What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-31 compared with 2021-03-31 · 110 added, 119 removed, 166 unchanged (58% of the section changed)

2 unchanged sentences

Any of these factors, many of which are beyond our control, could materially adversely affect our business, financial condition, operating results, cash flow and stock price.

We have significant investments in our CVD Materials segment, which could be met with further delays and ongoing losses that could further materially and adversely impact our financial results and cash flow.

In 2017, to support the expected growth of our CVD Materials segment and to house the US based business, on November 30, 2017, we purchased the 555 Building located at 555 North Research Place, Central Islip, NY (the “Premises”).

The purchase price of the building was $13,850,000, exclusive of closing costs.

We have monthly principal and interest payments of $62,481 and have invested $1.6 million, $2.7 million and $2.5 million during 2020, 2019 and 2018, respectively, in building improvements, machinery, and other expenses related primarily to CVD Materials.

Since September 2019, MesoScribe™ has secured orders of in excess of $2 million, and in early 2020 we have hired four employees including test and project management to support those orders and growth opportunities.

Tantaline® US equipment continued to be installed in 2020 and are in various stages of process testing and refinement.

The projected growth of the Materials Business has not met expectations.

Although we have made substantial investments in facilities, equipment and acquisitions in furtherance of our strategy, the foregoing has proven to be a significant drain on our finances and our liquidity.

Since 2018 revenues for the Materials Business have been $1,700,000 in 2018, $1,600,000 in 2019 and $2,300,000 in 2020, with operating losses recorded in all years for a total loss of $2.5 million, exclusive of a $3.6 million impairment charge.

These cumulative results are due to operating losses from the Tantaline operations offset by operating profits of $.5 million from the MesoScribe operations.

In January 2021, our Board of Directors concluded that we needed a change in direction and new leadership to evaluate our business strategy and operations, and take timely actions to halt and reverse the declines of the past few years.

As such, they appointed Emmanuel Lakios as President and Chief Executive Officer (previously our Vice-President- Sales and Marketing).

We began an intensive analysis of our entire business and operations including the Materials Business.

Based upon that analysis we believe our primary focus should be on the core equipment business and that the Materials Business strategy should be revised, with some of its current elements potentially minimized or ceased.

Based upon this analysis, we are forecasting continued losses and negative cash flow for our Tantaline product line and as a consequence, we have implemented plans to eliminate further investment in our Tantaline product line, which will result in the avoidance of approximately $1.5-$2.0 million in additional costs.

In addition, we have recorded an impairment charge of $3.6 million in the fourth quarter and year ended December 31, 2020.

Based upon certain decisions and actions currently being reviewed, there may be additional costs to be incurred, inclusive of employee related and lease termination costs estimated at approximately $400,000.

In order to increase our liquidity and to provide necessary working capital to support our on-going business and operations, we have decided to sell the 555 Building.

We have determined the 555 Building is not needed for present and future business operations.

We have concluded that any remaining elements of the Materials Business can be consolidated into the 355 Building, which we believe can accommodate any needs for our growth for the foreseeable future.

We might require additional financing.

Our overall revenues have declined from $41.1 million in 2017 to $16.9 million in 2020.

Cumulative operating losses for the last three years (2018-2020) totaled ($18.1 million), which are comprised of 2018 ($5.3 million), 2019 ($5.0 million) and 2020 ($7.8 million).

As a result of these continuing losses, and the investments in the Materials Business, our cash balances have declined from $21.7 million at December 31, 2016 to $7.7 million as of December 31, 2020, and liquidity has been strained.

Contributing to and compounding this decline, is the negative effect the COVID-19 crisis has had in 2020 on the aerospace industry, which resulted from reduced travel and reduction of industry gas turbine engine sales.

Aerospace sales have represented as much as 60% of our total revenue.

Our mortgage debt on the 355 Building and 555 Building, in the amount of $2.1 million and $9.3 million respectively, at December 31 2020, matures in March and December 2022, respectively.

As such, they appointed Emmanuel Lakios as President and Chief Executive Officer (previously our Vice-President- Sales and Marketing).

We began an intensive analysis of our entire business and operations including the Materials Business.

In addition, we have recorded an impairment charge of $3.6 million in the fourth quarter and year ended December 31, 2020.

In order to increase our liquidity and to provide necessary working capital to support our on-going business and operations, we have decided to sell the 555 Building.

