The remaining contractual revenue, deferred costs, and
installation costs are recorded upon successful installation of the
product.

For purposes of revenue recognition,
proven technology means that the Company has a history of at least two
successful installations. New technology systems are those systems with respect
to which the Company cannot demonstrate that it can meet the provisions of
customer acceptance at the time of shipment.

Revenue on new technology is deferred
until installation and acceptance at the customers premises is completed, as
these sales do not meet the provisions of customer acceptance at the time of
shipment. Cost of the equipment relating to new technology is recorded against
deferred profit and then recorded in cost of sales upon customer
acceptance.

Revenue from services is recognized as
the services are performed. Revenue from prepaid service contracts is recognized
ratably over the life of the contract. Revenue from spare parts is recorded upon
shipment.

Deferred Profit Revenue deferred pursuant to our revenue policy, net of the
related deferred costs, if any, is recorded as deferred profit in current
liabilities. The components of deferred profit are as follows:

September 30,**2008**
    
    2007
    
    **2006**(dollars in thousands)Deferred revenues
    
    $
    6,934
    
    $
    3,894
    
    $
    2,493Deferred
      costs
    
    
    1,582
    
    
    1,750
    
    
    1,422Deferred profit
    
    $
    5,352
    
    $
    2,144
    
    $
    1,071


Cash Equivalents Cash equivalents consist of mutual funds invested in securities issued by the U.S. Government and its agencies and time certificates of deposit.

Restricted Cash Restricted cash of $1.0 million and $0.4 million as of
September 30, 2008 and 2007, respectively, consists of bank guarantees in excess
of our European overdraft facility. The bank guarantees are required by certain
customers from whom amounts have been received in advance of
shipment.

46

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Accounts receivable and allowance
for doubtful accounts Accounts receivable
are recorded at the gross sales price of products sold to customers on trade
credit terms. Accounts receivable are considered past due when payment has not
been received from the customer within the normal credit terms extended to that
customer. A valuation allowance is established for accounts when collection is
no longer probable. Accounts are written off against the allowance when the
probability of collection is remote.

The following is a summary of the
activity in the Companys allowance for doubtful accounts:

|                                             |  | Years Ended September
    30,
|-------------------------------------------- |  | -----------------------------
|                                             |  | **2008**                     
|                                             |  | (dollars
      in thousands) 
|Balance at beginning of year                 |  | $                            
|Provision /
      (adjustment)               |  |                              
|Write offs                                   |  |                              
|Acquired through
      business acquisitions |  |                              
|Balance at end of year                       |  | $                            

Accounts Receivable - Unbilled and
Other Unbilled and other accounts
receivable consist mainly of the contingent portion of the sales price that is
not collectible until successful installation of the product. These amounts are
generally billed upon final acceptance by our customers. The majority of these
amounts are offset by balances included in deferred profit.

Concentrations of Credit Risk Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist
principally of trade accounts receivable. The Companys customers consist of
manufacturers of solar cells, semiconductors, semiconductor wafers, and MEMS
located throughout the world. Credit risk is managed by performing ongoing
credit evaluations of the customers financial condition, by requiring
significant deposits where appropriate, and by actively monitoring collections.
Letters of credit are required of certain customers depending on the size of the
order, type of customer or its creditworthiness, and its country of domicile.
Reserves for potentially uncollectible receivables are maintained based on an
assessment of collectability.

As of September 30, 2008, receivables
from two customers individually represented 22% and 20% of accounts receivable.
As of September 30, 2007, receivables from three customers individually
represented 22%, 13%, and 10% of accounts receivable, respectively.

Refer to Note 10, Business Segment
Information, for information regarding revenue and assets in other countries
subject to fluctuation in foreign currency exchange rates.

Inventories We value our inventory at the lower of cost or net realizable
value. Costs for approximately 80% of inventory are determined on an average
cost basis with the remainder determined on a first-in, first-out (FIFO) basis.
The components of inventories are as follows:

September 30,
    
    September 30,2008
    
    2007(In thousands)Purchased parts and raw materials
    
    $
    9,776
    
    $
    5,291Work-in-process
    
    
    5,057
    
    
    1,456Finished goods
    
    
    1,069
    
    
    542$
    15,902
    
    $
    7,289


Property, Plant and Equipment Property plant, and equipment are recorded at
cost. Maintenance and repairs are charged to expense as incurred. 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.

47

---

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

September 30,
    
    September 30,2008
    
    2007(dollars in thousands)Land, building and leasehold improvements
    
    $
    6,916
    
    
    $
    5,105Equipment and
      machinery
    
    
    3,654
    
    
    
    2,874Furniture and fixtures
    
    
    3,306
    
    
    
    2,57013,876
    
    
    
    10,549Accumulated depreciation and amortization
    
    
    (5,467
    )
    
    
    (4,304
    )$
    8,409
    
    
    $
    6,245


Goodwill Goodwill and intangible assets with indefinite lives are not
subject to amortization, but are tested for impairment at least annually. The
Company accounts for goodwill under the provisions of SFAS No. 142. Accordingly,
goodwill is reviewed for impairment on an annual basis, typically at the end of
the fiscal year or more frequently if circumstances dictate. Based on the
Companys analysis, there was no impairment of goodwill for the years ended
September 30, 2008, 2007 and 2006.

Intangibles Intangible assets are capitalized and amortized over their
useful life if the life is determinable. If the life is not determinable,
amortization is not recorded. Amortization expense related to intangible assets
was $388,000, $80,000 and $84,000 in fiscal 2008, 2007 and 2006, respectively.
The aggregate amortization expense for the intangible assets for each of the
five succeeding fiscal years is estimated to be $436,000, $431,000, $431,000,
$431,000 and $431,000 in 2009, 2010, 2011, 2012 and 2013, respectively, and
$2,224,000 thereafter.

In April 2007, the Company entered into
a license agreement with PST Co., LTD (PST) to market, sell, install, service
and manufacture machinery and equipment for the manufacturing of photovoltaic
cells that employs PECVD Technology (Licensed Product) developed by PST. Under
the terms of this agreement the Company paid $0.3 million to PST in April 2007,
$0.4 million in May 2008 and the final payment of $0.3 million in October 2008.
The license agreement expires in April 2017. These payments will be amortized
over the life of the agreement beginning in the first quarter of Fiscal 2009.
The Company may be required to pay additional license fees in the future if the
profitability of the Licensed Product surpasses certain thresholds.

In October 2007, the Company acquired
the operations of R2D. The intangible assets of R2D consist principally of
intellectual property and technology, customer lists, customer contracts,
trademarks and non-compete agreements totaling $3.0 million. The fair value of
intangible assets was determined by a valuation approach that estimates the
future economic benefit stream of the asset determined with the assistance of an
independent third-party consultant. This benefit stream was then discounted to
present value with an appropriate risk-adjusted discount rate. See Note 13,
Acquisition, for detail of the intangible assets acquired.

