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<SEC-DOCUMENT>0001206774-07-001997.txt : 20070814
<SEC-HEADER>0001206774-07-001997.hdr.sgml : 20070814
<ACCEPTANCE-DATETIME>20070814160028
ACCESSION NUMBER:		0001206774-07-001997
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20070630
FILED AS OF DATE:		20070814
DATE AS OF CHANGE:		20070814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMTECH SYSTEMS INC
		CENTRAL INDEX KEY:			0000720500
		STANDARD INDUSTRIAL CLASSIFICATION:	SPECIAL INDUSTRY MACHINERY, NEC [3559]
		IRS NUMBER:				860411215
		STATE OF INCORPORATION:			AZ
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-11412
		FILM NUMBER:		071055065

	BUSINESS ADDRESS:	
		STREET 1:		131 S CLARK DR
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281
		BUSINESS PHONE:		6029675146

	MAIL ADDRESS:	
		STREET 1:		131 SOUTH CLARK DRIVE
		CITY:			TEMPE
		STATE:			AZ
		ZIP:			85281

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	QUARTZ ENGINEERING & MATERIALS INC
		DATE OF NAME CHANGE:	19870715
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>amtech_10q.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>

<BODY bgColor=#ffffff><P align=center><B><FONT face=serif size=4>UNITED STATES <BR></FONT></B><B><FONT face=serif size=4>SECURITIES AND EXCHANGE COMMISSION</FONT></B><B><FONT face=serif> <BR>Washington, D.C. 20549 </FONT></B></P>

<P align=center><B><FONT face=serif size=5>__________<BR>FORM 10-Q </FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="99%"><B><FONT face=serif size=2>(Mark One)</FONT></B>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="99%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>[X] QUARTERLY REPORT PURSUANT</FONT>&nbsp; <FONT face=serif size=2>TO SECTION</FONT>&nbsp; <FONT face=serif size=2>13</FONT>&nbsp; <FONT face=serif size=2>OR</FONT>&nbsp; <FONT face=serif size=2>15</FONT><FONT face=serif size=2>(d)</FONT>&nbsp; <FONT face=serif size=2>OF</FONT>&nbsp; <FONT face=serif size=2>THE</FONT>&nbsp; <FONT face=serif size=2>SECURITIES</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="99%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>EXCHANGE ACT OF 1934</FONT>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </TD></TR>
<TR>
<TD width="99%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="99%"><FONT face=serif size=2>For the quarterly period ended: June 30, 2007</FONT>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </TD></TR>
<TR>
<TD width="99%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD align=center width="99%"><FONT face=serif size=2>OR</FONT> </TD></TR>
<TR>
<TD width="99%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="99%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>[ ] TRANSITION REPORT PURSUANT</FONT>&nbsp; <FONT face=serif size=2>TO SECTION</FONT>&nbsp; <FONT face=serif size=2>13</FONT>&nbsp; <FONT face=serif size=2>OR</FONT>&nbsp; <FONT face=serif size=2>15</FONT><FONT face=serif size=2>(d)</FONT>&nbsp; <FONT face=serif size=2>OF</FONT>&nbsp; <FONT face=serif size=2>THE</FONT>&nbsp; <FONT face=serif size=2>SECURITIES</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="99%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>EXCHANGE ACT OF 1934</FONT>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>For the transition period from ________________ to ________________<BR></FONT></P>

<P align=center><FONT face=serif size=2>Commission File Number: </FONT><U><FONT face=serif size=2>0-11412</FONT></U><FONT face=serif size=2> </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="99%" colSpan=3><B><FONT face=serif size=5>AMTECH SYSTEMS, INC.</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="99%" colSpan=3><FONT face=serif size=2>(Exact name of registrant as specified in its charter)</FONT>&nbsp; </TD></TR>
<TR>
<TD noWrap align=center width="33%">&nbsp;</TD>
<TD noWrap align=center width="33%"></TD>
<TD noWrap align=center width="33%"></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%"><FONT face=serif size=2>Arizona</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%"><FONT face=serif size=2>86-0411215</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="33%"><FONT face=serif size=2>(State or other jurisdiction of</FONT>&nbsp; </TD>
<TD noWrap align=center width="33%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD noWrap align=center width="33%"><FONT face=serif size=2>(I.R.S. Employer</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="33%"><FONT face=serif size=2>incorporation or organization)</FONT>&nbsp; </TD>
<TD noWrap align=center width="33%"></TD>
<TD noWrap align=center width="33%"><FONT face=serif size=2>Identification No.)</FONT>&nbsp; </TD></TR>
<TR>
<TD noWrap align=center width="33%">&nbsp;</TD>
<TD noWrap align=center width="33%"></TD>
<TD noWrap align=center width="33%"></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%"><FONT face=serif size=2>131 South Clark Drive, Tempe, Arizona</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=center width="33%"><FONT face=serif size=2>85281</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="33%"><FONT face=serif size=2>(Address of principal executive offices)</FONT>&nbsp; </TD>
<TD noWrap align=center width="33%"></TD>
<TD noWrap align=center width="33%"><FONT face=serif size=2>(Zip Code)</FONT>&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=left><FONT face=serif size=2>Registrant&#146;s telephone number, including area code: </FONT><U><FONT face=serif size=2>480-967-5146</FONT></U><FONT face=serif size=2> </FONT></P>

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

<P align=left><FONT face=serif size=2>Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one): </FONT></P>

<P align=left><FONT face=serif size=2>Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ X ]</FONT></P>

<P align=left><FONT face=serif size=2>Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] </FONT></P>

<P align=center><FONT face=serif size=2>Shares of Common Stock outstanding as of August 10, 2007: 6,515,923 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=center><B><FONT face=serif>AMTECH SYSTEMS, INC. AND SUBSIDIARIES <BR>TABLE OF CONTENTS</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%"><FONT face=serif>&nbsp;Page</FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif>PART I. FINANCIAL INFORMATION</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>Item
      1.</FONT></B>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp;<B><FONT face=serif>Condensed Consolidated Financial Statements</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Condensed Consolidated Balance Sheets</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;<FONT face=serif>June 30, 2007 (Unaudited) and September 30,
      2006</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>3</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Condensed Consolidated Statements of Operations
      (Unaudited)</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;<FONT face=serif>Three and Nine Months Ended June 30, 2007
      and 2006</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>4</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Condensed Consolidated Statements of Cash Flows
      (Unaudited)</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;<FONT face=serif>Nine Months Ended June 30, 2007 and
      2006</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>5</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Notes
      to Condensed Consolidated Financial Statements (Unaudited)</FONT>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>6</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="84%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>Item
      2.</FONT></B>&nbsp;</TD>
    <TD noWrap align=left width="84%" bgColor=#c0c0c0 colSpan=2>&nbsp;<B><FONT face=serif>Management&#146;s Discussion and Analysis of Financial Condition and
      Results</FONT></B>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>of
      Operations</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Cautionary Statement&nbsp;Regarding Forward-Looking
      Statements</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;15&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Overview</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;16&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%">&nbsp;&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Results
      of Operations</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;16&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Liquidity and Capital Resources</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>20</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Off-Balance Sheet Arrangements</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>21</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Contractual Obligations</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;21&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif>Critical Accounting Policies</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;21&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="84%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>Impact of Recently
      Issued Accounting Pronouncements</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;23&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="98%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>Item 3. Quantitative and Qualitative Disclosures About Market
      Risk</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>24</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="98%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>Item 4. Controls and Procedures</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>24</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="98%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif>PART II. OTHER INFORMATION</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="83%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif>Item 4.</FONT></B>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp;<B><FONT face=serif>Submission of Matters to a Vote
      of Security Holders</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>25&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="83%">&nbsp; </TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif>Item
      6.</FONT></B>&nbsp;</TD>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0>&nbsp;<B><FONT face=serif>Exhibits</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>25</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="98%" colSpan=2>&nbsp; </TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif>SIGNATURES</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>26</FONT>&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="98%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif>EXHIBIT INDEX</FONT></B>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif>27</FONT>&nbsp;</TD></TR></TABLE>

<BR>
<P align=center><FONT face=serif>2</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>PART I FINANCIAL INFORMATION</FONT></B></P>

<P align=justify><B><FONT face=serif size=2>ITEM 1. Condensed Consolidated Financial Statements</FONT></B></P>

<P align=justify><B><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND SUBSIDIARIES <BR>Condensed Consolidated Balance Sheets<BR></FONT></B><B><FONT face=serif size=1>(in thousands except share data)</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; </TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B> </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>September 30,</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; </TD>
<TD align=center width="6%" colSpan=2>&nbsp;<FONT face=serif size=1>(Unaudited)</FONT> </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="41%" bgColor=#c0c0c0><B><FONT face=serif size=2>Assets</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="41%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2><B><FONT face=serif size=1>Current Assets</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Cash and cash equivalents</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>17,872</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>6,433</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accounts receivable</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Trade (less allowance for doubtful accounts of $190 and $223 at</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD vAlign=bottom noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD vAlign=bottom noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>June 30, 2007 and September 30, 2006, respectively)</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>
<P align=right><FONT size=1>10,384</FONT>&nbsp; </P>
</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>
<P align=right><FONT size=1>6,545</FONT> </P>
</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Unbilled and other</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>2,131</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>849</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Inventories</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>6,814</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>4,979</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Deferred income taxes</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,029</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=center width="5%">
<P align=right><FONT face=serif size=1>-</FONT> </P>
</TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Other</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,030</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>414</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Total current assets</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>39,260</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>19,220</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif size=1>Property, Plant and Equipment - Net</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>5,533</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>2,382</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2><B><FONT face=serif size=1>Intangible Assets - Net</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,383</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,144</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif size=1>Goodwill</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>817</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>817</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<B><FONT face=serif size=1>Total Assets</FONT></B>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=1>$<FONT size=3> </FONT></FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=1>46,993</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=1>23,563</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="41%" bgColor=#c0c0c0><B><FONT face=serif size=2>Liabilities and Stockholders' Equity</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="41%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2><B><FONT face=serif size=1>Current Liabilities</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accounts payable</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>3,579</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>3,631</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Bank loans and current maturities of long-term debt</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>219</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>258</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accrued compensation and related taxes</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,121</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,187</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accrued warranty expense</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>283</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>289</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Deferred profit</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,781</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,071</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Customer deposits</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>990</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=center width="5%">
<P align=right><FONT face=serif size=1>-</FONT> </P>
</TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accrued commissions</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>593</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>203</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Other accrued liabilities</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>381</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>379</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Income taxes payable</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>592</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>319</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Total current liabilities</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>9,539</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>7,337</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif size=1>Long-Term Obligations</FONT></B>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>774</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>617</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Total liabilities</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>10,313</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>7,954</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2><B><FONT face=serif size=1>Commitments and Contingencies</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2><B><FONT face=serif size=1>Stockholders' Equity</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Preferred stock; 100,000,000 shares authorized; none issued</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Common stock; $0.01 par value; 100,000,000 shares authorized;</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>shares issued and outstanding: 6,502,842 and 3,476,042</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>at June 30, 2007 and September 30, 2006, respectively</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>65</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>35</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Additional paid-in capital</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>35,412</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>15,774</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accumulated other comprehensive income</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>626</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>501</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Retained earnings (deficit)</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>577</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(701</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Total stockholders' equity</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp;&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>36,680</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>15,609</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="82%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp; &nbsp; <B><FONT face=serif size=1>Total Liabilities and Stockholders' Equity</FONT></B>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$<FONT size=3> </FONT></FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>46,993</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>23,563</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=center><FONT face=serif size=1>The accompanying notes are an integral part of these condensed consolidated financial statements.</FONT></P>

<P align=center><FONT face=serif>3 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND SUBSIDIARIES <BR>Condensed Consolidated Statements of Operations<BR></FONT></B><FONT face=serif size=1>(Unaudited)<BR></FONT><B><FONT face=serif size=1>(in thousands, except per share data)</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="58%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="19%" colSpan=7>&nbsp;<B><FONT face=serif size=1>Three Months Ended June 30,</FONT></B> </TD>
<TD noWrap align=center width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="18%" colSpan=6>&nbsp;<B><FONT face=serif size=1>Nine Months Ended June 30,</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Revenues, net of returns and allowances</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>12,874</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>10,351</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>32,864</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>29,157</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%"><FONT face=serif size=1>Cost of sales</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>9,450</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>7,708</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>24,180</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>21,240</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Gross profit</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>3,424</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>2,643</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>8,684</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>7,917</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Selling, general and administrative</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>2,700</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>2,238</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>7,336</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>6,299</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%"><FONT face=serif size=1>Restructuring Charge</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%">
<P align=right>&nbsp; &nbsp; &nbsp;<FONT face=serif size=1>-</FONT></P>
</TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>140</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%">
<P align=right><FONT face=serif size=1>-<FONT size=3>&nbsp; </FONT></FONT></P>
</TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>140</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Research and development</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>117</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>65</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>376</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>372</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Operating income</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>607</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>200</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>972</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,106</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Interest and other income (expense), net</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>170</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(29</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>313</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(4</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Income before income taxes</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>777</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>171</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,285</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,102</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Income tax expense (benefit)</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(233</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>3</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>7</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>280</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><B>Net income</B></FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,010</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>168</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,278</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>822</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=15>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><B><FONT face=serif size=1>Earnings Per Share:</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp; </TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Basic earnings per share</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.16</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.05</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.25</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.25</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%"><FONT face=serif size=1>Weighted average shares outstanding</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>6,498,100</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>3,436,629</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>5,049,517</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>2,980,020</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="58%">&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%" bgColor=#c0c0c0><FONT face=serif size=1>Diluted earnings per share</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.15</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.05</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.25</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>.24</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="58%"><FONT face=serif size=1>Weighted average shares outstanding</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>6,575,110</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>3,521,173</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>5,103,775</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>3,445,112</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=center><FONT face=serif size=1>The accompanying notes are an integral part of these condensed consolidated financial statements.</FONT></P>