We have determined the 555 Building is not needed for present and future business operations.

Our continuing operating losses and decline in revenues may make it difficult for us to obtain financing on commercially reasonable terms, if at all.

If any financing is not available if and when required on commercially reasonable terms, if at all, or, even if available and we issue additional common stock, it may materially dilute the ownership interests of the then existing shareholders.

We are presently experiencing Supply chain delays and cost increases that may adversely affect our business.

The COVID-19 pandemic has adversely impacted worldwide supply chains and the ability to obtain sufficient amounts of component parts.

In addition, geopolitical developments across Europe and Asia have and may continue to restrict our ability to procure raw materials and components such as nickel and integrated circuits.

Furthermore, disruptions and delays in the ability of our third party freight carriers to transport these items to our manufacturing facility also continues to be a challenge.

During the third and fourth quarters of 2021, and into 2022, we experienced increased costs on certain components as well as delays in supply chain delivery, which may also impact our ability to recognize revenue and reduce our gross profit margins, as well as extend our manufacturing lead times and reduce our manufacturing efficiencies.

We have commenced placing orders with more lead time to help mitigate the manufacturing delays, as well as assessing other suppliers or components to attempt to mitigate the potential cost impacts.

In addition, we are utilizing our in-house flexible manufacturing to attempt to further mitigate both potential schedule delivery delays and material cost increase, as well as increasing sales prices.

While we have initiated actions to mitigate the potential negative impacts to our revenue and profitability, there can be no assurance of the ultimate impact and the length of time period that the supply chain factors may impact our revenues and profitability.

A pandemic, epidemic or outbreak of an infectious disease such as COVID-19 in the United States or worldwide has adversely affected our business.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the recent outbreak of coronavirus disease (COVID-19) which has spread from China to the rest of the world.

Outbreaks such as these have resulted, and can continue to result, in governments around the world implementing increasingly stringent measures to help control the spread, including quarantines, "shelter in place" and "stay at home" orders, travel restrictions, business curtailments, school closures, and other measures.

These actions with respect to the COVID-19 outbreak have negatively impacted, and could continue to have negative impacts on, our operations, supply chain, transportation networks, customers and employees.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the outbreak of coronavirus disease (COVID-19) which has spread from China to the rest of the world. 

The COVID-19 outbreak has materially and adversely affected, and any continuing economic downturn as a result of this pandemic could continue to adversely affect, demand for our products, and negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers.

In particular, the aerospace sector, for which we rely on a significant part of our business, has been faced with significant reductions to its business due to lack of air travel.

Since the end of our first quarter 2020, we have experienced the impacts of COVID-19 on our markets and operations which have included significant decreases in demand, supply chain disruptions, and logistics constraints.

Given government mandates and concerns over employee safety, some of our production facilities were closed or significantly slowed production during the end of the first quarter 2020 and into the second quarter 2020.

The extent to which COVID-19 has and may continue to adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects.

While we expect this matter to materially and adversely impact our financial results, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time.

While we expect this situation to continue to materially and adversely impact our financial results, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time.

Inflation has and may continue to adversely affect our business, financial condition and results of operations

Recent inflation has adversely affected our costs, including the cost of materials, production, and labor.

As such, we have had to implement measures to mitigate the negative impacts of inflation on our costs.

Longstanding or increased periods of inflation could perpetuate these material adverse effects on our business, financial condition and results of operations.

We may be unable to obtain required export licenses for the sale of our products.

Whether with respect to sales to customers located in China or otherwise, products which (i) are manufactured in the United States, (ii) incorporate controlled U.S.

origin parts, technology, or software, or (iii) are based on U.S.

technology, are subject to the U.S.

Export Administration Regulations (“EAR”) when exported to and re-exported from international jurisdictions, in addition to the local jurisdiction’s export regulations applicable to individual shipments.

Licenses or proper license exceptions may be required for the shipment of our products to certain customers or countries.

Obtaining an export license or determining whether an export license exception exists often requires considerable effort by us and cooperation from the customer, which can add time to the order fulfillment process.

We may be unable to obtain required export licenses or qualify for export license exceptions and, as a result, we may be unable to export products to our customers and/or meet their servicing needs.

Non-compliance with the EAR or other applicable export regulations could result in a wide range of penalties including the denial of export privileges, fines, criminal penalties, and the seizure of commodities.

