# EDGAR Filing Document

**Accession Number:** 0001410172
**File Stem:** 0001213900-23-024745
**Filing Date:** 2023-3
**Character Count:** 282836
**Document Hash:** 75e3f85b409efbb9aa3c7c2821c70cdc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-024745.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001213900-23-024745

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 75

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Rubicon Technology, Inc.
- **CENTRAL INDEX KEY:** 0001410172
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEMICONDUCTORS & RELATED DEVICES [3674]
- **IRS NUMBER:** 364419301
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33834
- **FILM NUMBER:** 23781778

**BUSINESS ADDRESS:**
- **STREET 1:** 900 EAST GREEN STREET
- **CITY:** BENSENVILLE
- **STATE:** IL
- **ZIP:** 60106
- **BUSINESS PHONE:** (847) 295-7000

**MAIL ADDRESS:**
- **STREET 1:** 900 EAST GREEN STREET
- **CITY:** BENSENVILLE
- **STATE:** IL
- **ZIP:** 60106

?xml version="1.0" encoding="ASCII"?

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended December 31, 2022

or

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from <u>______</u> to <u>______</u>

Commission file number 001-33834

**RUBICON TECHNOLOGY, INC.**

(Exact Name of Registrant as Specified in Its Charter)

---

| | |
|:---|:---|
| **Delaware** | **36-4419301** |
| (State or Other Jurisdiction of<br> Incorporation or Organization) | (I.R.S. Employer <br> Identification No.) |
| **900 East Green Street**<br> **Bensenville, Illinois** | **60106** |
| (Address of Principal Executive Offices) | (Zip Code) |

---

Registrant's Telephone Number, Including Area Code: (847) 295-7000

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

<u>Title of each class</u> <u>Name of each exchange on which registered </u> <br> None Not applicable

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

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

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 ☒

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☐ Smaller reporting company ☒ <br> Emerging growth company ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2022, there were 2,010,177 shares of common stock outstanding held by non-affiliates of the registrant, with an aggregate market value of the common stock (based upon the closing price of these shares on the NASDAQ Capital Market) of approximately $18,473,527.

The number of shares of the registrant's common stock outstanding as of the close of business on February 28, 2023 was 2,410,265.

**Documents incorporated by reference:**

Not applicable.

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| **Item of Form 10-K** | **Item of Form 10-K** | **Page** |
| [**Part I**](#a_001) | [**Part I**](#a_001) | 1 |
| [1.](#a_002) | [Business Overview](#a_002) | 1 |
| [1A.](#a_003) | [Risk Factors](#a_003) | 4 |
| [1B.](#a_004) | [Unresolved Staff Comments](#a_004) | 11 |
| [2.](#a_005) | [Properties](#a_005) | 11 |
| [3.](#a_006) | [Legal Proceedings](#a_006) | 11 |
| [4.](#a_007) | [Mine Safety Disclosures](#a_007) | 11 |
| [**Part II**](#a_008) | [**Part II**](#a_008) | 12 |
| [5.](#a_009) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#a_009) | 12 |
| [6.](#a_010) | [\[Reserved\]](#a_010) | 12 |
| [7.](#a_011) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_011) | 13 |
| [7A.](#a_012) | [Quantitative and Qualitative Disclosure About Market Risk](#a_012) | 25 |
| [8.](#a_013) | [Consolidated Financial Statements and Supplementary Data](#a_013) | 25 |
| [9.](#a_014) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](#a_014) | 25 |
| [9A.](#a_015) | [Controls and Procedures](#a_015) | 25 |
| [9B.](#a_016) | [Other Information](#a_016) | 26 |
| [9C.](#a_017) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#a_017) | 26 |
| [**Part III**](#a_018) | [**Part III**](#a_018) | 27 |
| [10.](#a_019) | [Directors, Executive Officers and Corporate Governance](#a_019) | 27 |
| [11.](#a_020) | [Executive Compensation](#a_020) | 33 |
| [12.](#a_021) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#a_021) | 36 |
| [13.](#a_022) | [Certain Relationships and Related Transactions, and Director Independence](#a_022) | 38 |
| [14.](#a_023) | [Principal Accountant Fees and Services](#a_023) | 39 |
| [**Part IV**](#a_024) | [**Part IV**](#a_024) | 40 |
| [15.](#a_025) | [Exhibits and Consolidated Financial Statement Schedules](#a_025) | 40 |
| [16.](#z_001) | [Form 10-K Summary](#z_001) | 40 |
| [Signatures](#a_026) | [Signatures](#a_026) | 41 |
| [Exhibit Index](#a_027) | [Exhibit Index](#a_027) | 42 |

---

i

**PART I**

All statements, other than statements of historical facts, included in this Annual Report on Form 10-K including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, results of operations, financial position, net sales, projected costs, prospects and plans and objectives of management for future operations may be "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements can be identified by the use of terms and phrases such as "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," "forecast," "prospects," "goals," "potential," "likely," and the like, and/or future-tense or conditional constructions such as "will," "may," "could," "should," etc. (or the negative thereof). Items contemplating or making assumptions about actual or potential future sales, market size and trends or operating results also constitute forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Before investing in our common stock, investors should be aware that the occurrence of the risks, uncertainties and events described in the section entitled "Risk Factors" and elsewhere in this Annual Report on Form 10-K could have a material adverse effect on our business, results of operations and financial condition. These risks and uncertainties include our dependence on key customers; changes in demand or the average selling prices of sapphire products; the failure to achieve the margins we expect, whether due to our own operations or changes in the market for our products; the failure of third parties performing services for us to do so successfully; our ability to protect our intellectual property rights; the competitive environment; and the cost of compliance with environmental standards. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are inherently subject to known and unknown risks, including business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K, other than as may be required by applicable law or regulation. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

You should read this Annual Report on Form 10-K and the documents that we reference therein and have filed with the Securities and Exchange Commission (the "SEC") as exhibits with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Unless otherwise indicated, the terms "Rubicon," the "Company," "we," "us," and "our" refer to Rubicon Technology, Inc. and our consolidated subsidiaries.

**ITEM 1. BUSINESS OVERVIEW**

Rubicon currently consists of two subsidiaries, Rubicon Worldwide LLC, doing business as Rubicon Technology Worldwide LLC ("RTW") and Rubicon Technology BP LLC ("BP"). In June 2021 the operations of Rubicon DTP LLC, doing business as Direct Dose Rx ("Direct Dose") were discontinued.

RTW is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. Sapphire is a desirable material for high-performance applications due to its hardness and strength, transparency in the visible and infrared spectrum, thermal conductivity, thermal shock resistance, abrasion resistance, high melting point and chemical inertness. As a result, it is ideally suited for extreme environments in a range of industries where material durability is just as important as optical clarity. We believe that we continue to have a reputation as one of the highest quality sapphire sources in the market. We provide optical and industrial sapphire products and materials in a variety of shapes and sizes. We manage our operations and ship from our owned facility located in Bensenville, Illinois.

Our sapphire business operates in a very competitive market. Our ability to expand our optical and industrial business and the acceptance of new product offerings are difficult to predict. Our total sales backlog was approximately $1,167,100 and $1,735,000 as of December 31, 2022 and 2021, respectively.

In June 2021 the operations of Direct Dose Rx were discontinued. The costs associated with such closure were not material. Direct Dose Rx was a specialized pharmacy that provided prescription medications, over-the-counter drugs and vitamins to patients being discharged from skilled nursing facilities and hospitals, and directly to retail customers who want such medications delivered to their home. The delivered products were sorted by the dose, date, and time to be taken, and came in easy-to-use, perforated strip-packaging as opposed to separate pill bottles. Direct Dose Rx was licensed to operate in 11 states. The services offered by Direct Dose Rx benefited patients, skilled nursing facilities and hospitals by reducing the risk of hospital readmissions.

In August 2022, Janel Corporation ("Janel") completed a tender offer to acquire 1,108,000 shares or 45% of our outstanding common stock at a price per share of $20.00. The tender offer was made pursuant to the terms and conditions set forth in a Stock Purchase and Sale Agreement, dated as of July 1, 2022, between the Company and Janel (the "Purchase Agreement"). The terms and conditions provided that, immediately after the consummation of the tender offer, the Company pay a cash distribution to all stockholders of $11.00 per share. This cash distribution was made in August 2022 and totaled approximately $27.1 million. As part of the transaction, the Board of Directors of the Company (the "Board of Directors") approved Amendment No. 2 to the Rights Agreement dated as of December 18, 2017, between the Company and American Stock Transfer & Trust Company, LLC, regarding the Company's ability to utilize its U.S. net operating loss ("NOL") carryforwards (the "Rights Agreement"). This amendment extended the final expiration date of the Rights Agreement to September 1, 2025. For more information regarding the Rights Agreement, see Note 8 – Stockholder Rights Agreement to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

We have significant NOL carryforwards. Under federal tax laws, we can carry forward and use our NOLs to reduce our future U.S. taxable income and tax liabilities until such NOL carryforwards expire in accordance with the Internal Revenue Code of 1986, as amended (the "IRC"). Our NOL carryforwards provide a benefit to us, if fully utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the amount of our federal and state taxable income. If we do not have sufficient federal and state income in future years to use the benefits before they expire, we will permanently lose the benefit of the NOL carryforwards. Our ability to use the tax benefits associated with our NOL carryforwards is dependent upon our generation of future taxable profits and our ability to successfully identify and consummate suitable acquisitions or investment opportunities. As part of completing the Janel transaction, the Company took into consideration the impact it would have on the NOL carryforwards, and determined that the transaction would not result in any impairment. Rubicon is continuing to evaluate opportunities to utilize the NOL carryforwards.

**Rubicon Technology, Inc.** is a Delaware corporation and was incorporated on February 7, 2001. Our common stock was listed on the Nasdaq Capital Market under the symbol "RBCN" until it was delisted effective December 30, 2022 (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information). On January 3, 2023, our common stock began trading on the OTCQB Capital Market under the symbol "RBCN."

**Sapphire** **INDUSTRY OVERVIEW** 

Sapphire is utilized in optical and industrial applications. It is used for windows and optics for aerospace, sensor, medical, semiconductor, instrumentation, electronics and laser applications due to its wide-band transmission, superior strength, chemical and scratch resistance and high strength-to-weight ratio.

**PRODUCTS** 

We provide optical and industrial sapphire products in various shapes and sizes. These optical sapphire products are qualified and used in equipment for a wide variety of end markets and high-performance applications, including defense and aerospace, specialty lighting, instrumentation, sensors and detectors, semiconductor process equipment, electronic substrates, medical and laser applications.

**RESEARCH AND DEVELOPMENT** 

In 2022 and 2021, Rubicon did not incur any research and development ("R&D") expenses and it currently does not have any plans for expenditures in 2023 related to R&D.

**SALES AND MARKETING** 

We market and sell through our direct sales force to customers. Our direct sales team includes experienced and technically sophisticated sales professionals and engineers who are knowledgeable in the development, manufacturing and use of sapphire windows and other optical materials.

A key component of our marketing strategy is developing and maintaining strong relationships with our customers. We achieve this by working closely with our customers to optimize our products for their production processes. We believe that maintaining close relationships with our customers' senior management and providing technical support improves customer satisfaction.

**CUSTOMERS** 

Our principal customers have been defense subcontractors, industrial manufacturers, fabricators and resellers. A substantial portion of our sales have been to a small number of customers. In 2022, our top six customers (each 10% or greater of our revenues) accounted for, in the aggregate, approximately 72% of our revenue from our continuing operations and in 2021, the top three customers accounted for approximately 46% of our revenue from our continuing operations. A customer who had accounted for 22% of revenue from continuing operations in 2021 accounted for only 4% of revenue from continuing operations in 2022. Although we are attempting to diversify and expand our customer base, we expect our sales to continue to be concentrated among a small number of customers. We also expect that our significant customers may change from time to time due to various factors. No other customer accounted for 10% or more of our sapphire revenues during 2022 or 2021 other than those referred to above.

**COMPETITION** 

The markets for high-quality sapphire products are very competitive and have been characterized by rapid technological change. The products we sell must meet certain demanding requirements to succeed in the marketplace. Although we are a well-established sapphire provider, we face significant competition from other established providers of similar products as well as from new and potential entrants into our markets.

**ENVIRONMENTAL REGULATION** 

From time to time, we use water, oils, slurries, acids, adhesives and other industrial chemicals. We are subject to a variety of federal, state and local laws regulating the discharge of these materials into the environment or otherwise relating to the protection of the environment. These include statutory and regulatory provisions under which we are responsible for the management of hazardous materials we use and the disposition of hazardous wastes resulting from our manufacturing processes. Failure to comply with such provisions, whether intentional or inadvertent, could result in fines and other liabilities to the government or third parties, injunctions requiring us to suspend or curtail operations or other remedies, which could have a material adverse effect on our business. The cost of complying with environmental regulation is not material.

**EMPLOYEES** 

As of December 31, 2022, we had 12 full-time employees. None of our employees are represented by a labor union. We consider our employee relations to be good.

**OTHER INFORMATION** 

You may access, free of charge, our reports filed with the SEC (for example, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those forms) over the Internet at the SEC's website at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available through our Internet website (www.rubicontechnology.com). Reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC. Alternatively, if you would like a paper copy of any such SEC report (without exhibits) or document, write to Investor Relations, Rubicon Technology, Inc., 900 East Green Street, Bensenville, Illinois 60106, and a copy of such requested document will be provided to you, free of charge. The information found on our website is not part of this or any other report filed with, or furnished to, the SEC.

**ITEM 1A. RISK FACTORS**

 

*You should carefully read the risk factors set forth below, together with the financial statements, related notes and other information contained in this Annual Report on Form 10-K. Our business is subject to a number of important risks and uncertainties, some of which are described below. The risks described below, however, are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also impair our business operations. Any of these risks may have a material adverse effect on our business, financial condition, results of operations and cash flows. Please refer to the discussion of "forward-looking statements" on page one of this Annual Report on Form 10-K in connection with your consideration of the risk factors and other important factors that may affect future results described below.* 

**We have incurred significant losses in prior periods and may incur losses in the future.** 

We have incurred significant losses in prior periods and may incur significant losses in the future. These losses may have an adverse effect on our ability to attract new customers or retain existing customers. We have incurred net losses of $0.7 million, $1.1 million, $1.1 million, $17.8 million and $62.9 million in 2021, 2020, 2019, 2017 and 2016, respectively. Although we recorded net income of $0.9 million and $1.0 million in 2022 and 2018, respectively, there can be no assurance that we will achieve profitability in future periods.

**We are exploring, evaluating, and may begin to implement certain strategic alternatives with a goal of providing greater value to our stockholders. There can be no assurance that we will be successful in identifying additional strategic alternatives or implementing any strategic alternative, or that any strategic alternative will yield additional value for stockholders.** 

Our management and the Board of Directors are continuing to review strategic alternatives with a goal of providing greater value to our stockholders. These alternatives could result in, among other things, modifying or eliminating certain of our operations, selling material assets, seeking additional financing, selling the business, making investments, effecting a merger, consolidation or other business combination, partnering or other collaboration agreements, or potential acquisitions or recapitalizations, in one or more transactions.

There can be no assurance that our continued exploration of strategic alternatives will result in the identification of additional alternatives or that any transaction will be consummated. The process of exploring strategic alternatives may be costly and may be time consuming, distracting to management and disruptive to our business operations. If we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. We also cannot provide assurance that any potential transaction, investment or other alternative identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in the current stock price. Any potential transaction or investment would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends and the availability of financing to us on reasonable terms.

**We may acquire other businesses, products or technologies; if we do, we may be unable to integrate them with our business effectively or at all, which may adversely affect our business, financial condition and operating results.** 

If we find appropriate opportunities and have adequate funding, we may acquire other businesses, product lines or technologies. However, if we acquire a business, product line or technology, the process of integration may produce unforeseen operating difficulties and expenditures and may absorb significant attention of our management that would otherwise be available for the ongoing development of our business. Further, the acquisition of a business may result in the assumption of unknown liabilities or create risks with respect to our existing relationships with suppliers and customers. If we make acquisitions, we may issue shares of stock that dilute other stockholders, expend cash, incur debt, assume contingent liabilities or create additional expenses related to amortizing intangible assets, any of which may adversely affect our business, financial condition or operating results.

**If we are unable to raise additional capital when needed, we may not be able to execute the acquisition of other businesses.** 

We may require additional capital to fund operations, capital expenditures and or the acquisition of other businesses. We may finance future cash needs through public or private equity offerings, debt financings, corporate collaborations or licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our acquisition opportunities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through corporate collaborations or licensing arrangements, it may be necessary to relinquish some rights to our technologies or our new products, or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. In evaluating whether and how to raise capital, the Company will consider the impact it may have on the ability to utilize its tax attributes in the future. As a result, the Company may be limited as to the amount of equity it can issue without impairing its tax attributes. In evaluating whether and how to raise capital, the Company will consider the impact it may have on the ability to utilize its tax attributes in the future. As a result, the Company may be limited as to the amount of equity it can issue without impairing its tax attributes.

We believe our existing cash and cash equivalents, and interest thereon, will be sufficient to fund our projected operating requirements for at least the next twelve months. However, if our success in generating sufficient operating cash flow or our use of cash in the next twelve months were to significantly adversely change, we may not have enough funds available to continue operating at our current level in future periods. A limitation of funds available may raise concerns about our ability to continue to operate. Such concerns may limit our ability to obtain financing and some customers may not be willing to do business with us.

**Rubicon Technology Worldwide**

**We rely on third parties for certain material and finishing steps for our products, including the slicing and polishing of our sapphire crystal.** 

In order to reduce product costs and improve cash flow, we use third parties for certain material and finishing functions for our products, including the slicing and polishing of our sapphire crystal inventory. These types of services are only available from a limited number of third parties. Our ability to successfully outsource these finishing functions will substantially depend on our ability to develop, maintain and expand our strategic relationship with these third parties. Any impairment in our relationships with the third parties performing these functions, in the absence of a timely and satisfactory alternative arrangement, could have a material adverse effect on our business, results of operations, cash flow and financial condition. In addition, we do not control any of these third parties or the operation of their facilities, and we may not be able to adequately manage and oversee the third parties performing our finishing functions. Accordingly, any difficulties encountered by these third parties that result in product defects, delays or defaults on their contractual commitments to us could adversely affect our business, financial condition and results of operations. In addition, their facilities may be vulnerable to damage or interruption from natural disasters, inclement weather conditions, power loss, acts of terrorism and similar events. A decision to close a facility without adequate notice as a result of these or other unanticipated problems at the facility could result in lengthy interruptions in their services to us; and any loss or interruption of these services could significantly increase our expenses, cause us to default on our obligations to our customers and/or otherwise adversely affect our business. Furthermore, the outsourcing of our finishing steps, such as slicing and polishing of wafers, may not continue to be available at reasonable prices or on commercially reasonable terms, or at all.

**Our gross margins could fluctuate as a result of changes in our product mix and other factors, which may adversely impact our operating results.** 

We anticipate that our gross margins will fluctuate from period to period as a result of the mix of products that we sell in any given period. We are working to increase sales of higher margin products, introduce new differentiated products and lower our costs. There can be no assurance that we will be successful in improving our gross margin mix. If we are not successful, our overall gross margin levels and operating results in future periods would continue to be adversely impacted. Increased competition and the adoption of alternatives to our products, more complex engineering requirements, lower demand and other factors may lead to a further downward shift in our product margins, leading to price erosion and lower revenues for us in the future.

**The markets in which we operate are very competitive, and many of our competitors and potential competitors are larger, more established and better capitalized than we are.** 

The markets for selling high-quality sapphire products are very competitive and have been characterized by broad advancements and changes in technological capabilities. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses, and failure to increase, or the loss of, market share or expected market share, any of which would likely seriously harm our business, operating results and financial condition.

 **The average selling prices of sapphire products have historically been volatile and in recent years sapphire product prices have been increasingly depressed.** 

Historically, our industry has experienced volatility in product demand and pricing. However, in the last five years, the sales prices for our sapphire products have trended downward due to an over-supply of products in the market. In some countries, government programs support sapphire producers who would otherwise be unprofitable; in such circumstances, sapphire may be sold at prices below cost for an extended period of time, depressing market prices, to the detriment of our gross margins. This has had a significant adverse impact on our profitability and our results of operations. Moreover, changes in average selling prices of our products as a result of competitive pricing pressures increased sales discounts and new product introductions by our competitors could have a significant impact on our profitability. Although we attempt to optimize our product mix, reduce manufacturing costs and pass along certain increases in costs to our customers in order to lessen the effect of decreases in selling prices, we may not be able to successfully do so in a timely manner or at all, and our results of operations and business may be harmed.

**We depend on a few customers for a major portion of our sales and our results of operations would be adversely impacted if they reduce their order volumes.** 

Historically, we have earned, and believe that in the future we will continue to earn, a substantial portion of our revenue from a small number of customers. In 2022, our top six customers accounted for, in the aggregate, approximately 72% of our revenue from our continuing operations, and in 2021, our top three customers accounted for approximately 46% of our revenue from our continuing operations. A customer who had accounted for 22% of revenue from continuing operations in 2021 accounted for only 4% of revenue from continuing operations in 2022. A loss of one of our major customers or having a major customer significantly reduce its volume of business with us, could result in materially reduced revenues and profitability unless we are able to replace such demand with other orders promptly. We expect to continue to be dependent on our major customers, the number and identity of which may change from period to period.

We generally sell our products on the basis of purchase orders. Thus, most of our customers could cease purchasing our products with little or no notice and without penalties. In addition, delays in product orders could cause our quarterly revenue to vary significantly. A number of factors could cause our customers to cancel or defer orders, including interruptions to their operations due to a downturn in their industries, natural disasters, delays in manufacturing their own product offerings into which our products are incorporated, securing other sources for the products that we manufacture or developing such products internally.

**If we are unable to retain certain existing personnel, our business could be harmed.** 

Our success depends on our continued ability to retain and motivate highly skilled personnel. Competition for these individuals is intense, and we may not be able to successfully retain sufficiently qualified personnel. The inability to retain necessary personnel could harm our ability to obtain new customers and develop new products and could adversely affect our business and operating results. In addition, the loss of the services, or distraction, of our senior management for any reason could adversely affect our business, operating results and financial condition.

**We are dependent on the continued services and performances of certain senior management employees such as sales management and the head of operations.** 

On December 12, 2022, the Board of Directors and the Company's Chief Executive Officer, President and Acting Chief Financial Officer, Timothy Brog, mutually agreed that the Company's operational staffing requirements had changed and that a new Chief Executive Officer was needed. Mr. Brog remained employed by the Company until January 6, 2023. Mr. Brog's departure was not the result of any disagreements with the Company on any matters relating to its operations, policies or practices. On February 24, 2023, the Board of Directors appointed Joseph Ferrara as Executive Officer and Chief Financial Officer of the Company.

Our future success is dependent on the continued services and contributions of our senior management who must work together effectively in order to design and produce our products, expand our business, increase our revenue and improve our operating results. The loss of services of our senior management for any reason could adversely affect our business, operating results and financial condition.