The following is a summary of
intangibles:

|                               |  |                  |  | September 30,          |       | September 30,
|------------------------------ |  | ---------------- |  | ---------------------- | ----- | -------------
|                               |  | Useful Life      |  | 2008                   |       | 2007         
|                               |  |                  |  | (dollars in thousands)
|Trademarks                     |  | Indefinite       |  | $                      | 592   |              
|Non-compete
      agreements   |  | 8-10
      years |  |                        | 524   |              
|Customer lists                 |  | 10-15 years      |  |                        | 1,195 |              
|Technology                     |  | 4-10
      years |  |                        | 1,924 |              
|Licenses                       |  | 10 years         |  |                        | 700   |              
|Other                          |  | 2-10
      years |  |                        | 94    |              
|                               |  |                  |  |                        | 5,029 |              
|Accumulated
      amortization |  |                  |  |                        | (645  | )            
|                               |  |                  |  | $                      | 4,384 |              

48

---

**Proprietary Product Rights******Through the
acquisition of the net assets of P. R. Hoffman in 1997, 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 licensed the patent rights
from the patent holder, and paid a royalty to the patent holder for the use of
such patent rights. Per the license agreement, royalties ceased to accrue on
July 2, 2006. Royalty expense for all licenses is included in cost of sales and
totaled $26,000 and $113,000 in fiscal 2007 and 2006, respectively. There were
no royalty expenses in fiscal 2008.

Restricted Cash  Non-current Restricted cash  non-current consists of
cash in an escrow account related to contingent payments to be paid to the
sellers of R2D upon fulfillment of certain requirements. The amount of future
contingent payments earned will be allocated to goodwill.

Warranty A limited warranty is provided free of charge, generally for
periods of 12 to 24 months to all purchasers of the Companys new products and
systems. Accruals are recorded for estimated warranty costs at the time revenue
is recognized. The following is a summary of activity in accrued warranty
expense:

|                                   |  | Years Ended September 30,
|---------------------------------- |  | -------------------------
|                                   |  | **2008**                 
|                                   |  | (dollars in thousands)   
|Beginning balance                  |  | $                        
|Warranty
      expenditures        |  |                          
|Assumed liability from acquisition |  |                          
|Reserve
      Adjustment           |  |                          
|Ending balance                     |  | $                        

Research and Development Expenses****Product development costs
are expensed as incurred.

Foreign Currency Transactions and
Translation Financial information relating
to the Companys foreign subsidiaries is reported in accordance with SFAS No.
52, Foreign Currency Translation. The functional currency of the Companys
European operations is the Euro. Net income includes pretax net losses from
foreign currency transactions of $75,000, $125,000, and $62,000 in fiscal 2008,
2007 and 2006, respectively. The gains or losses resulting from the translation
of foreign financial statements have been included in 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 laws.

Deferred tax assets reflect the tax
effects of temporary differences between the carrying value of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management and based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred tax asset will not be
realized. Each quarter the valuation allowance is re-evaluated. During fiscal
2008, continued improvement in both the Companys earnings history and its
prospects for the future resulted in a $0.2 million lower estimate of the amount
of deferred assets that more likely than not will be unrealizable.

Stock-Based Compensation On October 1, 2005, the Company adopted
Statement of Financial Accounting Standards No. 123(R), Share-Based Payment
(SFAS 123(R)) and Staff Accounting Bulletin 107, Share-Based Payment. SFAS
123(R) requires the recognition of compensation costs relating to share-based
payment transactions in the financial statements. Under the fair value method,
the estimated fair value of awards is charged to income on a straight-line basis
over the requisite service period, which is generally the vesting period. The
Company has elected the modified prospective application method of reporting;
therefore, prior periods were not restated. Under the modified prospective
method, this statement was applied to new awards granted after the time of
adoption, as well as to the unvested portion of previously granted awards for
which the requisite service had not been rendered as of October 1, 2005. SFAS
123(R) also requires the benefits of tax deductions in excess of recognized
compensation cost to be reported as cash flow from financing activities rather
than as cash flow from operating activities.

49

---

Stock-based compensation expense
recognized under SFAS 123(R) for the fiscal years ended September 30, 2008 2007
and 2006 reduced the Companys results of operations as follows:

Years Ended September 30,2008
    
    2007
    
    2006(dollars in thousands, except per share
      amounts)Effect on income before income taxes
    
    $
    (473
    )
    
    $
    (347
    )
    
    $
    (176
    )Effect on net
      income
    
    $
    (380
    )
    
    $
    (295
    )
    
    $
    (88
    )Effect on basic income per share
    
    $
    (0.04
    )
    
    $
    (0.06
    )
    
    $
    (0.03
    )Effect on
      diluted income per share
    
    $
    (0.04
    )
    
    $
    (0.06
    )
    
    $
    (0.03
    )


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 ten years from the date of grant, with
the most recent grant expiring in 2018. Options vest over 1 to 5 years. The
Company estimates the fair value of awards on the date of grant using the
Black-Scholes option pricing model using the following assumptions:

|                        |  | Years Ended September 30,
|----------------------- |  | -------------------------
|                        |  | 2008                     
|Risk free interest rate |  | 3.3%                     
|Expected
      life     |  | 6
    years              
|Dividend rate           |  | 0%                       
|Volatility              |  | 62%                      
|Forfeiture rate         |  | 9%                       

To estimate expected lives for this
valuation, it was assumed that options will be exercised at varying schedules
after becoming fully vested. In accordance with SFAS 123(R), forfeitures have
been estimated at the time of grant and will be revised, if necessary, in
subsequent periods if actual forfeitures differ from those estimates.
Forfeitures were estimated based upon historical experience. Fair value
computations are highly sensitive to the volatility factor assumed; the greater
the volatility, the higher the computed fair value of the options
granted.

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 line of
credit (see Note 5) and long-term debt (see Note 6) approximate fair value
because their variable interest rates approximate the prevailing interest rates
for similar debt instruments.

Impact of Recently Issued Accounting
Pronouncements

In April 2008, the FASB issued Staff
Position (FSP) No. 142-3 Determination of the Useful Life of Intangible
Assets (FSP No. 142-3). FSP No. 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under SFAS No. 142 Goodwill and
Other Intangible Assets. FSP No. 142-3 is effective for the Companys quarter
beginning October 1, 2009. The Company is currently evaluating the impact that
FSP No. 142-3 will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes
a formal framework for measuring fair value and expands disclosures about fair
value measurements. The Company has not yet determined the impact, if any, that
SFAS No. 157 will have on its consolidated financial statements. SFAS No. 157 is
effective for the Companys fiscal year beginning October 1, 2009.

50

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In December 2007, the FASB issued SFAS
No. 141(R), Business Combinations. This Statement replaces SFAS No. 141,
Business Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement also
establishes principles and requirements for how the acquirer: a) recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree; b)
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase and c) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. SFAS No. 141(R) will apply prospectively to
business combinations for which the acquisition date is on or after Companys
fiscal year beginning October 1, 2009. While the Company has not yet evaluated
this statement for the impact, if any, that SFAS No. 141(R) will have on its
consolidated financial statements, the Company will be required to expense costs
related to any acquisitions after September 30, 2009.

2.Stock-Based
Compensation

Stock Option PlansThe 2007 Employee Stock Option Plan (the 2007 Plan), under
which 500,000shares could be granted, was adopted by the Board of Directors in April
2007, and approved by the shareholders in May 2007.The 1998 Employee Stock Option Plan (the
1998 Plan), under which 50,000 shares could be granted, was adopted by the
Board of Directors in January 1998, and approved by shareholders in March 1998.
The number of shares available for options under the 1998 Plan has since been
increased to 500,000 shares through authorization by the Board of Directors and
approval of shareholders. The 1998 Plan expired in January 2008. The
Non-Employee Directors Stock Option Plan was approved by the shareholders in
1996 for issuance of up to 100,000 shares of Common Stock to directors. In July
2005, the Board of Directors authorized, and shareholders approved, an increase
in the number of shares available for options under the Non-Employee Directors
Stock Option Plan to 200,000 shares.