In the event that an export regulatory body determines that any of our shipments violate applicable export regulations, we could be fined significant sums and our export capabilities could be restricted, which could have a material adverse impact on our business.

We might require additional financing.

Our continuing operating losses and decline in revenues may make it difficult for us to obtain financing on commercially reasonable terms, if at all.

If adequate financing is not available if and when required on commercially reasonable terms, if at all, our business and operations may be materially and adversely affected.

In addition we could issue additional common stock, to fund our growth initiatives and operations which could materially dilute the ownership interests of the then existing shareholders.

We have made investments in our proprietary technologies.

If third parties violate our proprietary rights, or accuse us of infringing upon their proprietary rights, such events could result in a loss of value of some of our intellectual property or costly litigation.

Our success is dependent in part on our technologies and our other proprietary rights.

We believe that while patents can be useful and may be utilized by us in the future, they are not always necessary or feasible to protect our intellectual property.

The process of seeking patent protection is lengthy and expensive, and we cannot be certain that applications will actually result in issued patents or that issued patents will be of sufficient scope or strength to provide meaningful protection or commercial advantage to us.

In addition to patent protection, we have also historically protected our proprietary information and intellectual property such as design specifications, blueprints, technical processes and employee know-how, by limiting access to this confidential information and trade secrets and through the use of non-disclosure agreements.

Other companies and individuals, including our larger competitors, may develop technologies that are similar or superior to our technology, or design around the intellectual property that we own or license.

Our failure to adequately protect our intellectual property, could result in the reduction or extinguishment of our rights to such intellectual property.

We also assert rights to certain trademarks relating to certain of our products and product lines.

We have not filed trademark applications to protect such marks with any governmental agency, including, but not limited to the U.S.

Patent and Trademark Office.

We claim copyright protection for certain proprietary software and documentation, but we have not filed any copyright applications with the U.S.

As a result, we can give no assurance that our trademarks and copyrights will be upheld or successfully deter infringement by third parties.

While patent, copyright and trademark protection for our intellectual property may be important, we believe our future success in highly dynamic markets is most dependent upon the technical competence and creative skills of our personnel.

We attempt to protect our trade secrets and other proprietary information through confidentiality agreements with our customers, suppliers, employees and consultants, and through other internal security measures.

However, these employees, consultants and third parties may breach these agreements, and we may not have adequate remedies for wrongdoing.

We attempt to protect certain of our intellectual property rights by obtaining patent and

trademark protection where we believe it is appropriate to do so.

We may also attempt to protect our trade secrets and other proprietary information through confidentiality agreements with our customers, suppliers, employees and consultants, and through other internal security measures. 

However, these employees, consultants and third parties may breach these agreements, and we may not have adequate remedies for wrongdoing. 

In addition, the laws of certain territories in which we sell our products may not protect our intellectual property rights to the same extent as do the laws of the United States.

Occasionally, we may receive communications from other parties asserting the existence of patent rights or other intellectual property rights that they believe cover certain of our products, processes, technologies or information.

In addition, it is possible we could have a dispute with a customer on intellectual property utilized in their equipment.

If such cases arise, we will evaluate our position and consider the available alternatives, which may include seeking licenses to use the technology in question on commercially reasonable terms, developing new alternative technology or defending our position.

Nevertheless, we cannot ensure that we will be able to obtain licenses, or, if we are able to obtain licenses, that related terms will be acceptable, or that litigation or other administrative proceedings will not occur.

Defending our intellectual property rights through litigation could be very costly.

In addition, it is possible we could have a dispute with a customer concerning the use of intellectual property utilized in their equipment. 

Defending our intellectual property rights through litigation could be very costly. 

If we are not able to negotiate the necessary licenses on commercially reasonable terms or successfully defend our position, our ability to utilize such intellectual property could substantially inhibit our access to certain markets and our ability to compete in these markets which could have a material adverse effect on our financial position and results of operations.

We have a highly concentrated customer base so that changes in ordering patterns, delays or order cancellations could have a material adverse effect on our business and results of operations.

Two customers represented 30.5% in total and two customers represented 39.3%, respectively, of our annual revenues in fiscal years 2020 and 2019.

We believe that our relationships with these customers are positive and may provide us with ongoing continuous sustainability for years to come, however the loss of a large customer would have to be replaced by others, and our inability to do so may have a material adverse effect on our business and financial condition.

We expect that contracts or orders from a relatively limited number of customers will continue to account for a substantial portion of our business.