<P align=center><FONT face=serif>4 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND SUBSIDIARIES <BR>Condensed Consolidated Statements Of Cash Flows<BR></FONT></B><FONT face=serif size=1>(Unaudited)<BR></FONT><B><FONT face=serif size=1>(in thousands)</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="19%" colSpan=7>&nbsp;<B><FONT face=serif size=1>Nine Months Ended June 30,</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Operating Activities</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Net income</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,278</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>822</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Adjustments to reconcile net income to net</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><FONT face=serif size=1><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>cash provided by (used in) operating activities:</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Depreciation and amortization</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>524</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>461</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Write-down of inventory</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>194</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>183</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Provision for doubtful accounts</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(41</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>40</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Deferred income taxes</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(1,029</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>
<P align=right><FONT face=serif size=1>- </FONT></P>
</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Non-cash share based compensation expense</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>228</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>154</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Other</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>7</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Changes in operating assets and liabilities:</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accounts receivable</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(4,734</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(3,462</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Inventories</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(1,855</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(1,673</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accrued income taxes</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>258</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>847</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Prepaid expenses and other assets</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(602</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>274</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accounts payable</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(199</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,154</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Accrued liabilities and customer deposits</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>1,225</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>836</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Deferred profit</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>659</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>777</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="80%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=left width="1%"></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Net cash provided by (used in) operating activities</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(4,087</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>413</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Investing Activities</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Purchases of property, plant and equipment</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(3,505</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(602</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Payment for licensing agreement</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(300</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Net cash used in investing activities</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>(3,805</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=1>(602</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Financing Activities</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Proceeds from issuance of common stock</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>19,440</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>709</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Preferred stock cash dividends paid</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(83</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Payments on long-term obligations</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(155</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(103</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Borrowings on long-term obligations</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>355</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Net short term borrowings (payments)</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>(111</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Excess tax benefit of stock options</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>27</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Net cash provided by financing activities</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>19,529</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>550</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Effect of Exchange Rate Changes on Cash</FONT></B>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(198</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>(96</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=1>)</FONT>&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Net Increase in Cash and Cash Equivalents</FONT></B>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>11,439</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>265</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%"><B><FONT face=serif size=1>Cash and Cash Equivalents, Beginning of Period</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>6,433</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>3,309</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Cash and Cash Equivalents, End of Period</FONT></B>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>17,872</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>3,574</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Supplemental Cash Flow Information:</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Interest paid</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>228</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>88</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Income tax refunds</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>370</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Income tax payments</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>778</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>16</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face=serif size=1>Supplemental Non-cash Financing Activities:</FONT></B>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Stock issued for preferred stock dividend</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%"><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=1>74</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=1>Preferred stock converted to common stock</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>- </FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=1>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=1>1,859</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=center><FONT face=serif>5 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND SUBSIDIARIES <BR></FONT></B><B><FONT face=serif size=2>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS <BR>THREE AND NINE MONTHS ENDED JUNE 30, 2007 AND 2006 <BR>(UNAUDITED) </FONT></B></P>

<P align=justify><B><FONT face=serif size=2>1. Basis of Presentation</FONT></B><FONT face=serif size=2> </FONT></P>

<P align=justify><B><FONT face=serif size=2>Nature of Operations and Basis of Presentation</FONT></B><FONT face=serif size=2> &#150; Amtech Systems, Inc. (the &#147;Company&#148;) designs, assembles, sells and installs capital equipment and related consumables used in the manufacture of semiconductors, solar cells, and wafers of various materials, primarily for the semiconductor and solar industries. The Company sells these products worldwide, particularly in the United States, Asia and Europe. In addition, the Company provides semiconductor manufacturing support services. </FONT></P>

<P align=justify><FONT face=serif size=2>The Company serves niche markets in industries that are experiencing rapid technological advances, and which historically have been very cyclical. Therefore, future profitability and growth depend on the Company&#146;s ability to develop or acquire and market profitable new products, and on its ability to adapt to cyclical trends. </FONT></P>

<P align=justify><FONT face=serif size=2>The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the &#147;SEC&#148;), and consequently do not include all disclosures normally required by U.S. generally accepted accounting principles. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments necessary, all of which are of a normal recurring nature, to present fairly our financial position, results of operations and cash flows. Certain information and note disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in&nbsp;the Company&#146;s&nbsp;Annual Report on Form 10-K for the fiscal
year ended September&nbsp;30, 2006. </FONT></P>

<P align=justify><FONT face=serif size=2>The consolidated results of operations for the three and nine month periods ended June 30, 2007, are not necessarily indicative of the results to be expected for the full year. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Reclassifications &#150; </FONT></B><FONT face=serif size=2>Certain reclassifications have been made in the accompanying consolidated financial statements for fiscal 2006 to conform to the 2007 presentation. These reclassifications did not have a material effect on the Company&#146;s results of operations.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Use of Estimates &#150; </FONT></B><FONT face=serif size=2>The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Revenue Recognition</FONT></B><B><I><FONT face=serif size=2> &#150; </FONT></I></B><FONT face=serif size=2>Revenue is recognized upon shipment of the Company&#146;s proven technology equal to the sales price less the greater of (i) the fair value of undelivered services and (ii) the contingent portion of the sales price, which is generally 10-20% of the total contract price. The entire cost of the equipment relating to proven technology is recorded upon shipment. The remaining contractual revenue, deferred costs and installation costs are recorded upon successful installation of the product. </FONT></P>

<P align=justify><FONT face=serif size=2>For purposes of revenue recognition, proven technology means the Company has a history of at least two successful installations. New technology systems are those systems with respect to which the Company cannot demonstrate that it can meet the provisions of customer acceptance at the time of shipment. </FONT></P>

<P align=justify><FONT face=serif size=2>Revenue on new technology is deferred until installation and acceptance at the customer&#146;s premises is completed, as these sales do not meet the provisions of customer acceptance at the time of shipment. Cost of the equipment relating to new technology is recorded against deferred profit and then recorded in cost of sales upon customer acceptance. </FONT></P>

<P align=justify><FONT face=serif size=2>Revenue from services is recognized as the services are performed. Revenue from prepaid service contracts is recognized ratably over the life of the contract. Revenue from spare parts is recorded upon shipment. </FONT></P>

<P align=center><FONT face=serif>6 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>Deferred Profit</FONT></B><FONT face=serif size=2> &#150; Revenue deferred pursuant to the Company&#146;s revenue recognition policy, net of the related deferred costs, if any, is recorded as deferred profit in current liabilities. The components of deferred profit are as follows: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B> </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>September 30,</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%">&nbsp; </TD>
<TD noWrap align=center width="19%" colSpan=7>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred revenues</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3,434</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2,493</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%"><FONT face=serif size=2>Deferred costs</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(1,653</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(1,422</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="80%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred profit</FONT>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,781</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,071</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Concentrations of Credit Risk &#150; </FONT></B><FONT face=serif size=2>Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. The Company&#146;s customers consist of manufacturers of semiconductors, semiconductor wafers, microelectromechanical systems, or MEMS, and solar cells located throughout the world. Credit risk is managed by performing ongoing credit evaluations of the customers&#146; financial condition, by requiring significant deposits where appropriate, and by actively monitoring collections. Letters of credit are required of certain customers depending on the size of the order, type of customer or its creditworthiness, and its country of domicile. Reserves for potentially uncollectible receivables are maintained based on an assessment of collectibility.</FONT></P>

<P align=justify><FONT face=serif size=2>As of June 30, 2007, accounts receivable from two customers exceeded 10% of accounts receivable; one customer accounted for 14% and the other customer accounted for 12% of total accounts receivable.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Accounts Receivable - Unbilled and Other</FONT></B><FONT face=serif size=2> &#150; Unbilled and other accounts receivable consist mainly of the contingent portion of the sales price that is not collectible until successful installation of the product. These amounts are generally billed upon final acceptance by our customers. The majority of these amounts are offset by balances included in deferred profit.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Inventories</FONT></B><FONT face=serif size=2> &#150; Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.</FONT></P>

<P align=justify><FONT face=serif size=2>The components of inventories are as follows:</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="83%">&nbsp; </TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>September 30,</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2006</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%">&nbsp; </TD>
<TD noWrap align=center width="17%" colSpan=5>&nbsp;<FONT face=serif size=1><B>(dollars in thousands)</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif size=2>Purchased parts and raw materials</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,346</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>3,400</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%"><FONT face=serif size=2>Work-in-process</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,788</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,159</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face=serif size=2>Finished goods</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>680</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>420</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="83%">&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>6,814</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>4,979</FONT>&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Property, Plant and Equipment</FONT></B><FONT face=serif size=2> &#150; Property, plant and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred. The cost of property retired or sold and the related accumulated depreciation are removed from the applicable accounts when disposition occurs and any gain or loss is recognized. Depreciation is computed using the straight-line method. Useful lives for equipment, machinery and leasehold improvements range from three to seven years; for furniture and fixtures from five to 10 years; and for buildings 20 years.</FONT></P>

<P align=center><FONT face=serif>7 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>In March 2007, the Company purchased a manufacturing facility in The Netherlands for a purchase price of approximately $3.1 million. The following is a summary of property, plant and equipment: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B> </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>September 30,</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD noWrap align=center width="19%" colSpan=7>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%" bgColor=#c0c0c0><FONT face=serif size=2>Land, building and leasehold improvements</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4,383</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,094</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%"><FONT face=serif size=2>Equipment and machinery</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,760</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,676</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%" bgColor=#c0c0c0><FONT face=serif size=2>Furniture and fixtures</FONT>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2,464</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2,514</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>9,607</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>6,284</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%" bgColor=#c0c0c0><FONT face=serif size=2>Accumulated depreciation and amortization</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(4,074</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(3,902</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>5,533</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>2,382</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Goodwill &#150; </FONT></B><FONT face=serif size=2>Goodwill and intangible assets with indefinite lives are not subject to amortization, but are tested for impairment at least annually. The Company accounts for goodwill under the provisions of Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 142. Accordingly, goodwill is reviewed for impairment on an annual basis, typically at the end of the fiscal year, or more frequently if circumstances dictate. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Intangibles</FONT></B><FONT face=serif size=2> &#150; Intangible assets are capitalized and amortized over 4 to 15 years if the life is determinable. If the life is not determinable, amortization is not recorded.</FONT></P>

<P align=justify><FONT face=serif size=2>In April 2007, the company entered into a license agreement with PST Co., LTD (PST) to market, sell, install, service and, under certain circumstances,&nbsp;manufacture machinery and equipment for the manufacturing of photovoltaic cells that employs PECVD Technology (Licensed Product) developed by PST. Under the terms of this agreement the Company paid $0.3 million to PST in April, with an additional payment due of $0.7 million upon&nbsp;successful development of the Licensed Product. Under the terms of the agreement PST is required to return the original payment if the development of the Licensed Product is unsuccessful within six months. The license agreement expires in April 2017. These payments will be amortized over the life of the agreement beginning with the successful development of the Licensed Product.</FONT></P>

<P align=justify><FONT face=serif size=2>The following is a summary of intangibles: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="71%">&nbsp; </TD>
<TD noWrap align=center width="5%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B> </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>September 30,</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Useful Life</B></FONT> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B> </TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="19%" colSpan=7>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%" bgColor=#c0c0c0><FONT face=serif size=2>Patents</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0><FONT face=serif size=2>7 years</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>
<P align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;<FONT face=serif size=2>-</FONT></P>
</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>74</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%"><FONT face=serif size=2>Trademarks</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%"><FONT face=serif size=2>Indefinite</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>592</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>592</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%" bgColor=#c0c0c0><FONT face=serif size=2>Non-compete agreements</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0><FONT face=serif size=2>10 years</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>350</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>350</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%"><FONT face=serif size=2>Customer lists</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%"><FONT face=serif size=2>15 years</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>276</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>276</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%" bgColor=#c0c0c0><FONT face=serif size=2>Technology</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4 years</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>102</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>102</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%"><FONT face=serif size=2>Licenses</FONT>&nbsp; </TD>
<TD noWrap align=center width="5%"><FONT face=serif size=2>10 years</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>300</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>-</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,620</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,394</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%"><FONT face=serif size=2>Accumulated amortization</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(237</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(250</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="71%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,383</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,144</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Warranty &#150; </FONT></B><FONT face=serif size=2>A limited warranty is provided free of charge, generally for periods of 12 to 24 months to all purchasers of the Company&#146;s new products and systems. Accruals are recorded for estimated warranty costs at the time revenue is recognized.</FONT><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>The following is a summary of activity in accrued warranty expense: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD noWrap align=center width="19%" colSpan=7>&nbsp;<B><FONT face=serif size=1>Nine Months Ended June 30,</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%">&nbsp; </TD>
<TD noWrap align=center width="19%" colSpan=7><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%" bgColor=#c0c0c0><FONT face=serif size=2>Beginning balance</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>289</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>248</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%"><FONT face=serif size=2>Warranty expenditures</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(61</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(38</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%" bgColor=#c0c0c0><FONT face=serif size=2>Provision</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>55</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>79</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="81%"><FONT face=serif size=2>Ending balance</FONT>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>283</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>289</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Long-Term Debt</FONT></B><FONT face=serif size=2> &#150; In October 2006, the Company received $0.4 million of additional long-term financing secured by new equipment acquired prior to the end of fiscal 2006. This debt has an interest rate of 7.43% per annum and will be repaid over five years.</FONT></P>