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 in 2018. Options issued by the Company vest over one to five years. The
Company may also grant restricted stock awards under the 2007 Plan.

In December 2007, the Company awarded
restricted shares under the existing share-based compensation plans. Our
restricted share awards vest in equal annual installments over a four-year
period. The total value of these awards is expensed on a ratable basis over the
service period of the employees receiving the grants. The service period is
the time during which the employees receiving grants must remain employees for
the shares granted to fully vest. There were 31,500 restricted share awards
granted during fiscal 2008 with a fair value of $14.79 per share and a total
fair value of $466,000. There were no restricted shares that vested and 1,000
restriced shares were cancelled in fiscal 2008.

Stock-based compensation plans are
summarized in the table below:

|                                         |  | Shares     |  | Shares    |  | Options     |  | Plan         
|---------------------------------------- |  | ---------- |  | --------- |  | ----------- |  | -------------
|Name of Plan                             |  | Authorized |  | Available |  | Outstanding |  | Expiration   
|2007 Employee Stock Incentive Plan       |  | 500,000    |  | 382,187   |  | 87,313      |  | Apr. 2017    
|1998 Employee
      Stock Option Plan    |  | 500,000    |  | -         |  | 335,740     |  | Jan.
    2008
|Non-Employee Directors Stock Option Plan |  | 200,000    |  | 58,600    |  | 64,000      |  | Jul. 2015    
|                                         |  |            |  | 440,787   |  | 487,053     |  |              

51

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Stock options were valued using the
Black-Scholes option pricing model. See Note 1 for further discussion. Stock
option transactions and the options outstanding are summarized as
follows:

|                                       |  | Years Ended September
    30,
|-------------------------------------- |  | -----------------------------
|                                       |  | 2008                         
|                                       |  |                              
|                                       |  |                              
|                                       |  |                              
|                                       |  | Options                      
|Outstanding at beginning of period     |  |                              
|Granted                                |  |                              
|Exercised                              |  |                              
|Forfeited/cancelled                    |  |                              
|Outstanding at end of period           |  |                              
|                                      
|Exercisable at end of period           |  |                              
|                                      
|Weighted average grant-date fair value |  |                              
|of options granted during the period   |  | $                            

52

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The following tables summarize
information for stock options outstanding and exercisable as of September 30,
2008:

|                  |                     | **Options
    Outstanding**  
|----------------- | ------------------- | -----------------------------
|                  |                     |                              
|Range of Exercise |                     | **Number**                   
|Prices            |                     | **Outstanding**              
|                  |                     |                              
|$                 | 2.00 - 3.00         |                              
|                  | 3.01 -
      4.00   |                              
|                  | 4.01 - 5.00         |                              
|                  | 5.01 -
      6.00   |                              
|                  | 6.01 - 7.00         |                              
|                  | 7.01 -
      8.00   |                              
|                  | 8.01 - 9.00         |                              
|                  | 9.01 -
      10.00  |                              
|                  | 10.01 - 11.00       |                              
|                  | 11.01 -
      15.00 |                              
|                  |                     |                              
|                 
|                  | Vested and expected |                              
|                  | to vest as of       |                              
|                  | September 30, 2008  |                              
|                  |                    
|                  |                     | **Options
      Exercisable**
|                  |                     |                              
|Range of Exercise |                     | **Number**                   
|Prices            |                     | **Exercisable**              
|                  |                     |                              
|$                 | 2.00 - 3.00         |                              
|                  | 3.01 -
      4.00   |                              
|                  | 4.01 - 5.00         |                              
|                  | 5.01 -
      6.00   |                              
|                  | 6.01 - 7.00         |                              
|                  | 7.01 -
      8.00   |                              
|                  | 8.01 - 9.00         |                              
|                  | 9.01 -
      10.00  |                              
|                  |                     |                              

The aggregate intrinsic value in the
tables above represents the total pretax intrinsic value, based on the Companys
closing stock price of $9.31 per share as of September 30, 2008, which would
have been received by the option holders had all option holders exercised their
options as of that date. The total intrinsic value of stock options exercised
during the fiscal years ended September 30, 2008, 2007 and 2006 was $0.6
million, $0.1 million and $0.8 million, respectively.

3. Earnings Per
Share

Basic earnings per share is computed by
dividing net income (loss) available to common stockholders (net income less
accrued preferred stock dividends) by the weighted average number of common
shares outstanding for the

53

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period. Diluted earnings per share is
computed similarly to basic earnings per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if potentially dilutive common shares had been issued, and the
numerator is based on net income. In the case of a net loss, diluted earnings
per share is calculated in the same manner as basic earnings per share. Options
and restricted stock of approximately 160,500, 196,000 and 50,000 shares are
excluded from the fiscal 2008, 2007 and 2006 earnings per share calculations as
they are anti-dilutive.

|                                         |  | 2008                                             |       | 2007 |   | 2006 
|---------------------------------------- |  | ------------------------------------------------ | ----- | ---- | - | -----
|                                         |  | (dollars in thousands, except per share amounts)
|**Basic Earnings Per Share Computation** |  |                                                 
|Net Income                               |  | $                                                | 2,857 |      | $ | 2,417
|Preferred stock dividends                |  |                                                  | -     |      |   | -    
|Net income available to                  |  |                                                  |       |      |   |      
|common stockholders                      |  | $                                                | 2,857 |      | $ | 2,417
|                                        
|Weighted Average Shares Outstanding:     |  |                                                  |       |      |   |      
|Common
    stock                         |  |                                                  | 8,719 |      |   | 5,419
|                                        
|Basic income per share                   |  | $                                                | 0.33  |      | $ | 0.45 
|                                        
|Diluted Earnings Per Share Computation   |  |                                                  |       |      |   |      
|Net income                               |  | $                                                | 2,857 |      | $ | 2,417
|                                        
|Weighted Average Shares Outstanding:     |  |                                                  |       |      |   |      
|Common
      stock                       |  |                                                  | 8,719 |      |   | 5,419
|Common stock
      equivalents           |  |                                                  | 127   |      |   | 79   
|Diluted
      shares                     |  |                                                  | 8,846 |      |   | 5,498
|                                        
|Diluted income per share                 |  | $                                                | 0.32  |      | $ | 0.44 

4. Comprehensive Income
(Loss)

|                                              |  | Years Ended September
    30,
|--------------------------------------------- |  | -----------------------------
|                                              |  | 2008                         
|                                              |  | (dollars in thousands)       
|Net income, as reported                       |  | $                            
|Foreign currency
      translation adjustment |  |                              
|Comprehensive income                          |  | $                            

5. Line of Credit

The Company has a line of credit in the
amount of 250,000 Euros (approximately $360,000) as of September 30, 2008. The
line of credit accrues interest at a rate of 1.75% over a Netherlands banks
basic interest rate (6.0% and 5.2% at September 30, 2008 and 2007,
respectively). The line of credit has no fixed expiration date. The line of
credit is secured by a lien on the Companys land and buildings and on trade
accounts receivable in The Netherlands. As of September 30, 2008 and 2007, there
were no borrowings on the line of credit.

