What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

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Factors that might cause such a difference include, among other things, those set forth under "Liquidity and Capital Resources"

below and under “Risk Factors” in Part I, Item 1A to our annual report on Form 10-K for the year ended December 31, 2019 , in Part II, Item 1A of our Form 10-Q for the quarter ended March 31, 2020, and in Part II, Item 1A to this report on Form 10-Q, which discussion is incorporated herein by reference.

below and under “Risk Factors” in Part I, Item 1A to our annual report on Form 10-K for the year ended December 31, 2019 , in Part II, Item 1A of our Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and in Part II, Item 1A to this report on Form 10-Q, which discussion is incorporated herein by reference.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof.

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Consolidation and partnering within the semiconductor manufacturing industry has resulted in a small number of customers representing a substantial portion of our business.

Our ten largest customers accounted for 80.3% of total revenue for the six months ended June 30, 2020.

In the first half of 2020, we delivered strong financial performance driven by demand for our Purion systems.

Our ten largest customers accounted for 76.3% of total revenue for the nine months ended September 30, 2020.

In the first nine months of 2020, we delivered strong financial performance driven by demand for our Purion systems.

The semiconductor supply chain was identified as a critical infrastructure sector in the Advisory Memorandum issued by the U.S.

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For example, the pandemic is driving enhanced investment in PCs, video streaming and communications technologies.

On the other hand, it is dampening the demand for semiconductors for automotive and aviation applications.

Our customers will be adapting to the changes in the volumes of different types of semiconductors demanded by the market.

These adaptations could cause delay and uncertainty that could impact Axcelis.

On the other hand, it has dampened the demand for semiconductors for some automotive and industrial applications.

Our customers are adapting to the changes in the demand for different types of semiconductors, which could cause uncertainty and ultimately a delay in investments that could impact Axcelis.

However, we are continuing to work closely with our customers across market segments, even during this difficult time, to provide them with the best ion implant solutions for their specific manufacturing challenges.

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The extent to which COVID-19 may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including the severity and duration of the current pandemic.

We managed to achieve strong performance in the first half of 2020, despite

the pandemic-related business risks described in this paragraph.

We managed to achieve strong performance in the first nine months of

2020, despite the pandemic-related business risks described in this paragraph.

At this time, however, there can be no assurance that these risks will not affect our future performance.

Effective June 29, 2020, the U.S.

Commerce Department adopted a rule, Export Administration Regulations Section 744.21, which requires U.S.

exporters to obtain U.S.

licenses to ship listed products to customers in China who are military end users or that support military end use (the “MEU Rule”).

Several types of semiconductor equipment, including certain ion implanters and specially designed parts, not generally restricted for shipment to China, were included in the list of products subject to the MEU Rule.

Subsequently, on September 25, 2020, the Commerce Department sent certain semiconductor equipment exporters, including Axcelis, a letter regarding Semiconductor Manufacturing International Corporation (“SMIC”), indicating that the U.S.

government was reviewing SMIC and its subsidiaries in relation to the MEU Rule, and required the exporters to submit applications for licenses prior to shipping MEU listed products to SMIC or its subsidiaries.

Critical Accounting Estimates

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The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates and assumptions.

On an ongoing basis, we evaluate our estimates and assumptions.

Management’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Total revenue

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Income before income taxes

Income tax provision

Income tax provision (benefit)

The following table sets forth our product and services revenue:

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Total revenue

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

Product revenue, which includes systems sales, sales of spare parts, product upgrades and used systems was $117.2 million, or 95.3% of revenue during the three months ended June 30, 2020, compared with $68.7 million, or 92.5%

of revenue for the three months ended June 30, 2019.

The $48.5 million increase in product revenue for the three month period ending June 30, 2020, in comparison to the same period in 2019, was primarily driven by an increase in the number of systems sold.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

Product revenue, which includes systems sales, sales of spare parts, product upgrades and used systems was $104.8 million, or 94.9% of revenue during the three months ended September 30, 2020, compared with $64.3 million, or 92.6% of revenue for the three months ended September 30, 2019.

The $40.5 million increase in product revenue for the three month period ending September 30, 2020, in comparison to the same period in 2019, was primarily driven by an increase in the number of systems sold.

A portion of our revenue from systems sales is deferred until installation and other services related to future performance obligations are performed.