<P align=center><FONT face=serif>8 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2><B>Share-Based Compensation </B>&#150;<B> </B></FONT><FONT face=serif size=2>On October 1, 2005, the Company adopted SFAS No. 123 (R), &#147;Share-Based Payment&#148; (&#147;SFAS 123 (R)&#148;) and Staff Accounting Bulletin 107, &#147;Share-Based Payment.&#148; SFAS 123 (R) requires the Company to measure compensation costs relating to share-based payment transactions based upon the grant-date fair value of the award. Those costs are recognized as expense over the requisite service period, which is generally the vesting period. The Company elected the modified prospective application method of reporting; therefore, prior periods were not restated. Under the modified prospective method, this statement was applied to new awards granted after the time of adoption, as well as to the unvested portion of previously granted awards for which the requisite service had not been rendered as of October 1, 2005. SFAS 123 (R) also requires the benefits of tax deductions in
excess of recognized compensation cost to be reported as cash flow from financing activities rather than as cash flow from operating activities. Our share-based compensation plans are summarized in the table below: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="59%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Shares</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Shares</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Options</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Plan</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="59%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Name of Plan</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Authorized</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Available</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Outstanding</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Expiration</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>2007 Employee Stock Incentive Plan</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>500,000</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>500,000</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>-</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>April 2017</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>1998 Employee Stock Option Plan</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>500,000</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>11,937</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>410,634</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="5%"><FONT face=serif size=2>Jan 2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Non-Employee Directors Stock Option Plan</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>200,000</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>78,600</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>55,000</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face=serif size=2>July 2015</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>590,537</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>465,634</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="5%">&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>Share-based compensation expense recognized under SFAS 123 (R) reduced the Company&#146;s results of operations by the following amounts: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="61%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="17%" colSpan=5><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended June 30,</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="17%" colSpan=5><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended June 30,</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%">&nbsp; </TD>
<TD noWrap align=center width="39%" colSpan=11>&nbsp;<FONT face=serif size=1>(dollars in thousands, except per share amounts)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%" bgColor=#c0c0c0><FONT face=serif size=2>Income before income taxes (1)</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>118</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>26</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>228</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>154</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%"><FONT face=serif size=2>Net income</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>99</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>21</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>195</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>141</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%" bgColor=#c0c0c0><FONT face=serif size=2>Basic income per share</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>0.02</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>0.01</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>0.05</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>0.05</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="61%"><FONT face=serif size=2>Diluted income per share</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0.02</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0.01</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0.04</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0.04</FONT>&nbsp; </TD></TR>
</TABLE>

<BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD vAlign=top noWrap><FONT face=serif size=2>(1)</FONT></TD>
<TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD width="100%"><FONT face=serif size=2>Stock option expense is included in selling, general and administrative expenses.</FONT></TD></TR>
</TABLE>


<P align=justify><FONT face=serif size=2>Stock options issued under the terms of the plans have, or will have, an exercise price equal to or greater than the fair market value of the common stock at the date of the option grant and expire no later than 10 years from the date of grant, with the most recent grant expiring in 2017. Options issued by the Company vest over one to five years. In May 2007 the Board of Directors approved the 2007 Employee Stock Incentive Plan (&#147;2007 Plan&#148;). The Company may also grant restricted stock awards under the 2007 Plan.</FONT></P>

<P align=center><FONT face=serif>9 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>The stock option transactions and the options outstanding are summarized as follows: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="41%" colSpan=13><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended June 30,</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="18%" colSpan=6><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="18%" colSpan=6><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Weighted</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Weighted</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Average</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Average</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Exercise</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Exercise</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Options</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Price</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Options</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Price</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Outstanding at beginning of period</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>308,384</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;</FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5.95</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>468,206</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;</FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4.78</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>Granted</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>167,250</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>7.09</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>37,522</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>7.16</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Exercised</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(8,050</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>3.63</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(148,779</FONT> </TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>3.10</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>Forfeited</FONT>&nbsp; </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(1,950</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>7.01</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(33,896</FONT> </TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>4.59</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Outstanding at end of period</FONT>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>465,634</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;</FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6.40</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>323,053</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;</FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5.85</FONT>&nbsp; </TD></TR>
<TR>
<TD width="100%" colSpan=14>&nbsp; </TD></TR>
<TR>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT size=2>Exercisable at end of period</FONT>&nbsp; </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT size=2>&nbsp; 258,418</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT><FONT size=3> </FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT size=2>6.04</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="1%" bgColor=#c0c0c0><FONT size=3>&nbsp;</FONT></TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp; 248,754</FONT> </TD>
<TD style="BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT><FONT size=3> </FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT size=2>5.83</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>Weighted average fair value of options</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="5%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>granted during the period</FONT>&nbsp; </TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>4.30</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3></FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>5.33</FONT> </TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>The fair value of options was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="78%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="21%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended June 30,</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%">&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="8%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="8%"><FONT face=serif size=1><FONT size=1></FONT><FONT size=3>&nbsp;</FONT><B>2006</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face=serif size=2>Risk free interest rate</FONT>&nbsp; </TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;4.5% to 4.9% </FONT>&nbsp;</TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;4.4% to 4.6% </FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%"><FONT face=serif size=2>Expected life</FONT>&nbsp; </TD>
<TD noWrap align=center width="8%"><FONT face=serif size=2>5 - 6.4 years </FONT>&nbsp;</TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="8%"><FONT face=serif size=2>&nbsp;3-7.5 years </FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face=serif size=2>Dividend rate</FONT>&nbsp; </TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;0% </FONT>&nbsp;</TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;0% </FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%"><FONT face=serif size=2>Volatility</FONT>&nbsp; </TD>
<TD noWrap align=center width="8%"><FONT face=serif size=2>&nbsp;61% to 69% </FONT>&nbsp;</TD>
<TD noWrap align=center width="5%">&nbsp; </TD>
<TD noWrap align=center width="8%"><FONT face=serif size=2>&nbsp;63% to 101% </FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face=serif size=2>Forfeiture rate</FONT>&nbsp; </TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;4.8% </FONT>&nbsp;</TD>
<TD noWrap align=center width="5%" bgColor=#c0c0c0>&nbsp; </TD>
<TD noWrap align=center width="8%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;7.5% </FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>To estimate expected lives for this valuation, it was assumed that options will be exercised at varying schedules after becoming fully vested. In accordance with SFAS 123 (R), forfeitures have been estimated at the time of grant and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based upon historical experience. Fair value computations are highly sensitive to the volatility factor assumed; the greater the volatility, the higher the computed fair value of the options granted. </FONT></P>

<P align=justify><FONT face=serif size=2>There were 11,000 and 167,250 options granted during the three and nine months ended June 30, 2007, respectively; and 17,500 and 37,522 options granted for the comparable periods of fiscal 2006. Total fair value of options granted was approximately $53,000 and $767,000 for the three and nine months ended June 30, 2007, respectively; and $92,000 and $200,000 for the comparable periods of fiscal 2006.</FONT></P>

<P align=justify><FONT face=serif size=2>The following tables summarize information for stock options outstanding and exercisable at June 30, 2007: </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="59%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Remaining</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="4%"></TD>
<TD noWrap align=center width="1%">&nbsp; </TD>
<TD noWrap align=center width="5%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Aggregate</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="59%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%">&nbsp; </TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Contractual</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="4%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Weighted</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Intrinsic</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="59%">&nbsp; </TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Number</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Life</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="4%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Average</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Value</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="59%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Range of Exercise Prices</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Outstanding</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(in years)</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="4%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Exercise Price</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="5%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(in thousands)</B><FONT size=3>&nbsp;</FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Options outstanding</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>465,634</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6.5</FONT>&nbsp; </TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;<FONT face=serif size=2>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6.40</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;&nbsp;<FONT face=serif size=2>$</FONT> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,099</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>Vested and expected to vest</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="5%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>445,471</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>6.4</FONT>&nbsp; </TD>
<TD noWrap align=left width="4%">&nbsp;</TD>
<TD noWrap align=right width="1%">&nbsp;&nbsp;<FONT face=serif size=2>$</FONT> </TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>6.38</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%">&nbsp;</TD>
<TD noWrap align=right width="1%"><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;</FONT>$<FONT size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,059</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Options exercisable</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>258,418</FONT>&nbsp; </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4.4</FONT>&nbsp; </TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;<FONT face=serif size=2>$</FONT> </TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6.04</FONT>&nbsp; </TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2><FONT style="BACKGROUND-COLOR: #c0c0c0" size=3>&nbsp;&nbsp;</FONT>$<FONT style="BACKGROUND-COLOR: #c0c0c0" size=3> </FONT></FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>701</FONT>&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Impact of Recently Issued Accounting Pronouncements</FONT></B><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>In June 2006, the FASB published FASB Interpretation No. 48, </FONT><I><FONT face=serif size=2>Accounting for Uncertainty in Income Taxes</FONT></I><FONT face=serif size=2>, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#146;s financial statements in accordance with SFAS No. 109, </FONT><I><FONT face=serif size=2>Accounting for Income Taxes</FONT></I><FONT face=serif size=2>. SFAS No. 109 does not prescribe a recognition threshold or measurement attributable for the financial statement recognition and measurement of a tax position</FONT></P>

<P align=center><FONT face=serif>10 </FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>taken in a tax return. Diversity in practice exists in the accounting for income taxes. To address that diversity this Interpretation clarifies the application of SFAS No. 109 by defining a criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise&#146;s financial statements. Additionally, this Interpretation provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition for such uncertain tax transactions. This Interpretation is effective for the Company&#146;s 2008 fiscal year (beginning October 1, 2007). The Company has not yet determined the impact, if any, that the adoption of Interpretation No. 48 will have on its consolidated financial statements.</FONT></P>

<P align=justify><FONT face=serif size=2>In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, &#147;Fair Value Measurements&#148;. SFAS No. 157 defines fair value, establishes a formal framework for measuring fair value and expands disclosures about fair value measurements. The Company has not yet determined the impact, if any, that SFAS No. 157 will have on its consolidated financial statements. SFAS No. 157 is effective for the Company&#146;s fiscal year beginning October 1, 2008.</FONT></P>

<P align=justify><FONT face=serif size=2>In February 2007, the FASB issued SFAS No. 159, &#147;The Fair Value Option for Financial Assets and Financial Liabilities (as amended)&#148;. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. In addition, FAS No. 159 establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The Company has not yet determined the impact, if any, that SFAS No. 159 will have on its consolidated financial statements. SFAS No. 159 is effective for the Company&#146;s fiscal year beginning October 1, 2008.</FONT><B><FONT face=serif size=2></FONT></B></P>

<P align=justify><B><FONT face=serif size=2>2. Deferred Taxes</FONT></B></P>

<P align=justify><FONT face=serif size=2>Deferred tax assets reflect the tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. SFAS No. 109 &#147;Accounting for Income Taxes&#148; requires that a valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Each quarter the valuation allowance is re-evaluated. During the nine months ended June 30 2007, continued improvement in both the Company&#146;s earnings history and&nbsp;its prospects for the future resulted in a $0.5 million lower estimate of the amount of deferred assets that more likely than not will be unrealizable. Tax payments of $778,000 were made during the nine months ended June 30, 2007. During the nine months ended June 30, 2007, the Company also recorded an increase of $0.5 million in deferred tax assets
for items that meet the more likely than not criteria for recognition under SFAS No. 109.</FONT></P>

<P align=justify><FONT face=serif size=2>The tax effects of temporary book-tax differences that give rise to significant portions of the deferred tax asset and deferred tax liability are as follows:</FONT><FONT face=serif></FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=2><B><FONT size=1>June 30</FONT></B></FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=2><B><FONT size=1>September 30,</FONT></B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><B><FONT face=serif size=1>2007</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=2><B><FONT size=1>2006</FONT></B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp;</TD>
<TD noWrap align=center width="15%" colSpan=7>&nbsp;<FONT face=serif size=1>(dollars in thousands)</FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred tax assets - current:</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Capitalized inventory costs</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>279</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>205</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Inventory write-downs</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>421</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>412</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Deferred profit</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>610</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>377</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Accruals and reserves not currently deductible</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>660</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>467</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>1,970</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>1,461</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred tax assets - non-current:</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Stock option expense</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>51</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>17</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>State net operating losses</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>183</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>172</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>234</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>189</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=8>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred tax liabilities - non-current</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%">&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Book vs. tax depreciation and amortization</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>(81</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>(17</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0><FONT face=serif size=2>Total deferred tax assets - net</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2,123</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,633</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%"><FONT face=serif size=2>Valuation allowance</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>(1,094</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>(1,633</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="84%" bgColor=#c0c0c0><FONT face=serif size=2>Deferred tax assets net of valuation allowance</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$<FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,029</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>-</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
</TABLE>


<P align=center>11</P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>3. Earnings Per Share</FONT></B></P>

<P align=justify><FONT face=serif size=2>Earnings per share (EPS) is computed by dividing net income available to common shareholders (net income less accrued preferred stock dividends) by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued, and the numerator is based on net income available to common shareholders.</FONT></P>