54

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6. Other Long-Term
Obligations

Other long-term obligations included a
mortgage, secured by a lien on the Companys land and buildings in Heerde, The
Netherlands and on trade accounts receivable, in The Netherlands. The principal
amount of the mortgage was $503,000 as of September 30, 2007. The mortgage was
paid off in fiscal 2008.

In December 2004, the Company financed
a laser cutting tool purchased in the fourth quarter of fiscal 2004. The Company
financed $500,000 at an interest rate of 6.55% with 48 equal monthly payments of
$12,000, including principal and interest. The outstanding principal balance of
this loan was $35,000 and $170,500 as of September 30, 2008 and 2007,
respectively.

In October 2006, the Company financed a
de-burring machine purchased in the fourth quarter of fiscal 2006. The Company
financed $355,000 at an interest rate of 7.43% with 60 equal monthly payments of
$7,000, including principal and interest. The outstanding principal balance of
this loan was $230,000 and $294,500 as of September 30, 2008 and 2007,
respectively.

In October 2007, the Company acquired,
through the acquisition of R2D, CNC machine purchased in the 3rd quarter of
fiscal 2007. The amount originally financed was $108,000 at an interest rate of
5.1% with 60 equal monthly payments of $2,000, including principal and interest.
The outstanding balance at the time of the acquisition was $102,000. The
outstanding principal balance of this loan was $82,000 as of September 30,
2008.

In October 2007, the Company acquired,
through the acquisition of R2D, a CNC machine purchased in the 4th quarter of
fiscal 2007. The amount originally financed was $108,000 at an interest rate of
5.2% with 60 equal monthly payments of $2,000, including principal and interest.
The outstanding balance at the time of the acquisition was $105,000. The
outstanding principal balance of this loan was $85,000 as of September 30,
2008.

Total maturities of long term debt are
$148,000 in 2009, $120,000 in 2010, $128,000 in 2012 and $36,000 in
2012.

7. Stockholders
Equity

In November 2007, the Company completed
and underwritten public offering of 2,500,000 shares of its common stock in an
underwritten public offering at a price to the public of $14.41 per share. Net
proceeds to the Company were approximately $33.6 million, net of approximately
$0.3 million of offering expenses and $2.2 million of underwriting commissions.
The Company intends to use the net proceeds from this offering for working
capital and other general corporate purposes. Pending application of these
proceeds, the Company will invest the net proceeds in short-term, interest
bearing investment grade securities. The Company received $0.4 million from the
exercise of stock options during fiscal 2008.

In February 2007, the Company filed
registration statements on Form S-1 with the Securities and Exchange Commission
for the sale of 2,625,000 shares of its common stock in an underwritten public
offering at a price to the public of $7.05 per share. The Company also granted
the underwriters a 30-day option to purchase up to 393,750 additional shares of
common stock to cover over-allotments. Net proceeds to the Company were
approximately $19.4 million including the exercise of the over-allotment, net of
$0.4 million of offering expenses and $1.5 million of underwriting
commissions.

On April 22, 2005, the Company
completed a private placement of 540,000 shares of Series A Convertible
Preferred Stock, par value $0.01 per share (the Preferred Stock). The gross
proceeds of this transaction were $2,160,000. The placement agent received
commissions of 8% of the proceeds, totaling $172,800, and a non-accountable
expense allowance of 2% of the proceeds, totaling $43,200. The agent also
received a warrant to purchase up to 60,000 shares of our Common Stock, $0.01
par value per share (Common Stock), at a price of $4.67 per share. The
warrants were valued at $49,200 using the Black-Scholes pricing
model.

The Preferred Stock was automatically
converted into 540,000 shares of the Companys common Stock on March 20,
2006.

The Companys stockholder rights plan
authorizes the distribution of one right for each outstanding common share. Each
right entitles the holder to purchase one one-hundredth of a share of Series A
Participating Preferred Stock, at

55

---

a purchase price of $8.50, subject to
certain anti-dilution 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 Companys Common Stock (a Stock
Acquisition Date). If a Stock Acquisition Date occurs, each right, unless
redeemed by the Company at $0.01 per right, entitles the holder to purchase an amount of the
Companys Common Stock, 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. These
rights are not exercisable as of September 30, 2008.

8. Commitments and
Contingencies

License Agreements -
In April 2007, the Company entered into a license
agreement with PST Co., LTD (PST) to market, sell, install, service and
manufacture machinery and equipment for the manufacturing of photovoltaic cells
that employs PECVD Technology (Licensed Product) developed by PST. Under the
terms of this agreement the Company paid $0.3 million to PST in April 2007, $0.4
million in May 2008 and the final payment of $0.3 million in October 2008. The
license agreement expires in April 2017. These payments will be amortized over
the life of the agreement beginning in the first quarter of Fiscal 2009. The
Company may be required to pay additional license fees in the future if the
profitability of the Licensed Product surpasses certain
thresholds.

Purchase Obligations
 As of September 30, 2008, we had unrecorded purchase
obligations in the amount of $8.5 million. These purchase obligations consist of
outstanding purchase orders for goods and services. While the amount represents
purchase agreements, the actual amounts to be paid may be less in the event that
any agreements are renegotiated, cancelled or terminated.

Legal Proceedings  The Company and its subsidiaries are defendants from time to
time in actions for matters arising out of their business operations. The
Company does not believe that any matters or proceedings presently pending will
have a material adverse effect on its consolidated financial position, results
of operations or liquidity.

Operating Leases - The Company leases buildings, vehicles and equipment under
operating leases. Rental expense under such operating leases was $933,000,
$857,000 and $741,000 in fiscal 2008, 2007 and 2006, respectively. As of
September 30, 2008, future minimum rental commitments under non-cancelable
operating leases with initial or remaining terms of one year or more totaled
$1,925,000, of which $690,000, $526,000, $498,000, $88,000 and $38,000 is
payable in fiscal 2009, 2010, 2011, 2012 and 2013, respectively, and
$85,000 thereafter.

9. Major Customers
and Foreign Sales

One customer individually accounted for
20%, 13% and 17% of net revenue during fiscal 2008, 2007 and 2006, respectively.
Our largest customer has been different in each of the last three fiscal
years.

56

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Our net revenues for fiscal 2008, 2007
and 2006 were to customers in the following geographic regions:

|                       |  | Years Ended September
    30,
|---------------------- |  | -----------------------------
|                       |  | 2008                         
|United States          |  |                              
|Other                  |  |                              
|Total North America    |  |                              
|                       |  |                              
|Taiwan                 |  |                              
|China                  |  |                              
|Malaysia               |  |                              
|Other                  |  |                              
|**Total
      Asia**   |  |                              
|                       |  |                              
|Germany                |  |                              
|Other                  |  |                              
|**Total
      Europe** |  |                              
|                       |  |                              

10. Business Segment
Information

The Companys products are classified
into two core business segments. The solar and semiconductor equipment segment
designs, manufactures and markets semiconductor wafer processing and handling
equipment used in the fabrication of integrated circuits, solar cells and MEMS.
Also included in the solar and semiconductor equipment segment are the
manufacturing support service operations and corporate expenses, except for a
small portion that is allocated to the polishing supplies segment. 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.