**The protection of our intellectual property rights and the defense of claims of infringement against us by third parties may subject us to costly litigation.** 

Other companies might allege that we are infringing certain of their patents or other rights. If we are unable to resolve these matters satisfactorily, or to obtain licenses on acceptable terms, we may face litigation. Any litigation to enforce patents issued to us, to protect trade secrets or know-how possessed by us or to defend us or indemnify others against claimed infringement of the rights of others could have a material adverse effect on our financial condition and operating results. Regardless of the validity or successful outcome of any such intellectual property claims, we may need to expend significant time and expense to protect our intellectual property rights or to defend against claims of infringement by third parties, which could have a material adverse effect on us. If we lose any such litigation where we are alleged to infringe the rights of others, we may be required to:

● pay substantial damages;

● seek licenses from others; or

● change, or stop manufacturing or selling, some or all of our products.

Any of these outcomes could have an adverse effect on our business, results of operations or financial condition.

**We are subject to numerous environmental laws and regulations, which could expose us to environmental liabilities, increase our manufacturing and related compliance costs or otherwise adversely affect our business and operating results.** 

From time to time, we use water, oils, slurries, acids, adhesives and other industrial chemicals. We are subject to a variety of foreign, federal, state and local laws and regulations governing the protection of the environment. These environmental laws and regulations include those relating to the use, storage, handling, discharge, emission, disposal and reporting of toxic, volatile or otherwise hazardous materials used in our manufacturing processes. These materials may have been or could be released into the environment at properties currently or previously operated by us, at other locations during the transport of the materials, or at properties to which we send substances for treatment or disposal. If we were to violate or become liable under environmental laws and regulations or become non-compliant with permits required at some of our facilities, we could be held financially responsible and incur substantial costs, including investigation and cleanup costs, fines and civil or criminal sanctions, third-party property damages or personal injury claims. In addition, new laws and regulations or stricter enforcement of existing laws and regulations could give rise to additional compliance costs and liabilities.

**RTW's operations are concentrated in one facility, and the unavailability of this facility could harm our business.** 

Our operations are concentrated in one facility located in Bensenville, Illinois. Should a casualty, natural disaster, inclement weather, an outbreak of disease, power loss, an act of terrorism or similar event affect the Chicagoland area, our operations could be significantly impacted. We may not be able to replicate the operations of our Bensenville facility. The disruption from such an event could adversely affect or interrupt entirely our ability to conduct our business.

**We are dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations. In addition, increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services.**

We rely on information technology networks and systems, including the Internet and cloud services, many of which are managed by third parties, to securely process, transmit and store electronic information of financial, marketing, legal and regulatory nature to manage our business processes and activities. Although we have implemented enhanced controls around our information technology systems, these systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases, power outages, hardware failures, telecommunication failures, user errors, natural disasters, terrorist attacks or other catastrophic events. If any of our significant information technology systems suffer severe damage, disruption or shutdown, and our disaster recovery and business continuity plans do not effectively resolve the issues in a timely manner, our product sales, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results, or our operations may be disrupted, exposing us to performance failures with customers. In addition, cybersecurity threats, such as computer viruses, attacks by computer hackers or other cybersecurity threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. There can be no assurance that our security controls and safeguard measures taken to improve our cybersecurity protection will be sufficient to mitigate all potential risks to our systems, networks and data. Potential consequences of a cybersecurity attack include disruption to systems, corruption of data, unauthorized release of confidential or otherwise protected information, reputational damage, and litigation with third parties. The amount of insurance coverage we maintain may be inadequate to cover claims or liabilities related to a cybersecurity attack.

**Our NOL carryforwards may expire or could be substantially limited if we experience an ownership change as defined in the IRC or if changes are made to the IRC.** 

We have significant NOL carryforwards. Under federal tax laws, we can carry forward and use our NOLs to reduce our future U.S. taxable income and tax liabilities until such NOL carryforwards expire in accordance with the IRC. Our NOL carryforwards provide a benefit to us, if fully utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the amount of our federal and state taxable income. If we do not have sufficient federal and state income in future years to use the benefits before they expire, we will permanently lose the benefit of the NOL carryforwards. Our ability to use the tax benefits associated with our NOL carryforwards is dependent upon our generation of future taxable profits and our ability to successfully identify and consummate suitable acquisitions or investment opportunities.

Additionally, Section 382 and Section 383 of the IRC provide an annual limitation on our ability to utilize our NOL carryforwards, as well as certain built-in losses, against the future U.S. taxable income in the event of a change in ownership, as defined under the IRC. While we have implemented a stockholder's right plan to protect our NOL carryforwards, there is no assurance that we will not experience a change in ownership in the future as a result of changes in our stock ownership, and any such subsequent changes in ownership for purposes of the IRC could further limit our ability to use our NOL carryforwards.

Under the recently enacted Tax Cut and Jobs Act, NOLs generated on or after January 1, 2018, could be limited to 80% of taxable income. If other changes were made to the IRC, they could impact our ability to utilize our NOLs. Accordingly, any such occurrences could adversely affect our financial condition, operating results and cash flows.

**The Company's business, results of operations, financial condition and stock price have been adversely affected and could in the future be materially adversely affected by the COVID-19 pandemic.**

COVID-19 has spread rapidly throughout the world, prompting governments and businesses to take unprecedented measures in response. Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders. The COVID-19 pandemic has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets. The Company maintains a limited staff of full-time employees in skilled technical, non-technical and key management positions. If employees become infected by the COVID-19 virus we may not be able to maintain normal business operations for an extended period of time.

The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Company's business, results of operations, financial condition and stock price. Following the initial outbreak of the virus, the Company experienced disruptions to its manufacturing, supply chain and logistical services provided by outsourcing partners, resulting in temporary supply shortages that affected sales worldwide. The Company is heavily reliant on domestic and foreign supply chains to operate its businesses. The COVID-19 pandemic may limit and restrict our access to necessary products that are required to operate.

The Company is continuing to monitor the situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities. The full extent of the impact of the COVID-19 pandemic on the Company's operational and financial performance is currently uncertain and will depend on many factors outside the Company's control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of and compliance with protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products. Additional future impacts on the Company may include, but are not limited to, material adverse effects on: demand for the Company's products and services; the Company's supply chain and sales and distribution channels; the Company's ability to execute its strategic plans; and the Company's profitability and cost structure.

To the extent the COVID-19 pandemic adversely affects the Company's business, results of operations, financial condition and stock price, it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Annual Report on Form 10-K.

**RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK** 

**The trading price of our common stock has been and will likely continue to be volatile due to various factors, some of which are beyond our control, and each of which could adversely affect our stockholders' value.** 

Our common stock was listed on the Nasdaq Capital Market under the symbol "RBCN" until it was delisted effective December 30, 2022 (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information). On January 3, 2023, our common stock began trading on the OTCQB Capital Market under the symbol "RBCN." Factors related to our Company and our business, as well as broad market and industry factors, may adversely affect the market price of our common stock, regardless of our actual operating performance. Such factors that could cause fluctuations in our stock price include, among other things:

● changes in financial guidance or estimates by us, by investors or by any financial analysts who might cover our stock or our industry;

● our ability to meet the performance expectations of financial analysts or investors;

● general market and economic conditions; and

● the size of the public float of our stock.

**Our certificate of incorporation, bylaws and Delaware law may discourage takeovers and business combinations that our stockholders might consider in their best interests.** 

A number of provisions in our certificate of incorporation and bylaws, as amended, as well as anti-takeover provisions of Delaware law, may have the effect of delaying, deterring, preventing or rendering more difficult a change in control of Rubicon that our stockholders might consider in their best interests. These provisions include:

● a classified Board of Directors;

● a tax benefit preservation plan designed to preserve our ability to utilize our net operating losses as a result of certain stock ownership changes, which may have the effect of discouraging transactions involving an actual or potential change in our ownership;

● granting to the Board of Directors sole power to set the number of directors and to fill any vacancy on the Board of Directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;

● limitations on the ability of stockholders to remove directors;

● the ability of our Board of Directors to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the Board of Directors;

● prohibition on stockholders from calling special meetings of stockholders;

● prohibition on stockholders from acting by written consent;

● establishment of advance notice requirements for stockholder proposals and nominations for election to the Board of Directors at stockholder meetings; and

● a requirement that any action taken by the Company or any stockholder that would result in a stockholder owning greater than 49% (an "Above 49% Stockholder") of the outstanding shares of common stock, would require the approval of a majority of stockholders of the common stock, excluding such Above 49% Stockholder and any entity or person(s) affiliated with such Above 49% Stockholder;

These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

The foregoing provisions of our certificate of incorporation and bylaws, as amended, may also make it difficult for stockholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.

**We are subject to litigation risks, including securities class action litigation, which may be costly to defend.** 

All industries, including ours, are subject to legal claims, including securities litigation. When the market price of a stock declines significantly, due to factors such as trends in the stock market in general, broad market and industry fluctuations or operating performance, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock. This sort of litigation can be particularly costly and may divert the attention of our management and our resources in general. We have been subject to securities class action litigation in the past, as disclosed in our previous filings with the SEC. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal claim or proceeding (including by settlement) could have a material effect on our business, financial condition, results of operations or cash flows. Further, uncertainties resulting from the initiation and continuation of securities or other litigation could harm our ability to obtain credit and financing for our operations and to compete in the marketplace.

**Our Board of Directors may declare or pay any dividends to our stockholders in the foreseeable future.** 

The declaration, payment and amount of any future dividends will be made at the discretion of our Board of Directors and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors the Board of Directors considers relevant. Historically, the Company has never declared or paid cash dividends on its common stock. At the end of August 2022, the Company returned $27,092,000 of capital to its shareholders. At the time of the distribution, the Company had an accumulated deficit of approximately $331 million. The Company accounted for the distribution as a reduction of additional paid in capital (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information). The Company may decide to make similar distributions or declare cash dividends in the future, but there is no assurance that the Company will do so.

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

Disclosure under this item is not required, as the registrant is a smaller reporting company.

**ITEM 2. PROPERTIES**

All of our sapphire operations and certain of our executive functions are located in our Bensenville, Illinois, 30,000 square-foot facility that we purchased in September 2018. During the year ended December 31, 2022, the Company entered into a business loan agreement and promissory note in the amount of $1,620,000, which is secured by the property. For more information regarding the business loan agreement and promissory note, see Note 1 – Summary of Significant Accounting Policies of our Consolidated Financial Statements included in this Annual Report on Form 10-K.

On September 19, 2022, the Company completed the sale of a parcel of land located in Batavia, Illinois pursuant to the terms and conditions of the agreement of sale, dated as of February 7, 2022. The selling price for the property was $722,000. The Company realized net proceeds of approximately $600,000 after the payment of real estate taxes, brokerage and legal fees, transfer taxes and other expenses.

**ITEM 3. LEGAL PROCEEDINGS**

From time to time, we, our subsidiaries and/or our directors and officers may be named in claims arising in the ordinary course of business. Management believes that there are no pending legal proceedings involving us or any of our subsidiaries that will, individually or in the aggregate, have a material adverse effect on our consolidated results of operations or financial condition.

There are no outstanding material matters as of December 31, 2022 and through the date of this filing.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**PART II** 

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

**Market Information** 

Our common stock was listed on the Nasdaq Capital Market under the symbol "RBCN" until it was delisted effective December 30, 2022 (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information). On January 3, 2023, our common stock began trading on the OTCQB Capital Market under the symbol "RBCN." The following table sets forth the high and low sales prices for our common stock as reported on those markets for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **High** | **Low** |
| **Fiscal year ended December 31, 2022** | | |
| First Quarter | $9.39 | $8.61 |
| Second Quarter | $9.68 | $8.58 |
| Third Quarter | $17.74 | $2.14 |
| Fourth Quarter | $2.39 | $1.26 |

---

---

| | | |
|:---|:---|:---|
|  | **High** | **Low** |
| **Fiscal year ended December 31, 2021** |  |  |
| First Quarter | $11.84 | $9.18 |
| Second Quarter | $11.92 | $9.42 |
| Third Quarter | $11.00 | $8.60 |
| Fourth Quarter | $10.75 | $8.65 |

---

**Holders** 

As of February 28, 2023, our common stock was held by approximately 12 stockholders of record and there were 2,410,265 shares of our common stock outstanding.

**Dividend Policy** 

Historically, the Company has never declared or paid cash dividends on its common stock. At the end of August 2022, the Company returned $27,092,000 of capital to its shareholders. At the time of the distribution, the Company had an accumulated deficit of approximately $330 million. The Company accounted for the distribution as a reduction of additional paid in capital (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information. The Company may decide to make similar distributions or declare cash dividends in the future.

**ITEM 6. [Reserved]**

Disclosure under this item is not required as the registrant is a smaller reporting company.

**Recent Sales of Unregistered Securities** 

None.

**Issuer Purchases of Equity Securities** 

In November 2018, the Board of Directors authorized a program to repurchase up to $3,000,000 of shares of the Company's common stock. As of July 2020, the Company had repurchased $3,000,000 of shares of the Company's common stock.

On December 14, 2020, the Board of Directors authorized an additional $3,000,000 for the repurchase of the Company's common stock. On July 5, 2022 the Company announced that it had entered into the Purchase Agreement with Janel, pursuant to which Janel would commence a cash tender offer to purchase up to 45% of the outstanding shares of the Company's common stock on a fully-diluted basis at a price of $20.00 per share. The transaction was subsequently consummated in August 2022. Pursuant to the terms of the Company's share repurchase program, the Janel transaction resulted in the automatic termination of the program.

There was no share repurchase activity during the year ended December 31, 2022.

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

 

*The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. You should review the "Risk Factors" section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis.* 

**OVERVIEW** 

Rubicon currently consists of two subsidiaries, Rubicon Worldwide LLC, doing business as RTW, and Rubicon Technology BP LLC. In June 2021, the operations of Rubicon DTP LLC, doing business as Direct Dose Rx were discontinued.

RTW is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. Sapphire is a desirable material for high-performance applications due to its hardness and strength, transparency in the visible and infrared spectrum, thermal conductivity, thermal shock resistance, abrasion resistance, high melting point and chemical inertness. As a result, it is ideally suited for extreme environments in a range of industries where material durability is just as important as optical clarity. We believe that we continue to have a reputation as one of the highest quality sapphire sources in the market. We provide optical and industrial sapphire products in a variety of shapes and sizes. We manage our operations and ship from our owned facility located in Bensenville, Illinois.

Our sapphire business operates in a very competitive market. Our ability to expand our optical and industrial business and the acceptance of new product offerings are difficult to predict. Our total sales backlog was approximately $1,167,100 and $1,735,000 as of December 31, 2022 and 2021, respectively.

In June 2021 the operations of Direct Dose Rx were discontinued. The costs associated with such closure were not material. Direct Dose Rx was a specialized pharmacy that provided prescription medications, over-the-counter drugs and vitamins to patients being discharged from skilled nursing facilities and hospitals and directly to retail customers who want such medications delivered to their home. The delivered products were sorted by the dose, date, and time to be taken, and came in easy-to-use, perforated strip-packaging as opposed to separate pill bottles. Direct Dose Rx was licensed to operate in 11 states. The services offered by Direct Dose Rx benefited patients, skilled nursing facilities and hospitals by reducing the risk of hospital readmissions.

In August 2022, Janel completed a tender offer to acquire 1,108,000 shares or 45% of our outstanding common stock at a price per share of $20.00. The tender offer was made pursuant to the terms and conditions set forth in the Purchase Agreement. The terms and conditions provided that, immediately after the consummation of the tender offer, the Company pay a cash distribution to all stockholders of $11.00 per share. This cash distribution was made in August 2022 and totaled approximately $27.1 million. As part of the transaction, the Board of Directors approved Amendment No. 2 to the Rights Agreement, regarding the Company's ability to utilize its NOL carryforwards. This amendment extended the final expiration date of the Rights Agreement to September 1, 2025. For more information regarding the Rights Agreement, see Note 8 – Stockholder Rights Agreement to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

We have significant NOL carryforwards. Under federal tax laws, we can carry forward and use our NOLs to reduce our future U.S. taxable income and tax liabilities until such NOL carryforwards expire in accordance with the IRC. Our NOL carryforwards provide a benefit to us, if fully utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the amount of our federal and state taxable income. If we do not have sufficient federal and state income in future years to use the benefits before they expire, we will permanently lose the benefit of the NOL carryforwards. Our ability to use the tax benefits associated with our NOL carryforwards is dependent upon our generation of future taxable profits and our ability to successfully identify and consummate suitable acquisitions or investment opportunities. As part of completing the Janel transaction, the Company took into consideration the impact it would have on the NOL carryforwards, and determined that the transaction would not result in any impairment. Rubicon is continuing to evaluate opportunities to utilize the NOL carryforwards.

**Rubicon Technology, Inc.** is a Delaware corporation and was incorporated on February 7, 2001. Our common stock historically was listed on the Nasdaq Capital Market. On December 13, 2022, the Company notified The Nasdaq Stock Market LLC ("Nasdaq") of its decision to voluntarily delist its common stock from the Nasdaq Capital Market, and on December 23, 2022, filed a Form 25 with the SEC. The delisting of the Company's common stock became effective on December 30, 2022. On January 3, 2023, the Company's common stock began trading on the OTCQB Capital Market under the symbol "RBCN."

The Board of Directors has determined that the voluntary delisting of the Company's common stock from the Nasdaq Capital Market was in the best interests of the Company and its stockholders. The decision of the Board of Directors was based on careful review of several factors, including the benefits to the Company of eliminating the expenses of being listed on the Nasdaq Capital Market and the costs associated with it, as well as eliminating the demands on management's time of complying with the Nasdaq listing standards. On March 10, 2023, the Company commenced filing with the SEC post-effective amendments to various registration statements on Form S-3 (File Nos. 333-167272 and 333-192536) and Form S-8 (File Nos. 333-147552, 333-180211 and 333-213025) to remove from registration any and all securities registered but unsold under each of the registration statements as of the date of the relevant post-effective amendment. On March 28, 2023, the Board of Directors determined that the voluntary deregistration from the reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was in the best interests of the Company and its stockholders. Further, on or about March 30, 2023, the Company intends to file a Form 15 with the SEC to suspend the Company's reporting obligations under Section 15(d) of the Exchange Act. Upon the filing of the Form 15, the Company's obligation to file periodic reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, will be suspended immediately.

Historically, we have earned, and believe that in the future we will continue to earn, a substantial portion of our revenue from a small number of customers. For the year ended December 31, 2022, we had six customers individually that accounted for approximately 15%, 12%, 12%, 11%, 11%, and 11% of our revenue from our continuing operations. For the year ended December 31, 2021, we had three customers individually that accounted for approximately 22%, 12%, and 12% of our revenue from our continuing operations. The customer who had accounted for 22% of revenue from continuing operations in 2021 accounted for only 4% of revenue from continuing operations in 2022. Our principal customers have been defense subcontractors, industrial manufacturers, fabricators and resellers. Although we are attempting to diversify and expand our customer base, we expect our sales to continue to be concentrated among a small number of customers. We also expect that our significant customers may change from time to time. No other customer accounted for 10% or more of our revenues from our continuing operations during the years ended December 31, 2022 and 2021 other than those referred to above.

We sell our products on a global basis. For the year ended December 31, 2022, the North American and other markets accounted for 82% and 18% of our revenue, respectively. For the year ended December 31, 2021, the North American and other markets accounted for 90% and 10% of our revenue of continuing operations, respectively. All our revenue and corresponding accounts receivable are denominated in U.S. dollars. For more information about our revenues by geographic region, see Note 2 – Segment Information of our Consolidated Financial Statements included in this Annual Report on Form 10-K.

**Financial operations** 

*Revenue.* RTW's revenue consists of sales of optical and industrial sapphire products sold as blanks or polished windows. Products are made to varying specifications, such as crystal planar orientations and thicknesses. We expect that in future periods our revenue will continue to be primarily from the sale of optical materials. We recognize revenue once the performance obligation is satisfied, when the product is manufactured to the customer's specification and based upon shipping terms, title, and control of the product and risk of loss transfer to the customer. Delays in product orders or changes to the timing of shipments could cause our quarterly revenue to vary significantly. All of our revenue and corresponding accounts receivable are denominated in U.S. dollars. Substantially all our revenue is generated by our direct sales team and we expect this to continue in the future.

*Cost of goods sold*. Our cost of goods sold consists primarily of manufacturing materials, labor, manufacturing related overhead such as utilities, depreciation, rent, provisions for excess and obsolete inventory reserves, idle plant and other variance charges, outsourcing costs, freight and warranties. We purchase materials and supplies to support current and future demand for our products. We are subject to variations in the cost of consumable assets from period to period because we do not have long-term fixed-price agreements with our suppliers. We currently outsource a material amount of our production processes and needs.

 

*Gross profit (loss).* Our gross profit (loss) has been and will continue to be affected by a variety of factors, including average sales prices of our products, product mix, and our ability to reduce costs.

 

*General and administrative expenses.* General and administrative expenses ("G&A") consist primarily of compensation and associated costs for employees in finance, information technology and administrative activities, charges for accounting, legal services, insurance and stock-based compensation.

 

*Sales and marketing expenses.* Sales and marketing expenses consist primarily of salaries and associated costs for employees engaged in sales activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(Gain) loss on sale or disposal of assets*. (Gain) loss on sale or disposal of assets represents the difference between the amount of proceeds from sale of our property, equipment and consumable assets and their respective net book values. When the amount of proceeds exceeds the net book value of an underlying asset, we record this favorable variance as a gain on sale or disposal of assets. Alternatively, when the net book value of an asset exceeds the amount of proceeds recovered from sale or disposal of this asset, such unfavorable variance is recorded as a loss on sale or disposal of assets.

 

*Other gain.* Other gain includes the settlement of liabilities for amounts that were less than amounts originally recorded and compensation received for an easement right.

*Other income (expense).* Other income (expense) consists of interest income, interest expense, gains and losses on investments, and grant revenue.

 

*Provision for income tax.* We account for income taxes under the asset and liability method whereby the expected future tax consequences of temporary differences between the book value and the tax basis of assets and liabilities are recognized as deferred tax assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to be recognized. Our analysis of ownership changes that limit the utilization of our NOL carryforwards as of December 31, 2022, shows no impact on such utilization. We are in a cumulative loss position for the past three years which is considered significant negative evidence that is difficult to overcome on a "more likely than not" standard through objectively verifiable data. Based on an evaluation in accordance with the accounting standards, as of December 31, 2022 and 2021, a valuation allowance has been recorded against the net U.S deferred tax assets in order to measure only the portion of the deferred tax assets that are more likely than not to be realized based on the weight of all the available evidence. Until an appropriate level of sustained profitability is attained, we expect to maintain a full valuation allowance on our U.S. net deferred tax assets. Any U.S tax benefits or tax expense recorded on the Consolidated Statement of Operations will be offset with the corresponding adjustment from the use of the NOL carryforward asset which currently has a full valuation allowance. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

 

*Stock-based compensation.* The majority of our stock-based compensation relates primarily to our Board of Directors, executive and administrative personnel and is accounted for as a G&A expense. For the years ended December 31, 2022 and 2021, our stock-based compensation expense was $182,000 and $371,000, respectively.