<P align=justify><FONT face=serif size=2>For the three and nine months ended June 30, 2007, options for 190,750 and 196,272 shares, respectively, are excluded from the diluted EPS calculations because they are anti-dilutive. For the three and nine months ended June 30, 2006, options for 17,473 and 6,923 shares, respectively, are excluded from the diluted EPS calculations because they are anti-dilutive.</FONT></P>
<FONT size=2></FONT>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="10%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT size=1>Three Months Ended</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%"></TD>
<TD noWrap align=center width="11%" colSpan=6>&nbsp;<B><FONT face=serif size=2><FONT size=1>Nine Months Ended</FONT></FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT size=1>June 30,</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="11%" colSpan=6>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>June 30,</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>2007</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>2006</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%" colSpan=2>&nbsp;<FONT face=serif size=2><B><FONT face=serif size=1>2007</FONT></B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=3>&nbsp;<B><FONT face=serif size=2><FONT size=1>2006</FONT></FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="10%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT size=1>(in thousands, except per share amounts)</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%"></TD>
<TD noWrap align=center width="11%" colSpan=6>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>(in thousands, except per share amounts)</FONT></FONT></B></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2><B>Basic Earnings Per Share Computation</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="75%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2><FONT face=serif size=2>Net income</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>1,010</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>168</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>1,278</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3></FONT>822</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Preferred stock dividends</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>-</FONT>&nbsp;</TD>
<TD noWrap align=right width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>-</FONT>&nbsp;</TD>
<TD noWrap align=right width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>-</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(81</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2><FONT face=serif size=2>Net income available to</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="3%">&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="3%">&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="3%">&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="3%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp; &nbsp;<FONT face=serif size=2>common stockholders</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>1,010</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>168</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>1,278</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>741</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=14>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Weighted Average Shares Outstanding:</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp; &nbsp;<FONT face=serif size=2>Common stock</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>6,498</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>3,437</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>5,050</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>2,980</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=14>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Basic earnings per share</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.16</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.05</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.25</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>0.25</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=14>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><B><FONT face=serif size=2>Diluted Earnings Per Share Computation</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="75%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2><FONT face=serif size=2>Net income</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>1,010</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>168</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>1,278</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>822</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=14>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Weighted Average Shares Outstanding:</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp; &nbsp;<FONT face=serif size=2>Common stock</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>6,498</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>3,437</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>5,050</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>2,980</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2>&nbsp; &nbsp;<FONT face=serif size=2>Common stock equivalents (1)</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>77</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>84</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>54</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>465</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" colSpan=2>&nbsp; &nbsp;<FONT face=serif size=2>Diluted shares</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>6,575</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>3,521</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>5,104</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>3,445</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=14>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="76%" bgColor=#c0c0c0 colSpan=2><FONT face=serif size=2>Diluted earnings per share</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.15</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.05</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>0.25</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>0.24</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
</TABLE>

<BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD vAlign=top noWrap><FONT face=serif size=2>(1)</FONT></TD>
<TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD width="100%"><FONT face=serif size=2>The number of common stock equivalents is calculated using the treasury stock method and the average market price during the period.</FONT></TD></TR>
</TABLE>


<P align=justify><B><FONT face=serif size=2>4. Comprehensive Income</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp;</TD>
<TD noWrap align=center width="20%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>Three Months Ended</FONT></B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="19%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT size=1>Nine Months Ended</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="20%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>June 30,</FONT></B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="19%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>June 30,</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%" colSpan=2><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>2007</FONT></B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%" colSpan=2><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT size=1>2006</FONT></B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT size=1>2007</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%" colSpan=2>&nbsp;<B><FONT size=2><FONT size=1>2006</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%">&nbsp;</TD>
<TD noWrap align=center width="20%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>(dollars in thousands)</FONT></B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="19%" colSpan=5>&nbsp;<B><FONT face=serif size=2><FONT size=1>(dollars in thousands)</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Net income, as reported</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>1,010</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>168</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>1,278</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>822</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%"><FONT face=serif size=2>Foreign currency translation adjustment</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="8%"><FONT face=serif size=2>26</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="8%"><FONT face=serif size=2>94</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="8%"><FONT face=serif size=2>125</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="8%"><FONT face=serif size=2>68</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="59%" bgColor=#c0c0c0><FONT face=serif size=2>Comprehensive income</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>1,036</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="2%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>262</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>1,403</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="8%" bgColor=#c0c0c0><FONT face=serif size=2>890</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>5. Business Segment Information</FONT></B></P>

<P align=justify><FONT face=serif size=2>The Company&#146;s products are classified into two core business segments; the semiconductor and solar equipment segment and the polishing supplies segment. The semiconductor and solar equipment segment designs, manufactures and markets semiconductor wafer processing and handling equipment used in the fabrication of</FONT></P>

<P align=center><FONT face=serif>12</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>integrated circuits, solar cells and MEMS. Also included in the semiconductor and solar equipment segment are the manufacturing support service operations and corporate expenses, except for a small portion that is allocated to the polishing supplies segment. The polishing supplies segment designs, manufactures and markets carriers, templates and equipment used in the lapping and polishing of wafer-thin materials, including silicon wafers used in the production of semiconductors.</FONT></P>

<P align=justify><FONT face=serif size=2>Information concerning the Company&#146;s business segments is as follows:</FONT><FONT face=serif></FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;</TD>
<TD noWrap align=center width="15%" colSpan=6>&nbsp;<B><FONT face=serif size=1>Three Months Ended</FONT></B></TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="15%" colSpan=7>&nbsp;<B><FONT face=serif size=1>Nine Months Ended</FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" colSpan=6>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" colSpan=7>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B></TD></TR>
<TR>
<TD noWrap align=left width="68%"></TD>
<TD noWrap align=center width="15%" colSpan=6><FONT size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="15%" colSpan=7>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%" bgColor=#c0c0c0><FONT face=serif size=2>Net Revenue:</FONT>&nbsp;</TD>
<TD noWrap align=center width="15%" bgColor=#c0c0c0 colSpan=6>&nbsp;</TD>
<TD noWrap align=center width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="15%" bgColor=#c0c0c0 colSpan=7></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Semiconductor and solar equipment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>10,886</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>8,648</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>26,641</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>23,927</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Polishing supplies</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,988</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,703</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6,223</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5,230</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>12,874</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>10,351</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>32,864</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>29,157</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=15>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%" bgColor=#c0c0c0><FONT face=serif size=2>Operating Income (loss):</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Semiconductor and solar equipment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>306</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(26</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>(75</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>351</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Polishing supplies</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>301</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>226</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,047</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>755</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>607</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>200</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>972</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,106</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR>
<TD width="99%" colSpan=15>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%" bgColor=#c0c0c0><FONT face=serif size=2>Interest and other income (expense), net</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>170</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(29</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>313</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(4</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="68%">&nbsp; &nbsp;<FONT face=serif size=2>Income before income taxes</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>777</FONT>&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>171</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>1,285</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>1,102</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
</TABLE>

<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="88%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>June 30,</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="4%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>September 30,</FONT></FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="88%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT size=1>2007</FONT></FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%" colSpan=2>&nbsp;<B><FONT face=serif size=2><FONT face=serif size=1>2006</FONT></FONT></B>&nbsp;</TD></TR>
<TR>
<TD noWrap align=left width="88%"></TD>
<TD noWrap align=center width="11%" colSpan=5><FONT size=2><FONT size=3>&nbsp;</FONT><B><FONT size=1>(dollars in thousands)</FONT></B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="88%" bgColor=#c0c0c0><FONT face=serif size=2>Identifiable Assets:</FONT>&nbsp;</TD>
<TD noWrap align=center width="11%" bgColor=#c0c0c0 colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="88%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Semiconductor and solar equipment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;&nbsp;</FONT> &nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>42,733</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="3%"><FONT face=serif size=2>19,564</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="88%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Polishing supplies</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4,260</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%" bgColor=#c0c0c0><FONT face=serif size=2>3,999</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="88%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;&nbsp; &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>46,993</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face=serif size=2>23,563</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>6. Major Customers and Foreign Sales</FONT></B></P>

<P align=justify><FONT face=serif size=2>During the three and nine months ended June 30, 2007, two customers represented 14% and 11%, individually, and 12% and 10%, individually, of net revenue, respectively. During the three and nine months ended June 30, 2006, one customer represented 17% and 20% of net revenue, respectively.</FONT></P>

<P align=justify><FONT face=serif size=2>Net revenue&nbsp;was in the following geographic regions:</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="49%">&nbsp;</TD>
<TD noWrap align=left width="37%">&nbsp;</TD>
<TD noWrap align=center width="13%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>Nine Months Ended</FONT></B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%">&nbsp;</TD>
<TD noWrap align=left width="37%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" colSpan=5><FONT face=serif size=2><FONT size=3>&nbsp;</FONT><B><FONT face=serif size=1>June 30,</FONT></B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%">&nbsp;</TD>
<TD noWrap align=left width="37%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT size=2><FONT size=3>&nbsp;</FONT><B><FONT size=1>2007</FONT></B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT size=2><FONT size=3>&nbsp;</FONT><B><FONT size=1>2006</FONT></B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face=serif size=2>North America (1)</FONT>&nbsp;</TD>
<TD noWrap align=left width="37%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>29</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>35</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%"><FONT face=serif size=2>Asia (2) (3) (4)</FONT>&nbsp;</TD>
<TD noWrap align=left width="37%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>48</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>44</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face=serif size=2>Europe (5)</FONT>&nbsp;</TD>
<TD noWrap align=left width="37%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>23</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>21</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="49%">&nbsp;</TD>
<TD noWrap align=left width="37%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>100</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>100</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=1><FONT face=serif size=2>(1)</FONT></FONT></TD>
<TD vAlign=top noWrap><FONT size=1>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD width="100%"><FONT face=serif size=1><FONT face=serif size=2>Includes 29% and 34% to the United States in 2007 and 2006, respectively</FONT></FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(2)</FONT></TD>
<TD vAlign=top noWrap><FONT size=1>&nbsp;</FONT></TD>
<TD width="100%"><FONT face=serif size=1><FONT face=serif size=2>Includes 17% and 4% to China in 2007 and 2006, respectively.</FONT></FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(3)</FONT></TD>
<TD vAlign=top noWrap><FONT size=1>&nbsp;</FONT></TD>
<TD width="100%"><FONT face=serif size=1><FONT face=serif size=2>Includes 19% and 11% to Taiwan in 2007 and 2006, respectively.</FONT></FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(4)</FONT></TD>
<TD vAlign=top noWrap><FONT size=1>&nbsp;</FONT></TD>
<TD width="100%"><FONT face=serif size=1><FONT face=serif size=2>Includes 6% and 17% to Malaysia in 2007 and 2006, respectively.</FONT></FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(5)</FONT></TD>
<TD vAlign=top noWrap><FONT size=1>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD width="100%"><FONT face=serif size=2>Includes 6% and 11% to Germany in 2007 and 2006, respectively.</FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
</TABLE>


<P align=center><FONT face=serif>13</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>7. Commitments and Contingencies</FONT></B></P>

<P align=justify><B><FONT face=serif size=2>Purchase Obligations</FONT></B> <FONT face=serif size=2>&#150; As of June 30, 2007, the Company had purchase obligations in the amount of $6.3 million. These purchase obligations consist of outstanding purchase orders for goods and services. While the amount represents purchase agreements, the actual amounts to be paid may be less in the event that any agreements are renegotiated, cancelled or terminated.</FONT></P>

<P align=justify><B><FONT face=serif size=2>8. Issuance of Common Stock</FONT></B></P>

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

<P align=justify><B><FONT face=serif size=2>9. Line of Credit</FONT></B></P>

<P align=justify><FONT face=serif size=2>Effective June 30, 2007, the Company terminated the $1.0 million export revolver loan and security agreement (LSA) with the Silicon Valley Bank and the Working Capital Guarantee Program Borrower Agreement with the Export-Import Bank of the United States. The termination of the agreements was initiated by the Company as it was no longer needed and was carried out at no cost to the Company. The $2.0 million domestic LSA remains in force with no changes to its terms.</FONT></P>

<P align=center><FONT face=serif>14</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</FONT></B></P>

<P align=justify><FONT face=serif size=2>The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included in Item 1, &#147;Condensed Consolidated Financial Statements&#148; in this quarterly report on Form 10-Q and our consolidated financial statements and related notes included in Item 8, &#147;Financial Statements and Supplementary Data&#148; in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006, as amended.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Cautionary Statement Regarding Forward-Looking Statements</FONT></B></P>

<P align=justify><I><FONT face=serif size=2>The statements in this report include forward-looking statements. These forward-looking statements are based on our management&#146;s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology, including the words &#147;believes,&#148; &#147;expects,&#148; &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;seeks,&#148; &#147;intends,&#148; &#147;plans,&#148; &#147;estimates&#148; or &#147;anticipates&#148; or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to,
among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; research and development expenses; selling, general and administrative expenses; the development and timing of the introduction of new products and technologies; our ability to maintain and develop relationships with our existing and potential future customers and our ability to maintain the level of investment in research and development and capacity that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: whether we will be able to complete acquisitions and integrate such businesses successfully and achieve anticipated synergies; variability of our revenues and financial performance; risks associated with product development and technological changes; the acceptance of our products in the marketplace by existing and
potential future customers; disruption of operations or increases in expenses caused by civil or political unrest or other catastrophic events; general economic conditions and conditions in the semiconductor and solar industries in particular; the continued employment of our key personnel and risks associated with competition.</FONT></I><FONT face=serif size=2></FONT></P>

<P align=justify><I><FONT face=serif size=2>For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see the &#147;Risk Factors&#148; set forth in Item 1A of Part I of Amtech Systems, Inc.&#146;s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, the &#147;Liquidity and Capital Resources&#148; section under &#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations&#148; in this item of this report and the other risks and uncertainties that are set forth elsewhere in this report or detailed in our other Securities and Exchange Commission reports and filings. We assume no obligation to update these forward-looking statements.</FONT></I></P>

<P align=justify><B><FONT face=serif size=2>Introduction</FONT></B><B><FONT face=serif></FONT></B></P>

<P align=justify><FONT face=serif size=2>Management&#146;s Discussion and Analysis (&#147;MD&amp;A&#148;) is intended to facilitate an understanding of our business and results of operations. MD&amp;A consists of the following sections:</FONT> <FONT face=serif></FONT></P>