The total amount of deferred revenue at June 30, 2020 and December 31, 2019 was $30.4 million and $29.3 million, respectively.

The net increase in deferred revenue was primarily due to the collection of advance payments on systems.

Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $5.8 million, or 4.7% of revenue for the three months ended June 30, 2020, compared with $5.6 million, or 7.5% of revenue for the three months ended June 30, 2019.

The total amount of deferred revenue at September 30, 2020 and December 31, 2019 was $17.0 million and $29.3 million, respectively.

The net decrease in deferred revenue was primarily due to the recognition of revenue on tools that were paid in advance.

Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $5.6 million, or 5.1% of revenue for the three months ended September 30, 2020, compared with $5.2 million, or 7.4% of revenue for the three months ended September 30, 2019.

Although services revenue typically increases with the expansion of the installed base of systems, it can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the need for equipment service.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

Product revenue was $229.3 million, or 94.8% of revenue during the six months ended June 30, 2020, compared with $152.9 million, or 92.2% of revenue for the six months ended June 30, 2019.

The $76.4 million increase in product revenue for the six month period ended June 30, 2020, in comparison to the same period in 2019, was primarily driven by an increase in the number of systems sold.

Services revenue was $12.6 million, or 5.2% of revenue for the six months ended June 30, 2020, compared with $12.9 million, or 7.8% of revenue for the six months ended June 30, 2019.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

Product revenue was $334.1 million, or 94.8% of revenue during the nine months ended September 30, 2020, compared with $217.2 million, or 92.3% of revenue for the nine months ended September 30, 2019.

The $116.9 million increase in product revenue for the nine month period ended September 30, 2020, in comparison to the same period in 2019, was primarily driven by an increase in the number of systems sold.

Services revenue was $18.2 million, or 5.2% of revenue for the nine months ended September 30, 2020, compared with $18.0 million, or 7.7% of revenue for the nine months ended September 30, 2019.

Revenue Categories used by Management

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Aftermarket purchases reflect current fab utilization as opposed to Systems purchases which reflect capital investment decisions by our customers, which have differing economic drivers;

● Revenue by geographic regions, since economic factors impacting customer purchasing decisions may vary by geographic region;

● Revenue by geographic regions, since economic factors impacting customer purchasing decisions may

vary by geographic region;

● Revenue by our customer market segments, since they can be subject to different economic drivers at different periods of time, impacting a customer’s likelihood of purchasing capital equipment during any particular period.

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The ion implant and Aftermarket revenue categories for recent periods are discussed below.

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

Included in total revenue of $123.0 million during the three months ended June 30, 2020 is revenue from sales of ion implant products and services of $118.7 million, or 96.6% of total revenue, compared with $70.2 million, or 94.5%, of total revenue for the three months ended June 30, 2019.

The remaining $4.3 million of revenue for the three months ended June 30, 2020 was non-ion implant parts and services.

Included in total revenue of $123.0 million during the three months ended June 30, 2020 is revenue from our Aftermarket business of $46.2 million, compared to $37.1 million for the three months ended June 30, 2019.

The remaining $76.8 million of revenue for the three months ended June 30, 2020 was from system sales.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

Included in total revenue of $110.4 million during the three months ended September 30, 2020 is revenue from sales of ion implant products and services of $106.0 million, or 96.0% of total revenue, compared with $65.2 million, or 93.9%, of total revenue for the three months ended September 30, 2019.

The remaining $4.4 million of revenue for the three months ended September 30, 2020 was non-ion implant parts and services.

Included in total revenue of $110.4 million during the three months ended September 30, 2020 is revenue from our Aftermarket business of $40.2 million, compared to $32.6 million for the three months ended September 30, 2019.

The remaining $70.2 million of revenue for the three months ended September 30, 2020 was from system sales.

Aftermarket revenue fluctuates from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the sale of spare parts and demand for equipment service.

Aftermarket revenue can also fluctuate from period to period based on the demand for system upgrades or used equipment.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

Included in total revenue of $242.0 million during the six months ended June 30, 2020 is revenue from sales of ion implant products and services of $233.8 million, or 96.6% of total revenue, compared with $157.2 million, or 94.8%, of total revenue for the six months ended June 30, 2019.

The remaining $8.2 million of revenue for the six months ended June 30, 2020 was non-ion implant parts and services.