**RESULTS OF OPERATIONS** 

The following table sets forth our consolidated statements of continuing operations for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Revenue | $3587 | $4061 |
| Cost of goods sold | 2147 | 2798 |
| Gross profit | 1440 | 1263 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp; General and administrative | 2346 | 2130 |
| &nbsp;&nbsp;&nbsp; Sales and marketing | 136 | 210 |
| &nbsp;&nbsp;&nbsp;Gain on sale or disposal of assets | (1410) | (613) |
| &nbsp;&nbsp;&nbsp; Other gain | (217) |  |
| Total operating expenses | 855 | 1728 |
| Income (loss) from continuing operations | 585 | (464) |
| Other income | 334 | 5 |
| Income (loss) before income taxes from continuing operations | 919 | (459) |
| Income (loss) from discontinued operations, net of taxes | 16 | (271) |
| Income tax expense |  |  |
| Net income (loss) | $935 | $(730) |

---

The following table sets forth our statements of operations as a percentage of total revenue for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Revenue | 100% | 100% |
| Cost of goods sold | 60 | 69 |
| Gross profit | 40 | 31 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 65 | 52 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 4 | 5 |
| &nbsp;&nbsp;&nbsp;Gain on sale or disposal of assets | (39) | (15) |
| &nbsp;&nbsp;&nbsp;Other gain | (6) |  |
| Total operating expenses | 24 | 42 |
| Income (loss) from continuing operations | 16 | (11) |
| Other income | 9 |  |
| Income (loss) before income taxes from continuing operations | 25 | (11) |
| Income (loss) from discontinued operations, net of taxes |  | (7) |
| Income tax expense |  |  |
| Net income (loss) | 25% | (18)% |

---

**Comparison of years ended December 31, 2022 and 2021**

 

*Revenue.* Revenue from continuing operations was $3,587,000 for the year ended December 31, 2022, and $4,061,000 for the year ended December 31, 2021, a decrease of $474,000. This decrease in revenue was primarily due to the reduction in revenue from a major customer, offset by increased revenue from the remaining customer base.

Revenue from discontinued operations was $0 and $370,000 for the years ended December 31, 2022 and 2021, respectively. This decrease of $370,000 was due to the discontinuation of operations in June 2021.

 

*Gross profit (loss).* Gross profit from continuing operations was $1,440,000 for the year ended December 31, 2022, and $1,263,000 for the year ended December 31, 2021, an increase of $177,000. The increase was due to an improvement in production variances and an increased use of inventory that had previously been reserved, offset by a reduction in overall revenues.

Gross profit from discontinued operations was $0 and $33,000, for the years ended December 31, 2022 and 2021, respectively. This decrease of $33,000 was due to the discontinuation of operations.

*General and administrative expenses.* General and administrative expenses from continuing operations were $2,346,000 and $2,130,000 for the years ended December 31, 2022 and 2021, respectively, an increase of $216,000. The increase was due to an increase in legal and consulting fees of $547,000, related to the Company's exploration of strategic alternatives, including the Purchase Agreement and the transactions contemplated thereby. This was offset by a reduction of $208,000 in employee compensation, $58,000 in insurance expense, $27,000 in licenses and fees, and $38,000 in other general and administrative expenses.

General and administrative expenses from discontinued operations were $0 and $285,000 for the years ended December 31, 2022 and 2021, respectively. This decrease of $285,000 was due to the discontinuation of operations.

*Sales and marketing expenses.* Sales and marketing expenses from continuing operations were $136,000 and $210,000 for the years ended December 31, 2022 and 2021, respectively, a decrease of $74,000. This was primarily due to a decrease in staffing.

Sales and marketing expenses from discontinued operations were $0 and $10,000, for the years ended December 31, 2022 and 2021, respectively. This decrease of $10,000 was due to the discontinuation of operations.

 

*Gain on sale or disposal of assets.* The gain on sale or disposal of assets for the year ended December 31, 2022 was $1,410,000, an increase of $797,000 over the gain of $613,000 recorded for the year ended December 31, 2021. The gain in 2022 includes a gain on the sale of equipment and excess consumable assets of $1,332,000, and a gain on the sale of the Company's parcel of land located in Batavia, Illinois of $78,000. The gain in 2021 was entirely from the sale of excess consumable assets.

The Company recorded a loss on the sale of assets from discontinued operations of $9,000 for the year ended December 31, 2021.

*Other gain.* During the year ended December 31, 2022, the Company settled liabilities that were accrued in prior years, resulting in a gain of approximately $189,000, and received $28,000 from the Illinois Toll Authority as compensation for an easement right.

 

*Other income (expense).* Other income from continuing operations was $334,000 and $5,000 for the years ended December 31, 2022 and 2021, respectively, an increase of $329,000. This increase was primarily due to the recognition of $250,000 of grant revenues (see Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates of this Annual Report on Form 10-K for more information), as well as an increase in interest income of $100,000 due to rising interest rates and realized gains on the Company's marketable securities of $18,000, offset by $39,000 of interest expense.

*Income tax (expense) benefit.* We are subject to income taxes in the United States. On an annual basis, we assess the recoverability of deferred tax assets and the need for a valuation allowance. For the year ended December 31, 2022, a valuation allowance has been included in the 2022 forecasted effective tax rate. At December 31, 2022, we continue to be in a three-year cumulative loss position; therefore, as of December 31, 2022, we maintained a full valuation allowance on our United States net deferred tax assets and until an appropriate level of profitability is attained, we expect to maintain a full valuation allowance going forward. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act") which, among other provisions, reduced the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The SEC issued guidance, Staff Accounting Bulletin 118, on accounting for the tax effects of the Act. The guidance allowed us to record provisional amounts for those impacts, with the requirement that the accounting be completed in a period not to exceed one year from the date of enactment. We have completed our accounting for the tax effects of the enactment of the Act. The deemed inclusion from the repatriation tax was $5.0 million at the time the calculation was finalized for the tax return. As we are in a full valuation allowance position (as described above), an equal benefit adjustment was recorded for the impact of the increase of the deemed repatriation tax. The tax provision for the years ended December 31, 2022 and 2021 is based on an estimated combined statutory effective tax rate. For the years ended December 31, 2022 and 2022, we recorded a tax expense of $0 and $0, respectively, for an effective tax rate of 0.0% and 0.0%, respectively. For the years ended December 31, 2022 and 2021, the difference between our effective tax rate and the U.S. federal 21% statutory rate and state 7.4% (net of federal benefit) statutory rate was primarily related to the change in our U.S. NOL valuation allowances and U.S. R&D credit.

At December 31, 2022, we had separate Federal, Illinois and Indiana NOL carryforwards of $189 million, $181 million, and $723,000, respectively. The Federal NOLs will begin to expire in 2026, the Illinois NOLs will begin to expire in 2024, and the Indiana NOLs will begin to expire in 2039. With the adoption of ASU 2016-09 in 2017, we recorded a deferred tax asset related to $26,400,000 of unrecorded Federal and State NOLs attributable to stock option exercises. NOLs attributable to the stock option exercise were fully offset by the valuation allowance (as described above). We have recorded an uncertain tax position of $2,600,000 that further reduces the net operating loss deferred tax assets reported in the financial statements. In addition, at December 31, 2022, we had Federal research and development credits of $662,000, which will begin to expire in 2028.

**LIQUIDITY AND CAPITAL RESOURCES** 

We have historically funded our operations using a combination of issuances of common stock and cash generated from our operations. However, during the year ended December 31, 2022, the Company entered into a business loan agreement and promissory note in the amount of $1,620,000. For more information regarding the business loan agreement and promissory note, see Note 1 – Summary of Significant Accounting Policies of our Consolidated Financial Statements included in this Annual Report on Form 10-K.

As of December 31, 2022, we had cash and cash equivalents totaling $1,590,000, including cash of $1,584,000 held in deposits at major banks and $6,000 invested in money market funds.

As of December 31, 2021, we had cash equivalents and short-term investments totaling $26,011,000, including cash of $8,123,000 held in deposits at major banks, $3,137,000 invested in money market funds and $14,751,000 of short-term investments in U.S. Treasury securities.

The Company currently has no plans for material capital expenditures.

**Cash flows from operating activities**

For the year ended December 31, 2022, cash used in operating activities of continuing operations was $521,000. The Company generated a net income of $919,000, including non-cash items of $1,315,000, and a decrease in cash from an increase in net working capital of $125,000. The net working capital increase was primarily driven by an increase in grants receivable of $250,000, a decrease in accrued payroll of $298,000, and a decrease in corporate income and franchise taxes and accrued real estate taxes of $33,000, offset by a decrease in inventories of $145,000, a decrease in prepaid assets and other current assets of $158,000, a decrease in accounts receivable of $41,000, an increase in accounts payable of $12,000 and an increase in accrued and other current liabilities and advance payments of $100,000.

There was no cash used in or provided by discontinued operations for the year ended December 31, 2022.

For the year ended December 31, 2021, cash used in operating activities of continuing operations was $61,000. The Company generated a net loss of $459,000, including non-cash items of $102,000, and an increase in cash from a decrease in net working capital of $500,000. The net working capital decrease was primarily driven by a decrease in inventories of $356,000, was a decrease in prepaid assets and other current assets of $108,000, and an increase in accrued payroll of $215,000. Additionally, there was an increase in accounts receivable of $236,000, which was the result of an increase in 3<sup>rd</sup> party trade receivables of $447,000 offset by a $211,000 decrease in amounts due from Direct Dose Rx.

Cash used in discontinued operations for the year ended December 31, 2021 of $262,000 was primarily the result of a net loss from discontinued operations of $271,000, as well as a decrease in inventories of $59,000 and an increase in accounts payable of $29,000. There was also a decrease in 3<sup>rd</sup> party trade receivables of $113,000, as well as a decrease in amounts owed to Rubicon of $211,000.

**Cash flows from investing activities**

For the year ended December 31, 2022, net cash provided from investing activities of continuing operations of $16,722,000 was comprised of proceeds from the sale of property and excess equipment and consumable assets of $1,954,000, as well as proceeds from the sale of investments of $15,823,000, offset by investment purchases of $1,055,000.

For the year ended December 31, 2021, net cash provided from investing activities of continuing operations of $640,000 was from the sale of excess equipment and consumable assets.

**Cash flows from financing activities** 

For the year ended December 31, 2022, net cash used in financing activities of continuing operations was $25,751,000, resulting from a return of shareholder capital of $27,092,000 and cash used to settle net equity awards of $210,000, and mortgage loan principal payments of $9,000, offset by proceeds from the mortgage, net of escrow funding and loan costs, of $1,560,000.

For the year ended December 31, 2021, net cash used in financing activities of continuing operations was $187,000, resulting from cash used to settle net equity awards of $187,000.

**Future liquidity requirements** 

We believe that our existing cash, cash equivalents, anticipated cash flows from operating activities and proceeds from sales or leases of fixed assets will be sufficient to meet our anticipated cash needs for at least the next twelve months. However, if our ability to generate sufficient operating cash flow or our use of cash in the next twelve months were to significantly adversely change, we may not have enough funds available to continue operating at our current level in future periods. Our cash needs include cash required to fund our operations. If the assumptions underlying our business plan regarding future revenues and expenses change, or if unexpected opportunities or needs arise, we may seek to raise additional cash by selling equity or convertible debt securities. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. In evaluating whether and how to raise capital, the Company will consider the impact it may have on the ability to utilize its tax attributes in the future. As a result, the Company may be limited as to the amount of equity it can issue without impairing its tax attributes.

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES** 

The preparation of financial statements in accordance with the accounting principles generally accepted in the U.S. requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying notes. We base our estimates on historical experience and various other assumptions that we believe to be reasonable. Although these estimates are based on our present best knowledge of the future impact on the Company of current events and actions, actual results may differ from these estimates, assumptions and judgments.

We consider to be critical those accounting policies that require our most subjective or complex judgments, which often result from a need to make estimates about the effect of matters that are inherently uncertain, and that are among the most important of our accounting policies in the portrayal of our financial condition and results of operations. We believe the following to be our critical accounting policies, including the more significant estimates and assumptions used in preparation of our financial statements.

**Revenue recognition.**

We recognize revenue in accordance with ASC Topic 606, *Revenue From Contracts with Customers* ("Topic 606") which was adopted on January 1, 2018. We recognize revenue when performance obligations under a purchase order or signed quotation are satisfied. Our business practice commits us to manufacture and deliver product upon acceptance of a customer's purchase order or signed quotation ("agreement"). The agreement with the customer includes specifications of the product to be delivered, price, expected ship date and payment terms. Our agreements generally do not contain variable, financing, rights of return or non-cash components. There are no up-front costs to develop the production process. The performance obligation is satisfied at the point in time (single performance obligation) when the product is manufactured to the customer's specification, as performance does not create an asset with an alternative use to us. Accordingly, revenue is recognized when product is shipped, and control of the product, title and risk of loss transfer to a customer. We grant credit terms considering normal collection risk. If there is doubt about collection, full prepayment for the order is required. Any payments received prior to shipment are recorded as deferred revenue and included in Advance Payments in the Consolidated Balance Sheets.

We do not provide maintenance or other services and we do not have sales that involve multiple elements or deliverables.

All of our revenue is denominated in U.S. dollars.

**Inventory valuation** 

We value our inventory at the lower of cost or net realizable value. Net realizable value is determined based on an estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal. Raw materials cost is determined using the first-in, first-out method, and work-in-process and finished goods costs are determined on a standard cost basis which includes materials, labor and overhead. We establish inventory reserves when conditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based on customer required specifications. We evaluate the ability to realize the value of our inventory based on a combination of factors, including forecasted sales, estimated current and future market value and changes in customers' product specifications. For the year ended December 31, 2022, there was a reduction in excess or obsolete inventory of $697,000, which was attributable to consumed inventory which had previously been reserved. For the year ended December 31, 2021, there was a reduction in excess or obsolete inventory of $159,000, which was attributable to consumed inventory which had previously been reserved. In addition, in 2022 we sold inventory that was valued at the lower of cost or market, resulting in a reduction in both the lower of cost or market inventory and the related reserve of $17,000. In 2021, we sold inventory that was valued at the lower of cost or market, resulting in a reduction in both the lower of cost or market inventory and the related reserve of $27,000. The excess and obsolete inventory reserve at December 31, 2022 was $7,052,000 compared to $7,749,000 at December 31, 2021.

We did not record any additional write-downs of consumable inventories for the years ended December 31, 2022 and 2021.

We did not record any additional adjustments of raw materials for the year ended December 31, 2022 and 2021, as we sold some of such raw materials at a price exceeding its book value.

Our method of estimating excess and obsolete inventory has remained consistent for all periods presented. If our recognition of excess or obsolete inventory is, or if our estimates of our inventory's potential utility become, less favorable than currently expected, additional inventory reserves will be made as required.

As of December 31, 2022 and 2021, the Company made the determination that raw material inventories were such that the likelihood of significant usage within the current year was doubtful and reclassified such raw material inventories as non-current in the reported financial statements. For the year ended December 31, 2022, an additional $301,000 of current inventory was reclassified as non-current. Also, during the year ended December 31, 2022, there were sales of non-current inventory totaling $95,000.

We determine our normal plant capacity and record as an expense the costs attributable to lower utilization of that capacity. For the years ended December 31, 2022 and 2021, such expenses were $65,000 and $99,000, respectively.

**Investments**

When the Company invests its available cash, it primarily invests in U.S. Treasury securities, investment grade commercial paper, FDIC guaranteed certificates of deposit, common stock, equity-related securities and corporate notes. Investments classified as available-for-sale debt securities are carried at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in equity securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statements of Operations. Investments in which we have the ability and intent, if necessary, to liquidate in order to support our current operations are classified as short-term.

We review our available-for-sale debt securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. We consider various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, changes in underlying credit ratings, forecasted recovery, our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When we conclude that an other-than-temporary impairment has resulted, the difference between the fair value and carrying value is written off and recorded as a charge on the Consolidated Statement of Operations. As of December 31, 2022, the Company had no such investments, and no impairment was recorded as of December 31, 2021.

**Allowance for doubtful accounts** 

We estimate the allowance for doubtful accounts based on an assessment of the collectability of specific customer accounts. The determination of risk for collection is assessed on a customer-by-customer basis considering our historical experience and expected future orders with the customer, changes in payment patterns and recent information we have about the current status of our accounts receivable balances. If we determine that a specific customer is a risk for collection, we provide a specific allowance for credit losses to reduce the net recognized receivable to the amount we reasonably believe will be collected. If a receivable is deemed uncollectible, and the account balance differs from the allowance provided, the specific amount is written off to bad debt expense. We believe that based on the customers to whom we sell and the nature of our agreements with them, our estimates are reasonable. Our method of estimating collectability has remained consistent for all periods presented and with past collections experience.

**Grants receivable and grant revenue**

Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and its subsequent amendments in sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, provides for a refundable payroll tax credit (Employee Retention Credit or ERC) to eligible employers with less than 500 employees who paid qualified wages after March 12, 2020, and before June 30, 2021. During the quarter ended June 30, 2022, the Company determined that although it did not meet the eligibility conditions during the period beginning March 12, 2020, and ending December 31, 2020, it did qualify to claim the ERC for the periods ending March 31, 2021, and June 30, 2021. As such, the Company recorded Grant Revenue and Grants Receivable of approximately $250,000 related to its pending ERC claim analogous to ASC Subtopic 958-605. Since the Company does not expect to receive the funds for the ERC claim for at least twelve months, the receivable has been classified as a non-current asset on its balance sheet.

**Assets held for sale and long-lived assets**

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, we perform an analysis to review the recoverability of the asset's carrying value using estimates of the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. The estimated fair value of assets is determined using appraisal techniques which assume the highest and best use of the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. Any impairment losses are recorded as operating expenses, which reduce net income.

On September 19, 2022, the Company completed the sale of its parcel of land located in Batavia, Illinois pursuant to the terms and conditions of the agreement of sale, dated as of February 7, 2022. The selling price for the property was $722,000. The Company realized net proceeds of approximately $600,000 after the payment of real estate taxes, brokerage and legal fees, transfer taxes and other expenses. This property was classified as current assets held for sale at December 31, 2021.

**Stock-based compensation**

We grant stock-based compensation in the form of stock options, restricted stock units ("RSUs") and restricted stock. We expense stock options based upon the fair value on the date of grant. We use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by assumptions regarding a number of complex and subjective variables. These variables include our expected stock volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, forfeitures and expected dividends.

The expected term represents the weighted-average period that our stock options are expected to be outstanding and is based upon five years of historical data. We estimate the volatility of our common stock based on a five-year historical stock price. We base the risk-free interest rate that we use in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option pricing model. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The current forfeiture rate of 36.13% was based on our past history of forfeitures.

All stock options are granted at an exercise price per share equal to the closing market price of our common stock on the last market trading day prior to the date of grant. Therefore, there is no intrinsic value because the exercise price per share of each option was equal to the fair value of the common stock on the date of grant.

We used a Monte Carlo simulation model valuation technique to determine the fair value of RSUs granted to a key executive pursuant to an employment agreement, because the awards vest based upon achievement of market price targets of our common stock. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each RSU. The daily expected stock price volatility is based on a four-year historical volatility of our common stock. The daily expected dividend yield is based on annual expected dividend payments. The average daily risk-free interest rate is based on the three-year treasury yield as of the grant date. Each of the tranches is calculated to have its own fair value and requisite service period. The fair value of each tranche is amortized over the requisite or derived service period, which is up to four years.

We allocate stock-based compensation costs relating to options using a straight-line method which amortizes the fair value of each option on a straight-line basis over the service period, but in no event less than the amount vested.

All option grants are granted at an exercise price per share equal to the closing market price of our common stock on the day before the date of grant. Therefore, there is no intrinsic value because the exercise price per share of each option was equal to the fair value of the common stock on the date of grant. As of December 31, 2022, there were no stock options exercisable or outstanding.

For more information on stock-based compensation, see Note 7 – Stock Incentive Plans to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

**Current and long-term debt**

The Company reports debt issuance costs as an adjustment to the carrying amount of the related debt in accordance with ASC 835-30-45. The amortization of such costs is included in interest expense for the period.

On August 15, 2022, Rubicon Technology BP LLC, a Delaware limited liability company (the "<u>Borrower</u>"), entered into a business loan agreement (the "<u>Loan</u>") and promissory note (the "<u>Note</u>") in the amount of $1,620,000 with American Community Bank & Trust (the "<u>Lender</u>"). The Borrower is a wholly owned subsidiary of the Company. The interest rate on the Note is 6% and it matures on August 15, 2027. The Note has a 25-year amortization schedule. Interest and principal payments will be made on a monthly basis and a balloon payment will be made upon the maturity of the Note. The Borrower may pay, without penalty, a portion or the entirety of the amount owed earlier than it is due. The Loan and Note have customary terms and provisions for default and increases in payment. As part of the Loan the Lender required approximately 12 months in "payment reserves" totaling $120,000 which are restricted from use by the Company until it can meet certain debt service ratio requirements. The Loan is secured by a real estate mortgage encumbering the property commonly known as 900 E. Green Street, Bensenville, IL. Rubicon Worldwide LLC, and the Company entered into unlimited commercial guaranty agreements in favor of the Lender. As of December 31, 2022, the Company is in compliance with all terms and covenants related to the Loan and Note.

**Income tax valuation allowance**

Evaluating the need for and amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all the positive and negative evidence available to determine whether all or some portion of the deferred tax assets will not be realized. A valuation allowance must be established for deferred tax assets when it is more likely than not (a probability level of more than 50%) that they will not be realized. In general, "realization" refers to the incremental benefit achieved through the reduction in future taxes payable or an increase in future taxes refundable from the deferred tax assets, assuming that the underlying deductible differences and carryforwards are the last items to enter into the determination of future taxable income. In determining our valuation allowance, we consider the source of taxable income including taxable income in prior carryback years, future reversals of existing temporary differences, the required use of tax planning strategies, and future taxable income exclusive of reversing temporary differences and carryforwards. We are in a cumulative loss position for the past three years which is considered significant negative evidence that is difficult to overcome on a "more likely than not" standard through objectively verifiable data. Under the accounting standards, verifiable evidence will have greater weight than subjective evidence such as our projections for future growth. Based on an evaluation in accordance with the accounting standards, as of December 31, 2022, a valuation allowance has been recorded against the net U.S. deferred tax assets in order to measure only the portion of the deferred tax assets that are more likely than not to be realized based on the weight of all the available evidence. Any U.S. tax benefit or tax expense recorded on the Consolidated Statement of Operations will be offset with a corresponding adjustment from the use of the NOL carryforward asset which currently has a full valuation allowance. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made**.**

**Accounting for uncertainty in income taxes**

We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. At December 31, 2022 and 2021, we had $1.1 million of unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on our financial statements as an offset to the valuation allowance related to tax positions taken in 2012. We recognize interest and/or penalties related to income tax matters in income tax expense.

The Company is subject to taxation in the U.S. and in a U.S. state jurisdiction. Due to the existence of NOL carryforwards, tax years ended December 31, 2006, 2008, 2009 and 2012 through 2021 are open to examination by tax authorities for Federal purposes. Due to NOL carryforwards at the State level, tax years ended 2012 through 2021 are open to examination by state tax authorities.

Currently, the Company is trying to determine whether, and the extent to which, it has a Malaysian withholding tax obligation. It is performing related due diligence with Malaysian tax experts to resolve the issue, and has recorded an appropriate liability for the potential tax obligation.

**Return of shareholder capital**

On July 1, 2022, the Company and Janel entered into the Purchase Agreement pursuant to which Janel would commence a cash tender offer (the "Offer") to purchase up to 45.0% of the issued and outstanding shares of the Company's common stock, on a fully-diluted basis, at a price per share of $20.00, subject to the terms and conditions set forth in the Purchase Agreement. The transaction was approved by the Board of Directors of both Janel and the Company. The Purchase Agreement provided that, immediately after the consummation of the Offer, the Company would set a record date to authorize and approve a "return of capital" to be paid to all stockholders of the Company, which would include the Purchaser, in the aggregate amount of $11.00 per share. The Janel transaction was consummated in August 2022. At the end of August 2022, the Company returned $27,092,000 of capital to its shareholders in accordance with the Purchase Agreement. At the time of the distribution, the Company had an accumulated deficit of approximately $330 million. The Company accounted for the distribution as a reduction of additional paid-in capital.