<UL style="TEXT-ALIGN: justify">
<LI><FONT size=2><FONT face=serif>Overview<BR>&nbsp;&nbsp;</FONT>&nbsp;</FONT>
<LI><FONT size=2><FONT face=serif>Results of Operations<BR>&nbsp;&nbsp;&nbsp;</FONT></FONT>
<LI><FONT size=2><FONT face=serif>Liquidity and Capital Resources<BR>&nbsp;</FONT>&nbsp;</FONT>
<LI><FONT size=2><FONT face=serif>Off &#150; Balance Sheet Arrangements<BR>&nbsp;</FONT>&nbsp;</FONT>
<LI><FONT size=2><FONT face=serif>Contractual Obligations<BR>&nbsp;</FONT>&nbsp;</FONT>
<LI><FONT size=2><FONT face=serif>Critical Accounting Policies<BR>&nbsp;</FONT>&nbsp;</FONT>
<LI><FONT size=2><FONT face=serif>Impact of Recently Issued Accounting Pronouncements</FONT></FONT></LI></UL>
<P align=center><FONT face=serif>15</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><B><FONT face=serif size=2>Overview</FONT></B><FONT face=serif></FONT></P>

<P align=justify><FONT face=serif size=2>We operate in two segments: the semiconductor and solar equipment segment and the polishing supplies segment. Our semiconductor and solar equipment segment is a leading supplier of thermal processing systems, including related automation, parts and services, to the semiconductor, photovoltaic solar, silicon wafer and MEMS industries.</FONT><FONT face=serif></FONT></P>

<P align=justify><FONT face=serif size=2>Our polishing supplies segment is a leading supplier of wafer carriers to manufacturers of silicon wafers. The polishing segment also manufactures polishing templates, steel carriers and double-sided polishing and lapping machines to fabricators of optics, quartz, ceramics and metal parts, and to manufacturers of medical equipment components.</FONT><FONT face=serif></FONT></P>

<P align=justify><FONT face=serif size=2>Our customers are primarily manufacturers of integrated circuits and solar cells, and suppliers of silicon to those manufacturers. The semiconductor and solar cell industries are cyclical and historically have experienced significant fluctuations. Our revenue is impacted by these broad industry trends.</FONT></P>

<P align=justify><FONT face=serif size=2>Due to the nature of the capital equipment markets that we serve and due to the nature of our contracts, which, include holdbacks of 10-20% of revenue that are recognized at the time of customer acceptance, revenues, gross margins, and operating results have historically fluctuated on a quarterly basis.</FONT><FONT face=serif></FONT></P>

<P align=justify><FONT face=serif size=2>As our automation products are often sold in conjunction with new diffusion furnaces, to increase efficiency and reduce costs, we adopted a plan to consolidate the manufacturing of our automation product line into facilities already used to manufacture diffusion furnaces in June 2006. This consolidation was completed during January 2007.</FONT><FONT face=serif></FONT></P>

<P align=justify><B><FONT face=serif size=2>Results of Operations</FONT></B></P>

<P align=justify><FONT face=serif size=2>The following table sets forth certain operational data as a percentage of net revenue for the periods indicated:</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="73%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" colSpan=5><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended</B></FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" colSpan=5><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended</B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT> <B>2007</B></FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT> <B>2006</B></FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT> <B>2007</B></FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT> <B>2006</B></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face=serif size=2>Net revenue</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>100</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>100</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>100</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>100</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%"><FONT face=serif size=2>Cost of goods sold</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>73</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>74</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>74</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>73</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face=serif size=2>Gross margin</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>27</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>26</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>26</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>27</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%"><FONT face=serif size=2>Operating expenses:</FONT>&nbsp;</TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="5%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0>&nbsp; &nbsp;<FONT face=serif size=2>Selling, general and administrative</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>21</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>22</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>22</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>22</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%">&nbsp; &nbsp;<FONT face=serif size=2>Restructurning charges</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0>&nbsp; &nbsp;<FONT face=serif size=2>Research and Development</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%"><FONT face=serif size=2>Total operating expenses</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>22</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>24</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>23</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>23</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face=serif size=2>Income from operations</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>3</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%"><FONT face=serif size=2>Interest income (expense), net</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face=serif size=2>Income before income taxes</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%"><FONT face=serif size=2>Income tax expense (benefit)</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>(2</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>0</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>1</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face=serif size=2>Net Income</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>8</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>2</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>4</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>3</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><B><I><FONT face=serif size=2>Net Revenue</FONT></I></B><FONT face=serif size=2></FONT></P>

<P align=justify><FONT size=2><FONT face=serif>Net revenue consists of equipment revenue recognized upon shipment or installation of products using proven technology and upon acceptance of products using new technology. In addition, spare parts sales are recognized upon shipment. Service revenue is recognized upon completion of the service activity or ratably over the term of the service contract. The majority of our revenue is generated from large furnace systems sales which, depending on the timing of shipment and installation, can have a significant impact on our revenue and earnings in any given period.</FONT> <I><FONT face=serif>See</FONT></I> <FONT face=serif>Critical Accounting Policies &#150; Revenue Recognition.</FONT></FONT></P>

<P align=center><FONT face=serif>16</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>
<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="42%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="28%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="28%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="42%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="42%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Net Revenue</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp; <FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(Dec)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="42%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="21%" colSpan=8><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="21%" colSpan=8>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="42%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Semiconductor and Solar</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="42%"><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;</FONT>Equipment Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>10,886</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="2%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>8,648</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,238</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>26</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>26,641</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>23,927</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT> &nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,714</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>11</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="42%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Polishing Supplies Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,988</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,703</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>285</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>17</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>6,223</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5,230</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>993</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>19</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="42%">&nbsp;&nbsp;<FONT face=serif size=2>Total</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>12,874</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="2%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>10,351</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;</FONT> &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%">&nbsp;<FONT face=serif size=2>2,523</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>24</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="6%"><FONT face=serif size=2>32,864</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>29,157</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp; &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>3,707</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>13</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>Net revenue for the quarter ended June 30, 2007 increased</FONT><FONT face=serif size=2></FONT> <FONT face=serif size=2>by $2.5 million, or 24%, compared to the quarter ended June 30, 2006. Net revenue from the solar market increased $3.1 million due to the continuing increase in demand for our solar products. This increase was partially offset by a decrease in semiconductor equipment revenue. In the third quarter of fiscal 2006 we recognized $0.8 million from the acceptance of several furnaces from&nbsp;a $5.2 million multi-furnace order which was shipped in the second quarter of fiscal 2006. There was no corresponding acceptance of similar magnitude in the third quarter of fiscal 2007. Net revenue for other semiconductor equipment in the third quarter of fiscal 2007 remained comparable to the same period in fiscal 2006 after excluding the multi-furnace order. The 17% increase in revenue from our polishing supplies segment was primarily the result of increased
volume of shipments of our polishing machines.</FONT></P>

<P align=justify><FONT face=serif size=2>Net revenue for the nine months ended June 30, 2007 increased by $3.7 million, or 13%, compared to the nine months ended June 30, 2006. The 13% increase was driven primarily by $8.1 million of solar revenue, a $5.8 million increase over the same period in fiscal 2006, a $1.9 million increase in other semiconductor revenue, excluding the $5.0 million of 2006 net revenue from the multi-system order discussed above and a $1.0 million, or 19%, increase for our polishing supplies segment resulting from increased demand for our polishing machines and polishing templates.</FONT></P>

<P align=justify><FONT face=serif size=2>The following table reflects new orders<B><SUP>(1)</SUP></B>, shipments and net revenues for the third quarter during the current and prior fiscal year, and the backlog as of the end of those periods, on a consolidated basis, as well as for each of our two business segments.</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="21%" colSpan=8>&nbsp;<B><FONT face=serif size=1>Third Quarter</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="21%" colSpan=8>&nbsp;<B><FONT face=serif size=1>Year-to-Date</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Semi-</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Semi-</FONT></B></TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>conductor</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="7%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>conductor</FONT></B></TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>and Solar</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="7%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>and Solar</FONT></B></TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp; &nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Equipment</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Polishing</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="7%" colSpan=2>&nbsp;</TD>
<TD align=center width="1%"></TD>
<TD align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Equipment</FONT></B></TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Polishing</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Segment</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Supplies</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Total</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Segment</FONT></B></TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Supplies</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Total</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<FONT face=serif size=1><B>(2</B></FONT><FONT size=1><B>)</B></FONT><FONT size=3></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Segment</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Company</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<FONT face=serif size=1><B>(2)</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>Segment</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Company</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="21%" colSpan=8>&nbsp;<FONT face=serif size=1>(dollars in thousands)</FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="21%" colSpan=8>&nbsp;<FONT face=serif size=1>(dollars in thousands)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=right width="2%" bgColor=#c0c0c0><FONT face=serif size=1><B><FONT size=2>2007:</FONT></B><FONT size=3></FONT></FONT></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><FONT face=serif size=2>New orders (1)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>15,020</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,314</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>17,334</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>33,477</FONT></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>6,440</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>39,917</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2>Shipments</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>11,638</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,988</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>13,626</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>27,510</FONT></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>6,223</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>33,733</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><FONT face=serif size=2>Net revenues</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>10,886</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,988</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>12,874</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>26,641</FONT></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>6,223</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>32,864</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2>Backlog 6/30/2007</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>19,450</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,203</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>20,653</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>19,450</FONT></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,203</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>20,653</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><B><FONT face=serif size=2>Book-to-bill ratio</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.3:1</FONT></B></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.2:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="6%"><B><FONT face=serif size=2>1.3:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.2:1</FONT></B></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.0:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.2:1</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=right width="2%" bgColor=#c0c0c0><FONT face=serif size=2><B>2006:</B></FONT></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><FONT face=serif size=2>New orders (1)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>8,708</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,798</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>10,506</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>23,084</FONT></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>5,163</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>28,247</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2>Shipments</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>9,204</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>1,695</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>10,899</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>25,467</FONT></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5,230</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>30,697</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><FONT face=serif size=2>Net revenues</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>8,648</FONT></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,703</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>10,351</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>23,928</FONT></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>5,230</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>29,158</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2>Backlog 6/30/2006</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>12,556</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>921</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>13,477</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>12,556</FONT></TD>
<TD noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>921</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>13,477</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="54%"><B><FONT face=serif size=2>Book-to-bill ratio</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>0.9:1</FONT></B></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.1:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="6%"><B><FONT face=serif size=2>1.0:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>0.9:1</FONT></B></TD>
<TD noWrap align=left width="2%">&nbsp;</TD>
<TD noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>1.0:1</FONT></B>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=right width="5%"><B><FONT face=serif size=2>0.9:1</FONT></B>&nbsp;</TD></TR>
</TABLE>

<BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(1)</FONT></TD>
<TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD width="100%"><FONT face=serif size=2>Orders are net of cancellations and include the change in the U.S. dollar value of orders recorded in Euros by our semiconductor and solar equipment segment.</FONT></TD></TR>
<TR>
<TD width="100%" colSpan=3>&nbsp;</TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>(2)</FONT></TD>
<TD vAlign=top noWrap></TD>
<TD width="100%"><FONT face=serif size=2>The backlog as of June 30, 2007 and 2006, respectively, includes $0.9 million and $1.0 million of deferred revenue for which there is an equal amount of deferred costs, i.e. with no gross profit to be realized.</FONT></TD></TR>
</TABLE>


<P align=justify><B><I><FONT face=serif size=2>Backlog</FONT></I></B></P>

<P align=justify><FONT face=serif size=2>Our order backlog as of June 30, 2007 and 2006 was $20.7 million and $13.5 million, respectively, a 53% increase. Our backlog as of June 30, 2007 includes approximately $11.5 million of orders from our solar industry customers compared to $3.1 million in orders from solar industry customers at June 30, 2006. The orders included in our</FONT></P>

<P align=center><FONT face=serif>17</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>backlog are generally credit approved customer purchase orders expected to ship within the next six to twelve months. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. We believe the orders included in backlog are probable of being filled and not cancelled. Our backlog also includes revenue deferred pursuant to our revenue recognition policy, derived from orders that have already been shipped, but which have not met the criteria for revenue recognition.</FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Gross Profit and Gross Margin</FONT></I></B></P>

<P align=justify><FONT face=serif size=2>Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment and spare parts and the cost of service, including factory and field support to customers for warranty, installation, service contracts and paid service calls. In addition, the cost of outsourcing the assembly or manufacturing of certain systems and subsystems to third parties and subcontracted field service is included in cost of goods sold. The timing of recognizing the revenue components of an order may have a particularly significant effect on gross margin when the component attributed to equipment is recognized in one period and the remaining component attributed to installation, generally a holdback of 10% to 20% of the order, is recognized in a later period because the latter revenue has a significantly higher gross margin percentage.</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Gross profit</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp; <FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(Dec)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Semiconductor and Solar</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%"><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;</FONT>Equipment Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>2,758<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>2,103</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>655</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>31</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>6,533<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>6,227</FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT> &nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>306</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>5</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Polishing Supplies Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>666<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>540</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>126</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>23</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>2,151<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>1,690</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>461</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>27</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Total</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%"><FONT face=serif size=2>3,424<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>2,643</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;</FONT> &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%">&nbsp;<FONT face=serif size=2>781</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>30</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="6%"><FONT face=serif size=2>8,684<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%"><FONT face=serif size=2>7,917</FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp; &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>767</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>10</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR>
<TD noWrap align=left width="43%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Gross margin</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0><FONT size=2>27%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;<FONT size=2>26%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0>&nbsp;<FONT size=2>26%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0><FONT size=2>27%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
</TABLE>