Historically, we have maintained a highly concentrated customer base so that changes in ordering patterns, delays or order cancellations could have a material adverse effect on our business and results of operations.

While in 2021 no customers account for greater than 10% of our annual revenues, the loss of a major customer would have to be replaced by others, and our inability to do so may have a material adverse effect on our business and financial condition.

We expect that contracts or orders from a relatively limited number of customers will, at times, continue to account for a substantial portion of our business.

The mix and type of customers, and sales to any single customer, may vary significantly from quarter to quarter and from year to year.

If any of our significant customers do not place orders, or they substantially reduce, delay or cancel orders, we may not be able to replace the business in a timely manner or at all, which can and has had a material adverse effect on our results of operations and financial condition.

If any major customer did not place orders, or substantially reduced, delayed or cancelled orders, we may not be able to replace the business in a timely manner or at all, which can and has had a material adverse effect on our results of operations and financial condition.

Major customers may also seek, and on occasion receive, pricing, payment, intellectual property-related, or other commercial terms that are less favorable to us and can hurt our competitive position.

2 unchanged sentences

The lengthy sales cycle makes forecasting the volume and timing of sales difficult, and raises additional risks that customers may cancel or decide not to enter into contracts.

The length of the sales cycle depends on the size and complexity of the project, the customer’s in-depth evaluation of our products, and, in some cases, the protracted nature of a bidding process.

Because a significant portion of our operating expenses are fixed, we have and may continue to incur substantial expense before we earn associated revenue.

7 unchanged sentences

If our assets were impaired, our financial condition and results of operations could be materially and adversely affected.

Following our recent change in management, we began an intensive analysis of our entire business and operations including the Materials Business.

In addition, we have recorded an impairment charge of $3.6 million in the fourth quarter and year ended December 31, 2020.

Our success is highly dependent on the technical, sales, marketing and managerial contributions of key individuals, including our newly appointed Chief Executive Officer and President, and we may be unable to retain these individuals or recruit others.

We depend on our senior executives including our newly appointed Chief Executive Officer and President, and certain key managers as well as, engineering, research and development, sales, marketing and manufacturing personnel, who are critical to our business.

We do not have long-term employment agreements with our key employees.

Furthermore, larger competitors may be able to offer more generous compensation packages to our executives and key employees, and therefore we risk losing key personnel to those competitors.

In January 2021, we began an intensive analysis of our entire business and operations including the Materials Business.

Based upon that analysis we believed our primary focus should be on the core equipment business and that the Materials Business strategy should be revised, with some of its current elements potentially minimized or ceased. 

Based upon that analysis, we forecasted continued losses and negative cash flow for our Tantaline product line and as a consequence, we have implemented plans to eliminate further investment in our Tantaline product line.

This resulted in a discontinuation of all US Tantaline operations, including the halting of substantial capital investments, and the consolidation of all Tantaline operating activities into the Denmark Tantaline facility.

In addition, we recorded an impairment charge of $3.6 million in the fourth quarter and year ended December 31, 2020.

Our success is highly dependent on the technical, sales, marketing and managerial contributions of key individuals, including our Chief Executive Officer and President, and we may be unable to retain these individuals or recruit others.

We depend on our senior executives including our Chief Executive Officer and President, and certain key managers as well as, engineering, research and development, sales, marketing and manufacturing personnel, who are critical to our business.

With the exception of our Chief Executive Officer and President, and our Chief Financial Officer, we do not have employment agreements with our key employees.

Furthermore, the current labor market remains very competitive and challenging for the acquisition and retention of key employees.

Larger competitors may be able to offer more generous compensation packages to our executives and key employees, and therefore we risk losing key personnel to those competitors.

If we were to lose the services of any of our key personnel, our engineering, product development, manufacturing and sales efforts could be slowed.

1 unchanged sentence

The integration of any new personnel could disrupt our ongoing operations.

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

We continually evaluate potential acquisitions of businesses and technologies, and we consider targeted acquisitions that expand our core competencies to be an important part of our future growth strategy.

In the past, we have made acquisitions of other businesses with synergistic products, services and technologies, and plan to continue to do so in the future.

Acquisitions can result in an increase in our operating costs, divert management ’

s attention away from other operational matters and expose us to other associated risks.

In the past, we have made acquisitions of other businesses with synergistic products, services and technologies, and plan to continue to do so in the future. 