**RECENT ACCOUNTING PRONOUNCEMENTS** 

See Note 1 – Summary of Significant Accounting Policies to the Consolidated Financial Statements included in this Annual Report on Form 10-K for a discussion of new accounting standards.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Disclosure under this item is not required as the registrant is a smaller reporting company.

**ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

Our Consolidated Financial Statements, together with the related notes and the report of independent registered public accounting firm, are set forth on the pages indicated in Item 15 – Exhibits and Consolidated Financial Statement Schedules of this Annual Report on Form 10-K and are incorporated by reference herein.

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

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

**Management's Evaluation of Disclosure Controls and Procedures.** 

An evaluation was performed under the supervision and with the participation of our management, including our (chief) executive officer and chief financial officer ("certifying officer"), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the year covered by this report. Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed by us in our periodic reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms, and that the information is accumulated and communicated to our management, including the (chief) executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation, our certifying officer concluded that these disclosure controls and procedures were effective as of December 31, 2022.

**Management's Report on Internal Control over Financial Reporting** 

The financial statements were prepared by management, which is responsible for their integrity and objectivity and 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).

The Company's internal control over financial reporting is 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. The Company's internal control over financial reporting includes those policies and procedures that:

&nbsp;&nbsp;&nbsp;&nbsp;i. pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;ii. provide reasonable assurance
that transactions are recorded as necessary to permit preparation of Consolidated 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

&nbsp;&nbsp;&nbsp;&nbsp;iii. 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 Consolidated Financial Statements.

There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to the financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time.

Management assessed the design and effectiveness of the Company's internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth in 2013 *Internal Control—Integrated Framework* by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on management's assessment using those criteria, as of December 31, 2022, management concluded that the Company's internal control over financial reporting was effective.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The Company's internal controls over financial reporting were not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC.

**Changes in Internal Control over Financial Reporting** 

There have been no changes in our internal control over financial reporting that occurred during the year ended December 31, 2022, that our certifying officer(s) concluded materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

**ITEM 9B. OTHER INFORMATION**

None.

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

None.

**PART III**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

Our bylaws, as amended, permit our Board of Directors to establish by resolution the authorized number of directors. Our Board of Directors currently consists of four directors, who are divided into three classes with staggered three-year terms.

All of our directors bring to our Board of Directors a wealth of executive leadership experience derived from their service as corporate executives as well as service as directors on other boards. When evaluating director candidates, the Nominating and Governance Committee takes into account all factors it considers appropriate, which include (i) ensuring that the Board of Directors, as a whole, is diverse and consists of individuals with various and relevant career experience, relevant technical skills, industry knowledge and experience, and financial expertise (including expertise that could qualify a director as a "financial expert," as that term is defined by the rules of the SEC), and (ii) minimum individual qualifications, including strength of character, mature judgment, familiarity with the Company's business and industry and independence of thought. The Nominating and Governance Committee also considers geographical, cultural, experiential and other forms of diversity when evaluating director candidates. In addition, the Nominating and Governance Committee also may consider the extent to which the candidate would fill a present need on the Board of Directors. Information about our current directors, including their business experience for the past five years, appears below.

**Class I Director**

**John Eidinger**, 42, was appointed as a Class I director whose current term will expire at the Company's 2023 annual meeting of stockholders. On January 1, 2023, Mr. Eidinger was elected to serve on the Board of Directors of Janel Corporation (Janel") and, upon the recommendation of its Nominating and Corporate Governance Committee, appointed to serve as the Vice Chairman of the Board, and to serve on its Nominating and Corporate Governance Committee. Mr. Eidinger has served in business development at Janel Corporation since 2019. Mr. Eidinger was previously an associate portfolio manager for Select Equity Group. L.P. from 2011 to 2017. From 2007 to 2011, Mr. Eidinger served as an analyst and principal at Blum Capital Partners. From 2002 to 2007, Mr. Eidinger served as an analyst and associate at Merrill Lynch. Mr. Eidinger holds BS degrees in Finance and Economics from New York University. Mr. Eidinger's qualifications to serve on the Board of the Company include his extensive experience in finance and acquisitions.

**Class II Directors**

**Timothy Brog,** 59, is a continuing Class II director whose current term expires at our 2024 Annual Meeting. Mr. Brog joined us in May 2016 as a member of our Board of Directors and was appointed as our President and Chief Executive Officer effective March 17, 2017. Mr. Brog served on our Audit Committee from July 1, 2016 until March 17, 2017 and on the Compensation Committee from December 14, 2016 to March 17, 2017. From March 2015 until March 17, 2017, Mr. Brog served as the president of Locksmith Capital Management LLC, an investment advisory firm. Previously, he served as Chairman of the Board of Directors of Peerless Systems Corporation from June 2008 to February 2015, Chief Executive Officer from August 2010 to March 2015 and a director beginning in July 2007. Mr. Brog served as a Managing Director and Portfolio Manager to Locksmith Value Opportunity Fund LP from September 2007 to August 2010. He also served as Managing Director of E2 Investment Partners LLC, a special purpose vehicle to invest in Peerless, from March 2007 to July 2008. Prior to his experience at Locksmith Capital and E2 Investment Partners, Mr. Brog was President of Pembridge Capital Management LLC and the Portfolio Manager of Pembridge Value Opportunity Fund LP, a small cap value hedge fund, from June 2004 to September 2007. He also worked as the Managing Director of The Edward Andrews Group Inc., a boutique investment bank, from 1996 to 2007. From 1989 to 1995, Mr. Brog was a corporate finance and mergers and acquisitions associate of the law firm Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Brog has previously served as a director of Eco-Bat Technologies Limited from October 2007 to July 2019, Chairman of the Board and Chairman of the Audit Committee of Deer Valley Corporation from October 2014 to April 2015, and as a member of the board of directors of the Topps Company Inc., from July 2006 to October 2007. Mr. Brog received a JD from Fordham University School of Law in 1989 and a BA from Tufts University in 1986. Mr. Brog's qualifications to serve on our Board of Directors include his operational, legal, investment banking, executive management and financial analysis experience.

**Michael Mikolajczyk**, 71, is a continuing Class II director whose current term expires at our 2024 Annual Meeting. Mr. Mikolajczyk has served as a member of our Board of Directors from June 2001 until May 2002 and rejoined our Board of Directors in March 2004. Mr. Mikolajczyk was elected as the chairman of our Board of Directors in December 2017. Mr. Mikolajczyk also serves as a member of our Audit, Compensation, and Nominating and Governance Committees. Since September 2003, Mr. Mikolajczyk has served as managing director of Catalyst Capital Management, LLC, a private equity firm. From 2001 through 2003, Mr. Mikolajczyk worked as an independent consultant providing business and financial advisory services to early stage and mid-cap companies. Mr. Mikolajczyk also served as vice chairman of Diamond Management & Technology Consultants, Inc., a management and technology consulting firm, from 2000 to 2001, president from 1998 to 2000 and chief financial officer from 1994 to 1998. Mr. Mikolajczyk served as chief financial officer of Technology Solutions Company, a business solutions provider, from 1993 to 1994. In addition, Mr. Mikolajczyk served as a director of Diamond Management & Technology Consultants, Inc. from 1994 to 2010 and served as director of Kanbay International, Inc. from 2004 to 2007. Mr. Mikolajczyk is a CPA in the State of Michigan and holds an MBA from Harvard Business School and a BS in business from Wayne State University. Mr. Mikolajczyk's qualifications to serve on our Board of Directors include his experience as an operating executive and his years of experience providing business and financial advisory services. Mr. Mikolajczyk is a financial expert with extensive experience in corporate governance.

**Class III Director**

**Darren Seirer**, 48, was appointed as a Class III director who was re-elected at the Company's 2022 annual meeting of stockholders. His term will expire at our 2025 annual meeting. On January 1, 2023, Mr. Seirer was elected to serve on the Board of Directors of Janel Corporation, and appointed to serve as President and Chief Executive Officer. Furthermore, upon the recommendation of its Nominating and Corporate Governance Committee, Mr. Seirer was also appointed to serve as the Chairman of the Board and to serve on its Nominating and Corporate Governance Committee. Previously, Mr. Seirer had been a private investor and had served as an advisor to Janel Corporation since 2021. Mr. Seirer was previously at Select Equity Group, L.P. from 1993 to 2019. Mr. Seirer holds a BA in Economics from Columbia University. Mr. Seirer's qualifications to serve on the Board of the Company include his extensive experience in finance and acquisitions.

**Recent Resignations and Appointments of Executive Officers and Directors**

Timothy E. Brog, age 59*,* was appointed as our President and Chief Executive Officer effective March 17, 2017. Mr. Brog has also been a member of our Board of Directors since May 2016. As of April 24, 2021, until such time as a new candidate is appointed, Mr. Brog took on the role of Acting Chief Financial Officer. His biographical information is provided above.

On December 12, 2022, the Board of Directors of the Company and Mr. Brog mutually agreed that the Company's operational staffing requirements had changed and that a new Chief Executive Officer was needed. Mr. Brog remained employed by the Company until January 6, 2023. Mr. Brog's departure was not the result of any disagreements with the Company on any matters relating to its operations, policies or practices. On February 24, 2023, the Board of Directors named Joseph Ferrara as the Executive Officer and Chief Financial Officer.

On February 20, 2023, Mr. Brog tendered his resignation as a Class II director, which became effective on February 22, 2023. Mr. Brog's resignation as a member of the Board of Directors was not the result of any disagreements with the Company on any matters relating to its operations, policies or practices. On March 3, 2023, the Board of Directors appointed Dennis Paul, 50, as an independent director. Since 2012, Mr. Paul has served as a Founder and Managing Member of Thyra Global Management, and since 2012, he has served as a Senior Advisor at Blackstone.

**CORPORATE GOVERNANCE**

**Director Independence** 

Our Board of Directors undertook a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board of Directors determined that Mr. Mikolajczyk independent under the standards for director independence adopted by the Board of Directors and are "independent directors" as defined under the Nasdaq rules. Based on the foregoing, our Board of Directors has concluded that a majority of our Board of Directors has been independent during 2021, as required by the Nasdaq rules.

On August 19, 2022, Mr. Jefferson Gramm and Ms. Susan Westphal, both of whom were independent directors, resigned from the Board the committees of the Board that they serve on. Mr. Seirer and Mr. Eidinger were appointed as their replacements by the Board of Directors.

On October 14, 2022, the Company received notifications from Nasdaq that it was no longer in compliance with various Nasdaq independent director requirements set forth in Listing Rule 5605. This rule requires, among other things, that (i) the Board of Directors be composed of a majority of independent directors, (ii) the Audit Committee be composed of three independent directors, and (iii) the Compensation Committee be composed of two independent directors. The Board of Directors was composed of four directors, one of which was an employee of the Company and therefore was not independent. At that time, the Board of Directors had not yet determined whether the two newly appointed directors would be deemed to be independent under the Nasdaq Listing Rules. Subsequently, on December 13, 2022, the Company notified Nasdaq of its decision to delist its common stock from the Nasdaq Capital Market. The delisting became effective December 30, 2022.

During December 2022, the Board began the analysis and review of the independence of Mr. Seirer and Mr. Eidinger to consider whether they have a material relationship with the Company that could compromise their ability to exercise independent judgment in carrying out their responsibilities. This review has not been completed as of the date hereof. On March 10, 2023, the Board of Directors appointed Dennis Paul as an independent director, and following Mr. Paul's appointment, there were no vacancies on the Board of Directors. As such, the Board of Directors has determined that Mr. Mikolajczyk and Mr. Paul are the only independent directors under the standards for director independence adopted by the Board of Directors and therefore cannot conclude that a majority of the Board of Directors is independent under the Nasdaq rules.

**Board of Directors Leadership Structure**

Our Board of Directors is led by an independent Chairman, Mr. Mikolajczyk. The Board has determined that having an independent Chairman is in the best interest of the Company's stockholders at this time and adopted a formal policy to that effect on December 14, 2016. The Board believes that this leadership structure is appropriate because it strikes an effective balance between management and independent director participation in the Board process. The independent Chairman role allows our Executive Officer to focus on his management responsibilities in leading the business, setting the strategic direction of the Company and optimizing the day-to-day performance and operations of the Company. At the same time, the independent Chairman can focus on Board leadership, providing guidance to the Executive Officer and the Company's overall business strategy. The Board believes that the separation of functions between the Executive Officer and Chairman of the Board provides independent leadership of the Board in the exercise of its management oversight responsibilities, increases the accountability of the Executive Officer and creates transparency into the relationship among executive management, the Board of Directors and the stockholders. The independent Chairman regularly presides at executive sessions of the independent directors, without the presence of management.

**Board of Directors Oversight of Risk**

Our executive management team is responsible for our day-to-day risk management activities. The Board of Directors oversees these risk management activities, delegating its authority in this regard to the standing committees of the Board of Directors. The Audit Committee is responsible for discussing with executive management policies with respect to financial risk and enterprise risk management. The Audit Committee also oversees the Company's corporate compliance programs. The Compensation Committee considers risk in connection with its design of compensation programs for our executives. The Nominating and Governance Committee reviews the Company's corporate governance principles and their implementation. Each committee regularly reports to the Board of Directors. In addition to each committee's risk management oversight, the Board of Directors regularly engages in discussions of the most significant risks that the Company is facing and how these risks are being managed.

The Board of Directors believes that each committee's risk oversight function, together with the efforts of the full Board of Directors and the Chief Executive Officer in this regard, enables the Board of Directors to effectively oversee the Company's risk management activities.

**Committees of the Board of Directors and Meetings**

Our Board of Directors has established three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Described below are the membership and principal responsibilities of each of the standing committees of the Board of Directors, as well as the number of meetings held during 2022. Each of these committees is composed entirely of non-employee directors who, for 2022, have been determined by our Board of Directors to be independent under the current requirements of Nasdaq and the rules and regulations of the SEC. Each committee operates under a charter approved by the Board of Directors setting out the purposes and responsibilities of the committee. As of December 31, 2022, Mr. Mikolajczyk was the only member of each committee, as he was the only director whose independence had been confirmed by the Board. On March 10, 2023, the Board of Directors appointed Dennis Paul as an independent director, and following Mr. Paul's appointment, there were no vacancies on the Board of Directors. The Board of Directors has not yet determined the committees, if any, on which Mr. Paul will serve.

The Board of Directors held 16 meetings during 2022. Each of our directors attended every meeting. Our non-employee directors meet regularly without our Chief Executive Officer present.

**Audit Committee** 

From January 1, 2022 to August 19, 2022, our Audit Committee was comprised of Michael E. Mikolajczyk, Susan M. Westphal and Jefferson Gramm. Subsequently, Mr. Mikolajczyk was the only member of the committee.

Mr. Mikolajczyk is the chairman of our Audit Committee. Our Board of Directors has determined that each member of our Audit Committee, during the period served on the committee, met or meets the requirements for financial sophistication and independence for Audit Committee membership under the current requirements of Nasdaq and SEC rules and regulations. Our Board of Directors has also determined that Mr. Mikolajczyk is an "audit committee financial expert" as defined in the SEC rules. The Audit Committee's responsibilities include, but are not limited to:

● selecting and hiring our independent registered public accounting firm, and approving the audit and permitted non-audit services to be performed by our independent registered public accounting firm;

● evaluating the qualifications, experience, performance and independence of our independent registered public accounting firm;

● monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

● reviewing the adequacy, effectiveness and integrity of our internal control policies and procedures;

● discussing the scope and results of the audit with the independent registered public accounting firm and reviewing with management and the independent registered public accounting firm our interim and year-end operating results;

● preparing the Audit Committee report required by the SEC in our annual proxy statement; and

● overseeing management with respect to enterprise and financial risk management.

Our Audit Committee held six meetings during 2022.

**Compensation Committee**

From January 1, 2022 to August 19, 2022, our Compensation Committee was comprised of Jefferson Gramm, Michael E. Mikolajczyk and Susan M. Westphal. Subsequently, Mr. Mikolajczyk was the only member of the committee.

Mr. Gramm was the chairman of our Compensation Committee. The Compensation Committee's responsibilities include, but are not limited to:

● reviewing and approving our Chief Executive Officer's and other executive officers' annual base salaries and annual bonuses;

● evaluating and recommending to the Board of Directors incentive compensation plans;

● overseeing an evaluation of the performance of our executive officers;

● administering, reviewing and making recommendations with respect to our equity compensation plans; and

● reviewing and making recommendations to the Board of Directors with respect to director compensation.

The Compensation Committee may, in its sole discretion, retain or obtain the advice of one or more compensation consultants or other advisors to assist it with these duties.

Our Compensation Committee held one meeting during 2022.

**Nominating and Governance Committee** 

From January 1, 2022 to August 19, 2022, our Nominating and Governance Committee was comprised of Susan M. Westphal, Jefferson Gramm and Michael E. Mikolajczyk. Subsequently, Mr. Mikolajczyk was the only member of the committee.

Ms. Westphal was the chairman of our Nominating and Governance Committee. The Nominating and Governance Committee's responsibilities include, but are not limited to:

● developing and recommending to the Board of Directors criteria for Board of Directors and committee membership;

● assisting our Board of Directors in identifying prospective director nominees and recommending to the Board of Directors nominees for each annual meeting of stockholders;

● recommending members for each committee to our Board of Directors;

● reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our Board of Directors; and

● overseeing the evaluation of the Board of Directors.

Our Nominating and Governance Committee held one meeting during 2022.

**Code of Ethics**

We have adopted a Code of Ethics that applies to all of our employees, officers and directors. If you would like a copy our Code of Ethics, write to Investor Relations, Rubicon Technology, Inc., 900 East Green Street, Bensenville, Illinois 60106, and a copy of the Code of Ethics will be provided to you, free of charge. Any waiver from or amendment to the Code of Ethics granted to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, will be timely disclosed by filing a Current Report on Form 8-K.

**Policies and Procedures Governing Director Nominations**

The Nominating and Governance Committee considers candidates for nomination to the Board of Directors from a number of sources, including recommendations by current members of the Board of Directors and members of management. Current members of the Board of Directors are considered for re-election unless they have notified us that they do not wish to stand for re-election. The Nominating and Governance Committee will also consider director candidates recommended by our stockholders, although a formal policy has not been adopted with respect to consideration of such candidates because stockholders may nominate director candidates pursuant to our bylaws. Stockholders desiring to submit recommendations for director candidates must follow the following procedures:

● The Nominating and Governance Committee will accept recommendations of director candidates throughout the year; however, in order for a recommended candidate to be considered for nomination for election at an upcoming annual meeting of stockholders, the recommendation must be received by the Acting Secretary of the Company not later than the close of business on the 60<sup>th</sup> day nor earlier than the close of business on the 90<sup>th</sup> day prior to the anniversary date of our most recent annual meeting of stockholders, unless the date of the annual meeting is more than 30 days before or more than 60 days after the first anniversary of the preceding year's annual meeting, in which case notice must be delivered not earlier than the 90<sup>th</sup> day prior to such annual meeting and not later than the close of business on the later of the 60<sup>th</sup> day prior to such annual meeting or the 10<sup>th</sup> day following the day on which we first publicly announce the date of such annual meeting. If the number of directors to be elected to the Board is increased and the Company does not make public announcement naming all of the nominees for director or specifying the size of the increased Board at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's nomination notice will also be considered timely with respect to nominees for any newly created positions if such notice is delivered to the Acting Secretary not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company.

● A stockholder making the recommendation must be a stockholder of record at the time of giving of notice, be entitled to vote at the meeting and comply with the notice procedures set forth in the bylaws. Furthermore, this recommendation must be in writing and must include the following initial information: (i) as to each person whom the stockholder proposes to nominate for election as a director, all information relating to such person that would be required to be disclosed in proxy solicitations for election of directors in an election contest, or would otherwise be required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 promulgated under the Exchange Act, including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, the name and address of such stockholder and beneficial owner, and the class and number of shares of the Company that are owned beneficially and of record by such stockholder and beneficial owner. The Nominating and Governance Committee may subsequently request additional information regarding the candidate.

In evaluating nominees for director, the Nominating and Governance Committee is guided by, among other things, the objective that the Board of Directors be composed of qualified, dedicated and highly regarded individuals who have experience relevant to our operations and who understand the complexities of our business environment. The Nominating and Governance Committee may also consider other factors such as whether the candidate is independent under the standards adopted by the Board of Directors and within the meaning of the listing standards of Nasdaq, and whether the candidate meets any additional requirements for service on the Audit Committee. The Nominating and Governance Committee does not intend to evaluate candidates recommended by stockholders any differently than other candidates. Under the Company's bylaws, as amended, at least 50% of the members of the Board of Directors must be independent under the Nasdaq Listing Rules.

**Stockholder Communications with the Board of Directors**

Interested parties, including stockholders, may communicate by mail with all or selected members of the Board of Directors. Correspondence should be addressed to the Board of Directors or any individual director(s) or group or committee of directors either by name or title (for example, "Chairman of the Nominating and Governance Committee" or "All Non-Management Directors"). All correspondence should be sent to Rubicon Technology, Inc., 900 East Green Street, Bensenville, Illinois 60106. The Board of Directors will, as necessary, generally screen out communications from stockholders to identify communications that are (i) commercial, charitable or other solicitations for products, services and funds, (ii) matters of a personal nature not relevant for stockholders, or (iii) matters that are of a type that render them improper or irrelevant to the functioning of the Board of Directors and the Company.

**Attendance at Annual Meeting** 

Directors are encouraged, but not required, to attend our annual stockholders' meeting. All directors attended the 2022 Annual Meeting of Stockholders either in person or telephonically.

**SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and to provide us copies of these reports. Based solely on a review of the copies of these reports furnished to us and written representations that no other reports were required to be filed, we believe that all such filings applicable to our officers, directors and beneficial owners of greater than 10% of our common stock were made timely during the fiscal year ended December 31, 2022.

**ITEM 11. EXECUTIVE COMPENSATION**

**DIRECTOR COMPENSATION**

In 2022, all non-employee directors received an annual fee of $20,000 cash, payable quarterly. At every Annual Meeting, beginning in 2018 until 2021, non-employee directors received $10,000 in restricted stock units ("RSUs") which vest on the day immediately preceding the next following Annual Meeting of Stockholders. The Board granted no RSUs in 2022. The Chairman of the Board and Chairman of the Audit Committee each receive an annual cash retainer of $5,000, payable quarterly.

We also have a policy of reimbursing directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at Board or committee meetings or conducting Company business.

The following table sets forth information regarding the aggregate compensation we paid to the non-employee members of our Board of Directors for 2022.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees<br> earned or<br> paid in cash<br> ($)** | **Stock<br> awards<sup>(1)</sup><br> ($)** | **Total<br> ($)** |
| Michael E. Mikolajczyk | 30000 | 10000<sup>(2)</sup> | 40000 |
| John Eidinger | 7283<sup>(3)</sup> |  | 7283 |
| Darren Seirer | 7283<sup>(3)</sup> |  | 7.283 |
| Susan M. Westphal | 12717<sup>(4)</sup> | 10000<sup>(5)</sup> | 30000 |
| Jefferson Gramm | 12717<sup>(4)</sup> | 10000<sup>(6)</sup> | 30000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Amounts reflect the grant date fair value of the restricted stock units granted at the 2021 Annual Meeting (the "2021 RSUs").