<P align=justify><FONT face=serif size=2>Gross profit for the quarter ended June 30, 2007 increased 30%, to $3.4 million from $2.6 million in the quarter ended June 30, 2006, with the gross margin increasing one percentage point to 27%, from 26%. Gross profit in the semiconductor and solar equipment segment increased despite a $0.9 million unfavorable change in deferred profit in the quarter, relative to the change in deferred profit in the third quarter of fiscal 2006. In the third quarter of fiscal 2007, the amount of profit deferred to future periods increased $0.7 million compared to a $0.2 million decrease in the third quarter of fiscal 2006. Contributing to the higher margins in this segment were improved product mix and better labor efficiencies and plant utilization achieved through higher manufacturing volumes. Shipments in the third quarter of fiscal 2006 included certain products which had lower margins due to higher engineering and material costs. The polishing supplies segment also
achieved higher labor efficiencies from increased sales volumes, resulting in a gross margin improvement of two percentage points.</FONT></P>

<P align=justify><FONT face=serif size=2>Gross profit for the nine months ended June 30, 2007 increased 10%, to $8.7 million from $7.9 million, with a slight decrease in the gross margin percentage compared to the nine months ended June 30, 2006. The improvements in gross margin in the third quarter of fiscal 2007 are offset by a slight decline in gross margin in the first half of fiscal 2007, when compared to the same period in fiscal 2006. In the first half of fiscal 2006, we shipped a significantly higher number of semiconductor automation systems and etching machines, which typically carry a higher gross margin than the products we shipped in the first half of fiscal 2007.</FONT></P>

<P align=justify><FONT face=serif size=2>The continued growth of our sales to the solar industry created capacity constraints at our European operations. Consequently, we purchased a new operating plant in March of 2007, which will significantly increase our capacity and is expected to incrementally improve the operating efficiencies in our semiconductor and solar cell equipment manufacturing segment in fiscal 2008.</FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Selling, General and Administrative</FONT></I></B><FONT face=serif size=2></FONT></P>

<P align=justify><FONT face=serif size=2>Selling, general and administrative expenses consist primarily of the cost of employees, consultants and contractors, facility costs, sales commissions, promotional marketing expenses, legal, investor relations and accounting expenses.</FONT></P>

<P align=center><FONT face=serif>18</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>
<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%">&nbsp;<B><FONT size=1>Selling, general</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>and administrative</B><FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp; <FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(Dec)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;Semiconductor and Solar</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%"><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;</FONT>Equipment Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>2,335<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>1,925</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>410</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>21</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>6,231<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>5,364<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT> &nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>867</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>16</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;Polishing Supplies Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>365<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>313</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>52</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>17</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>1,105<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>935<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>170</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>18</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Total</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%"><FONT face=serif size=2>2,700<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>2,238</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;</FONT> &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%">&nbsp;<FONT face=serif size=2>462</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>21</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="6%"><FONT face=serif size=2>7,336<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="4%"><FONT face=serif size=2>6,299<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp; &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>1,037</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>16</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR>
<TD noWrap align=left width="43%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Percent of net revenue</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0><FONT size=2>21%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp;<FONT size=2>22%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="6%" bgColor=#c0c0c0>&nbsp;<FONT size=2>22%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="4%" bgColor=#c0c0c0><FONT size=2>22%</FONT><FONT size=3>&nbsp;</FONT></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>Selling, general and administrative expenses for the quarter ended June 30, 2007 increased $0.5 million, or 21%, to $2.7 million from $2.2 million for the quarter ended June 30, 2006. The increase was primarily due to a $0.2 million increase in personnel and consulting costs, and a $0.1 million increase in stock option expense. Additionally, commissions increased $0.2 million for the three months ended June 30, 2007 when compared to the same period in fiscal 2006 due to higher shipments to regions where third-party sales representatives are utilized. For the three and nine months ended June 30, 2007, other personnel and consulting costs increased compared to the same periods ended June 30, 2006 as a result of the need to (i) improve internal financial and operational reporting, (ii) identify potential improvements in operational efficiencies, (iii) assist in developing and executing our growth strategies and (iv) manage the increasing compliance obligations of
a growing multi-national public company.</FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Restructuring Charges</FONT></I></B></P>

<P align=justify><FONT face=serif size=2>In June 2006, Amtech adopted a plan to consolidate the manufacturing of its automation product line into facilities already used to manufacture diffusion furnaces. Amtech&#146;s automation products are often sold in conjunction with the sale of new diffusion furnaces. As a result of this decision, the Company incurred a restructuring charge of $0.1 million. We incurred no comparable costs in fiscal 2007.</FONT><B><FONT face=serif size=2></FONT></B></P>

<P align=justify><B><I><FONT face=serif size=2>Research and Development</FONT></I></B><FONT face=serif size=2></FONT></P>

<P align=justify><FONT face=serif size=2>Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes; materials and supplies used in those activities; and product prototyping.</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Three Months Ended</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="27%" colSpan=11><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Nine Months Ended</B></FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%"></TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="43%"><FONT face=serif size=1><FONT size=3><B><FONT size=1>&nbsp;Research and Development</FONT></B>&nbsp;</FONT></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2007</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%" colSpan=2>&nbsp; <FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(Dec)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT>%</FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=center width="43%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>(dollars in thousands)</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%"></TD>
<TD noWrap align=center width="1%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="20%" colSpan=8>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="5%">&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;Semiconductor and Solar</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="6%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%"><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;</FONT>Equipment Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>117<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>65</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>52</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>80</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="6%"><FONT face=serif size=2>376<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="4%"><FONT face=serif size=2>372<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>$</FONT> &nbsp;</TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2>4</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>1</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;Polishing Supplies Segment</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;<FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;<FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>0<FONT size=3><FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="6%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;<FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;<FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>-<FONT size=3>&nbsp;<FONT style="BACKGROUND-COLOR: #c0c0c0"></FONT></FONT></FONT></TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>0</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="43%">&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Total</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%"><FONT face=serif size=2>117<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="3%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>65</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;</FONT> &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%">&nbsp;<FONT face=serif size=2>52</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>80</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="6%"><FONT face=serif size=2>376<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="4%"><FONT face=serif size=2>372<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp; &nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%"><FONT face=serif size=2>4</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD noWrap align=right width="5%"><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>1</FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT>&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>Research and development costs for the three and nine months ended June 30, 2007 are comparable to the three and nine month periods ended June 30, 2006. Costs reflect credits for $0.1 million of government grants for the three and nine month periods ended June 30, 2007 and 2006.</FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Interest and other income (expense), net</FONT></I></B></P>

<P align=justify><FONT face=serif size=2>Interest and other income (expense), net primarily consists of interest income, interest expense and gains and losses on foreign currency transactions.</FONT></P>

<P align=center><FONT face=serif>19</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>
<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="21%" colSpan=9>&nbsp;<B><FONT face=serif size=1>Three Months Ended</FONT></B></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="23%" colSpan=11>&nbsp;<B><FONT face=serif size=1>Nine Months Ended</FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%"><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Interest and other</B></FONT>&nbsp;</TD>
<TD align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="6%" colSpan=2><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>June 30,</FONT></B></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>June 30,</B></FONT></TD>
<TD noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>Inc.</B></FONT></TD></TR>
<TR vAlign=bottom>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="54%">&nbsp;<B><FONT face=serif size=1>income (expense), net</FONT></B>&nbsp;</TD>
<TD align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>2007</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3><FONT face=serif size=1><FONT size=3>&nbsp;</FONT><B>2006</B></FONT>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="6%" colSpan=2>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2007</FONT></B></TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>2006</FONT></B>&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="7%" colSpan=3>&nbsp;<B><FONT face=serif size=1>(Dec)</FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%">&nbsp;</TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="21%" colSpan=9>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B></TD>
<TD noWrap align=center width="1%"></TD>
<TD noWrap align=center width="23%" colSpan=11>&nbsp;<B><FONT face=serif size=1>(dollars in thousands)</FONT></B></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Interest and other income</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>(expense), net</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>155</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(4</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0>&nbsp; <FONT face=serif size=2>159</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>324</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(9</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>$</FONT></TD>
<TD noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>333</FONT></TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD></TR>
<TR>
<TD width="100%" colSpan=23>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%" bgColor=#c0c0c0><FONT face=serif size=2><FONT size=3>&nbsp;</FONT>Foreign currency gains (losses)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>15</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(25</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>40</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(11</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>5</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="5%" bgColor=#c0c0c0><FONT face=serif size=2>(16</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="54%">&nbsp; &nbsp;<FONT face=serif size=2>Total</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>170</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>(29</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;<FONT size=3>&nbsp;</FONT></FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%">&nbsp;<FONT face=serif size=2>199</FONT>&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>313</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD>
<TD noWrap align=left width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$</FONT>&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>(4</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>)</FONT>&nbsp;</TD>
<TD noWrap align=right width="1%"></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%"><FONT face=serif size=2>$&nbsp;&nbsp;</FONT> &nbsp;&nbsp;&nbsp;</TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="5%"><FONT face=serif size=2>317</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=left width="1%">&nbsp;</TD></TR>
</TABLE>

<BR>
<P align=justify><FONT face=serif size=2>Interest income represents earnings on invested funds. Interest expense primarily consists of interest incurred on our overdraft facility, revolving line of credit, equipment financing, a mortgage on Amtech&#146;s land and buildings in the Netherlands, and amortization of debt issuance costs. Due to an increase in cash and cash equivalents raised in the secondary public offering of common stock during the second quarter of fiscal 2007, net interest income increased by $0.2 million and $0.3 million during the three and nine months ended June 30, 2007, respectively, from the comparable periods in fiscal 2006.</FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Income Taxes</FONT></I></B><FONT face=serif size=2></FONT></P>

<P align=justify><FONT face=serif size=2>During the three months ended June 30, 2007 we recorded an income tax benefit of $0.2 million while the provision for the same period ended June 30, 2006 was effectively zero, as a result of recording reductions in the valuation allowance on deferred tax assets of $0.5 million and $0.1 million, respectively. The reductions in the valuation allowance on deferred tax assets result from a continued improvement in both our earnings history and our prospects for the future, which caused us to reduce our estimate of the amount of deferred assets that more likely than not will be unrealizable. During the nine months ended June 30, 2007 and 2006, we recorded income tax provisions of effectively zero and $0.3 million, respectively, as a result of recording reductions in the valuation allowance on deferred tax assets of $0.5 million and $0.2 million, respectively. In addition, during the nine months ended June 30, 2007, we recorded an increase of $0.5 million in deferred
tax assets, excluding the effects of the change in the valuation allowance for items that meet the more likely than not criteria for recognition under SFAS No. 109. (See Note 2 to the condensed consolidated financial statements). For the nine months ended June 30, 2007 and 2006, the effective tax rates excluding the benefit from the reductions in the valuation allowance were 43.3% and 47%, respectively, as permanent differences have become smaller in relation to income before taxes.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Liquidity and Capital Resources</FONT></B></P>

<P align=justify><FONT face=serif size=2>In February 2007, we completed the sale of 3,018,750 shares of common stock in a public offering for $7.05 per share. The net proceeds of the sale after offering expenses and underwriting fees was $19.4 million. We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including possible future product or business acquisitions in connection with the planned expansion of our solar and semiconductor businesses.</FONT></P>

<P align=justify><FONT face=serif size=2>At June 30, 2007 and September 30, 2006, cash and cash equivalents were $17.9 million and $6.4 million, respectively. Our working capital increased $17.8 million to $29.7 million as of June 30, 2007, compared to $11.9 million at September 30, 2006. Our ratio of current assets to current liabilities increased to 4.1:1 at June 30, 2007, from 2.6:1 at September 30, 2006. The increase in cash and cash equivalents and working capital and the improvement in the current ratio resulted primarily from the $19.4 million of net proceeds after deducting expenses raised from the secondary public offering of common stock during February 2007. The increase was partially offset by $3.5 million of capital expenditures, primarily a building acquired in the Netherlands, which will increase the capacity of our semiconductor and solar equipment segment. We intend to mortgage the new facility once improvements have been made and operations have been transferred.</FONT></P>

<P align=justify><FONT face=serif size=2>At June 30, 2007, our principal sources of liquidity consisted of $17.9 million of cash and cash equivalents and the $2.3 million in available domestic and export credit facilities. Amtech&#146;s revolving line of credit with Silicon Valley Bank contains certain financial and other covenants. Amtech was in compliance with these covenants as of June 30, 2007. Effective June 30, 2007, the $1.0 million export credit facility was terminated at the request of and at no cost to Amtech. We believe that our principal sources of liquidity discussed above and the increased capital and liquidity resulting from the February 2007 secondary public offering are sufficient to support operations and will</FONT></P>

<P align=center><FONT face=serif>20</FONT></P>

<HR align=center width="100%" noShade SIZE=2>


<PAGE>

<P align=justify><FONT face=serif size=2>allow us to pursue our growth strategies, which include possible acquisitions. </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Cash Flows from Operating Activities</FONT></I></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>Cash used in our operating activities was $4.1 million for the nine months ended June 30, 2007, compared to $0.4 million provided by such activities for the nine months ended June 30, 2006. During the nine months ended June 30, 2007 cash was primarily used to finance business growth, including increases in accounts receivable ($4.7 million), inventory ($1.9 million) and prepaid and other assets ($0.6 million). This use of cash was partially offset by increases in accrued liabilities and customer deposits of $1.2 million, deferred profit of $0.7 million and accrued income taxes of $0.3 million. </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Cash Flows from Investing Activities</FONT></I></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>Our investing activities for the nine months ended June 30, 2007 and 2006 used $3.8 million and $0.6 million of cash, respectively. During fiscal 2007, the most significant investment was the purchase of a 48,000 sq. ft. manufacturing facility located in Vaassen, The Netherlands for approximately $3.1 million. Another significant investment in fiscal 2007 was $0.3 million paid for a license of certain solar PECVD technology from the licensor. Other investments in both periods consisted primarily of purchases of equipment. </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Cash Flows from Financing Activities</FONT></I></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>Cash provided by financing activities for the nine months ended June 30, 2007 was $19.5 million, which primarily consists of the $19.4 million, net of expenses, raised in the secondary public offering of the Company&#146;s common stock. Other financing activities during the first nine months of fiscal 2007 include the October 2006 equipment financing of $0.4 million and $0.3 million of payments on debt. This compares to $0.6 million of cash provided by financing activities during the nine months ended June 30, 2006, primarily from the exercise of warrants and stock options. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Off-Balance Sheet Arrangements</FONT></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>As of June 30, 2007, Amtech had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K promulgated by the Securities and Exchange Commission. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Contractual Obligations</FONT></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>Significant changes in contractual obligations since the end of fiscal 2006 consist mainly of increases in our purchase obligations and long-term debt (See Notes 1 and 7 of the Condensed Consolidated Financial Statements). In April, 2007, the Company also committed, under a license agreement, to pay an additional $0.7 million to a third party for the successful development of a product to be licensed by the Company. Refer to Amtech&#146;s annual report on Form 10-K for the year ended September 30, 2006, for information on the Company&#146;s other contractual obligations.</FONT></P>