57

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Information concerning our business
segments is as follows:

|                                               |  | Years Ended September
    30,
|---------------------------------------------- |  | -----------------------------
|                                               |  | 2008                         
|                                               |  | (dollars in thousands)       
|Net revenue:                                   |  |                              
|Solar and semiconductor
      equipment        |  | $                            
|Polishing
      supplies                       |  |                              
|                                               |  | $                            
|                                              
|Operating income:                              |  |                              
|Solar and
      semiconductor equipment        |  | $                            
|Polishing
      supplies                       |  |                              
|                                               |  |                              
|Interest
      and other income (expense), net |  |                              
|Income before
      income taxes               |  | $                            
|                                              
|Capital expenditures:                          |  |                              
|Solar and
      semiconductor equipment        |  | $                            
|Polishing
      supplies                       |  |                              
|                                               |  | $                            
|                                              
|Depreciation and amortization expense:         |  |                              
|Solar and
      semiconductor equipment        |  | $                            
|Polishing
      supplies                       |  |                              
|                                               |  | $                            
|                                              
|                                               |  |                              
|                                               |  |                              
|Indentifiable assets:                          |  |                              
|Solar and
      semiconductor equipment        |  |                              
|Polishing
      supplies                       |  |                              
|                                               |  |                              
|                                              
|Goodwill:                                      |  |                              
|Solar and
      semiconductor equipment        |  |                              
|Polishing
      supplies                       |  |                              
|                                               |  |                              

58

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

|                                     |  | Years Ended September
    30,
|------------------------------------ |  | -----------------------------
|                                     |  | 2008                         
|                                     |  | (dollars in thousands)       
|Net
      revenue:                   |  |                              
|The Netherlands                      |  | $                            
|United
    States                    |  |                              
|France                               |  |                              
|                                     |  | $                            
|                                    
|Operating income (loss):             |  |                              
|The
      Netherlands                |  | $                            
|United
    States                    |  |                              
|France                               |  |                              
|                                     |  | $                            
|                                    
|                                     |  |                              
|                                     |  |                              
|Net Long-lived Assets                |  |                              
|(excluding intangibles and goodwill) |  |                              
|The
      Netherlands                |  |                              
|United
      States                  |  |                              

59

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11. Income Taxes

The components of the provision for income
taxes are as follows:

|                                                                                                                                                                     |  | Years Ended September
    30
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------
|                                                                                                                                                                     |  | 2008                        
|                                                                                                                                                                     |  | (dollars in thousands)      
|Current:                                                                                                                                                             |  |                             
|Domestic federal                                                                                                                                                     |  | $                           
|Foreign                                                                                                                                                              |  |                             
|Domestic state                                                                                                                                                       |  |                             
|                                                                                                                                                                     |  |                             
|                                                                                                                                                                    
|Deferred:                                                                                                                                                            |  |                             
|Domestic federal                                                                                                                                                     |  |                             
|Foreign                                                                                                                                                              |  |                             
|Domestic state                                                                                                                                                       |  |                             
|                                                                                                                                                                     |  |                             
|                                                                                                                                                                     |  | $                           
|                                                                                                                                                                    
|A reconciliation of actual income
      taxes to income taxes at the expected United States federal corporate
      income tax rate of 34 percent is as
    follows: | 
|                                                                                                                                                                    
|                                                                                                                                                                     |  | Years Ended September
    30
|                                                                                                                                                                     |  | 2008                        
|                                                                                                                                                                     |  | (dollars in thousands)      
|Tax provision (benefit) at the statutory federal rate                                                                                                                |  | $                           
|Effect of
      permanent book-tax differences                                                                                                                       |  |                             
|State tax provision                                                                                                                                                  |  |                             
|Valuation
      allowance for net deferred tax assets                                                                                                                |  |                             
|Expiration of foreign net operating loss                                                                                                                             |  |                             
|Other
      items                                                                                                                                                    |  |                             
|                                                                                                                                                                     |  | $                           

60

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Deferred income taxes reflect the tax
effects of temporary differences between the carrying value of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. The tax effects of temporary book-tax differences that give rise to
significant portions of the deferred tax assets and deferred tax liability are
as follows:

|                                                                      |  | Years Ended September
    30
|--------------------------------------------------------------------- |  | ----------------------------
|                                                                      |  | 2008                        
|                                                                      |  | (dollars in thousands)      
|Deferred tax assets - current:                                        |  |                             
|Capitalized inventory costs                                           |  | $                           
|Inventory write-downs                                                 |  |                             
|Deferred profit                                                       |  |                             
|Accruals and reserves not currently
      deductible                  |  |                             
|                                                                      |  |                             
|Valuation allowance                                                   |  |                             
|Deferred tax assets - current
      net of valuation allowance        |  | $                           
|                                                                     
|Deferred tax assets (liabilities) - non-current:                      |  |                             
|Stock options expense                                                 |  | $                           
|Book vs. tax basis of acquired assets                                 |  |                             
|State net operating losses                                            |  |                             
|Book vs. tax depreciation and
    amortization                        |  |                             
|                                                                      |  |                             
|Valuation allowance                                                   |  |                             
|Deferred tax assets - current
      net of valuation allowance        |  | $                           
|                                                                     
|Changes in the deferred tax valuation allowance are as
      follows:
|                                                                     
|                                                                      |  | Years Ended September
    30
|                                                                      |  | 2008                        
|                                                                      |  | (dollars in thousands)      
|Balance at the beginning of the year                                  |  | $                           
|Additions
      (subtractions) to valuation allowance                 |  |                             
|Balance at the end of the year                                        |  | $                           

The Company has state net operating
losses in a couple of states at September 30, 2008 which expire in varying
amounts between 2009 and 2013. These operating losses have been fully reserved
in those states where we determined that we will not be able to utilize those
net operating losses.

SFAS No. 109 Accounting for Income
Taxes requires that a valuation allowance is recognized if, based on the weight
of available evidence, it is more likely than not that some portion or all of
the deferred tax asset will not be realized. Each quarter the valuation
allowance is re-evaluated. During fiscal 2008, continued improvement in both the
Companys earnings history and its prospects for the future resulted in a $0.2
million lower estimate of the amount of deferred assets that more likely than
not will be unrealizable. Tax payments of $3.5 million were made during 2008.
During fiscal 2008, the Company also recorded an increase of $0.1 million in
deferred tax assets for items that meet the more likely than not criteria for
recognition under SFAS No. 109.

We adopted the provisions of FIN 48,
Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109, (FIN 48) as of the beginning of fiscal 2008. Prior to
adoption, our policy was to establish reserves that reflected the probable
outcome of known tax contingencies. The effects of final resolution, if any,
were recognized as changes to the effective income tax rate in the period of
resolution. FIN 48 requires application of a more likely than not threshold to
the recognition and derecognition of uncertain tax positions. FIN 48 requires us
to recognize the amount of tax benefit that has a greater than 50 percent
likelihood of being ultimately realized

61

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upon settlement. It further requires
that a change in judgment related to the expected ultimate resolution of
uncertain tax positions be recognized in earnings in the quarter of such
change.

As a result of adoption, we recorded a
$0.3 million increase to tax liabilities, and a $0.3 million increase to
retained earnings at the beginning of fiscal 2008.

The following table sets forth changes
in our total gross unrecognized tax benefit liabilities for fiscal 2008.
Approximately $0.4 million of this total represents the amount that, if
recognized would favorably affect our effective income tax rate in future
periods.