&nbsp;&nbsp;&nbsp;&nbsp;(2) During the three months ended June 30, 2022, the 2021 RSUs were automatically converted and Mr. Mikolajczyk was issued 1,010 shares of restricted stock.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The Company has accrued $7,283 for each of Messrs. Eidinger and Seirer, which represents the pro rata share of the annual fee for the portion of the year each member served. Both directors have not determined whether they will take payment for their services.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Amount represents the pro rata share of the annual fee for the portion of the year each member served.

&nbsp;&nbsp;&nbsp;&nbsp;(5) During the three months ended June 30, 2022, the 2021 RSUs were automatically converted and Ms. Westphal was issued 1,010 shares of restricted stock.

&nbsp;&nbsp;&nbsp;&nbsp;(6) During the three months ended June 30, 2022, the 2021 RSUs were automatically converted and Mr. Gramm was issued 1,010 shares of restricted stock.

**Summary Compensation Table**

The table below sets forth, the compensation earned by Timothy E. Brog, the President, Chief Executive Officer and Acting Chief Financial Officer, and Kevin T. Lusardi our former Chief Financial Officer, during fiscal 2022 and fiscal 2021. Such persons are referred to in this Report on Form 10-K as our "named executive officers." Mr. Lusardi was the Company's Chief Financial Officer from March 2021 to April 2021.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary<br> ($)** | **Bonus<br> ($)** | **Stock<br> Awards<br> ($)** | **All Other <br> Compensation<br> ($)** | **Total <br> ($)** |
| Timothy E. Brog | 2022 | 332692 | 350000<sup>(1)</sup> | 398750<sup>(2)</sup> |  | 1081442 |
| &nbsp;&nbsp;&nbsp;President, Chief Executive Officer & Acting Chief Financial Officer | 2021 | 350000 |  | 341055<sup>(3)</sup> |  | 691055 |
| Kevin T. Lusardi<sup>(4)</sup> | 2021 | 19048 |  |  |  | 19048 |
| &nbsp;&nbsp;&nbsp;Former Chief Financial Officer |  |  |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) During 2022, the Company amended Mr. Brog's executive employment agreement, whereby Mr. Brog was paid $350,000 to reward him for his assistance in the closing of the Stock Purchase and Sale Agreement between Rubicon Technology, Inc. and Janel Corporation. As part of that same amendment, Mr. Brog waived his rights to severance under his original employment agreement.

&nbsp;&nbsp;&nbsp;&nbsp;(2) During 2022, Mr. Brog's 25,000 RSUs vested at a price of $15.95.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Pursuant to Mr. Brog's employment agreement, he was eligible for a bonus based upon certain objectives set forth by the Compensation Committee and agreed to by him and a discretionary bonus. For work performed in 2020 and paid in 2021, as part of his objective bonus, Mr. Brog was eligible to earn up to 42,067 shares of the Company's common stock if certain goals were achieved. The Board of Directors determined that Mr. Brog's 2020 objectives were only partially met and as a result Mr. Brog was granted 31,550 shares of common stock in 2021 for work performed in 2020.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Prior to his appointment as CFO in March 2021, Mr. Lusardi served as a consultant to the Company from December 2020 to the date of such appointment and was paid $50,346 for his services during that period.

**Discussion of Summary Compensation Table**

Our executive compensation policies and practices for fiscal 2022 and 2021, pursuant to which the compensation set forth in the "Summary Compensation Table" table was paid or awarded, are described below.

***Base salary***

Pursuant to the terms of his employment agreement, the annual base salary for 2022 for Mr. Brog was $350,000 until it was changed to $300,000 as part of his amended employment agreement.

Pursuant to the terms of their employment agreements, the annual base salaries for 2021 for Mr. Brog and Mr. Lusardi were $350,000 and $170,000, respectively.

We formally evaluate executive performance on an annual basis, and these evaluations are one of the factors considered in making adjustments to base salaries.

***Incentive bonuses***

The primary objectives of our incentive bonus plan are to provide an incentive for superior work, to motivate our executives toward even higher achievement and business results, to tie our executives' goals and interests to ours and our stockholders' and to enable us to attract and retain highly qualified individuals. These targets are typically set in the first three months of the year. The targets under our objective incentive bonus plan are mutually agreed upon by the independent directors and each of the executives.

***Objective incentive compensation***

In 2008, our Board of Directors adopted a policy generally to grant equity awards to executives once per year to the extent equity awards are to be granted during such year (except in the case of newly hired executives, as described below). With respect to newly hired executives, our practice is typically to make equity grants at the first meeting of the Board of Directors following such executive's hire date. We do not have any program, plan or practice to time equity awards in coordination with the release of material non-public information.

Pursuant to Mr. Brog's employment agreement, he was eligible for a bonus based upon certain objectives set forth by the Compensation Committee and agreed to by him.

**<u>2022 Goals</u>**

The Compensation Committee did not set specific goals for Mr. Brog in 2022, however, Mr. Brog was paid $350,000 to reward him for his assistance in the closing of the Stock Purchase and Sale Agreement between Rubicon Technology, Inc. and Janel Corporation. As part of that same amendment, Mr. Brog waived his rights to severance under his original employment agreement.

**<u>2021 Goals</u>**

In 2021, Mr. Brog's primary goal was to identify and consummate an acquisition. The Compensation Committee decided that Mr. Brog's bonus for work performed in 2021 would be solely discretionary and that there would be no objective goals or bonus. To date, Mr. Brog did not receive an objective nor a discretionary bonus for work performed in 2021.

***Severance and change in control arrangements***

Payments upon termination are described below under "Termination of Employment or Change in Control".

**OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END**

There were no outstanding equity awards at December 31, 2022.

**TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL**

Mr. Brog was the only employee to have an employment agreement during 2022. That agreement did include severance terms and restrictive covenants. During 2022, Mr. Brog's employment agreement was amended, whereby he forfeited and waived his right to severance in exchange for the Company's payment of the $350,000 awarded to him for his assistance in the closing of the Janel transaction. On February 20, 2023, the Company entered into a Confidential Separation Agreement and General Release (the "Separation Agreement") with Mr. Brog, in connection with Mr. Brog's resignation from the Company as Chief Executive Officer, President and Acting Chief Financial Officer. Pursuant to the Separation Agreement, Mr. Brog was entitled to receive, among other things, a payment of $112,000 for the assignment to the Company by Mr. Brog of 57,593 shares of common stock of the Company held by Mr. Brog. The Separation Agreement also contained a general release of claims against the Company, as well as certain other customary covenants, including covenants pertaining to non-disparagement and confidentiality.

***Equity Compensation Awards*.** The equity compensation awards granted under the 2016 Plan or 2007 Plan may become vested upon a change in control. The 2016 and 2007 Plans provide that in the event of "change in control," as defined in the 2016 and 2007 Plans, each outstanding award will be treated as the Compensation Committee determines, including that the successor corporation or its parent or subsidiary may be required to assume or substitute an equivalent award for each outstanding award. The Compensation Committee is not required to treat all awards similarly. If there is no assumption or substitution of outstanding awards, the award recipient will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, all restrictions on restricted stock and RSUs will lapse and all performance goals or other vesting requirements for performance awards will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met. If an option or stock appreciation right is not assumed or substituted, the Compensation Committee will provide notice to the award recipient that the option or stock appreciation right will be fully vested and exercisable for a period of time determined by the Compensation Committee in its discretion, and the option or stock appreciation right will terminate upon the expiration of such period. Notwithstanding the Compensation Committee's general discretionary authority described above, the individual award agreements may provide for the vesting of such awards upon the occurrence of a change in control. Under the 2016 and 2007 Plans, a "change in control" is deemed to occur when (i) a person becomes the beneficial owner (directly or indirectly) of at least 50% of the voting power represented by the Company's outstanding voting securities, (ii) the Company sells or disposes of all or substantially all of its assets, (iii) the composition of the Board of Directors changes within a two-year period resulting in fewer than a majority of the directors being "incumbent directors" (as defined in the 2016 and 2007 Plans), or (iv) a merger or consolidation of the Company is consummated with any other corporation resulting in the voting securities of the Company outstanding immediately prior thereto representing (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) less than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

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

**Securities Authorized for Issuance under Equity Compensation Plans** 

The following table represents securities authorized for issuance under, the Rubicon Technology Inc. 2007 Stock Incentive Plan, as amended and restated, and the Rubicon Technology Inc. 2016 Stock Incentive Plan as of December 31, 2022.

**Equity Compensation Plan Information**

---

| | | | |
|:---|:---|:---|:---|
| **Plan category** | **Number of securities<br> to be issued<br> upon exercise of<br> outstanding options,<br> warrants and rights** | **Weighted-average<br> exercise price of<br> outstanding options,<br> warrants and rights** | **Number of securities<br> remaining available<br> for future issuances<br> under the equity<br> compensation plans<br> (excluding securities<br> reflected in column<br> (a))** |
|  | **(a)** | **(b)** | **©** |
| Equity compensation plans approved by security holders<sup>(1)</sup> | 300 | $44.10 | 320273 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Rubicon Technology Inc. 2007 Stock Incentive Plan was approved by stockholders before our initial public offering. The Rubicon Technology Inc. 2016 Stock Incentive Plan was approved by stockholders in June 2016.

**Security Ownership of Certain Beneficial Owners and Management**

Unless otherwise noted, the following table sets forth, as of February 28, 2023, the beneficial ownership of our common stock by:

● each person that was a beneficial owner of 5% of more of our outstanding shares of common stock;

● each of our named executive officers;

● each of our directors, including the director nominees; and

● all of our named executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Percentage of beneficial ownership is based on 2,410,265 shares of common stock outstanding as of February 28, 2023. Unless otherwise indicated in the footnotes below, the address for each beneficial owner is c/o Rubicon Technology, Inc., 900 East Green Street, Bensenville, Illinois 60106.

---

| | | |
|:---|:---|:---|
| | **Shares beneficially owned** | **Shares beneficially owned** |
| <br>**Name of beneficial owner** | **Number** | **Percent** |
| ***5% stockholders:*** | | |
| Bandera Master Fund L.P.<sup>(1)</sup> | 128323 | 5.3% |
| Janel Corporation<sup>(2)</sup> | 1108000 | 46.0% |
| ***Named Executive Officers, Directors and Nominees:*** |  |  |
| Timothy Brog | 4969 | 0.2% |
| Darren Seirer**<sup>(3)</sup>** |  | 0.0% |
| Michael E. Mikolajczyk | 31456 | 1.3% |
| John Eidinger**<sup>(4)</sup>** |  | 0.0% |
| **All executive officers and directors as a group (4 persons)<sup>(5)</sup>** | 36425 | 1.5% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The ownership information set forth in the table is based on information contained in a statement on Schedule 13D (the "Bandera 13D"), filed on August 19, 2022, with the SEC by Bandera Master Fund L.P. ("Bandera"), together with Bandera Partners LLC, Gregory Bylinsky and Jefferson Gramm, Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners ("Reporting Persons") with respect to ownership of shares of our common stock. The Bandera 13D reflects that each of Bandera Master Fund L.P. and Bandera Partners has sole dispositive and voting power with respect to 128,323 of the reported shares. Bandera reports on the Bandera 13D that each of Messrs. Bylinsky and Gramm as Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners may be deemed to have shared power to vote or dispose of the shares owned by Bandera. Bandera reports on the Bandera 13D that no person other than the Reporting Persons have the right to receive or the power to direct the receipts of dividends from, or the proceeds from the sale of, our common stock. The principal business address of Bandera is 50 Broad Street, Suite 1820, New York, New York 10004.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The ownership information set forth in the table is based on information contained in a statement on Schedule 13D (the "Janel 13D"), filed on August 15, 2022, with the SEC by Janel, together with Oaxaca Group L.L.C. and Dominique Schulte, its then Chief Executive Officer, ("Reporting Persons") with respect to ownership of shares of our common stock. The Janel 13D reflects that the Reporting Persons have shared dispositive and voting power with respect to 1,108,000 of the reported shares. The principal business address of Janel is 80 Eighth Avenue, New York, New York 10011.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Mr. Seirer is the President and Chief Executive Officer of Janel Corporation, and serves as the Chairman of the Board on Janel's Board of Directors. Excludes the shares owned by Janel, as Mr. Seirer does not have sole dispositive and voting power with respect to the Janel shares, and therefore is not a beneficial owner of those shares.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Mr. Eidinger serves as the Vice Chairman of the Board on Janel's Board of Directors. Excludes the shares owned by Janel, as Mr. Eidinger does not have sole dispositive and voting power with respect to the Janel shares, and therefore is not a beneficial owner of those shares.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Excludes the shares owned by Janel.

On March 3, 2023, the Board of Directors appointed Dennis Paul, 50, as an independent director. Mr. Paul has no beneficial ownership of Rubicon shares.

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

**Policy and Procedures for Review, Approval or Ratification**

We recognize that transactions between the Company and related persons present a potential for actual or perceived conflicts of interest. Our general policies with respect to such transactions are included in our Code of Ethics which is administered by our Audit Committee. All employees and members of our Board of Directors agree to be bound by the Code of Ethics. As a supplement to the Code of Ethics, the Audit Committee adopted a written policy setting out the procedures and standards to be followed for the identification and evaluation of "related party transactions." For purposes of the policy, a related party transaction is any transaction or series of related transactions in excess of $120,000 in which we are a party and in which a "related person" has a material interest. Related persons include our directors, director nominees, executive officers, beneficial owners of 5% or more of any class of our voting securities and members of their immediate families. The Audit Committee has determined that certain transactions are deemed to be pre-approved under this policy. These include (i) transactions with another company in which the related person's only interest is as a director or beneficial owner of less than 10% of the equity interests in that other company and (ii) certain compensation arrangements that have either been disclosed in our public filings with the SEC or approved by our Compensation Committee.

We collect information about potential related party transactions in our annual questionnaires completed by directors, executive officers and certain beneficial owners of 5% or more of any class of our voting securities. Potential related party transactions are first reviewed and assessed by our Acting Secretary to consider the materiality of the transactions and then reported to the Audit Committee. If a related party transaction is identified during the year, it is reported promptly to the Audit Committee. The Audit Committee reviews and considers all relevant information available to it about each related party transaction. A related party transaction is approved or ratified only if the Audit Committee determines that it is in, or is not inconsistent with, our best interests and those of our stockholders and is in compliance with the Code of Ethics.

**Director Independence**

Our Board of Directors undertook a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board of Directors determined that Mr. Mikolajczyk is independent under the standards for director independence adopted by the Board of Directors and are "independent directors" as defined under the Nasdaq rules. Based on the foregoing, our Board of Directors has concluded that a majority of our Board of Directors has been independent during 2021, as required by the Nasdaq rules.

On August 19, 2022, Mr. Jefferson Gramm and Ms. Susan Westphal, both of whom were independent directors, resigned from the Board the committees of the Board that they serve on. Mr. Seirer and Mr. Eidinger were appointed as their replacementds by the Board of Directors.

On October 14, 2022, the Company received notifications from Nasdaq that it was no longer in compliance with various Nasdaq independent director requirements set forth in Listing Rule 5605. This rule requires, among other things, that (i) the Board of Directors be composed of a majority of independent directors, (ii) the Audit Committee be composed of three independent directors, and (iii) the Compensation Committee be composed of two independent directors. The Board of Directors was composed of four directors, one of which was an employee of the Company and therefore was not independent. At that time, the Board of Directors had not yet determined whether the two newly appointed directors would be deemed to be independent under the Nasdaq Listing Rules. Subsequently, on December 13, 2022, the Company notified Nasdaq of its decision to delist its common stock from the Nasdaq Capital Market. The delisting became effective December 30, 2022.

During December 2022, the Board began the analysis and review of the independence of Mr. Seirer and Mr. Eidinger to consider whether they have a material relationship with the Company that could compromise their ability to exercise independent judgment in carrying out their responsibilities. This review has not been completed as of the date hereof. On March 10, 2023, the Board of Directors appointed Dennis Paul as an independent director, and following Mr. Paul's appointment, there were no vacancies on the Board of Directors. As such, the Board of Directors has determined that Mr. Mikolajczyk and Mr. Paul are the only independent directors under the standards for director independence adopted by the Board of Directors and therefore cannot conclude that a majority of the Board of Directors is independent under the Nasdaq rules.

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The Audit Committee of the Board of Directors has selected Marcum LLP ("Marcum") to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2023, and is submitting this matter to the stockholders for ratification at the Annual Meeting. Marcum has served as the Company's independent registered public accounting firm since 2017.

Neither our bylaws nor other governing documents or law require stockholder ratification of the selection of Marcum as our independent registered public accounting firm. However, the Board of Directors is submitting the selection of Marcum to the stockholders for ratification as a matter of good corporate practice. In the event the proposal to ratify the selection of Marcum is defeated, the adverse vote will be considered as a direction to the Board of Directors to select another independent registered public accounting firm for the next fiscal year ending December 31, 2024. However, because of the expense and difficulty in changing independent registered public accounting firms after the beginning of a year, the Board intends to allow the appointment of Marcum for the fiscal year ending December 31, 2023 to stand unless the Board finds other reasons for making a change.

**Audit Fees**

The aggregate fees billed by Marcum for audit services of the Company's annual financial statements and review services of the Company's quarterly financial statements for the fiscal year 2022 were $221,883. The aggregate fees billed by Marcum for audit services of the Company's annual financial statements and assistance with and review of SEC filings for the fiscal year 2021 were approximately $200,356.

**Audit-Related Fees**

There were no audit-related fees billed by Marcum in the fiscal years 2022 and 2021.

**Tax Fees**

There were no tax fees billed by Marcum in the fiscal years 2022 and 2021.

**All Other Fees**

There were no other fees billed by Marcum in the fiscal years 2022 and 2021 for any other services.

**Pre-Approval Policy and Procedures**

In accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee is required to pre-approve all auditing services and permissible non-audit services, including related fees and terms, to be performed for the Company by its independent registered public accounting firm subject to the de minimis exceptions for non-audit services described under the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit. In the fiscal years 2022 and 2021, the Audit Committee pre-approved all audit and non-audit services provided to the Company by its independent registered public accounting firm.

**PART IV**

**ITEM 15. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Financial statements. The following Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;**Page** |
| [Report of Independent Registered Public Accounting Firm (PCAOB ID #688)](#a_028) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2022 and 2021](#a_029) | F-4 |
| [Consolidated Statements of Operations for the years ended December 31, 2022 and 2021](#a_030) | F-5 |
| [Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021](#a_031) | F-6 |
| [Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022 and 2021](#a_032) | F-7 |
| [Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021](#a_033) | F-8 |
| [Notes to Consolidated Financial Statements](#a_034) | F-9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Exhibits. The exhibits filed or incorporated by reference as a part of this report are listed in the Index to Exhibits which appears following the signature page to this Annual Report on Form 10-K and are incorporated by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Financial statement schedules not listed above have been omitted because they are inapplicable, are not required under applicable provisions of Regulation S-X, or the information that would otherwise be included in such schedules is contained in the registrant's financial statements or accompanying notes.

**ITEM 16. FORM 10-K SUMMARY**

None.

**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 on March 30, 2023.

---

| | |
|:---|:---|
| **Rubicon Technology, Inc.** | **Rubicon Technology, Inc.** |
| By | /s/ Joseph Ferrara |
|  | Joseph Ferrara<br> Executive Officer and Chief Financial Officer (Principal Executive, Financial, and Accounting Officer) |

---

KNOWN BY ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Joseph Ferrara, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 30, 2023.

---

| | |
|:---|:---|
| **Signature** | **Title** |
| /s/ Joseph Ferrara | Executive Officer and Chief Financial Officer |
| Joseph Ferrara | (Principal Executive, Financial, and Accounting Officer) |
| /s/ Michael E. Mikolajczyk | Chairman of the Board of Directors |
| Michael E. Mikolajczyk |  |
| /s/ Darren Seirer | Director |
| Darren Seirer |  |
| /s/ John Eidinger | Director |
| John Eidinger |  |
| /s/ Dennis Paul | Director |
| Dennis Paul |  |

---

**EXHIBIT INDEX**

The Exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K.