<P align=justify><B><FONT face=serif size=2>Critical Accounting Policies</FONT></B><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.</FONT><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory valuation, accounts receivable collectibility, warranty and impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. The results of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. </FONT></P>

<P align=justify><FONT face=serif size=2>A critical accounting policy is one that is both important to the presentation of our financial position and results of operations, and requires management&#146;s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These uncertainties are discussed in </FONT></P>

<P align=center><FONT face=serif>21 </FONT></P>

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<PAGE>

<P align=justify><FONT face=serif size=2>&#147;Item 1A. Risk Factors&#148; of our Annual Report on Form 10-K. We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.</FONT><FONT face=serif> </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Revenue Recognition. </FONT></I></B><FONT face=serif size=2>We review product and service sales contracts with multiple deliverables to determine if separate units of accounting are present in the arrangements. Where separate units of accounting exist, revenue is allocated to delivered items equal to the total sales price less the greater of the relative fair value of the undelivered items, and all contingent portions of the sales arrangement.</FONT><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>We recognize revenue when persuasive evidence of an arrangement exists; the product has been delivered and title has transferred, or services have been rendered; the seller&#146;s price to the buyer is fixed or determinable; and collectibility is reasonably assured. For us, this policy generally results in revenue recognition at the following points: </FONT><FONT face=serif></FONT></P>

<UL style="TEXT-ALIGN: justify">
<LI><FONT face=serif size=2>For the semiconductor and solar equipment segment, transactions where legal title passes to the customer upon shipment, we recognize revenue upon shipment for those products where the customer&#146;s defined specifications have been met with at least two similarly configured systems and processes for a comparably situated customer. However, a portion of the revenue associated with certain installation-related tasks, equal to the greater of the relative fair value of those tasks or the portion of the contract price contingent upon their completion, generally 10%-20% of the system&#146;s selling price (the &#147;holdback&#148;), and directly related costs, if any, are deferred and recognized into income when the tasks are completed. Since we defer only those costs directly related to installation or other unit of accounting not yet delivered and that portion of the contract price is often considerably greater than the fair market value of those items, our policy at times will
result in deferral of profit that is disproportionately greater than the deferred revenue. When this is the case, the gross profit recognized in one period will be lower and the gross profit reported in a subsequent period will improve.<BR>&nbsp;</FONT>
<LI><FONT face=serif size=2>For products where the customer&#146;s defined specifications have not been met with at least two similarly configured systems and processes, the revenue and directly related costs are deferred at the time of shipment and recognized into income at the time of customer acceptance or when this criterion has been met. We have, on occasion, experienced longer than expected delays in receiving cash from certain customers pending final installation or system acceptance. If some of our customers refuse to pay the final payment, or otherwise delay final acceptance or installation, the deferred revenue would not be recognized, adversely affecting our future operating results.<BR>&nbsp;</FONT>
<LI><FONT face=serif size=2>Equipment sold by the polishing supplies segment does not include process guarantees, acceptance criteria or holdbacks; therefore, the related revenue is recorded upon transfer of title which is generally at time of shipment. Our shipping terms for both segments are customarily FOB our shipping point or equivalent terms.<BR>&nbsp;</FONT>
<LI><FONT face=serif size=2>For all segments, sales of spare parts and consumables are recognized upon shipment, as there are no post shipment obligations other than standard warranties.<BR>&nbsp;</FONT>
<LI><FONT face=serif size=2>Service revenue is recognized upon performance of the services requested by the customer. Revenue related to service contracts is recognized ratably over the period of the contract or in accordance with the terms of the contract, which generally coincides with the performance of the services requested by the customer.</FONT></LI></UL>
<P align=justify><B><I><FONT face=serif size=2>Deferred Tax Asset Valuation Allowance. </FONT></I></B><FONT face=serif size=2>We currently have significant deferred tax assets resulting from expenses not currently deductible for tax purposes, revenue recognized for tax purposes but deferred for financial statement purposes and state net operating loss carryforwards that will reduce taxable income in future periods.</FONT></P>

<P align=justify><FONT face=serif size=2>SFAS No. 109 requires a valuation allowance be established when it is &#147;more likely than not&#148; that all or a portion of deferred tax assets will not be realized. It also states that it is difficult to conclude that a valuation allowance is not needed when there is negative evidence such as cumulative losses in recent years. Therefore, the cumulative losses weigh heavily in the overall assessment. Each quarter, Amtech analyzes each deferred tax asset to determine the amount that is more likely than not to be realized, based upon the weight of available evidence, and adjusts the valuation allowance to the amount of deferred taxes that do not meet the criteria for recognition under SFAS No. 109.</FONT></P>

<P align=center><FONT face=serif>22 </FONT></P>

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<PAGE>

<P align=justify><B><I><FONT face=serif size=2>Inventory Valuation. </FONT></I></B><FONT face=serif size=2>We value our inventory at the lower of cost (first-in, first-out method) or net realizable value. We regularly review inventory quantities and record a write-down for excess and obsolete inventory. The write-down is primarily based on historical inventory usage adjusted for expected changes in product demand and production requirements. However, our industry is characterized by customers in highly cyclical industries, rapid technological changes, frequent new product developments and rapid product obsolescence. While the inventories acquired in the Bruce Technologies transaction, which is described in our annual report on Form 10-K for the year ended September 30, 2006, will require several years to consume in production and through spare parts sales, management believes the write-downs taken were sufficient to protect against future losses, as this product line is receiving greater attention
under its current ownership. Changes in demand for our products and product mix could result in further write-downs.</FONT><FONT face=serif> </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Allowance for Doubtful Accounts. </FONT></I></B><FONT face=serif size=2>We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues we have identified. Since a significant portion of our revenue is derived from the sale of high-value systems, our accounts receivable are often concentrated in a relatively few number of customers. A significant change in the liquidity or financial position of any one of these customers could have a material adverse impact on the collectibility of our accounts receivable and our future operating results.</FONT><FONT face=serif> </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Warranty. </FONT></I></B><FONT face=serif size=2>We provide a limited warranty, generally for 12 to 24 months, to our customers. A provision for the estimated cost of providing warranty coverage is recorded upon shipment of all systems. On occasion, we have been required and may be required in the future to provide additional warranty coverage to ensure that the systems are ultimately accepted or to maintain customer goodwill. While our warranty costs have historically been within our expectations and we believe that the amounts accrued for warranty expenditures are sufficient for all systems sold through June 30, 2007, we cannot guarantee that we will continue to experience a similar level of predictability with regard to warranty costs. In addition, technological changes or previously unknown defects in raw materials or components may result in more extensive and frequent warranty service than anticipated, which could result in an increase in our
warranty expense.</FONT><FONT face=serif> </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Impairment of Long-lived Assets. </FONT></I></B><FONT face=serif size=2>We periodically evaluate whether events and circumstances have occurred that indicate the estimated useful lives of long-lived assets or intangible assets may warrant revision or that the remaining balance may not be recoverable. Goodwill is also tested for impairment at least annually. When factors indicate that an asset should be evaluated for possible impairment, we use an estimate of the related undiscounted net cash flows generated by the asset over the remaining estimated life of the asset in measuring whether the asset is recoverable. We make judgments and estimates used in establishing the carrying value of long-lived or intangible assets. Those judgments and estimates could be modified if adverse changes occurred in the future resulting in an inability to recover the carrying value of these assets. We have not experienced any impairment to long-lived assets during fiscal
2007, 2006 or 2005. Future adverse changes could be caused by, among other factors, a downturn in the semiconductor industry, a general economic slowdown, reduced demand for our products in the marketplace, poor operating results, the inability to protect intellectual property or changing technologies and product obsolescence.</FONT><FONT face=serif> </FONT></P>

<P align=justify><B><FONT face=serif size=2>Impact of Recently Issued Accounting Pronouncements </FONT></B></P>

<P align=justify><FONT face=serif size=2>For discussion of the impact of recently issued accounting pronouncements, see &#147;Item 1: Financial Information&#148; under &#147;Impact of Recently Issued Accounting Pronouncements&#148;. </FONT></P>

<P align=center><FONT face=serif>23 </FONT></P>

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<PAGE>

<P align=justify><B><FONT face=serif size=2>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </FONT></B></P>

<P align=justify><B><FONT face=serif size=2></FONT></B><FONT face=serif size=2>We are exposed to financial market risks, including changes in foreign currency exchange rates and interest rates. Our operations in the United States are conducted in U.S. dollars. Our operations in Europe, a component of the semiconductor and solar equipment segment, conduct business primarily in the Euro, but also enter into transactions denominated in U.S. dollars. The functional currency of our European operation is the Euro. Nearly all of the transactions, assets and liabilities of all other operating units are denominated in the U.S. dollar, their functional currency. The following disclosures about market risk should be read in conjunction with the more in depth discussion in Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.</FONT><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>As of June 30, 2007, we did not hold any stand-alone or separate derivative instruments. We incurred net foreign currency transaction gains or losses of less than $0.1 million during the three months ended June 30, 2007 and 2006. As of June 30, 2007, our foreign subsidiaries had $8.2 million of assets (cash and receivables) denominated in currencies other than the functional currency, primarily the U.S. dollar. As of June 30, 2007, we had $5.4 million of accounts payable, consisting primarily of amounts owed by our foreign subsidiaries to our U.S. companies, denominated in U.S. dollars. Although the intercompany accounts are eliminated in consolidation, they reduce our foreign subsidiaries&#146; net exposure to fluctuations in the value of the U.S. dollar to $3.0 million. A 10% change in the value of the functional currency relative to the non-functional currency would result in net gains or losses of $0.3 million. Our net investment in and long-term advances
to our foreign operations totaled $3.0 million as of June 30, 2007. A 10% change in the value of the Euro relative to the U.S. dollar would cause an approximately $0.3 million foreign currency translation adjustment, a type of other comprehensive income (loss), which would be a direct adjustment to our stockholders&#146; equity.</FONT><FONT face=serif> </FONT></P>

<P align=justify><FONT face=serif size=2>During the nine months ended June 30, 2007, our European operations transacted U.S. dollar denominated sales and purchases of $4.2 million and $2.9 million, respectively. As of June 30, 2007, sales commitments denominated in a currency other than the function currency of our transacting operation totaled $3.9 million. Our lead-times to fulfill these commitments generally range between 13 and 20 weeks. A 10% change in the relevant exchange rates between the time the order was taken and the time of shipment would cause our gross profit on such orders to be approximately $0.4 million greater than or less than expected on the date the order was taken.</FONT><B><FONT face=serif size=2> </FONT></B></P>

<P align=justify><B><FONT face=serif size=2>ITEM 4. CONTROLS AND PROCEDURES</FONT></B><FONT face=serif size=2> </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Disclosure Controls and Procedures</FONT></I></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>Our management, including the Chief Executive Officer (&#147;CEO&#148;) and the Chief Financial Officer (&#147;CFO&#148;), has carried out an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2007, pursuant to Exchange Act Rules 13a-15(e) and 15(d)-15(e). Based upon that evaluation, our CEO and CFO have concluded that as of such date, our disclosure controls and procedures in place are effective. </FONT></P>

<P align=justify><B><I><FONT face=serif size=2>Changes in Internal Control Over Financial Reporting</FONT></I></B><FONT face=serif size=2> </FONT></P>

<P align=justify><FONT face=serif size=2>There has been no change in Amtech&#146;s internal control over financial reporting during the third quarter of fiscal 2007 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting. </FONT></P>

<P align=center><FONT face=serif>24 </FONT></P>

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<PAGE>

<P align=justify><B><FONT face=serif size=2>PART II. OTHER INFORMATION </FONT></B></P>

<P align=justify><B><FONT face=serif size=2>Item 4. Submission of Matters to a Vote of Security Holders </FONT></B></P>

<P align=justify><B><FONT face=serif size=2>Election of Directors </FONT></B></P>