(dollars inthousands)Balance as of October 1, 2007
    $
    410Tax positions related to current year:Additions
    
    170Reductions
    
    -Tax positions related to prior years:Additions
    
    50Reductions
    
    -Settlements
    
    -Lapses in statues of limiations
    
    (190
    )Balance as of
      September 30, 2008
    $
    440


We have classified all of our
liabilities for uncertain tax positions as income taxes payable
long-term.

We report accrued interest and
penalties related to unrecognized tax benefits in income tax expense. For fiscal
2008, we recognized a benefit of $26,147 of tax-related net interest and
penalties, and had $70,185 of accrued interest and penalties as of September 30,
2008.

We do not expect that the amount of our
tax reserves will materially change in the next 12 months other than the
continued accrual of interest and penalties.

We have not signed any agreements with
the Internal Revenue Service, any state or foreign jurisdiction to extend the
statute of limitations for any fiscal year. As such, the number of open years is
the number of years dictated by statute in each of the respective taxing
jurisdictions, but generally is from 3 to 5 years.

During the current fiscal year we
recorded a benefit of $187,201, resulting from the reversal of liabilities in
taxing jurisdictions where the statute of limitations had expired.

Various examinations by United States,
state or foreign tax authorities could be conducted for any open tax
year.

12. Restructuring
Charge

In the third quarter of fiscal 2008,
Bruce Technologies operations were reorganized to better position the Company
for profitability in light of lower plant utilization resulting from a slowdown
in the semiconductor industry. As a result of this reorganization, the Company
notified certain personnel of their termination date and severance and recorded
a restructuring charge of $356,000. All amounts had been paid as of September
30, 2008. These charges are presented as a separate line item on the
Consolidated Statements of Operations.

In June 2006, Amtech adopted a plan to
consolidate the manufacturing of its automation product line into facilities
already used to manufacture diffusion furnaces. Amtechs automation products are
often sold in conjunction with

62

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the sale of new diffusion furnaces. As
a result of this decision, the Company notified certain personnel of the
termination date and severance and recorded a restructuring charge of $190,000.
These charges are presented as a separate line item on the Consolidated
Statements of Operations.

13. Acquisition

On October 8, 2007, the Company
acquired, through its wholly-owned subsidiary, Tempress Holding B.V., 100% of
the equity of R2D, a solar cell and semiconductor automation equipment
manufacturing company, located near Montpellier, France. R2D provides solutions
to the solar and semiconductor industries. The purpose of the acquisition was to
expand the Companys automation products which are used in the semiconductor
manufacturing and solar diffusion processes. The acquisition of the technology
and business of R2D enhances the growth strategy by allowing the Company to
increase sales by offering an integrated system under the Tempress brand to the
solar industry.

The aggregate purchase price is based
on the cash consideration paid at closing of $5.5 million plus acquisition costs
of $1.0 million, including cost of legal representation and due diligence.
Contingent payments of $1.6 million to be paid to sellers upon fulfillment of
certain requirements were deposited in an escrow account. Milestone payments of
$0.9 million have been paid or accrued as of September 30, 2008. The amount of
future contingent payments earned will be allocated primarily to goodwill. The
assets of R2D principally consist of intellectual property and technology,
reseller relationships, customer contracts, trademarks, non-compete agreements,
inventories and other tangible property used in connection with the acquired
business. Liabilities assumed include current liabilities, loans, obligations
under certain contracts, leases, purchase orders and warranty claims for certain
products and services under warranty as of the date of the
acquisition.

The valuation of acquired assets was
determined with the assistance of an independent third-party consultant. The
fair value of intangible assets was determined by a valuation approach that
estimates the future economic benefit stream of the asset. This benefit stream
was then discounted to present value with an appropriate risk-adjusted discount
rate.

The allocation of the purchase price to
the fair value of the assets acquired and liabilities assumed at the date of
acquisition is as follows (dollars in thousands):

|                            |   |        |  | **Useful Life**
|--------------------------- | - | ------ |  | ---------------
|Assets Acquired:            |   |        |  |                
|Current Assets              | $ | 4,804  |  |                
|Property, plant & equipment |   | 234    |  |                
|Intangible assets:          |   |        |  |                
|Non-compete agreements      |   | 174    |  | 8 years        
|Customer lists              |   | 919    |  | 10
    years   
|Technology                  |   | 1,822  |  | 10 years       
|Other                       |   | 94     |  | 2-10
    years 
|Goodwill                    |   | 3,632  |  |                
|Total
      assets acquired |   | 11,679 |  |                
|                           
|Liabilities Assumed:        |   |        |  |                
|Current Liabilities         |   | 4,039  |  |                
|Long-term liabilities       |   | 204    |  |                
|Total liabilities assumed   |   | 4,243  |  |                
|Net
      assets acquired   | $ | 7,436  |  |                

63

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The following consolidated pro forma
financial information was prepared assuming that the acquisition had occurred at
the beginning of the fiscal 2007. This pro forma information does not
necessarily reflect the results of operations that would have occurred had the
acquisition taken place at the beginning of the period and is not necessarily
indicative of results that may be obtained in the future (unaudited):

|                      |  | For the Year Ended       
|--------------------- |  | -------------------------
|                      |  | September 30,
  2007     
|                      |  | (dollars in thousands,   
|                      |  | except per share amounts)
|Revenues              |  |                          
|Net
      income      |  |                          
|Net income per share: |  |                          
|Basic                 |  |                          
|Diluted               |  |                          

For purposes of the above pro forma
presentation, the historical revenues and earnings of R2D for fiscal 2007 have
been combined with the revenues and earnings of Amtech for fiscal
2007.

15. Selected Quarterly Data
(Unaudited)

|                            |  | First Quarter                                  |        | Second Quarter |   | Third Quarter |  | Fourth Quarter
|--------------------------- |  | ---------------------------------------------- | ------ | -------------- | - | ------------- |  | --------------
|                            |  | (in
      thousands, except per share amounts)
|Fiscal Year
      2008:     |  |                                               
|Revenue                     |  | $                                              | 11,741 |                | $ | 17,591        |  | $             
|Gross
    margin            |  | $                                              | 3,560  |                | $ | 4,127         |  | $             
|Net
      income            |  | $                                              | 108    |                | $ | 161           |  | $             
|Net income per
      share: |  |                                                |        |                |   |               |  |               
|Basic                       |  | $                                              | 0.01   |                | $ | 0.02          |  | $             
|Shares used in calculation  |  |                                                | 7,636  |                |   | 9,072         |  |               
|Diluted                     |  | $                                              | 0.01   |                | $ | 0.02          |  | $             
|Shares used in calculation  |  |                                                | 7,818  |                |   | 9,185         |  |               
|                           
|                            |  | (in
      thousands, except per share amounts)
|Fiscal Year
      2007:     |  |                                               
|Revenue                     |  | $                                              | 9,451  |                | $ | 10,539        |  | $             
|Gross
    margin            |  | $                                              | 2,392  |                | $ | 2,868         |  | $             
|Net
      income            |  | $                                              | 6      |                | $ | 262           |  | $             
|Net income per
      share: |  |                                                |        |                |   |               |  |               
|Basic                       |  | $                                              | 0.00   |                | $ | 0.05          |  | $             
|Shares used in calculation  |  |                                                | 3,476  |                |   | 5,193         |  |               
|Diluted                     |  | $                                              | 0.00   |                | $ | 0.05          |  | $             
|Shares used in calculation  |  |                                                | 3,511  |                |   | 5,255         |  |               

64

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ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS
AND PROCEDURES

Conclusion Regarding the
Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), has carried out
an evaluation of the effectiveness of our disclosure controls and procedures as
of September 30, 2008, pursuant to Exchange Act Rules 13a-15(e) and 15(d)-15(e).
Based upon that evaluation, our CEO and CFO have concluded that as of such date,
our disclosure controls and procedures in place were effective as of the end of
the period covered by this annual report.