Included in total revenue of $242.0 million during the six months ended June 30, 2020 is revenue from our Aftermarket business of $82.8 million, compared to $71.5 million for the six months ended June 30, 2019.

The remaining $159.2 million of revenue for the six months ended June 30, 2020 was from system sales.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

Included in total revenue of $352.4 million during the nine months ended September 30, 2020 is revenue from sales of ion implant products and services of $339.8 million, or 96.4% of total revenue, compared with $222.4 million, or 94.5%, of total revenue for the nine months ended September 30, 2019.

The remaining $12.6 million of revenue for the nine months ended September 30, 2020 was non-ion implant parts and services.

Included in total revenue of $352.4 million during the nine months ended September 30, 2020 is revenue from our Aftermarket business of $123.0 million, compared to $104.1 million for the nine months ended September 30, 2019.

The remaining $229.4 million of revenue for the nine months ended September 30, 2020 was from system sales.

Gross Profit / Gross Margin

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Total gross profit

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

Gross margin from product revenue was 44.1% for the three months ended June 30, 2020, compared to 45.9% for the three months ended June 30, 2019.

The decrease in gross margin resulted from a decreased mix of higher margin parts and upgrades, partially offset by improved margins on Purion systems.

Gross margin from services revenue was 3.9% for the three month periods ended June 30, 2020, compared to 4.0% for the three months ended June 30, 2019.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

Gross margin from product revenue was 46.2% for the three months ended September 30, 2020, compared to 47.8% for the three months ended September 30, 2019.

The decrease in gross margin resulted from a decreased mix of higher margin parts and upgrades and changes in the mix of Purion systems.

Gross margin from services revenue was (3.8)% for the three month periods ended September 30, 2020, compared to (2.4)% for the three months ended September 30, 2019.

The decrease in gross margin is attributable to changes in the mix of service contracts.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

Gross margin from product revenue was 42.1% for the six months ended June 30, 2020, compared to 44.7% for the six months ended June 30, 2019.

The decrease in gross margin resulted from a decreased mix of higher margin parts and upgrades, partially offset by improved margins on Purion systems.

Gross margin from services revenue was 6.4% for the six months ended June 30, 2020, compared to 6.7% for the six months ended June 30, 2019.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

Gross margin from product revenue was 43.4% for the nine months ended September 30, 2020, compared to 45.6% for the nine months ended September 30, 2019.

The decrease in gross margin resulted from a decreased mix of higher margin parts and upgrades and changes in the mix of Purion systems.

Gross margin from services revenue was 3.3% for the nine months ended September 30, 2020, compared to 4.1% for the nine months ended September 30, 2019.

The decrease in gross margin is attributable to changes in the mix of service contracts.

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and professional fees, travel and depreciation expenses.

Personnel costs are our largest expense, representing $22.8 million or 64.3% of our total operating expenses for the three month period ended June 30, 2020, compared to $17.8 million or 59.9% of our total operating expenses for the three month period ended June 30, 2019.

Personnel costs were $42.8 million or 63.5% of our total operating expenses for the six month period ended June 30, 2020, compared to $35.6 million or 59.2% of our total operating expenses for the six month period ended June 30, 2019.

The higher personnel costs for the three and six month periods ended June 30, 2020 is primarily due to higher incentive based pay expense.

Personnel costs are our largest expense, representing $22.2 million or 64.8% of our total operating expenses for the three month period ended September 30, 2020, compared to $16.9 million or 58.5% of our total operating expenses for the three month period ended September 30, 2019.

Personnel costs were $65.0 million or 63.9% of our total operating expenses for the nine month period ended September 30, 2020, compared to $52.6 million or 59.0% of our total operating expenses for the nine month period ended September 30, 2019.

The higher personnel costs for the three and nine month periods ended September 30, 2020 are primarily due to higher incentive based pay expense.

Research and Development

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Accordingly, based on our strategic plan, we establish annual R&D budgets to fund programs that we expect will solve customers’ high value, high impact, ion implantation challenges.

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

Research and development expense was $16.0 million during the three months ended June 30, 2020, an increase of $2.3 million, or 16.9%, compared with $13.7 million during the three months ended June 30, 2019.