---

| | | |
|:---|:---|:---|
| **Exhibit No.** | **Description** | **Incorporation by Reference** |
| 2.1 | [Stock Purchase and Sale Agreement, dated as of July 1, 2022, between Janel Corporation and Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex2-1_rubicontech.htm) | Filed as Exhibit 2.1 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-38834) |
| 3.1 | [Eighth Amended and Restated Certificate of Incorporation of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000119312507232424/dex31.htm) | Filed as Exhibit 3.1 to the registrant's Registration Statement on Form S-1/A, filed on November 1, 2007 (File No. 333-145880) |
| 3.2 | [Amendment No. 1 to Eighth Amended and Restated Certificate of Incorporation of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000119312511119006/ddef14a.htm#toc147106_40) | Filed as Appendix A to the registrant's Definitive Proxy Statement on Schedule 14A, filed on April 29, 2011 (File No. 1-33834) |
| 3.3 | [Amendment No. 2 to Eighth Amended and Restated Certificate of Incorporation of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000121390017004630/f8k050317ex3i_rubicontech.htm) | Filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K, filed on May 4, 2017 (File No. 1-33834) |
| 3.4 | [Second Amended and Restated Bylaws of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000119312516585675/d132914dex33.htm) | Filed as Exhibit 3.3 to the registrant's Quarterly Report on Form 10-Q, filed on May 10, 2016 (File No. 1-33834) |
| 3.5 | [Certificate of Designations of Series A Junior Participating Preferred Stock of Rubicon Technology, Inc. filed with the Secretary of State of Delaware on December 18, 2017.](https://www.sec.gov/Archives/edgar/data/1410172/000121390017013378/f8k121817ex3-1_rubicontech.htm) | Filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K, filed on December 18, 2017 (File No. 1-33834) |
| 3.6 | [Amendment No. 3 to Eighth Amended and Restated Certificate of Incorporation of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000121390018006316/f8k051018ex3-1_rubicontech.htm) | Filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K, filed on May 15, 2018 (File No. 1-33834) |
| 3.7 | [Third Amended and Restated Bylaws of Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000121390023014423/ea174254ex3-1_rubicon.htm) | Filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K, filed on February 24, 2023 (File No. 1-33834) |
| 4.1 | [Specimen Common Stock Certificate](https://www.sec.gov/Archives/edgar/data/1410172/000119312507245524/dex41.htm) | Filed as Exhibit 4.1 to the registrant's Registration Statement on Form S-1/A, filed on November 13, 2007 (File No. 333-145880) |
| 4.2 | [Description of Capital Stock](http://www.sec.gov/Archives/edgar/data/1410172/000119312507245532/d8a12b.htm) | Incorporated by reference to Item 1 of the registrant's Registration Statement on Form 8-A, filed on November 13, 2007 (File No. 1-33834) |
| 4.3 | [Description of Preferred Stock Purchase Rights](http://www.sec.gov/Archives/edgar/data/1410172/000121390022038573/ea162697-8a12ba_rubicon.htm) | Incorporated by reference to Item 1 of the registrant's Registration Statement on Form 8-A, filed on December 18, 2017 (File No. 1-33834), as amended by Amendment No. 1 to the Registration Statement on Form 8-A filed on December 22, 2020 (File No. 1-33834) and Amendment No. 2 to the Registration Statement on Form 8-A filed on July 11, 2022 (File No. 1-33834) |
| 4.4 | [Rights Agreement dated as of December 18, 2017, between Rubicon Technology, Inc. and American Stock Transfer & Trust Company, LLC, which includes the Form of Certificate of Designations of Series A Junior Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C.](https://www.sec.gov/Archives/edgar/data/1410172/000121390017013378/f8k121817ex4-1_rubicontech.htm) | Filed as Exhibit 4.1 to the registrant's Current Report on Form 8-K, filed on December 18, 2017 (File No. 1-33834) |
| 4.5 | [Amendment No. 1 to the Rights Agreement, dated as of December 18, 2020, between Rubicon Technology, Inc. and American Stock Transfer & Trust Company, LLC](https://www.sec.gov/Archives/edgar/data/1410172/000121390020043381/ea131772ex4-1_rubicontech.htm) | Filed as Exhibit 4.1 to the registrant's Current Report on Form 8-K, filed on December 18, 2020 (File No. 1-33834) |

---

---

| | | |
|:---|:---|:---|
| 10.1\* | [Rubicon Technology, Inc. 2007 Stock Incentive Plan, as amended and restated, effective March 23, 2011](https://www.sec.gov/Archives/edgar/data/1410172/000119312514097229/d657720dex102.htm) | Filed as Exhibit 10.2 to the registrant's Annual Report on Form 10-K, filed on March 13, 2014 (File No. 1-33834) |
| 10.2\* | [Rubicon Technology, Inc. 2016 Stock Incentive Plan](https://www.sec.gov/Archives/edgar/data/1410172/000119312516593768/d114966ddefc14a.htm#toc114966_38) | Filed as Appendix A to the registrant's Definitive Proxy Statement on Schedule 14A, filed on May 18, 2016 (File No. 1-33834) |
| 10.3(a)\* | [Form of Notice of Stock Option Grant and Stock Option Agreement pursuant to Rubicon Technology, Inc. 2016 Stock Incentive Plan](https://www.sec.gov/Archives/edgar/data/1410172/000119312516676829/d212491dex102.htm) | Filed as Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No. 1-33834) |
| 10.3(b)\* | [Form of Non-Employee Director Restricted Stock Agreement pursuant to Rubicon Technology, Inc. 2016 Stock Incentive Plan](https://www.sec.gov/Archives/edgar/data/1410172/000119312516676829/d212491dex103.htm) | Filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No. 1-33834) |
| 10.3(c)\* | [Form of Restricted Stock Unit Agreement pursuant to Rubicon Technology, Inc. 2016 Stock Incentive Plan (with time-based vesting)](https://www.sec.gov/Archives/edgar/data/1410172/000119312516676829/d212491dex104.htm) | Filed as Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q, filed on August 9, 2016 (File No. 1-33834) |
| 10.4\* | [Form of Indemnification Agreement for Directors and Executive Officers](https://www.sec.gov/Archives/edgar/data/1410172/000119312515178605/d910788dex101.htm) | Filed as Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q, filed on May 8, 2015 (File No. 1-33834) |
| 10.5\* | [Executive Employment Agreement by and between Rubicon Technology, Inc. and Timothy E. Brog, dated as of March 1, 2017](https://www.sec.gov/Archives/edgar/data/1410172/000119312517085594/d345411dex101.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on March 16, 2017 (File No. 1-33834) |
| 10.6\* | [Amended and Restated Executive Employment Agreement by and between Rubicon Technology, Inc. and Timothy E. Brog, dated as of May 12, 2017](https://www.sec.gov/Archives/edgar/data/1410172/000121390017004990/f10q0317ex10ii_rubicontec.htm) | Filed as Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q, filed on May 12, 2017 (File No. 1-33834) |
| 10.7 | [Stockholder's Agreement dated as of November 16, 2017, by and among Rubicon Technology, Inc. and Bandera Partners LLC, Bandera Master Fund L.P., Gregory Bylinsky and Jefferson Gramm](https://www.sec.gov/Archives/edgar/data/1410172/000121390017012226/f8k111617ex10-1_rubicon.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on November 16, 2017 (File No. 1-33834) |
| 10.8 | [Asset Purchase Agreement, dated as of May 17, 2019, by and among Wellfount, Corporation, Rubicon DTP LLC and Rubicon Technology, Inc.](https://www.sec.gov/Archives/edgar/data/1410172/000121390019015796/f10q0619ex10-1_rubicon.htm) | Filed as Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q, filed on August 14, 2019 (File No. 1-33834) |
| 10.9 | [Sale and Purchase Agreement, dated as of December 19, 2019, by and among Rubicon Sapphire Technology (Malaysia) SDN. BHD., Rubicon Technology, Inc. and Computime (Malaysia) SDN. BHD](https://www.sec.gov/Archives/edgar/data/1410172/000121390019026519/f8k121919ex10-1_rubicontech.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on December 19, 2019 (File No. 1-33834) |
| 10.10 | [Share Sale Agreement, dated December 9, 2020 between Rubicon Technology, Inc. and Kang Lan Hiang](https://www.sec.gov/Archives/edgar/data/1410172/000121390020041793/ea131332ex10-1_rubicontech.htm) | Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on December 9, 2020 (File No. 1-33834) |

---

---

| | | |
|:---|:---|:---|
| 10.11\* | [Executive Employment Agreement by and between Rubicon Technology, Inc. and Kevin T. Lusardi, dated as of March 17, 2021](https://www.sec.gov/Archives/edgar/data/1410172/000121390021016810/ea138109ex10-1_rubicon.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on March 22, 2021 (File No. 1-33834) |
| 10.12 | [Real Estate Sales Contract, dated as of February 7, 2022, between Rubicon Technology, Inc. and Capitol Trucking, Inc., a Texas corporation for the purchase of that parcel of real property commonly known as Fox Valley Business Park, Lot 101, Batavia, Illinois, 60510.](https://www.sec.gov/Archives/edgar/data/1410172/000121390022006136/ea155169ex10-1_rubicontech.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on February 9, 2022 (File No. 1-33834) |
| 10.13 | [Amendment No. 2 to Section 382 Rights Agreement, dated as of July 1, 2022, by and between Rubicon Technology, Inc. and American Stock Transfer & Trust Company, LLC.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex10-1_rubicontech.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |
| 10.14\* | [Form of First Amendment to Executive Employment Agreement, by and between Rubicon Technology, Inc. and Timothy E. Brog.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex10-2_rubicontech.htm) | Filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |
| 10.15 | [Business Loan Agreement, dated August 15, 2022, between Rubicon Technology BP LLC and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-1_rubicon.htm) | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.16 | [Promissory Note, dated August 15, 2022, between Rubicon Technology BP LLC and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-2_rubicon.htm) | Filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.17 | [Commercial Guaranty, dated August 15, 2022, between Rubicon Worldwide LLC and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-3_rubicon.htm) | Filed as Exhibit 10.3 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.18 | [Commercial Guaranty, dated August 15, 2022, between Rubicon Technology, Inc. and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-4_rubicon.htm) | Filed as Exhibit 10.4 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.19 | [Mortgage, dated August 15, 2022, between Rubicon Technology BP LLC and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-5_rubicon.htm) | Filed as Exhibit 10.5 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.20 | [Assignment of Rents, dated August 15, 2022, between Rubicon Technology BP LLC and American Community Bank & Trust](http://www.sec.gov/Archives/edgar/data/1410172/000121390022049680/ea164637ex10-6_rubicon.htm) | Filed as Exhibit 10.6 to the registrant's Current Report on Form 8-K, filed on August 19, 2022 (File No. 1-33834) |
| 10.21\* | [Confidential Separation Agreement and General Release, dated February 20, 2023, by and between Timothy E. Brog and Rubicon Technology, Inc](https://www.sec.gov/Archives/edgar/data/1410172/000121390023014423/ea174254ex10-1_rubicon.htm). | Filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K, filed on February 24, 2023 (File No. 1-33834) |
| 21.1\*\* | [Subsidiaries of the Company](f10k2022ex21-1_rubicontech.htm) |  |

---

---

| | | |
|:---|:---|:---|
| 24.1\*\* | [Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)](#a_035) |  |
| 31.1\*\* | [Certification of Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](f10k2022ex31-1_rubicontech.htm) |  |
| 32.1\*\* | [Certification of Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](f10k2022ex32-1_rubicontech.htm) |  |
| 99.1 | [Tender and Voting Agreement by and among Janel Corporation, Rubicon Technology, Inc. and Aldebaran Capital, LLC, dated July 1, 2022.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037065/ea162325ex99-1_rubicontech.htm) | Filed as Exhibit 99.1 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |
| 99.2 | [Tender and Voting Agreement by and among Janel Corporation, Rubicon Technology, Inc. and Bandera Master Fund, L.P., dated July 1, 2022.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex99-2_rubicontech.htm) | Filed as Exhibit 99.2 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |
| 99.3 | [Tender and Voting Agreement by and among Janel Corporation, Rubicon Technology, Inc. and Sententia Capital Management LLC, dated July 1, 2022.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex99-3_rubicontech.htm) | Filed as Exhibit 99.3 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |
| 99.4 | [Tender and Voting Agreement by and among Janel Corporation, Rubicon Technology, Inc. and Poplar Point Capital Management, LLC, L.P., dated July 1, 2022.](http://www.sec.gov/Archives/edgar/data/1410172/000121390022037059/ea162325ex99-4_rubicontech.htm) | Filed as Exhibit 99.4 to the registrant's Current Report on Form 8-K, filed on July 5, 2022 (File No. 1-33834) |

---

---

| | |
|:---|:---|
| 101.INS\*\* | Inline XBRL Instance Document. |
| 101.SCH\*\* | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL\*\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF\*\* | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB\*\* | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE\*\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Management contract or compensatory plan or arrangement of the Company. <br>\*\* Submitted electronically with this Annual Report on Form 10-K.

**Rubicon Technology, Inc.**

**INDEX TO FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm (PCAOB ID #688)](#a_028) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2022 and 2021](#a_029) | F-4 |
| [Consolidated Statements of Operations for the years ended December 31, 2022 and 2021](#a_030) | F-5 |
| [Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021](#a_031) | F-6 |
| [Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022 and 2021](#a_032) | F-7 |
| [Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021](#a_033) | F-8 |
| [Notes to Consolidated Financial Statements](#a_034) | F-9 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the Shareholders and Board of Directors of

Rubicon Technology, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Rubicon Technology, Inc. (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

We identified the valuation and presentation of inventory as a critical audit matter. The Company establishes inventory reserves when conditions exist to suggest inventory may be in excess of anticipated demand or is obsolete based on customer specifications. The Company's management evaluates the ability to realize the net carrying value of its inventory based on a combination of factors, including forecasted sales, estimated current market value and changes in customers' product specifications. Additionally, the Company reduces the carrying values of its inventories for differences between the cost and the estimated net realizable value, which is determined based on an estimated selling price less estimated costs of completion and disposal. Based on the likelihood of expected consumption within the next operating cycle, generally 12 months, management makes a determination on the appropriate presentation of inventory as a current or non-current asset in the financial statements. These were the principal considerations in our determination that this was a critical audit matter.

The primary procedures we performed to address this critical audit matter included: (a) obtaining management's sales forecast, accompanying commentary regarding the forecast, and relevant supporting documentation; (b) obtaining an understanding of management's process for determining the carrying value at the lower of cost or estimated net realizable value of inventory, and testing that process by recalculating their estimates, independently verifying the data used to develop those estimates, and obtaining supporting documents; (c) evaluating management's determination of the expected usage within one year from December 31, 2022; and (d) performing a retrospective review of management's estimates from the prior period.

/s/ Marcum llp

Marcum llp

We have served as the Company's auditor since 2017.

**New York, NY**

**March 30, 2023**

**Rubicon Technology, Inc.**

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands, other** | **(in thousands, other** |
|  | **than share data)** | **than share data)** |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $1590 | $11260 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 120 |  |
| &nbsp;&nbsp;&nbsp;Short-term investments |  | 14751 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 671 | 719 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 325 | 658 |
| &nbsp;&nbsp;&nbsp;Other inventory supplies | 124 | 133 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 47 | 167 |
| &nbsp;&nbsp;&nbsp;Assets held for sale |  | 529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 2877 | 28217 |
| &nbsp;&nbsp;&nbsp;Grants receivable | 250 |  |
| &nbsp;&nbsp;&nbsp;Inventories, non-current, net | 650 | 468 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 2182 | 2301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $5959 | $30986 |
| **Liabilities and stockholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $438 | $545 |
| &nbsp;&nbsp;&nbsp;Accrued payroll | 128 | 426 |
| &nbsp;&nbsp;&nbsp;Accrued and other current liabilities | 223 | 220 |
| &nbsp;&nbsp;&nbsp;Corporate income and franchise taxes | 304 | 327 |
| &nbsp;&nbsp;&nbsp;Accrued real estate taxes | 67 | 78 |
| &nbsp;&nbsp;&nbsp;Advance payments | 4 | 2 |
| &nbsp;&nbsp;&nbsp;Current portion of long term debt, net of unamortized finance costs | 25 |  |
| &nbsp;&nbsp;&nbsp;Total current liabilities | 1189 | 1598 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long term debt, net of current portion and unamortized finance costs | 1566 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 2755 | 1598 |
| Commitments and contingencies (see Note 11) |  |  |
| Stockholders' equity |  |  |
| Preferred stock, $0.001 par value, 1,000,000 undesignated shares authorized, no shares issued or outstanding |  |  |
| Common stock, $0.001 par value 8,200,000 shares authorized; 3,011,917 and 2,995,680 shares issued; 2,462,889 and 2,446,652 shares outstanding | 29 | 29 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 349520 | 376640 |
| &nbsp;&nbsp;&nbsp;Treasury stock, at cost, 549,028 and 549,028 shares | (15147) | (15147) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss |  | (1) |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (331198) | (332133) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 3204 | 29388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $5959 | $30986 |

---

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

**Rubicon Technology, Inc.** 

**Consolidated Statements of Operations** 

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands, other** | **(in thousands, other** |
|  | **than share data)** | **than share data)** |
| Revenue | $3587 | $4061 |
| Cost of goods sold | 2147 | 2798 |
| &nbsp;&nbsp;&nbsp;Gross profit | 1440 | 1263 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 2346 | 2130 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 136 | 210 |
| &nbsp;&nbsp;&nbsp;Gain on sale or disposal of assets | (1410) | (613) |
| &nbsp;&nbsp;&nbsp;Other gain | (217) |  |
| &nbsp;&nbsp;&nbsp;Income (loss) from continuing operations | 585 | (464) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income: |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 105 | 5 |
| &nbsp;&nbsp;&nbsp;Interest expense | (39) |  |
| &nbsp;&nbsp;&nbsp;Realized gain on equity investments | 18 |  |
| &nbsp;&nbsp;&nbsp;Grant revenue | 250 |  |
| &nbsp;&nbsp;&nbsp;Total other income | 334 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income (loss) before income taxes from continuing operations | 919 | (459) |
| Income tax expense |  |  |
| Income (loss) from continuing operations | 919 | (459) |
| Income (loss) from discontinued operations, net of taxes | 16 | (271) |
| Net income (loss) | $935 | $(730) |
| &nbsp;&nbsp;&nbsp;*Net income (loss) per common share: basic* |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations | $0.38 | $(0.19) |
| &nbsp;&nbsp;&nbsp;Discontinued operations | $0.01 | $(0.11) |
| &nbsp;&nbsp;&nbsp;*Net income (loss) per common share: diluted* |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations | $0.37 | $(0.19) |
| &nbsp;&nbsp;&nbsp;Discontinued operations | $0.01 | $(0.11) |
| Weighted average common shares outstanding used in computing net income (loss) per common share |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 2448682 | 2439764 |
| &nbsp;&nbsp;&nbsp;Diluted | 2455897 | 2439764 |

---

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

**Rubicon Technology, Inc.**

**Consolidated Statements of Comprehensive Income (Loss)**

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Income (loss) from continuing operations | $919 | $(459) |
| Income (loss) from discontinued operations | 16 | (271) |
| Net income (loss) | 935 | (730) |
| Other comprehensive income: |  |  |
| Unrealized gain (loss) on investments, net of taxes | 1 | (1) |
| Other comprehensive gain (loss) | 1 | (1) |
| Comprehensive income (loss) | $936 | $(731) |

---

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

**Rubicon Technology, Inc.**

**Consolidated Statements of Stockholders' Equity** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common stock** | **Common stock** | **Treasury stock** | **Treasury stock** | | **Stockholders' equity** | **Stockholders' equity** | **Stockholders' equity** |
|  | **Shares** | **Amount** | **Shares** | **Amount** |<br>**Additional<br> paid-in<br> capital** | **Accum<br> other<br> comp<br> loss** | **Accum<br> deficit** | **Total<br> stockholders'<br> equity** |
|  | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** | **(in thousands other than share data)** |
| Balance at January 1, 2021 | 2971283 | $29 | (549028) | $(15147) | $376456 | $— | $(331403) | $29935 |
| Stock-based compensation |  |  |  |  | 371 |  |  | 371 |
| Common stock issued, net of shares withheld for employee taxes | 24397 |  |  |  | (187) |  |  | (187) |
| Unrealized loss on investments, net of tax |  |  |  |  |  | (1) |  | (1) |
| Net loss |  |  |  |  |  |  | (730) | (730) |
| Balance at December 31, 2021 | 2995680 | $29 | (549028) | $(15147) | $376640 | (1) | $(332133) | $29388 |
| Stock-based compensation |  |  |  |  | 182 |  |  | 182 |
| Restricted stock issued, net of shares withheld for employee taxes | 15338 |  |  |  | (203) |  |  | (203) |
| Common stock issued, net of shares withheld for employee taxes | 899 |  |  |  | (7) |  |  | (7) |
| Return of shareholder capital |  |  |  |  | (27092) |  |  | (27092) |
| Unrealized gain on investments, net of tax |  |  |  |  |  | 1 |  | 1 |
| Net income |  |  |  |  |  |  | 935 | 935 |
| Balance at December 31, 2022 | 3011917 | $29 | (549028) | $(15147) | $349520 | $— | $(331198) | $3204 |

---

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

**Rubicon Technology, Inc.** 

**Consolidated Statements of Cash Flows** 

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Income (loss) from continuing operations | $919 | $(459) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) from continuing operations to net cash used in continuing operations |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 120 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale or disposal of assets | (1410) | (613) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of equity investments | (18) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other gain | (189) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 182 | 371 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 41 | (236) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 151 | 356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other inventory supplies | (6) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 158 | 108 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grants receivable | (250) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 12 | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll | (298) | 215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate income and franchise taxes | (22) | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued real estate taxes | (11) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance payments | 2 | (16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued and other current liabilities | 98 | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in operating activities from continuing operations** | (521) | (61) |
| **Cash flows from discontinued operations** |  | (262) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from sale or disposal of assets | 1954 | 643 |
| &nbsp;&nbsp;&nbsp;Purchase of investments | (1055) | (6) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of investments | 15823 | 3 |
| &nbsp;&nbsp;&nbsp;Net cash provided by investing activities | 16722 | 640 |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from mortgage, net of escrow funding and loan costs | 1560 |  |
| &nbsp;&nbsp;&nbsp;Mortgage loan principal payments | (9) |  |
| &nbsp;&nbsp;&nbsp;Taxes paid related to net share settlement of equity awards | (210) | (187) |
| &nbsp;&nbsp;&nbsp;Return of shareholder capital | (27092) |  |
| &nbsp;&nbsp;&nbsp;Net cash used in financing activities | (25751) | (187) |
| Net increase (decrease) in cash, cash equivalents and restricted cash | (9550) | 130 |
| Cash, cash equivalents and restricted cash, beginning of year | 11260 | 11130 |
| Cash, cash equivalents and restricted cash, end of year | $1710 | $11260 |
| **Supplemental disclosure of cash flow:** |  |  |
| Cash paid for interest | $33 | $— |

---

See Note 1 for cash and non-cash components of the mortgage transaction.

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

**Rubicon Technology, Inc.**

**Notes to Consolidated Financial Statements** 

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**Description of business** 

Rubicon Technology, Inc. ("Rubicon" or the "Company") currently consists of two subsidiaries, Rubicon Worldwide LLC, doing business as Rubicon Technology Worldwide LLC ("RTW"), and Rubicon Technology BP LLC. In June 2021, the operations of Rubicon DTP LLC, doing business as Direct Dose Rx ("Direct Dose") were discontinued.

RTW is an advanced materials provider specializing in monocrystalline sapphire for applications in optical and industrial systems. RTW sells its products on a global basis to customers in North America, Europe and Asia. RTW maintains its operating facility in the Chicago metropolitan area.

In June 2021 the operations of Direct Dose Rx were discontinued. The costs associated with such closure were not material. Direct Dose Rx was a specialized pharmacy that provided prescription medications, over-the-counter drugs and vitamins to patients being discharged from skilled nursing facilities and hospitals and directly to retail customers who want such medications delivered to their home. The delivered products were sorted by the dose, date, and time to be taken and come in easy-to-use perforated strip-packaging as opposed to separate pill bottles. Direct Dose Rx was licensed to operate in 11 states. The services offered by Direct Dose Rx benefited patients, skilled nursing facilities and hospitals by reducing the risk of hospital readmissions.

**Principles of consolidation** 

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, Rubicon Worldwide LLC, doing business as Rubicon Technology Worldwide LLC, Rubicon Technology BP LLC, and the discontinued operations of Rubicon DTP LLC. All intercompany transactions and balances have been eliminated in consolidation.

A summary of the Company's significant accounting policies applied in the preparation of the accompanying Consolidated Financial Statements follows.

**Cash, cash equivalents and restricted cash**

The Company considers all unrestricted highly liquid investments immediately available to be cash equivalents. Cash equivalents primarily consist of time deposits with banks, unsettled trades and brokerage money market accounts. As part of the Loan the lender required approximately 12 months in "payment reserves" totaling $120,000 which are restricted from use by the Company until it can meet certain debt service ratio requirements.

**Investments** 

When the Company invests its available cash, it primarily invests in U.S. Treasury securities, investment grade commercial paper, FDIC guaranteed certificates of deposit, common stock, equity-related securities and corporate notes. Investments classified as available-for-sale debt securities are carried at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in equity securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statements of Operations. Investments in which we have the ability and intent, if necessary, to liquidate in order to support our current operations are classified as short-term.

We review our available-for-sale debt securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. We consider various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, changes in underlying credit ratings, forecasted recovery, our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When we conclude that an other-than-temporary impairment has resulted, the difference between the fair value and carrying value is written off and recorded as a charge on the Consolidated Statement of Operations. As of December 31, 2022, the Company had no such investments, and no impairment was recorded as of December 31, 2021.

**Purchases of Equity Securities by the Issuer** 

In November 2018, the Company's Board of Directors authorized a program to repurchase up to $3,000,000 of its common stock. In July 2020, the Company used all of the original authorized $3,000,000.