There were no changes in our internal
controls over financial reporting that occurred during the year ended September
30, 2008, that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

Managements Report on Internal
Control Over Financial Reporting

To the Shareholders of Amtech Systems,
Inc.,

The management of Amtech Systems, Inc.
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f). Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.

Because of its inherent limitations,
our controls and procedures may not prevent or detect misstatements. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the controls system are met.
Because of the inherent limitations in all controls systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, have been detected.

Under the supervision and with the
participation of management we assessed the effectiveness of our internal
control over financial reporting based on the criteria in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Managements evaluation of and conclusion regarding the
effectiveness of our internal control over financial reporting excludes the
internal control over financial reporting of R2D Ingenierie SAS that was
acquired during 2008 as described in Note 13 to the Consolidated Financial
Statements  Business Acquisitions. The operations of R2D Ingenierie SAS
contributed approximately 4% of our total revenues from external customers for
the year ended September 30, 2008 and represented approximately 14% of our total
assets as of September 30, 2008. Based on our evaluation, excluding R2D
Ingenierie SAS, under the criteria in Internal
Control  Integrated Framework, we concluded
that our internal control over financial reporting was effective as of September
30, 2008.

The effectiveness of our internal
control over financial reporting as of September 30, 2008 has been audited
by Mayer Hoffman McCann P.C., an Independent Registered Public Accounting Firm, as stated
in their report which is included herein.

65

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Report of Independent Registered
Public Accounting Firm

To the Stockholders ofAmtech
Systems, Inc.:

We have audited Amtech Systems, Inc.
internal control over financial reporting as of September 30, 2008, based on
criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Companys management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Managements
Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the Companys internal control over financial reporting
based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit of internal control
over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

As indicated in the accompanying
Managements Report on Internal Control over Financial Reporting, managements
assessment of and conclusion on the effectiveness of internal control over
financial reporting did not include the internal controls of R2D Ingenierie SAS,
which was acquired by Amtech Systems Inc. in October 2007 and is included in the
2008 consolidated financial statements of Amtech Systems, Inc. and constituted
$14.2 million and $8.5 million of total and net assets, respectively, as of
September 30, 2008, and $3.1 million and ($0.2) million of revenues and net
income, respectively, for the year then ended. Our audit of internal control
over financial reporting of Amtech Systems, Inc. also did not include an
evaluation of the internal control over financial reporting of R2D Ingenierie
SAS.

In our opinion, Amtech Systems, Inc.
maintained, in all material respects, effective internal control over financial
reporting as of September 30, 2008, based on the criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements as of and for the year ended
September 30, 2008 of Amtech Systems, Inc., and our report dated December 10,
2008 expressed an unqualified opinion on those financial statements.

|/s/Mayer Hoffman McCann P.C.
|----------------------------

Phoenix, ArizonaDecember 10, 2008

66

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ITEM 9B. OTHER
INFORMATION

None.

PART III

Pursuant to Paragraph G(3) of the
General Instructions to Form 10-K, the information required by Part III of Form
10-K are incorporated by reference to Amtechs Definitive Proxy Statement to be
filed with the Securities and Exchange Commission in connection with its 2009
Annual Meeting of Stockholders (the Proxy Statement).

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND GOVERNANCE

The information required by this item
is incorporated herein by reference the Proxy Statement, which will be filed
with the Securities and Exchange Commission within 120 days of the end of our
fiscal year.

ITEM 11.
EXECUTIVE COMPENSATION

The information required by this item
is incorporated herein by reference the Proxy Statement, which will be filed
with the Securities and Exchange Commission within 120 days of the end of our
fiscal year.

ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS

The information required by this item
is incorporated herein by reference the Proxy Statement, which will be filed
with the Securities and Exchange Commission within 120 days of the end of our
fiscal year.

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item
is incorporated herein by reference the Proxy Statement, which will be filed
with the Securities and Exchange Commission within 120 days of the end of our
fiscal year.

ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item
is incorporated herein by reference the Proxy Statement, which will be filed
with the Securities and Exchange Commission within 120 days of the end of our
fiscal year.

PART IV

ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES

|(a)(1) | The consolidated
      financial statements required by this item are set forth on the pages
      indicated at Item 8.                                                                                        
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|(2)    | All financial statement
      schedules are omitted because they are either not applicable, or because
      the required information is shown in the consolidated financial statements
      or notes thereto.
|      
|(3)    | Exhibits: The response
      to this section of Item 15 is included in the Exhibit Index of the Annual
      Report and is incorporated herein by
reference.                                                   

67

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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 10, 2008 | By:                       
|                  |                           
|                  |                           

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             
|------------------------------------------ |  | ------------------------------------------- |  | -----------------
|                                          
|*                                          |  | Chairman of the
      Board,                |  | December 10, 2008
|Jong S. Whang                              |  | President and
      Chief Executive Officer |  |                  
|                                           |  | (Principal Executive
      Officer)         |  |                  
|                                           |  |                                             |  |                  
|/s/ Bradley C. Anderson                    |  | Vice President 
      Finance              |  | December 10, 2008
|Bradley C.
      Anderson                  |  | and Chief
      Financial Officer           |  |                  
|                                           |  | (Principal
      Financial Officer)         |  |                  
|                                          
|*                                          |  | Chief Accounting
      Officer              |  | December 10, 2008
|Robert T.
      Hass                       |  | (Principal
      Accounting Officer)        |  |                  
|                                          
|*                                          |  | Director                                    |  | December 10, 2008
|Michael
      Garnreiter                   |  |                                             |  |                  
|                                          
|*                                          |  | Director                                    |  | December 10, 2008
|Robert F.
      King                       |  |                                             |  |                  
|                                          
|*                                          |  | Director                                    |  | December 10, 2008
|Brian L.
      Hoekstra                    |  |                                             |  |                  
|                                          
|*                                          |  | Director                                    |  | December 10, 2008
|Alfred W.
      Giese                      |  |                                             |  |                  
|                                          
|                                          
|*By: /s/ Bradley C. Anderson               |  |                                             |  |                  
|Bradley C.
      Anderson, Attorney-In-    |  |                                             |  |                  
|Fact**                                     |  |                                             |  |                  
|                                          
|**By authority
      of the power of       |  |                                             |  |                  
|attorney filed
      as Exhibit 24 hereto. |  |                                             |  |                  