<P align=justify><FONT face=serif size=2>At our annual shareholders&#146; meeting, which was held on May 18, 2007, all nominees standing for election as directors were elected to serve for one year terms or until their successors are elected and qualified. The following chart indicates the number of votes cast for and the number of votes withheld with respect to each nominee for director:</FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="70%" border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="86%"><FONT face=serif size=2>Nominee</FONT><SUP><FONT face=serif size=2>(1)</FONT></SUP> </TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%"><FONT face=serif size=2>For</FONT> </TD>
<TD noWrap align=center width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="4%"><FONT face=serif size=2>Withheld</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%" bgColor=#c0c0c0><FONT face=serif size=2>Jong S. Whang</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>5,780,330</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp; 23,485</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%"><FONT face=serif size=2>Michael Garnreiter</FONT> </TD>
<TD noWrap align=center width="2%">&nbsp;</TD>
<TD noWrap align=center width="4%"><FONT face=serif size=2>5,665,396</FONT> </TD>
<TD noWrap align=center width="2%"></TD>
<TD noWrap align=center width="4%"><FONT face=serif size=2>138,419</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%" bgColor=#c0c0c0><FONT face=serif size=2>Alfred W. Giese</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>5,777,933</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp; 25,882</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%"><FONT face=serif size=2>Brian L. Hoekstra</FONT> </TD>
<TD noWrap align=center width="2%"></TD>
<TD noWrap align=center width="4%"><FONT face=serif size=2>5,778,022</FONT> </TD>
<TD noWrap align=center width="2%"></TD>
<TD noWrap align=center width="4%"><FONT face=serif size=2>&nbsp; 25,793</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%" bgColor=#c0c0c0><FONT face=serif size=2>Robert F. King</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>5,777,933</FONT> </TD>
<TD noWrap align=center width="2%" bgColor=#c0c0c0></TD>
<TD noWrap align=center width="4%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp; 25,882</FONT> </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="86%">

<P>____________________</P>


<P><FONT size=1>(1) Abstentions were not counted in the election of the directors.</FONT> </P>
</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="4%">&nbsp;</TD>
<TD noWrap align=left width="2%"></TD>
<TD noWrap align=left width="4%"></TD></TR>
</TABLE>

<BR>
<P align=justify><B><FONT face=serif size=2>Approval of 2007 Employee Stock Incentive Plan </FONT></B></P>

<P align=justify><FONT face=serif size=2>The Company&#146;s 2007 Employee Stock Incentive Plan was approved by a majority of the votes cast on the proposal, with 1,603,318 shares voted for, 207,308 shares voted against and 172,715 shares withholding their vote. </FONT></P>

<P align=justify><B><FONT face=serif size=2>Item 6. Exhibits</FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%"><FONT face=serif size=2>10.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD vAlign=middle align=left width="93%"><FONT face=serif size=2>Employment Agreement with J.S. Whang dated April 13, 2007</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; </TD>
<TD vAlign=middle noWrap align=left width="2%"><FONT face=serif size=2>**</FONT></TD></TR>
<TR>
<TD vAlign=middle width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>31.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%">&nbsp;</TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%"><FONT face=serif size=2>Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%"></TD>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>*</FONT></TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>31.2</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%"></TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%"><FONT face=serif size=2>Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-</FONT><FONT size=2>14(a) of the Securities Exchange Act of 1934, as Amended </FONT></TD>
<TD vAlign=middle noWrap align=left width="1%"></TD>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>*</FONT></TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5><FONT face=serif>&nbsp;</FONT></TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%"><FONT face=serif size=2>32.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%"></TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%"><FONT face=serif size=2>Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%"></TD>
<TD vAlign=middle noWrap align=left width="2%"><FONT face=serif size=2>*</FONT></TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>32.2</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%"></TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%"><FONT face=serif size=2>Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%"></TD>
<TD vAlign=middle noWrap align=left width="2%"><FONT size=2>*</FONT></TD></TR>
</TABLE>

____________________<BR>&nbsp;<BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>*</FONT></TD>
<TD width="100%"><FONT face=serif size=2>Filed herewith.</FONT></TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>**&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
<TD width="100%"><FONT face=serif size=2>Incorporated by reference to Amtech&#146;s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2007.</FONT></TD></TR>
</TABLE>


<P align=center><FONT face=serif>25 </FONT></P>

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<PAGE>

<P align=center><FONT face=serif size=2>SIGNATURES </FONT></P>

<P align=justify><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the requirements 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. </FONT></P>

<P align=justify><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AMTECH SYSTEMS, INC. </FONT></P>

<P align=justify><FONT size=2></FONT>&nbsp;</P>

<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
<TD noWrap align=left width="1%"><FONT face=serif size=2>By&nbsp;</FONT> </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="48%"><FONT face=serif size=2>/s/ Robert T. Hass</FONT>&nbsp; </TD>
<TD noWrap align=left width="20%"></TD>
<TD noWrap align=left width="30%"><FONT face=serif size=2>Dated: August 14, 2007<FONT size=3>&nbsp; </FONT></FONT></TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="48%"><FONT face=serif size=2>Robert T. Hass</FONT>&nbsp; </TD>
<TD noWrap align=left width="20%">&nbsp;</TD>
<TD noWrap align=left width="30%">&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="48%"><FONT face=serif size=2>Chief Accounting Officer</FONT>&nbsp; </TD>
<TD noWrap align=left width="20%"></TD>
<TD noWrap align=left width="30%">&nbsp; </TD></TR>
<TR vAlign=bottom>
<TD noWrap align=left width="1%"></TD>
<TD noWrap align=left width="1%">&nbsp; </TD>
<TD noWrap align=left width="48%"><FONT face=serif size=2>(Principal Accounting Officer)</FONT>&nbsp; </TD>
<TD noWrap align=left width="20%"></TD>
<TD noWrap align=left width="30%">&nbsp; </TD></TR>
</TABLE>

<BR>
<P align=center><FONT face=serif>26 </FONT></P>

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<P align=justify><B><FONT face=serif size=2>EXHIBIT INDEX </FONT></B></P>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR>
<TD vAlign=middle noWrap align=left width="2%">
<P align=justify><B><FONT face=serif size=2>Exhibit </FONT></B></P>
</TD>
<TD vAlign=middle noWrap align=left width="2%"></TD>
<TD vAlign=middle align=left width="93%"></TD>
<TD vAlign=middle noWrap align=left width="1%"></TD>
<TD vAlign=middle noWrap align=left width="2%">
<P align=justify><FONT face=serif size=2></FONT><B><FONT face=serif size=2>Page or </FONT></B></P>
</TD></TR>
<TR>
<TD style="BORDER-BOTTOM: #000000 1pt solid" vAlign=middle noWrap align=left width="2%">
<P align=justify><B><FONT face=serif size=2>Number</FONT></B><FONT face=serif size=2> </FONT></P>
</TD>
<TD vAlign=middle noWrap align=left width="2%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" vAlign=middle align=left width="93%">
<P align=justify><B><FONT face=serif size=2>Description</FONT></B><B><FONT face=serif size=2> </FONT></B></P>
</TD>
<TD vAlign=middle noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" vAlign=middle noWrap align=left width="2%">
<P align=justify><B><FONT face=serif size=2>Method of Filing</FONT></B><FONT face=serif size=2> </FONT></P>
</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0><FONT face=serif size=2>10.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD vAlign=middle align=left width="93%" bgColor=#c0c0c0><FONT face=serif size=2>Employment Agreement with J.S. Whang dated April 13, 2007</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp; </TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>
<P align=center><FONT face=serif size=2>**</FONT></P>
</TD></TR>
<TR>
<TD vAlign=middle width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0><FONT size=2>31.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%" bgColor=#c0c0c0><FONT face=serif size=2>Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>
<P align=center><FONT size=2>* &nbsp; </FONT></P>
</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0><FONT size=2>31.2</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%" bgColor=#c0c0c0><FONT face=serif size=2>Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-</FONT><FONT size=2>14(a) of the Securities Exchange Act of 1934, as Amended </FONT></TD>
<TD vAlign=middle noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>
<P align=center><FONT size=2>* &nbsp; </FONT></P>
</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5><FONT face=serif>&nbsp;</FONT></TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0><FONT face=serif size=2>32.1</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%" bgColor=#c0c0c0><FONT face=serif size=2>Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>
<P align=center><FONT face=serif size=2>* &nbsp; </FONT></P>
</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle align=left width="100%" colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0><FONT size=2>32.2</FONT></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>&nbsp;</TD>
<TD style="TEXT-ALIGN: justify" vAlign=middle align=left width="93%" bgColor=#c0c0c0><FONT face=serif size=2>Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></TD>
<TD vAlign=middle noWrap align=left width="1%" bgColor=#c0c0c0></TD>
<TD vAlign=middle noWrap align=left width="2%" bgColor=#c0c0c0>
<P align=center><FONT size=2>* &nbsp; </FONT></P>
</TD></TR>
</TABLE>

____________________<BR><BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>*</FONT></TD>
<TD width="100%"><FONT face=serif size=2>Filed herewith.</FONT></TD></TR>
<TR>
<TD vAlign=top noWrap><FONT face=serif size=2>**&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
<TD width="100%"><FONT face=serif size=2>Incorporated by reference to Amtech&#146;s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2007.</FONT></TD></TR>
</TABLE>


<P align=center><FONT face=serif>27 </FONT></P>

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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>exhibit31-1.htm
<DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
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<BODY bgColor=#ffffff>
<P align=right><FONT face=serif size=2>Exhibit 31.1 </FONT></P>

<P align=center><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND ITS SUBSIDIARIES<BR></FONT><FONT face=serif size=2>CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)<BR>OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED </FONT></P>

<P align=left><FONT face=serif size=2>I, Jong S. Whang, certify that: </FONT></P>

<P align=left><FONT face=serif size=2>1. I have reviewed this Quarterly Report on Form 10-Q of Amtech Systems, Inc. (the &#147;registrant&#148;), </FONT></P>

<P align=left><FONT face=serif size=2>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; </FONT></P>

<P align=left><FONT face=serif size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial position, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></P>

<P align=left><FONT face=serif size=2>4. The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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; </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Evaluated the effectiveness of the registrant&#146;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 </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and </FONT></P>

<P align=left><FONT face=serif size=2>5. The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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&#146;s ability to record, process, summarize and report financial information; and </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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&#146;s internal control over financial reporting. </FONT></P>

<TABLE cellSpacing=0 cellPadding=0 width="30%" border=0>
<TR>
<TD width="2%"><FONT size=2>By&nbsp;</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" width="98%"><FONT size=2>/s/ Jong S. Wang</FONT></TD></TR>
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<P align=left><FONT face=serif size=2>Jong S. Whang <BR>President and Chief Executive Officer <BR>Amtech Systems, Inc. <BR></FONT><FONT face=serif size=2>Date: August 14, 2007 </FONT></P>
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<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>exhibit31-2.htm
<DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER
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<P align=right><FONT face=serif size=2>Exhibit 31.2 </FONT></P>

<P align=center><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND ITS SUBSIDIARIES<BR>CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)<BR>OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED </FONT></P>

<P align=left><FONT face=serif size=2>I, Bradley C. Anderson, certify that: </FONT></P>

<P align=left><FONT face=serif size=2>1. I have reviewed this Quarterly Report on Form 10-Q of Amtech Systems, Inc. (the &#147;registrant&#148;), </FONT></P>

<P align=left><FONT face=serif size=2>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; </FONT></P>

<P align=left><FONT face=serif size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial position, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></P>

<P align=left><FONT face=serif size=2>4. The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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; </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Evaluated the effectiveness of the registrant&#146;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 </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and </FONT></P>

<P align=left><FONT face=serif size=2>5. The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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&#146;s ability to record, process, summarize and report financial information; and </FONT></P>

<P align=left><FONT face=serif size=2>&nbsp;&nbsp;&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&#146;s internal control over financial reporting. </FONT></P>

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<P align=left><FONT face=serif size=2>/s/ Bradley C. Andersen </FONT></P>
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<P align=left><FONT face=serif size=2>Bradley C. Anderson <BR>Chief Financial Officer <BR>Amtech Systems, Inc. <BR>Date: August 14, 2007 </FONT></P>
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<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>exhibit32-1.htm
<DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER
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<P align=right><FONT face=serif size=2>Exhibit 32.1 </FONT></P>

<P align=center><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND ITS SUBSIDIARIES</FONT></P>

<P align=center><FONT face=serif size=2>CERTIFICATION PURSUANT TO <BR>18 U.S.C. SECTION 1350, <BR>AS ADOPTED PURSUANT TO <BR></FONT><FONT face=serif size=2>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>In connection with the Quarterly Report of Amtech Systems, Inc. (the &#147;Company&#148;) on Form 10-Q for the period ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Jong S. Whang, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. </FONT></P>

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<TD width="2%"><FONT size=2>By&nbsp;</FONT></TD>
<TD style="BORDER-BOTTOM: #000000 1pt solid" width="98%">
<P align=left><FONT face=serif size=2>/s/ Jong S. Whang </FONT></P>
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<TD width="100%" colSpan=2><FONT size=2>Jong S. Whang <BR><FONT face=serif size=2>President and Chief Executive Officer <BR>Date: August 14, 2007 </FONT></FONT></TD></TR>
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<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>exhibit32-2.htm
<DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER
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<P align=right><FONT face=serif size=2>Exhibit 32.2 </FONT></P>

<P align=center><FONT face=serif size=2>AMTECH SYSTEMS, INC. AND ITS SUBSIDIARIES </FONT></P>

<P align=center><FONT face=serif size=2>CERTIFICATION PURSUANT TO<BR>18 U.S.C. SECTION 1350,<BR>AS ADOPTED PURSUANT TO <BR></FONT><FONT face=serif size=2>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>In connection with the Quarterly Report of Amtech Systems, Inc. (the &#147;Company&#148;) on Form 10-Q for the period ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Bradley C. Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and </FONT></P>

<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. </FONT></P>

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<TD width="2%"><FONT size=2>By&nbsp;</FONT></TD>
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<P align=left><FONT face=serif size=2>/s/ Bradley C. Andersen</FONT></P>
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<TD width="100%" colSpan=2><FONT size=2>Bradley C. Anderson <BR><FONT face=serif size=2><FONT face=serif size=2>Chief Financial Officer <BR>Date: August 14, 2007 </FONT></FONT></FONT></TD></TR>
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