The increase is primarily due to higher incentive based pay expense, supplies and materials costs for ongoing projects and increased depreciation associated with capital additions.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

Research and development expense was $30.6 million during the six months ended June 30, 2020, an increase of $3.2 million, or 11.8%, compared with $27.4 million during the six months ended June 30, 2019.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

Research and development expense was $14.9 million during the three months ended September 30, 2020, an increase of $1.9 million, or 15.0%, compared with $12.9 million during the three months ended September 30, 2019.

The increase is primarily due to higher incentive based pay expense, supplies and materials costs for ongoing projects and increased depreciation associated with capital additions.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

Research and development expense was $45.5 million during the nine months ended September 30, 2020, an increase of $5.2 million, or 12.8%, compared with $40.3 million during the nine months ended September 30, 2019.

The increase is primarily due to higher incentive based pay expense and costs for ongoing projects and increased depreciation associated with capital additions.

Sales and Marketing

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Our sales and marketing expenses result primarily from the sale of our equipment and services through our direct sales force.

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

Sales and marketing expense was $9.4 million during the three months ended June 30, 2020, an increase of $1.0 million, or 11.9%, compared with $8.4 million during the three months ended June 30, 2019.

The increase is primarily due to higher incentive based pay expense.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

Sales and marketing expense was $17.6 million during the six months ended June 30, 2020, an increase of $0.3 million, or 1.7%, compared with $17.4 million during the six months ended June 30, 2019.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

Sales and marketing expense was $9.8 million during the three months ended September 30, 2020, an increase of $1.7 million, or 21.2%, compared with $8.1 million during the three months ended September 30, 2019.

The increase is primarily due to higher incentive based pay and commission expense.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

Sales and marketing expense was $27.4 million during the nine months ended September 30, 2020, an increase of $2.0 million, or 7.8%, compared with $25.4 million during the nine months ended September 30, 2019.

The increase is primarily due to higher incentive based pay expense.

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Our general and administrative expenses result primarily from the costs associated with our executive, finance, information technology, legal and human resource functions.

Three months ended June 30, 2020 Compared with Three months ended June 30, 2019

General and administrative expense was $10.0 million during the three months ended June 30, 2020, an increase of $2.5 million, or 32.4%, compared with $7.6 million during the three months ended June 30, 2019.

Three months ended September 30, 2020 Compared with Three months ended September 30, 2019

General and administrative expense was $9.6 million during the three months ended September 30, 2020, an increase of $1.9 million, or 25.2%, compared with $7.7 million during the three months ended September 30, 2019.

The increase is primarily due to an increase in incentive based pay expense.

Six months ended June 30, 2020 Compared with Six months ended June 30, 2019

General and administrative expense was $19.1 million during the six months ended June 30, 2020, an increase of $3.7 million, or 24.0%, compared with $15.4 million during the six months ended June 30, 2019.

Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019

General and administrative expense was $28.7 million during the nine months ended September 30, 2020, an increase of $5.6 million, or 24.4%, compared with $23.1 million during the nine months ended September 30, 2019.

The increase is primarily due to an increase in incentive based pay expense.

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Other (expense) income consists primarily of interest expense relating to the finance lease obligation we incurred in connection with the 2015 sale of our headquarters facility and other financing obligations, foreign exchange gains and losses attributable to fluctuations of the US dollar against local currencies of certain of the countries in which we operate as well as interest earned on our invested cash balances.

Other expense was $0.8 million for the three months ended June 30, 2020, compared with $0.7 million for the three months ended June 30, 2019.

The increase in other expense of $0.1 million for the three month period ended June 30, 2020 compared to the three month period ended June 30, 2019, was primarily due to higher foreign currency exchange losses in the current year period compared to the prior year.

Other expense was $2.2 million for the six months ended June 30, 2020, compared with $1.2 million for the six months ended June 30, 2019.

The increase in other expense of $1.0 million for the six month period ended June 30, 2020 compared to the six month period ended June 30, 2019, was primarily due to higher foreign currency exchange losses in the current year period compared to the prior year.

During the six month periods ended June 30, 2020 and 2019, we had no significant off-balance-sheet risk such as exchange contracts, option contracts or other hedging arrangements.

Other expense was $0.3 million for the three months ended September 30, 2020, compared with $1.5 million for the three months ended September 30, 2019.