On December 14, 2020, Rubicon's Board of Directors authorized an additional $3,000,000 for the repurchase of the Company's common stock. On July 5, 2022 the Company announced that it had entered into a definitive Stock Purchase and Sale Agreement ("Purchase Agreement") with Janel Corporation ("Janel"), pursuant to which Janel would commence a cash tender offer (the "Offer") to purchase up to 45% of the outstanding shares of Rubicon's common stock on a fully-diluted basis at a price of $20.00 per share. The transaction was subsequently consummated in August of 2022. Pursuant to the terms of the Company's stock repurchase plan, this transaction resulted in the automatic termination of the plan.

There was no share repurchase activity during the years ended December 31, 2022 and 2021, respectively.

**Accounts receivable** 

The majority of the Company's accounts receivable are due from defense subcontractors, industrial manufacturers, fabricators and resellers. Credit is extended based on an evaluation of the customer's financial condition. Accounts receivable are due based on contract terms and at stated amounts due from customers, net of an allowance for doubtful accounts. Losses from credit sales are provided for in the financial statements.

Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time a customer's account is past due, the customer's current ability to pay and the condition of the general economy and industry as a whole. The Company writes off accounts receivable when they are deemed uncollectible and such write-offs, net of payments received, are recorded as a reduction to the allowance.

Accounts receivable is comprised of a net total of $671,000 and $719,000 for the years ended December 31, 2022 and 2021, respectively. The breakdown of accounts receivable for continuing operations and discontinued operations is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Continuing Operations: |  |  |
| Trade receivables | $683 | $732 |
| Allowance for doubtful accounts | (6) | (7) |
| Discontinued Operations: |  |  |
| Trade receivables | 6 | 6 |
| Allowance for doubtful accounts | (12) | (12) |
| Balance of accounts receivable, net | $671 | $719 |

---

**Inventories** 

Inventories are valued at the lower of cost or net realizable value. Net realizable value is determined based on an estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal. Raw materials cost is determined using the first-in, first-out method, and work-in-process and finished goods costs are determined on a standard cost basis, which includes materials, labor and overhead. The Company reduces the carrying value of its inventories for differences between the cost and the estimated net realizable value, taking into account usage, expected demand, technological obsolescence and other relevant information.

The Company establishes inventory reserves when conditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based on customer specifications. The Company evaluates the ability to realize the value of its inventory based on a combination of factors, including forecasted sales, estimated current and future market value and changes in customers' product specifications. The Company's method of estimating excess and obsolete inventory has remained consistent for all periods presented. The excess and obsolete inventory reserve at December 31, 2022 was $7,052,000 compared to $7,749,000 at December 31, 2021. For the year ended December 31, 2022, there was a reduction in excess or obsolete inventory of $697,000, which was attributable to consumed inventory which had previously been reserved. For the year ended December 31, 2021, there was a reduction in excess or obsolete inventory of $159,000, which was attributable to consumed inventory which had previously been reserved.

The Company also carries a lower of cost or market inventory reserve based on net realizable value using most recent sales prices to determine market value. As of December 31, 2022 and 2021, the balance of the lower of cost or market reserve was $8,000 and $25,000, respectively, representing a decrease of $17,000 resulting from sales of related reserved inventory. In 2021 we sold inventory that was valued at the lower of cost or market resulting in a reduction in both the lower of cost or market inventory reserve and cost of goods sold of $27,000.

In 2022 and 2021, the Company used some of its previously written down two-inch diameter core material in production of optical and industrial sapphire wafers and did not record any additional adjustments for the years ended December 31, 2022 and December 31, 2021.

The Company evaluates the amount of raw material needed for future production based on expected crystal growth production needed to meet anticipated sales. The Company did not record any write-downs of its raw materials inventory for the years ended December 31, 2022 and December 31, 2021.

Inventories are composed of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Raw materials | $367 | $468 |
| Work-in-process | 379 | 328 |
| Finished goods | 229 | 330 |
|  | $975 | $1126 |

---

As of December 31, 2022 and 2021, the Company made the determination that raw material inventories were such that the likelihood of significant usage within the current year was doubtful and reclassified such raw material inventories as non-current in the reported financial statements. For the year ended December 31, 2022, an additional $302,000 of current inventory was reclassified as non-current. Also, during the year ended December 31, 2022, there were sales of non-current inventory totaling $95,000.

There were no inventories of discontinued operations at years ended December 31, 2022 and 2021, respectively.

**Other inventory supplies**

The Company's other inventory supplies include stock of consumable assets and spare parts used in the manufacturing process.

**Assets held for sale**

An asset is considered to be held for sale when all of the following criteria are met: (i) management commits to a plan to sell the asset; (ii) it is unlikely that the disposal plan will be significantly modified or discontinued; (iii) the asset is available for immediate sale in its present condition; (iv) actions required to complete the sale of the asset have been initiated; (v) sale of the asset is probable and the completed sale is expected to occur within one year; and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value.

A long-lived asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell. If the long-lived asset is newly acquired, the carrying amount of the long-lived asset is established based on its fair value less cost to sell at the acquisition date. A long-lived asset is not depreciated or amortized while it is classified as held for sale.

On September 19, 2022, the Company completed the sale of its parcel of land located in Batavia, Illinois pursuant to the terms and conditions of the agreement of sale, dated as of February 7, 2022. The selling price for the property was $722,000. The Company realized net proceeds of approximately $600,000 after the payment of real estate taxes, brokerage and legal fees, transfer taxes and other expenses.

**Grants receivable and grant revenue**

Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and its subsequent amendments in sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, provides for a refundable payroll tax credit (Employee Retention Credit or ERC) to eligible employers with less than 500 employees who paid qualified wages after March 12, 2020, and before June 30, 2021. During the quarter ended June 30, 2022, the Company determined that although it did not meet the eligibility conditions during the period beginning March 12, 2020, and ending December 31, 2020, it did qualify to claim the ERC for the periods ending March 31, 2021, and June 30, 2021. As such, the Company recorded Grant Revenue and Grants Receivable of approximately $250,000 related to its pending ERC claim analogous to ASC Subtopic 958-605. Since the Company does not expect to receive the funds for the ERC claim for at least twelve months, the receivable has been classified as a non-current asset on its balance sheet.

**Property and equipment** 

Property and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Machinery, equipment and tooling | $3263 | $3296 |
| Buildings | 1711 | 1711 |
| Information systems | 819 | 819 |
| Land and land improvements | 594 | 594 |
| Furniture and fixtures | 7 | 7 |
| Total cost | 6394 | 6427 |
| Accumulated depreciation and amortization | (4212) | (4126) |
| Property and equipment, net | $2182 | $2301 |

---

Property and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The cost of maintenance and repairs is charged to expense as incurred. Significant renewals and improvements are capitalized. Depreciation expense associated with property and equipment was $120,000 and $140,000 for the years ended December 31, 2022 and 2021, respectively.

The estimated useful lives are as follows:

---

| | |
|:---|:---|
| **Asset description** | **Life** |
| Buildings | 39 years |
| Machinery, equipment and tooling | 3-10 years |
| Furniture and fixtures | 7 years |
| Information systems | 3 years |

---

There was no property and equipment of discontinued operations as of December 31, 2022 and 2021, respectively.

**Warranty cost** 

The Company's sales terms include a warranty that its products will meet certain specifications. The Company records a current liability for the expected cost of warranty-related claims at the time of sale. The warranty reserve is included in accrued and other current liabilities on the Consolidated Balance Sheets.

The following table presents changes in the Company's product warranty liability:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Balance, beginning of period | $1 | $1 |
| Charged to cost of sales | (16) | (9) |
| Actual product warranty expenditures | 16 | 9 |
| Balance, end of period | $1 | $1 |

---

The Company does not provide maintenance or other services and it does not have sales that involve bill & hold arrangements, multiple elements or deliverables. However, the Company does provide product warranty for up to 90 days, for which the Company has accrued a warranty reserve of $1,000 and $1,000 for the years ended December 31, 2022 and 2021, respectively.

**Current and long-term debt**

The Company reports debt issuance costs as an adjustment to the carrying amount of the related debt in accordance with ASC 835-30-45. The amortization of such costs is included in interest expense for the period.

On August 15, 2022, Rubicon Technology BP LLC, a Delaware limited liability company (the "<u>Borrower</u>"), entered into a business loan agreement (the "<u>Loan</u>") and promissory note (the "<u>Note</u>") in the amount of $1,620,000 with American Community Bank & Trust (the "<u>Lender</u>"). The Borrower is a wholly owned subsidiary of the Company. The interest rate on the Note is 6% and it matures on August 15, 2027. The Note has a 25-year amortization schedule. Interest and principal payments will be made on a monthly basis and a balloon payment will be made upon the maturity of the Note. The Borrower may pay, without penalty, a portion or the entirety of the amount owed earlier than it is due. The Loan and Note have customary terms and provisions for default and increases in payment. As part of the Loan the lender required approximately 12 months in "payment reserves" totaling $120,000 which are restricted from use by the Company until it can meet certain debt service ratio requirements. The Loan is secured by a real estate mortgage encumbering the property commonly known as 900 E. Green Street, Bensenville, IL. Rubicon Worldwide LLC, and the Company entered into unlimited commercial guaranty agreements in favor of the Lender. As of December 31, 2022, the Company is in compliance with all terms and covenants related to the Loan and Note.

The following table shows the net proceeds from the Loan at the time of its origination:

---

| | |
|:---|:---|
|  | **Proceeds From<br> Mortgage Loan** |
|  | **(in thousands)** |
| Initial loan amount | $&nbsp;&nbsp;&nbsp;&nbsp;1620 |
| Loan costs | (22) |
| Escrow funding for property tax | (38) |
| Net proceeds from mortgage loan | $1560 |

---

Current and long-term debt, net, are shown in the table below:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Mortgage note | $1611 | $&nbsp;&nbsp;&nbsp;&nbsp; — |
| Unamortized loan costs | (20) |  |
| Total debt | 1591 |  |
| Less: short-term portion | 25 |  |
| Long-term portion | $1566 | $— |

---

The Company had no interest expense for the year ended December 31, 2021.

Total interest and amortization expense on the Company's debt obligations during years ended December 31, 2022, and December 31, 2021, respectively, are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **December 31,**<br> **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Interest expense | $&nbsp;&nbsp;&nbsp;&nbsp;37 | $&nbsp;&nbsp;&nbsp;&nbsp;— |
| Amortization of loan costs | 2 |  |
| Total interest expense | $39 | $— |

---

The following table presents the future maturities of long-term debt and the related loan costs amortization for the years ended December 31:

---

| | | | |
|:---|:---|:---|:---|
|  | **Principal<br> Portion of<br> Payment** | **Amort.<br> Of Loan**<br> **Costs** | **Debt, Net of<br> Unamortized<br> Loan Costs** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| 2023 | $29 | $(4) | $25 |
| 2024 | 31 | (4) | 27 |
| 2025 | 33 | (4) | 29 |
| 2026 | 35 | (4) | 31 |
| 2027 | 1483 | (4) | 1479 |
| &nbsp;&nbsp;&nbsp;Total | $1611 | $(20) | $1591 |

---

**Fair value of financial instruments** 

The Company's financial instruments consist primarily of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, and accounts payable. The carrying values of these assets and liabilities approximate their fair values due to the short-term nature of these instruments at December 31, 2022 and 2021.

**Concentration of credit risks and other risks and uncertainties** 

Financial instruments that could potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, short-term investments and accounts receivable. As of December 31, 2022, the Company had $1,200,000 on deposit at financial institutions in excess of amounts insured by the FDIC. This compares to $8,100,000 as of December 31, 2021. The Company performs a periodic evaluation of these institutions for relative credit standing. The Company has not experienced any losses in such accounts and management believes it is not exposed to any significant risk of loss on these balances.

The Company uses third parties for certain finishing functions for its products, including the slicing and polishing of its sapphire crystal inventory. These types of services are only available from a limited number of third parties. The Company's ability to successfully outsource these finishing functions will substantially depend on its ability to develop, maintain and expand its strategic relationship with these third parties. As a result, the Company may be unable to meet the demand for its products, which could have a material adverse impact on the Company.

Concentration of credit risk related to revenue and accounts receivable is discussed in Note 5.

**Revenue recognition** 

Revenues recognized include product sales and billings for costs and fees for government contracts.

<u>Product Sales</u> 

The Company recognizes revenue in accordance with ASC Topic 606, *Revenue From Contracts with Customers* ("Topic 606") which was adopted on January 1, 2018. The Company recognizes revenue when performance obligations under a purchase order or signed quotation are satisfied. The Company's business practice commits the Company to manufacture and deliver product upon acceptance of a customer's purchase order or signed quotation ("agreement"). The agreement with the customer includes specifications of the product to be delivered, price, expected ship date and payment terms. The Company's agreements generally do not contain variable, financing, rights of return or non-cash components. There are no up-front costs to develop the production process. The performance obligation is satisfied at the point in time (single performance obligation) when the product is manufactured to the customer's specification, as performance does not create an asset with an alternative use to the Company. Accordingly, the Company recognizes revenue when the product is shipped, and control of the product, title and risk of loss have been transferred to the customer. The Company grants credit terms considering normal collection risk. If there is doubt about collection, full prepayment for the order is required. Any payments received prior to shipment are recorded as deferred revenue and included in Advance Payments in the Consolidated Balance Sheets.

The Company does not provide maintenance or other services and we do not have sales that involve multiple elements or deliverables.

All of the Company's revenue is denominated in U.S. dollars.

**Shipping and handling costs** 

The Company records costs incurred in connection with shipping and handling of products as cost of goods sold. Amounts billed to customers in connection with these costs are included in revenue and are not material for any of the periods presented in the accompanying financial statements.

**Sales tax** 

The Company collects and remits sales taxes on products sold to customers and reports such amounts under the net method in its Consolidated Statements of Operations and records a liability until remitted to the respective tax authority.

**Stock-based compensation** 

The Company requires all share-based payments to employees, including grants of employee stock options, to be measured at fair value and expensed in the Consolidated Statements of Operations over the service period (generally the vesting period) of the grant. Expense is recognized in the Consolidated Statements of Operations for these share-based payments. The Company uses Black Scholes option pricing model in order to determine the fair value of stock option grants.

**Accounting for uncertainty in income taxes** 

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and/or penalties related to income tax matters in income tax expense. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2022 and 2021.

The Company is subject to taxation in the U.S. and in a U.S. state jurisdiction. Due to the existence of NOL carryforwards, tax years ended December 31, 2006, 2008, 2009 and 2012 through 2021 are open to examination by tax authorities for Federal purposes. Due to NOL carryforwards at the State level, tax years ended 2012 through 2021 are open to examination by state tax authorities.

Currently, the Company is trying to determine whether, and the extent to which, it has a Malaysian withholding tax obligation. It is performing related due diligence with Malaysian tax experts to resolve the issue, and has recorded an appropriate liability for the potential tax obligation.

**Income taxes** 

Deferred tax assets and liabilities are provided for temporary differences between financial reporting and income tax bases of assets and liabilities, and are measured using the enacted tax rates and laws expected to be in effect when the differences will reverse. Deferred income taxes also arise from the future benefits of NOL carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Full valuation allowances on net deferred tax assets are maintained until an appropriate level of profitability that generates taxable income is deemed sustainable or until a tax strategy is developed that would enable the Company to conclude that it is more likely than not that a portion of the deferred tax assets will be realizable. Based on an evaluation in accordance with the accounting standards, as of December 31, 2022 and 2021, a valuation allowance has been recorded against the net U.S. and Malaysia deferred tax assets in order to measure only the portion of the deferred tax assets that are more likely than not to be realized based on the weight of all the available evidence**.**

**Use of estimates** 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and those differences could be material.

**Other comprehensive income (loss)** 

Comprehensive income (loss) is defined as the change in equity of a business enterprise from transactions and other events from non-owner sources. Comprehensive income (loss) includes net income (loss) and other non-owner changes in equity that bypass the statement of operations and are reported in a separate component of equity.

**Net income (loss) per common share** 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of diluted common shares outstanding during the period. Diluted shares outstanding are calculated by adding to the weighted-average shares (a) any outstanding stock options based on the treasury stock method and (b) restricted stock units ("RSU").

Diluted net loss per common share was the same as basic net loss per common share for the year December 31, 2021, because the effects of potentially dilutive securities were anti-dilutive.

**New accounting pronouncements adopted**

The Company has evaluated recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact the Company's consolidated financial statements and related disclosures.

**2. SEGMENT INFORMATION** 

Revenue is attributed by geographic region based on ship-to location of the Company's customers. The following table summarizes revenue by geographic region:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| North America | $2940 | $3671 |
| Asia | 567 | 349 |
| Other | 80 | 41 |
| &nbsp;&nbsp;&nbsp;Total revenue | $3587 | $4061 |

---

All revenues from continuing operations for the years ended December 31, 2022 and 2021, were from the sale of optical sapphire products and related materials.

All of our assets were located in the United States for the years ended December 31, 2022 and 2021.

**3. INVESTMENTS** 

When the Company invests its available cash, it primarily invests in U.S. Treasury securities, investment grade commercial paper, FDIC guaranteed certificates of deposit, common stock, equity-related securities and corporate notes. Investments classified as available-for-sale debt securities are carried at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in equity securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statements of Operations. Investments in which we have the ability and intent, if necessary, to liquidate in order to support our current operations are classified as short-term.

There were no short-term investments of the Company at December 31, 2022.

The following table presents the amortized cost, and gross unrealized gains and losses on all securities at December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |<br>**Amortized**<br>**cost** | **Gross**<br>**unrealized**<br>**gains** | **Gross**<br>**unrealized**<br>**losses** |<br>**Fair**<br>**value** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Short-term investments: |  |  |  |  |
| U.S. Treasury securities | $14751 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $&nbsp;&nbsp;&nbsp;&nbsp; — | $14751 |
| &nbsp;&nbsp;&nbsp;Total short-term investments | $14751 | $— | $— | $14751 |

---

The Company values its investments at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

● Level 1—Quoted prices in active markets for identical assets or liabilities.

● Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company's fixed income available-for-sale securities consist of U.S. Treasury securities, high-quality investment grade commercial paper, FDIC guaranteed certificates of deposit, common stock, equity related securities and corporate notes. The Company values these securities based on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The valuation techniques used to measure the fair value of the Company's financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques.

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market funds | $6 | $— | $— | $6 |
| Investments: |  |  |  |  |
| Available-for-sales securities—current: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $6 | $— | $— | $6 |

---

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market funds | $3137 | $— | $— | $3137 |
| Investments: |  |  |  |  |
| Available-for-sales securities—current: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Treasury securities |  | 14751 |  | 14751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $3137 | $14751 | $— | $17888 |

---

There are no terms or conditions restricting the Company from redeeming any of its investments.

In addition to the debt securities noted above, the Company had approximately $1,600,000 and $8,100,000 of time deposits included in cash and cash equivalents as of December 31, 2022 and 2021, respectively.

**4. DISCONTINUED OPERATIONS: Closure of Direct Dose Rx** 

On June 24, 2021, the Company's Board of Directors decided effective immediately to close its pharmacy operations dba Direct Dose Rx. Immediately thereafter, Direct Dose Rx began transitioning its customers to other providers and began the process of closing its operations. Direct Dose

was launched as a start-up pharmacy primarily to deliver medications and vitamins to patients being discharged from skilled nursing facilities. The Company does not believe that the costs associated with such closure will be material. Based on the Company's review and analysis of ASC 205-20 Presentation of Discontinued Operations it concluded to present the discontinued operations separately.

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Revenues (discontinued operations) | $— | $370 |
| Operating Expense (discontinued operations) | (16) | 641 |
| Income/loss from operations of discontinued operations, net of taxes | $16 | $(271) |

---

**5. SIGNIFICANT CUSTOMERS** 

For the year ended December 31, 2022, the Company had six customers that accounted for approximately 15%, 12%, 12%, 11%, 11%, and 11% of its revenue from continuing operations. For the year ended December 31, 2021, the Company had three customers that accounted for approximately 22%, 12%, and 12% of its revenue from continuing operations.

Customers individually representing more than 10% of trade receivables accounted for approximately 74% and 80% of accounts receivable as of December 31, 2022 and 2021, respectively.

**6. ASSETS HELD FOR SALE AND LONG-LIVED ASSETS** 

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, the Company performs an analysis to review the recoverability of the asset's carrying value using estimates of the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. The estimated fair value of assets is determined using appraisal techniques which assume the highest and best use of the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. Any impairment losses are recorded as operating expenses, which reduce net income.

On September 19, 2022, the Company completed the sale of its parcel of land located in Batavia, Illinois pursuant to the terms and conditions of the agreement of sale, dated as of February 7, 2022. The selling price for the property was $722,000. The Company realized net proceeds of approximately $600,000 after the payment of real estate taxes, brokerage and legal fees, transfer taxes and other expenses.

**7. STOCKHOLDERS' EQUITY** 

**Common stock** 

At the Company's annual meeting of stockholders held on May 3, 2017, the Company's stockholders approved amendments to the Company's Eighth Amended and Restated Certificate of Incorporation (as amended, the "Certificate of Incorporation") to (i) effect a reverse stock split of the Company's common stock; and (ii) decrease the Company's authorized number of shares of common stock to three times the number of shares of the Company's common stock outstanding immediately following the reverse stock split. On May 3, 2017, following the annual meeting, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to (a) implement the reverse stock split at a ratio of 1-for-10; and (b) to reduce the number of authorized shares of common stock from 40,000,000 to 8,200,000, consequently reducing the number of total authorized shares from 45,000,000 to 13,200,000. With the completion of the reverse stock split, the Company's shares began trading above the required $1.00 per share closing bid price, as required by the Listing Qualifications Department of NASDAQ. The share information has been retroactively reflected for the effects of this reverse stock split for all periods presented.

**Preferred stock**

At the Company's annual meeting of stockholders held on May 10, 2018, the Company's stockholders approved an amendment to the Certificate of Incorporation to decrease the Company's authorized number of shares of preferred stock from 5,000,000 shares to 1,000,000 shares. The Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to decrease the authorized number of preferred shares, consequently reducing the number of total authorized shares from 13,200,000 to 9,200,000.

**Common shares reserved**

As of December 31, 2022, the Company had reserved 300 shares of common stock for issuance upon the exercise of outstanding common stock options. Also, 320,273 shares of the Company's common stock were reserved for future grants of stock options and RSUs (or other similar equity instruments) under the Rubicon Technology, Inc. 2016 Stock Incentive Plan (the "2016 Plan") as of December 31, 2022.

**8. STOCKHOLDER RIGHTS AGREEMENT**

On December 18, 2017, the Company entered into a Section 382 Rights Agreement with American Stock Transfer & Trust Company, LLC, as Rights Agent (the "Rights Agreement") in an effort to protect stockholder value by attempting to diminish the risk that the Company's ability to use its net NOLs to reduce potential future federal income tax obligations may become substantially limited. The Company's ability to utilize its NOLs may be substantially limited if the Company experiences an "ownership change" within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the "IRC"). The Rights Agreement is intended to act as a deterrent to any person acquiring beneficial ownership of 4.9% or more of the Company's outstanding common stock without the approval of the Company's Board of Directors (the "Board").

The Board authorized the issuance of one Right for each outstanding share of common stock, par value $0.001 per share, of the Company, payable to stockholders of record date of the close of business on January 2, 2018. One Right will also be issued together with each share of the Company's common stock issued after January 2, 2018 but before the Distribution Date (as defined below) and, in certain circumstances, after the Distribution Date. Subject to the terms, provisions and conditions of the Rights Agreement, if the Rights become exercisable, each Right would initially represent the right to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company (the "Series A Preferred Stock") for a purchase price of $40.00. If issued, each one-thousandth of a share of Series A Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of common stock. However, prior to exercise, a Right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights.

The Rights will not be exercisable until the earlier of (i) ten business days after a public announcement that a person has become an "Acquiring Person" by acquiring beneficial ownership of 4.9% or more of outstanding common stock (or, in the case of a person that had beneficial ownership of 4.9% or more of the outstanding common stock as of the close of business on December 18, 2017, by obtaining beneficial ownership of any additional shares of common stock representing 0.5% or more of the shares of common stock then outstanding (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of the common stock or pursuant to a split or subdivision of the outstanding shares of common stock) at a time such person still beneficially owns 4.9% or more of the outstanding common stock), and (ii) ten business days (or such later date as may be specified by the Board prior to such time as any person becomes an Acquiring Person) after the commencement of a tender or exchange offer by or on behalf of a person that, if completed, would result in such person becoming an Acquiring Person (the "Distribution Date").

Until the Distribution Date, common stock certificates or the ownership statements issued with respect to uncertificated shares of common stock will evidence the Rights. Any transfer of shares of common stock prior to the Distribution Date will also constitute a transfer of the associated Rights. After the Distribution Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the underlying shares of common stock unless and until the Board has determined to effect an exchange pursuant to the Rights Agreement (as described below).

In the event that a person becomes an Acquiring Person, each holder of a Right, other than Rights that are or, under certain circumstances, were beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right and payment of the purchase price, a number of shares of the Company's common stock (or, in certain circumstances, cash, property or other securities of the Company) having a market value equal to two times the purchase price. However, Rights are subject to redemption and exchange at the option of the Company.

In the event that, at any time following a person becoming an Acquiring Person, (i) the Company engages in a merger or other business combination transaction in which the Company is not the surviving corporation; (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the common stock is changed or exchanged; or (iii) 50% or more of the Company's assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights which have previously been voided) shall thereafter have the right to receive, upon exercise of the Right, common stock of the acquiring company having a value equal to two times the purchase price.

At any time until the earlier of December 18, 2023, and ten calendar days following the first date of public announcement that a person has become an Acquiring Person or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board becomes aware of the existence of an Acquiring Person, the Board may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the "Redemption Price"). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

At any time after a person becomes an Acquiring Person, the Board may, at its option, exchange the Rights (other than Rights that have become void), in whole or in part, at an exchange ratio of one share of common stock, or a fractional share of Series A Preferred Stock (or of a share of a similar class or series of the Company's preferred stock having similar rights, preferences and privileges) of equivalent value, per Right (subject to adjustment). Immediately upon an exchange of any Rights, the right to exercise such Rights will terminate and the only right of the holders of Rights will be to receive the number of shares of common stock (or fractional share of Series A Preferred Stock or of a share of a similar class or series of the Company's preferred stock having similar rights, preferences and privileges) equal to the number of such Rights held by such holder multiplied by the exchange ratio.

Each one one-thousandth of a share of Series A Preferred Stock, if issued: (i) will be nonredeemable and junior to any other series of preferred stock the Company may issue (unless otherwise provided in the terms of such other series), (ii) will entitle holders to preferential cumulative quarterly dividends in an amount per share of Series A Preferred Stock equal to the greater of (a) $1 or (b) 1,000 times the aggregate the dividends, if any, declared on one share of the Company's common stock, (iii) will entitle holders upon liquidation (voluntary or otherwise) to receive $1,000 per share of Series A Preferred Stock plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, (iv) will have the same voting power as one share of common stock, and (v) will entitle holders to a per share payment equal to the payment made on one share of the Company's common stock, if shares of the common stock are exchanged via merger, consolidation, or a similar transaction. Because of the nature of the Series A Preferred Stock's dividend, liquidation and voting rights, the value of a Unit of Series A Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of common stock.

The Rights and the Rights Agreement will expire on the earliest of (i) December 18, 2023, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii) the time at which the Rights are exchanged in full pursuant to the Rights Agreement, (iv) the date that the Board determines that the Rights Agreement is no longer necessary for the preservation of material valuable Tax Benefits, (v) the beginning of a taxable year of the Company to which the Board determines that no NOL tax benefits may be carried forward, and (vi) a determination by the Board, prior to the time any Person becomes an Acquiring Person, that the Rights Agreement and the Rights are no longer in the best interests of the Company and its stockholders.

The Board may adjust the purchase price, the number of shares of Series A Preferred Stock or other securities or assets issuable and the number of outstanding Rights to prevent dilution that may occur as a result of certain events, including among others, a stock dividend, a stock split or a reclassification of the Series A Preferred Stock or common stock. With certain exceptions, no adjustments to the purchase price will be required until cumulative adjustments amount to at least 1% of the purchase price.

For so long as the Rights are redeemable, the Board may supplement or amend any provision of the Rights Agreement in any respect without the approval of the holders of the Rights. From and after the time the Rights are no longer redeemable, the Board may supplement or amend the Rights Agreement only to cure an ambiguity, to alter time period provisions, to correct inconsistent provisions, or to make any additional changes to the Rights Agreement which the Company may deem necessary or desirable, but only to the extent that those changes do not impair or adversely affect any Rights holder (other than an Acquiring Person or any Affiliate or Associate of an Acquiring Person or certain of their transferees) and do not result in the Rights again becoming redeemable or the Rights Agreement again becoming amendable other than in accordance with this sentence.

In connection with the adoption of the Rights Agreement and authorization and declaration of the dividend of the Rights, on December 18, 2017, the Company filed the Certificate of Designation with the Secretary of State of the State of Delaware. The Certificate of Designation became effective on December 18, 2017.

In connection with the execution of the Purchase Agreement, on June 27, 2022, the Company's Board of Directors approved Amendment No. 2 (the "Amendment") to the Rights Agreement. The Amendment, among other things, renders the Rights Agreement inapplicable to the Offer, the Purchase Agreement and the transactions contemplated under the Purchase Agreement. In addition, the Amendment provides that neither the Purchaser, nor any of its affiliates or associates will become an "Acquiring Person" or "Beneficial Owner" (as such terms are defined in the Rights Agreement), and a Distribution Date and Stock Acquisition Date (as such terms are defined in the Rights Agreement) will not be deemed to have occurred, as a result of the announcement of the Offer, the execution of the Purchase Agreement, or the consummation of the Offer or of the other transactions contemplated by the Purchase Agreement. The Amendment also extends the final expiration date of the Rights Agreement to September 1, 2025.

**9. STOCK INCENTIVE PLANS** 

In August 2007, the Company adopted the Rubicon Technology Inc. 2007 Stock Incentive Plan, which was amended and restated effective in March 2011 (the "2007 Plan"), and which allowed for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance awards and bonus shares. The maximum number of shares that could be awarded under the 2007 Plan was 440,769 shares. Options granted under the 2007 Plan entitle the holder to purchase shares of the Company's common stock at the specified option exercise price, which could not be less than the fair market value of the common stock on the grant date. On June 24, 2016, the 2007 Plan terminated with the adoption of the Rubicon Technology, Inc. 2016 Stock Incentive Plan, (the "2016 Plan"). Any existing awards under the 2007 Plan remain outstanding in accordance with their current terms under the 2007 Plan. In June 2016, the Company's stockholders approved adoption of the 2016 Plan effective as of March 17, 2016, which allows for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance awards and bonus shares. The Compensation Committee of the Board administers the 2016 Plan. The committee determines the type of award to be granted, the fair value, the number of shares covered by the award, and the time when the award vests and may be exercised.

Pursuant to the 2016 Plan, 222,980 shares of the Company's common stock plus any shares subject to outstanding awards under the 2007 Plan that subsequently expire unexercised, are forfeited without the delivery of shares or are settled in cash, will be available for issuance under the 2016 Plan. The 2016 Plan will automatically terminate on March 17, 2026, unless the Company terminates it sooner.

The following table summarizes the activity of the stock incentive and equity plans:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Shares<br> available<br> for <br> grant** | **Number of<br> options<br> outstanding** | **Weighted-<br> average<br> option<br> exercise price** | **Number of<br> restricted<br> stock shares<br> issued** | **Number of<br> RSUs<br> outstanding** |
| Outstanding at January 1, 2021 | 292355 | 20100 | $9.71 | 99570 | 48753 |
| &nbsp;&nbsp;&nbsp;Granted | (59580) |  |  |  | 28030 |
| &nbsp;&nbsp;&nbsp;Exercised/issued |  | (15000) | 6.10 |  | (3750) |
| &nbsp;&nbsp;&nbsp;Canceled/forfeited | 71956 | (1050) | 44.10 |  | (45003) |
| Outstanding at December 31, 2021 | 304731 | 4050 | 14.16 | 99570 | 28030 |
| &nbsp;&nbsp;&nbsp;Granted |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised/issued |  | (2250) | 6.10 |  | (28030) |
| &nbsp;&nbsp;&nbsp;Canceled/forfeited | 15542 | (1500) | 20.26 |  |  |
| Outstanding at December 31, 2022 | 320273 | 300 | $44.10 | 99570 |  |

---

There were no option grants made during 2022.

At December 31, 2022, the exercise prices of outstanding options were as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Exercise price** | **Number of<br> options<br> outstanding** | **Average<br> remaining<br> contractual life<br> (years)** | **Number of<br> options<br> exercisable** |
| $44.10 | 300 | 1.94 | 300 |
|  | 300 | 1.94 | 300 |

---

There were no options that were granted or became vested in the years ended December 31, 2022 or 2021, respectively.

The Company's aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company's common stock. Based on the fair value of the common stock at December 31, 2022 there was no intrinsic value arising from 300 stock options exercisable or outstanding.

The Company used historical stock prices as the basis for its volatility assumptions. The assumed risk-free rates were based on U.S. Treasury rates in effect at the time of grant with a term consistent with the expected option lives. The expected term for the year ended December 31, 2022, is based upon the Company's median average life of its options. The forfeiture rate is based on the past history of forfeited options. The expense is being allocated using the straight-line method. For the years ended December 31, 2022 and 2021, respectively, there was no recorded stock option compensation expense. As of December 31, 2022 and 2021, respectively, there were no options granted, and all outstanding options awarded have been fully vested.

There were no RSUs granted in the year ended December 31, 2022, and there were no RSUs outstanding at December 31, 2022.

The following table summarizes the award vesting terms for the RSUs granted in the year ended December 31, 2021:

---

| | |
|:---|:---|
| **Number of RSUs** | **Target<br> price** |
| 12500 | $12.00 |
| 12500 | $13.00 |

---

The RSUs vest in the amounts set forth below on the first date the 15-trading day average closing price of the Company's common stock equals or exceeds the corresponding target price for the common stock before December 28, 2025. On the date of grant of RSUs to a key executive, the closing price of the common stock was $9.20. During the twelve months ended December 31, 2021, neither tranche vested.

The Company used Monte Carlo simulation model valuation technique to determine the fair value of RSUs granted because the awards vest based upon achievement of market price targets. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each RSU. The Company used the following assumptions in determining the fair value of the RSUs:

---

| | |
|:---|:---|
|  | **Granted**<br>**December <br> 2021** |
| Daily expected stock price volatility | 2.1383% |
| Daily expected dividend yield | 0.0% |
| Average daily risk-free interest rate | 0.0039% |

---

The daily expected stock price volatility is based on a four-year historical volatility of the Company's common stock. The daily expected dividend yield is based on annual expected dividend payments. The average daily risk-free interest rate is based on the three-year treasury yield as of the grant date. Each of the tranches is calculated to have its own fair value and requisite service period. The fair value of each tranche is amortized over the requisite or derived service period, which is up to four years. The RSUs granted in December 2021 had a grant date fair value of $151,000. There were no grants with market price targets issued in the year ended December 31, 2021.

A summary of the Company's RSUs is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **RSUs<br> outstanding** | **Weighted-<br> average<br> price at<br> time of grant** | **Aggregate<br> intrinsic<br> value** |
| Non-vested RSUs as of January 1, 2021 | 48753 | $6.34 |  |
| Granted | 28030 | 9.90 |  |
| Vested | (3750) | 8.00 |  |
| Cancelled | (45003) | 7.45 |  |
| Non-vested RSUs as of December 31, 2021 | 28030 | 7.28 |  |
| Granted |  |  |  |
| Vested | (28030) | 9.29 |  |
| Cancelled |  |  |  |
| Non-vested RSUs at December 31, 2022 |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | $— |

---

The fair value of each RSU is the market price on the date of grant and is being recorded as compensation expense ratably over the vesting terms or the expected achievement of market price targets based on the Monte Carlo simulation model. In the event that an RSU vests in a given period, the remaining balance of the fair value of the RSU is expensed in that period. All outstanding RSUs vested in 2022, and as a result, the remaining fair value of $151,000 was recorded as compensation expense was recognized in the year ended December 31, 2022. For the year ended December 31 2021, the Company recorded $30,000 of RSU expense. The RSUs are forfeited by a participant upon termination for any reason, and there is no proportionate or partial vesting in the periods between the vesting dates. As of December 31, 2021, there was $151,000 of unrecognized compensation cost related to the non-vested RSUs.

For the years ended December 31, 2022 and December 31, 2021, the Company recorded no compensation related to restricted stock.

**10. INCOME TAXES** 

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act") which, among other provisions, reduced the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The SEC issued guidance, Staff Accounting Bulletin 118, on accounting for the tax effects of the Act. The guidance allowed the Company to record provisional amounts for those impacts, with the requirement that the accounting be completed in a period not to exceed one year from the date of enactment. The Company has completed its accounting for the tax effects of enactment of the Act. The deemed inclusion from the repatriation tax increased from $3.9 million at the time of provision to $5.0 million at the time the calculation was finalized for the tax return. The increase of the inclusion related primarily to the refinement of Malaysia earnings and profits. As the Company is in a full valuation allowance position, an equal benefit adjustment was recorded for the impact of the increase of the deemed repatriation tax.

Components of income before income taxes and the income tax provision are as follows:

Income (loss) before income taxes is all U.S.-based for the years ended December 31, 2022 and 2021, respectively.

Income taxes

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| *Current* |  |  |
| U.S. | $— | $— |
| State |  |  |
| Total current income tax expense |  |  |
| *Deferred* |  |  |
| U.S. |  |  |
| State |  |  |
| Total deferred income tax expense (benefit) |  |  |
| Total income tax expense (benefit) | $— | $— |

---

The reconciliation of income tax computed at the federal statutory rate to income before taxes is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| U.S. federal statutory rate | (21.0)% | (21.0)% |
| State taxes net of federal benefit | (5.4) | (6.9) |
| Valuation allowance | 26.4 | 27.9 |
|  | —% | —% |

---

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company's net deferred income taxes are as follows at December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | $5 | $5 |
| &nbsp;&nbsp;&nbsp;Inventory reserves | 2928 | 3033 |
| &nbsp;&nbsp;&nbsp;Consumables excess reserve | 162 | 162 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 15 | 155 |
| &nbsp;&nbsp;&nbsp;Warrant interest expense | 195 | 195 |
| &nbsp;&nbsp;&nbsp;Stock compensation expense | 706 | 775 |
| &nbsp;&nbsp;&nbsp;State net operating loss | 13425 | 13358 |
| &nbsp;&nbsp;&nbsp;Net operating loss carryforward | 39759 | 39597 |
| &nbsp;&nbsp;&nbsp;Capital loss carryforward |  | 6755 |
| &nbsp;&nbsp;&nbsp;Tax credits | 669 | 669 |
| &nbsp;&nbsp;&nbsp;Depreciation | 219 | 423 |
| &nbsp;&nbsp;&nbsp;Valuation allowance | (58068) | (65079) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets | 15 | 47 |
| &nbsp;&nbsp;&nbsp;Deferred tax liability: |  |  |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | (15) | (47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax liability | $— | $— |

---

In February 2018, the FASB issued ASU No. 2018-02 ("ASU 2018-02), *Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Comprehensive Income*. The new guidance allows companies to reclassify stranded tax effects resulting from the Tax Act, from accumulated other comprehensive income to retained earnings. The guidance also requires certain new disclosures regardless of the election. Early adoption is permitted. The Company's adoption of ASU 2018-02 did not have a material impact on its consolidated financial statements.

The Company adopted the guidance in ASU No. 2015-17, *Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes*, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the balance sheet. As a result, each jurisdiction has one net noncurrent deferred tax asset or liability. The new guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. The change in accounting principle did not have an impact on the Company's results of operations, cash flows or stockholders' equity.

At December 31, 2022, we had separate Federal, Illinois and Indiana NOL carryforwards of $189 million, $181 million and $723,000, respectively. The Federal NOLs will begin to expire in 2026, the Illinois NOLs will begin to expire in 2024, and the Indiana NOLs will begin to expire in 2039. With the adoption of ASU 2016-09 in 2017, we recorded a deferred tax asset related to $26.4 million of unrecorded Federal and State NOLs attributable to stock option exercises. NOLs attributable to the stock option exercise were fully offset by the valuation allowance (as described above). We have recorded an uncertain tax position of $2.6 million that further reduces the net operating loss deferred tax assets reported in the financial statements. In addition, at December 31, 2022, we had Federal research and development credits of $662,000, which will begin to expire in 2028.

The Company completed an analysis of the utilization of NOLs subject to limits based upon certain ownership changes as of December 31, 2022. The results of this analysis indicated no ownership change limiting the utilization of net operating losses and tax credits.

The Company prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. At December 31, 2022 and 2021, the Company had $1.1 million of unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company's financial statements as an offset to the valuation allowance related to tax positions taken in 2012. It is not reasonably possible that the amount will change in the next twelve months. There were no material changes to prior year or current year positions taken during the year ended December 31, 2022.

There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2022 and 2021.

The Company files income tax returns in the United States federal jurisdiction and in a state jurisdiction. During 2009, the Company began foreign operations in Malaysia and is subject to local income taxes in that jurisdiction. The Company's Malaysia tax returns for the periods ended December 31, 2010 through 2012 have been audited by the Malaysia Inland Revenue Board with no changes made to the taxable income for those years. All other tax years in Malaysia are open to examination by tax authorities.

The Company's federal tax returns for the periods ended December 31, 2010, 2008 and 2007 have been audited by the Internal Revenue Service (IRS) with no changes made to the Company's taxable losses for those years. The Company's state tax returns for the periods ended December 31, 2009 through 2012 have been audited by the Illinois Department of Revenue with no changes made to the Company's taxable losses for those years. Due to the existence of NOL carryforwards, tax years ended December 31, 2006, 2008, 2009 and 2012 through 2021 are open to examination by tax authorities for Federal purposes. Due to NOL carryforwards at the State level, tax years ended 2012 through 2021 are open to examination by state tax authorities. Tax years 2013 through 2019 are open to examination by the Malaysia Inland Revenue Board.

Due to the closing of the Rubicon Malaysia operations, the Company no longer considers the undistributed earnings of Rubicon Malaysia to be indefinitely reinvested. Upon liquidation of Rubicon Malaysia, it is anticipated any cash left after the liquidation will be brought back to the U.S. via a payment of principal towards the intercompany loan. A withholding tax may be payable to the Malaysian government on the interest portion of the loan. Currently, the Company is trying to determine whether, and the extent to which, it has a Malaysian withholding tax obligation. It is performing related due diligence with Malaysian tax experts to resolve the issue, and has recorded an appropriate liability for the potential tax obligation.

**11. COMMITMENTS AND CONTINGENCIES** 

**COVID-19 Pandemic**

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. The full impact of the COVID-19 outbreak is unknown and cannot be reasonably estimated. The magnitude and duration of the COVID-19 outbreak, as well as other factors, could result in a material impact to the Company's financial statements in future reporting periods.

**Operating Leases** 

The Company adopted ASU 2016-02 in the first quarter of the fiscal year ending December 31, 2019. The adoption of ASU 2016-02 did not have a material impact on the Company's consolidated financial statements, as the Company does not have any material lease agreements. Rubicon DTP did lease a building for its manufacturing and offices, however such lease was not considered material to the Company's financial statements.

Direct Dose's net rent expense under operating leases in 2022 and 2021 amounted to $0 and $26,784, respectively. On January 6, 2021, Direct Dose entered into a one-year lease for an aggregate commitment of approximately $35,500, which was terminated early per agreement with lessor as of September 9, 2021.

**Litigation** 

From time to time, the Company experiences routine litigation in the ordinary course of its business.

There are no outstanding material matters as of December 31, 2022 and through the date of this filing.

**12. BENEFIT PLAN** 

The Company sponsors a 401(k) savings plan (the "Plan"). Employees are eligible to participate in the Plan upon reaching 18 years of age. Employees make contributions to the Plan through payroll deferrals. Employer matching contributions are discretionary. There were no employer matching contributions for the years ended December 31, 2022 and 2021.

**13. SUBSEQUENT EVENTS**

On February 20, 2023, Mr. Brog tendered his resignation as a Class II director, which became effective on February 22, 2023. On February 20, 2023, the Company entered into a Confidential Separation Agreement and General Release with Mr. Brog, in connection with Mr. Brog's resignation from the Company as Chief Executive Officer, President and Acting Chief Financial Officer. Pursuant to the Separation Agreement, Mr. Brog was entitled to receive, among other things, a payment of $112,000 for the assignment to the Company by Mr. Brog of 57,593 shares of common stock of the Company held by Mr. Brog. The Separation Agreement also contained a general release of claims against the Company, as well as certain other customary covenants, including covenants pertaining to non-disparagement and confidentiality. On February 24, 2023, the Board of Directors named Joseph Ferrara as the Executive Officer and Chief Financial Officer, and approved an annual salary of $200,000 and a bonus with terms to be agreed upon at a later date, subject to the Company's customary compensation policies.

## Exhibit 21.1

**Exhibit 21.1**

**Rubicon Technologies, Inc.**

**Subsidiaries of the Company**

---

| | |
|:---|:---|
| **Name of subsidiary** | **State (or other jurisdiction of incorporation)** |
| Rubicon Technology Worldwide LLC | Illinois |
| Rubicon Technology BP LLC | Delaware |
| Rubicon DTP LLC | Delaware |

---

## Exhibit 31.1

**Exhibit 31.1**

**Certifications**

**<u>Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>**

I, Joseph Ferrara, certify that:

1. I
have reviewed this Annual Report on Form 10-K of Rubicon Technology, Inc. (the "registrant");

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

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

4. I
am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

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

&nbsp;&nbsp;&nbsp;&nbsp;b) designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
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;

&nbsp;&nbsp;&nbsp;&nbsp;c) evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and

&nbsp;&nbsp;&nbsp;&nbsp;d) disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) all
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b) any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.

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| | | |
|:---|:---|:---|
| Date: March 30, 2023 | By: | /s/ Joseph Ferrara |
|  |  | Joseph Ferrara |
|  |  | Executive Officer and Chief Financial Officer <br> (Principal Executive, Financial, and Accounting Officer) |

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## Exhibit 32.1

**Exhibit 32.1**

**Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350**

In connection with the Annual Report of Rubicon Technology, Inc. (the "Company") on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph Ferrara, Executive Officer and Chief Financial Officer (Principal Executive, Financial, and Accounting Officer), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.

---

| | | |
|:---|:---|:---|
| Date: March 30, 2023 | By: | /s/ Joseph Ferrara |
|  |  | Joseph Ferrara |
|  |  | Executive Officer and Chief Financial Officer <br> (Principal Executive, Financial, and Accounting Officer) |

---

A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.