68

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EXHIBIT INDEX

|EXHIBIT |  |                                                                                                                                                                                        |  | METHOD   
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------
|NO.     |  | DESCRIPTION                                                                                                                                                                            |  | OF FILING
|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                                                                                                           |  | D        
|        |  |                                                                                                                                                                                        |  |          
|3.6     |  | Articles of
      Amendment to Articles of Incorporation, dated March 14, 1999                                                                                                         |  | E        
|        |  |                                                                                                                                                                                        |  |          
|3.7     |  | Certificate
      of Designations, Preferences and Privileges of the Series A Convertible
      Preferred Stock, dated April 21, 2005                                                  |  | K        
|        |  |                                                                                                                                                                                        |  |          
|3.8     |  | Amended and
      Restated Bylaws                                                                                                                                                      |  | F        
|        |  |                                                                                                                                                                                        |  |          
|4.1     |  | Rights
      Agreement dated May 17, 1999                                                                                                                                              |  | G        
|        |  |                                                                                                                                                                                        |  |          
|4.2     |  | Form of
      Subscription Agreement for the Series A Convertible Preferred
    Stock                                                                                                  |  | K        
|        |  |                                                                                                                                                                                        |  |          
|10.1    |  | Amended and
      Restated 1995 Stock Option Plan                                                                                                                                      |  | H        
|        |  |                                                                                                                                                                                        |  |          
|10.2    |  | Non-Employee
      Directors Stock Option Plan                                                                                                                                         |  | I        
|        |  |                                                                                                                                                                                        |  |          
|10.3    |  | Amendment to
      Non-Employee Directors Stock Option Plan effective July 8, 2005                                                                                                     |  | L        
|        |  |                                                                                                                                                                                        |  |          
|10.4    |  | Employment
      Agreement with Robert T. Hass, dated May 19, 1992                                                                                                                     |  | J        
|        |  |                                                                                                                                                                                        |  |          
|10.5    |  | Warrant to
      Purchase Common Stock, dated April 22, 2005                                                                                                                           |  | L        
|        |  |                                                                                                                                                                                        |  |          
|10.6    |  | Loan and
      Security Agreement (Domestic), dated April 7, 2006, between Silicon Valley
      Bank and the Company.                                                                  |  | M        
|        |  |                                                                                                                                                                                        |  |          
|10.7    |  | Loan and
      Security Agreement (EXIM), dated April 7, 2006, between Silicon Valley
      Bank and the Company.                                                                      |  | M        
|        |  |                                                                                                                                                                                        |  |          
|10.8    |  | Export-Import Bank of the United States Working Capital Guarantee
      Program Borrower Agreement, dated April 7, 2006.                                                               |  | M        
|        |  |                                                                                                                                                                                        |  |          
|10.9    |  | Third
      Amendment to Lease, dated as of August 11, 2006, between Wakefield
      Investments, Inc. and Bruce Technologies, Inc.                                                    |  | N        
|        |  |                                                                                                                                                                                        |  |          
|10.10   |  | 2007
      Employee Stock Incentive Plan                                                                                                                                               |  | O        
|        |  |                                                                                                                                                                                        |  |          
|10.11   |  | Sale
      Agreement, dated March 15, 2007, for purchase of manufacturing facility
      Located in Vassen, The Netherlands by Tempress Holdings B.V. from Mr. F.
      H. Van Berlo.  |  | P        
|        |  |                                                                                                                                                                                        |  |          
|10.12   |  | Employment
      Agreement with J.S. Whang dated April 13, 2007                                                                                                                        |  | P        
|        |  |                                                                                                                                                                                        |  |          
|10.13   |  | Stock
      Purchase and Sale Agreement, by and among Tempress Holdings, B.V., R2D
      Ingenierie SAS and the Shareholders of R2D Ingenierie SAS, dated as of
      October 8, 2007. |  | O        
|        |  |                                                                                                                                                                                        |  |          
|10.24   |  | Change of
      Control Severance Agreement, dated as of March 10, 2008 between Amtech and
      Bradley Anderson.                                                                     |  | R        
|        |  |                                                                                                                                                                                        |  |          
|21      |  | Subsidiaries
      of the Registrant                                                                                                                                                   |  | *        
|        |  |                                                                                                                                                                                        |  |          
|23.1    |  | Consent of
      Independent Registered Public Accounting Firm - Mayer Hoffman McCann
      P.C.                                                                                       |  | *        
|        |  |                                                                                                                                                                                        |  |          
|24      |  | Powers of
      Attorney                                                                                                                                                               |  | *        
|        |  |                                                                                                                                                                                        |  |          
|31.1    |  | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934, as Amended                                                                            |  | *        
|        |  |                                                                                                                                                                                        |  |          
|31.2    |  | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934, as Amended                                                                            |  | *        
|        |  |                                                                                                                                                                                        |  |          
|32.1    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906of the Sarbanes-Oxley Act of
      2002                                                      |  | *        
|        |  |                                                                                                                                                                                        |  |          
|32.2    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                           |  | *        

69

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|* | Filed herewith.                                                                                                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                           
|A | Incorporated by reference to
      Amtechs Form S-1 Registration Statement No. 2-83934-LA.                                                                                                                               
| 
|B | Incorporated by reference to
      Amtechs Annual Report on Form 10-K for the year ended September 30,
      1987.                                                                                                       
| 
|C | Incorporated by reference to
      Amtechs Annual Report on Form 10-K for the year ended September 30,
      1988.                                                                                                       
| 
|D | Incorporated by reference to
      Amtechs Form S-1 Registration Statement (File No. 33-77368).                                                                                                                          
| 
|E | Incorporated by reference to
      Amtechs Annual Report on Form 10-K for the year ended September 30,
      1999.                                                                                                       
| 
|F | Incorporated by reference to
      Amtechs Current Report on Form 8-K filed with the Securities and Exchange
      Commission on January 8, 2008.                                                                        
| 
|G | Incorporated by reference to
      Amtechs Current Report on Form 8-A, filed with the Securities and
      Exchange Commission on May 17, 1999.                                                                          
| 
|H | Incorporated by reference to
      Amtechs Form S-8 Registration Statement (related to the Amended and
      Restated 1995 Stock Option Plan), filed with the Securities and Exchange
      Commission on August 9, 1996.
| 
|I | Incorporated by reference to
      Amtechs Form S-8 Registration Statement (related to the Non-Employee
      Director Stock Option Plan), filed with the Securities and Exchange
      Commission on August 9, 1996.    
| 
|J | Incorporated by reference to
      Amtechs Annual Report on Form 10-K for the year ended September 30,
      1993.                                                                                                       
| 
|K | Incorporated by reference to
      Amtechs Current Report on Form 8-K filed with the Securities and Exchange
      Commission on April 28, 2005.                                                                         
| 
|L | Incorporated by reference to
      Amtechs Annual Report on Form 10-K for the year ended September 30,
      2005.                                                                                                       
| 
|M | Incorporated by reference to
      Amtechs Current Report on Form 8-K, filed with the Securities and
      Exchange Commission on April 12, 2006.                                                                        
| 
|N | Incorporated by reference to
      Amtechs Quarterly Report on Form 10-Q for the quarterly period ended June
      30, 2006.                                                                                             
| 
|O | Incorporated by reference to
      Amtechs Proxy Statement for its 2007 Annual Shareholders Meeting, filed
      with the Securities and Exchange Commission on April 24,
2007.                                         
| 
|P | Incorporated by reference to
      Amtechs Quarterly Report on Form 10-Q for the quarterly period ended
      March 31, 2007.                                                                                            
| 
|Q | Incorporated by reference to
      Amtechs Current Report on Form 8-K filed with the Securities and Exchange
      Commission on October 11, 2007.                                                                       
| 
|R | Incorporated by reference to
      Amtechs Current Report on Form 8-K filed with the Securities and Exchange
      Commission on March 11, 2008.                                                                         

70

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