The decrease in other expense of $1.2 million for the three month period ended September 30, 2020 compared to the three month period ended September 30, 2019, was primarily due to foreign currency exchange gains of $0.8 million in the current year period compared to foreign currency exchange losses of $0.7 million in the same period in the prior year.

This was partially offset by a reduction of $0.6 million in interest income for the three month period ended September 30, 2020 compared to the three month period ended September 30, 2019.

Other expense was $2.5 million for the nine months ended September 30, 2020, compared with $2.7 million for the nine months ended September 30, 2019.

The decrease in other expense of $0.2 million for the nine month period ended September 30, 2020 compared to the nine month period ended September 30, 2019, was primarily due to foreign currency exchange gains, slightly offset by reduced interest income in the current year period compared to foreign currency exchange losses in the prior year.

During the nine month periods ended September 30, 2020 and 2019, we had no significant off-balance-sheet risk such as exchange contracts, option contracts or other hedging arrangements.

Income Tax Provision

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Income tax provision

Income tax provision (benefit)

Percentage of revenue

Income tax expense was $2.3 million for the three months ended June 30, 2020, compared to $0.8 million for the three months ended June 30, 2019.

The $1.5 million increase was primarily due to a $14.2 million increase in pretax income.

The income tax provision was $3.3 million during the six months ended June 30, 2020, compared to $1.3 million for the six months ended June 30, 2019.

Income tax expense was $2.8 million for the three months ended September 30, 2020, compared to a $0.3 million benefit for the three months ended September 30, 2019.

The $3.1 million increase was primarily due to a $13.2 million increase in pretax income.

The effective tax rate for the three and six months ended June 30, 2020 and 2019, respectively, was less than the U.S.

The income tax provision was $6.1 million during the nine months ended September 30, 2020, compared to $0.9 million for the nine months ended September 30, 2019.

The $5.2 million increase was primarily due to a $33.2 million increase in pretax income partially offset by a $2.0 million tax benefit relating to equity compensation.

The effective tax rate for the three and nine months ended September 30, 2020 and 2019, respectively, was less than the U.S.

statutory rate of 21% due to favorable discrete items related to equity compensation in those periods and Federal research and development tax credits that reduce the annual tax rate.

We had $64.6 million and $68.1 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of June 30, 2020 and December 31, 2019, respectively.

We had $58.2 million and $68.1 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of September 30, 2020 and December 31, 2019, respectively.

These deferred tax assets are available to reduce income taxes in future years.

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Liquidity and Capital Resources

We had $190.3 million in unrestricted cash and cash equivalents at June 30, 2020, in addition to $6.7 million in restricted cash, primarily comprised of the $5.9 million security deposit for the lease of our corporate headquarters.

We had $212.0 million in unrestricted cash and cash equivalents at September 30, 2020, in addition to $0.8 million in restricted cash.

Management believes that maintaining a strong cash balance is necessary to provide funding for potential ramps in our business which can require significant cash investment to meet sudden demand.

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We may also engage in stock repurchases, as discussed below.

During the six months ended June 30, 2020, we generated $56.6 million of cash related to operating activities.

In comparison, during the six months ended June 30, 2019, we used $20.3 million of cash from operations.

Investing activities for the six months ended June 30, 2020 and 2019 resulted in cash outflows of $3.0 million and $8.8 million, respectively, used for capital expenditures.

Financing activities for the six months ended June 30, 2020 resulted in a net cash usage of $3.7 million.

During the first half of 2020, $7.5 million in cash was used to repurchase our common stock and $3.9 million was used for payments to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs, where shares are withheld by the Company, as well as $0.1 million relating to the reduction of our financing lease liability.

These amounts were partially offset by $7.8 million of proceeds from the exercise of stock options and purchases under the ESPP, during the first half of 2020.

Financing activities for the six months ended June 30, 2019 resulted in a net cash usage of $12.8 million, $14.0 million of which related to the repurchase of our common stock and $1.6 million related to payments

made to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs.

These amounts were partially offset by $2.8 million of proceeds related to the exercise of stock options and purchase of shares under our ESPP during the first half of 2019.

During the nine months ended September 30, 2020, we generated $75.7 million of cash related to operating activities.

In comparison, during the nine months ended September 30, 2019, we used $0.3 million of cash from operations.

Investing activities for the nine months ended September 30, 2020 and 2019 resulted in cash outflows of $5.6 million and $11.1 million, respectively, used for capital expenditures.