Acquisitions involve numerous risks, which include but are not limited to:

difficulties and increased costs in connection with the integration of the personnel, operations, technologies, services and products of the acquired companies into our existing facilities and operations;

diversion of management’s attention from other operational matters;

failure to commercialize the acquired technology;

18 unchanged sentences

changes in technology;

The effects of the COVID-19 pandemic;

Geopolitical developments across Europe and Asia

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

Volatile and cyclical demand for our products may make it difficult for us to accurately budget our expense levels, which are based in part on our projections of future revenues.

Demand for our equipment and related consumable products may be volatile as a result of sudden changes in supply and demand, and other factors in the manufacturing process.

Historically, demand for our equipment and related consumable products have been volatile as a result of sudden changes in supply and demand, and other factors in the manufacturing process.

Our orders tend to be more volatile than our revenue, as any change in demand is reflected immediately in orders booked, which are net of cancellations, while revenue, tends to be recognized over multiple quarters as a result of procurement and production lead times, and the deferral of certain revenue under our revenue recognition policies.

6 unchanged sentences

If we fail to respond to these cyclical changes, our business could be seriously harmed.

In 2018, 2019 and 2020, we reported pre-tax income (loss) of ($5,558,000), ($4,914,000) and ($7,602,000), respectively.

In 2019, 2020 and 2021, we reported operating losses of, ($4,985,000), ($7,824,000) and ($4,807,000), respectively.

We do not have long-term volume production contracts with our customers, and we do not control the timing or volume of orders placed by our customers.

13 unchanged sentences

The health and environmental effects of nanotechnology are unknown.

There is no scientific agreement on the health effects of nanomaterials in general and carbon nanotubes, in particular, but some scientists believe that in some cases, nanomaterials may be hazardous to an individual’s health or to the environment.

The science of nanotechnology is based on arranging atoms in such a way as to modify or build materials not made in nature;

2 unchanged sentences

Since part of our growth strategy is based on sales of research equipment for the production of carbon nanotubes and the sale of such materials, the determination that these materials are harmful could adversely affect the expansion of our business.

We may experience increasing price pressure.

We are presently experiencing increased pricing pressure from reduced funding and increased competition.

Our historical business strategy for many of our products has focused on product performance and customer service rather than on price.

3 unchanged sentences

We believe that our continued success in the markets in which we operate depends, in part, on our ability to continually improve existing technologies and to develop and manufacture new products and product enhancements on a timely and cost-effective basis.

We must be able to introduce these products and product enhancements into the market in a timely manner, in response to customer’s demands for higher-performance research and assembly equipment, customized to address rapid technological advances in capital equipment designs.

Technological innovations are inherently complex, and require long development cycles and appropriate professional staffing.

8 unchanged sentences

Further, these conditions may cause some suppliers to scale back operations, exit businesses, merge with other companies, or file for bankruptcy protection and possibly cease operations.

We have also experienced and continue to experience significant

disruptions in our supply chain, resulting in delays and higher costs to procure certain

components and materials that we utilize in our business.

We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products or services, increased costs or customer order cancellations as a result of:

11 unchanged sentences

We also have a significant concentration of revenue with customers exceeding 10% of revenues.

Two customers represented 30.5% in total and two customers represented 39.3%, respectively, of our annual revenues in fiscal years 2020 and 2019.

These customized systems can have prices that range from $100,000 to several million dollars, depending on the configuration, specific options included and any special requirements of the customer.

Because our orders are 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 does our backlog provide any assurance of achievement of revenues or that we will realize a profit from completing these orders.

There were no customers in fiscal year 2021 that exceeded 10% of our revenues, while two customers represented 30.5% of our annual revenues in fiscal year 2020.

These customized systems can have prices that range from $200,000 to several million dollars, depending on the configuration, specific options included and any special requirements of the customer. 

Our financial position and results of operations could be materially and adversely affected should any large system order be cancelled prior to shipment, or not be accepted by the customer due to alleged non-conformity with product specifications or otherwise.

Likewise, a significant change in the liquidity or financial position of any of our customers that purchase large systems, could have a material impact on the collectability of our accounts receivable and our future operating results.

Our backlog does not provide any assurance that we will realize a profit from those orders, or indicate in which period revenue will be recognized.

We may not be able to hire or retain the number of qualified personnel, particularly engineering personnel, required for our business, which would harm the development and sales of our products and limit our ability to grow.

Competition in our industry for senior management, technical, sales, marketing and other key personnel is intense.

Competition in our industry for senior management, technical, sales, marketing and other key personnel is intense and has been made even more challenging in the current labor market.

If we are unable to retain our existing personnel, or attract and train additional qualified personnel, our growth may be limited due to a lack of capacity to develop and market our products.

In particular, we have, from time to time, experienced difficulty in hiring and retaining skilled engineers with appropriate qualifications to support our growth strategy.

In addition, the “Great Resignation”

has resulted in a high level of mobility of employees in many industries which makes it more difficult and costly to attract and retain qualified personnel.

Our success depends on our ability to identify, hire, train and retain qualified engineering personnel with experience in equipment design.

1 unchanged sentence

Our financial position and results of operations may be materially harmed if we are unable to recoup our investment in research and development.

The rapid change in technology in our industry requires that we continue to make substantial investments in research and development and selective acquisitions of technologies and products, in order to enhance the performance and functionality of our product line, to keep pace with competitive products and to satisfy customer demands for improved performance, features and functionality.

These efforts include those related to the development of technology for the commercialization of carbon nanotubes.

There can be no assurance that revenue from future products or enhancements will be sufficient to recover the development costs associated with such products, enhancements or acquisitions, or that we will be able to secure the financial resources necessary to fund future research and development or acquisitions.

Research and development costs are typically incurred before we confirm the technical feasibility and commercial viability of a product, and not all development activities result in commercially viable products.

In addition, we cannot ensure that products or enhancements will receive market acceptance, or that we will be able to sell these products at prices that are favorable to us.

Our business could be seriously harmed if we are unable to sell our products at favorable prices, or if our products are not accepted by the markets in which we operate.

Our reputation and operating performance may be negatively affected if our products are not timely delivered.

Our reputation and operating performance may be negatively affected if our products are not 

timely delivered.

We provide complex products that often require substantial lead-time for design, ordering parts and materials, and for assembly and installation.

The time required to design, order parts and materials and to manufacture, assemble and install our products, may in turn lead to delays or shortages in the availability of some products.

If a product is delayed or is the subject of shortage because of problems with our ability to design, manufacture or assemble the product on a timely basis, or if a product or software otherwise fails to meet performance criteria, we may lose revenue opportunities entirely, or experience delays in revenue recognition associated with a product or service.

If a product is delayed or is the subject of shortage because of problems with our ability to design, manufacture or assemble the product on a timely basis, obtain necessary materials and components, or if a product or software otherwise fails to meet performance criteria, we may lose revenue opportunities entirely, or experience delays in revenue recognition associated with a product or service.

In addition, we may incur higher operating expenses during the period required to correct the problem.

2 unchanged sentences

compared to approximately $2.8 million or 16.8% for the year ended December 31, 2020.

Because a portion of our revenues are derived from international customers, our operating results could be negatively affected by a decline in the economies of any of the countries or regions in which we do business.

Each region can exhibit unique characteristics, which can cause capital equipment investment patterns to vary significantly from period to period.

Periodic local or international economic downturns, trade balance issues and political instability, as well as fluctuations in interest and currency exchange rates, could negatively affect our business and results of operations.

All of our sales to date have been primarily priced in U.S.

While our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future.

Such risks include possible losses due to both currency exchange rate fluctuations and from possible social and political instability.

While our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future. 

Such risks include possible losses due to both currency exchange rate fluctuations and from possible social and political instability. 

If our critical suppliers fail to deliver sufficient quantities of quality materials and components in a timely and cost-effective manner, it could negatively affect our business.

We do not manufacture many components used in the production of our products, and consequently, we use numerous unrelated suppliers of materials and components.

We generally do not have guaranteed supply arrangements with our suppliers.

Because of the variability and uniqueness of our customer’s orders, we try to avoid maintaining an extensive inventory of materials and components for manufacturing.

We do not manufacture many components used in the production of our products, and consequently, we use numerous unrelated suppliers of materials and components. 

Due to the impact of the COVID-19 pandemic and geopolitical developments across Europe and Asia, we are experiencing reduced quantities of raw materials and components.

In turn, any reduction in the availability of these materials and components may reduce our ability to obtain sufficient amounts in a cost-effective manner.

We generally do not have guaranteed supply arrangements with our suppliers. 

Because of the variability and uniqueness of our customer’s orders, we try to avoid maintaining an extensive inventory of materials and components for manufacturing.

While we are not dependent on any principal or major supplier for most of our material and component needs, switching over to an alternative supplier may take significant amounts of time and added expense, which could result in a disruption of our operations and adversely affect our business.

It is not always practical or even possible to ensure that component parts are available from multiple suppliers;

accordingly, we procure some key parts from a single supplier or a limited group of suppliers.

At certain times, increases in demand for capital equipment can result in longer lead-times for many important system components, which may cause delays in meeting shipments to our customers.

The delay in the shipment of even a few systems could cause significant variations in our quarterly revenue, operating results and the market value of our common stock.

accordingly, we procure some key parts from a single supplier or a limited group of suppliers. 

At certain times, increases in demand for capital equipment can result in longer lead-times for many important system components, which may cause delays in meeting shipments to our customers. 

The delay in the shipment of even a few systems could cause significant variations in our quarterly revenue, operating results and the market value of our common stock. 

We cannot assure you that our financial position and results of operations will not be materially and adversely affected if, in the future, we do not receive in a timely and cost-effective manner a sufficient quantity of quality component parts and materials to meet our production requirements.

10 unchanged sentences

strategic transactions, such as acquisitions, divestitures, or spin-offs;

offerings of our securities;

the occurrence of major catastrophic events, including the effects of the spread of COVID-19;

trading volume is low

Significant price and value fluctuations have occurred with respect to our publicly traded securities and technology companies generally.

low trading volume

Significant price and value fluctuations have occurred with respect to our publicly traded securities and those of technology companies generally.

The price of our common shares is likely to be volatile in the future.

In the past, securities class action litigation often has been brought against a company following periods of volatility in the market price of its securities.

If similar litigation were pursued against us, it could result in substantial costs and a diversion of management’s attention and resources, which could materially and adversely affect our financial condition, results of operations, and liquidity.

We face the risk of product liability claims.

The manufacture and sale of our products, which in operation sometimes involve the use of toxic materials and extreme temperatures, and could result in product liability claims.

For example, our rapid thermal processing systems used to heat semiconductor materials to temperatures in excess of 1000º Celsius have certain inherent risks.

A failure of our product(s) at a customer site could also result in losses due to interruption of the business operations of our customer.

The manufacture and sale of our products, which in operation sometimes involve the use of toxic materials and extreme temperatures, and could result in product liability claims. 

For example, our rapid thermal processing systems used to heat semiconductor materials to temperatures in excess of 1000º

Celsius have certain inherent risks. 

A failure of our product(s) at a customer site could also result in losses due to interruption of the business operations of our customer.

While we regularly evaluate the nature and limits of our insurance coverages, there can be no assurance that our existing policies of insurance will be adequate to protect us from all liabilities that we might incur in connection with the manufacture and sale of our products in the event of a successful product liability claim or series of successful claims against us.

We are subject to environmental regulations, and our inability or failure to comply with these regulations could adversely affect our business.

We are subject to environmental regulations in connection with our business operations, including regulations related to the development and manufacture of our products and our customers’ use of our products.

We are subject to environmental regulations in connection with our business operations, including regulations related to the development and manufacture of our products and our customers’

use of our products.

Our failure or inability to comply with existing or future environmental regulations could result in significant remediation liabilities, the imposition of fines or the suspension or termination of development, manufacturing or use of certain of our products, or affect the operation of our facilities, use or value of our real property, each of which could damage our financial position and results of operations.

4 unchanged sentences

Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our systems or our products, or that otherwise exploit any security vulnerabilities.

The costs to address the foregoing security problems and security vulnerabilities before or after a cyber-incident could be significant.

While we have an active security training program for all employees during the year, utilize intrusion prevention and detection systems, as well as hardware firewall and virus security, the costs to address the foregoing security problems and security vulnerabilities before or after a cyber-incident could be significant.

Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service, and loss of existing or potential customers, impeding our sales, manufacturing, distribution, or other critical functions.

1 unchanged sentence

Regulations related to conflict minerals will force us to incur additional expenses, may make our supply chains more complex, and may result in damage to our relationships with customers.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the SEC adopted requirements for companies that manufacture products that contain certain minerals and metals known as “conflict minerals”.

These rules require public companies to perform diligence and to report annually to the SEC whether such minerals originate from the Democratic Republic of Congo and adjoining countries.

10 unchanged sentences

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-K

Item 1A. Risk Factors