Financing activities for the nine months ended September 30, 2020 resulted in a cash usage of $3.4 million.

During the first nine months of 2020, $7.5 million in cash was used to repurchase our common stock and $3.9 million was used for payments to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs, where shares are withheld by the Company, as well as $0.3 million relating to the reduction of the liability under the finance lease of our corporate headquarters.

These amounts were partially offset by $8.3 million of proceeds from the exercise of stock options and purchases under the ESPP, during the first nine months of 2020.

In comparison, financing activities for the nine months ended September 30, 2019 resulted in cash usage of $12.2 million, $14.0 million of which related to the repurchase of our common stock and $1.6 million related to payments made to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs.

These amounts were partially offset by $3.4 million of proceeds related to the exercise of stock options and purchase of shares under our ESPP during the first nine months of 2019.

Under the rules of the U.S.

Securities and Exchange Commission, we qualify as a “well-known seasoned issuer,” which allows us to file shelf registration statements to register an unspecified amount of securities that are effective upon filing.

Securities and Exchange Commission (the “SEC”), we qualify as a “well-known seasoned issuer,” which allows us to file shelf registration statements to register an unspecified amount of securities that are effective upon filing.

On May 29, 2020, we filed such a shelf registration statement with the SEC for the issuance of an unspecified amount of common stock, preferred stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or in units, from time to time at prices and on terms to be determined at the time of any such offering.

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Our obligations under the Credit Agreement are secured by a security interest, senior to any current and future debts and to any security interest, in all of our rights, title, and interest in, to and under substantially all of our assets, subject to limited exceptions, including permitted liens.

The revolving credit facility terminates on August 3, 2023 .

No borrowing is outstanding on this facility as of the filing of this Form 10-Q.

The revolving credit facility terminates on July 31, 2023.

As of September 30, 2020, we were in compliance with all covenant requirements of the Credit Agreement.

As of such date, no borrowings had been made under the Credit Agreement, although a letter of credit for $5.9 million, previously issued by Silicon Valley Bank, had been rolled under the Credit Agreement, reducing the funds available for borrowing under the credit line.

We have no immediate plans to borrow under the Credit Agreement, but we will use the facility for letters of credit, for ongoing working capital needs and to fund general corporate purposes, as desired.

See Note 18 to the financial statements included elsewhere in this Quarterly Report.

We believe that based on our current market, revenue, expense and cash flow forecasts, our existing cash, cash equivalents and borrowing capacity will be sufficient to satisfy our anticipated cash requirements for the short and long-term.

In December 2019, our Board of Directors authorized an increase and extension of the share repurchase program, of up to $50 million of the Company's common stock through 2020.

These shares could be purchased in the open market or through privately negotiated transactions.

At the end of the first quarter of 2020, we suspended the repurchase program in light of the economic uncertainty relating to the COVID-19 pandemic.

As of June 30, 2020, we had approximately $24.8 million remaining under the share repurchase program.

We continue to invest cash in our business and to evaluate whether to recommence stock repurchases.

Consideration of whether to do so includes an evaluation of the known and anticipated effects of the COVID-19 pandemic on our business and industry.

See Note 15 to the financial statements included elsewhere in this Quarterly Report.

If we do recommence stock purchases, the timing and actual number of shares repurchased in 2020 beyond those acquired in the first quarter, will depend on various factors, including the price of our common stock, general business and market conditions, and alternative investment opportunities or other uses of cash.

See Part II, Item 2 of this report for purchases under this program during the second quarter of 2020.

We believe that based on our current market, revenue, expense and cash flow forecasts, our existing cash, cash equivalents and equity and debt financing capacity will be sufficient to satisfy our anticipated cash requirements for the short and long-term.

Commitments and Contingencies

Significant commitments and contingencies at June 30, 2020 are consistent with those discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 16 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Significant commitments and contingencies at September 30, 2020 are consistent with those discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 16 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Quantitative and Qualitative Disclosures about Market Risk.

As of June 30, 2020, there have been no material changes to the quantitative information about market risk disclosed in Item 7A to our Annual Report on Form 10-K for the year ended December 31, 2019.

As of September 30, 2020, there have been no material changes to the quantitative information about market risk disclosed in Item 7A to our Annual Report on Form 10-K for the year ended December 31, 2019.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis