FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

================================================================================

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the Quarter Ended:    JUNE 30, 1997
                           ---------------------------

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ____________ to ___________

                         Commission File Number: 0-11412
                                                ---------

                              AMTECH SYSTEMS, INC.
             (Exact name of Registrant as specified in its charter)


           Arizona                                              86-0411215 
 ------------------------------                             -------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)


131 South Clark Drive, Tempe, Arizona                                    85281
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

Registrant's telephone number, including area code (602) 967-5146
- --------------------------------------------------------------------------------

Indicate by check mark whether the Registrant (i) has filed all reports required
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 (ii) has been subject to such filing requirements for
the past 90 days.    Yes X      No
                        ---       ---                

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of the close of the period covered by this report.

                          Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
                                (Title of Class)

                                4,154,718 Shares
- --------------------------------------------------------------------------------
                         Outstanding as of June 30, 1997

                          PART I. FINANCIAL INFORMATION

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES

- --------------------------------------------------------------------------------

                      CONSOLIDATED BALANCE SHEETS - ASSETS

- --------------------------------------------------------------------------------



                                                     JUNE 30,      SEPTEMBER 30,
                                                       1997            1996
                                                   -----------     -------------
                                                   (Unaudited)
CURRENT ASSETS:

    Cash and cash equivalents                      $ 2,299,906      $ 1,994,217
    Short-term investments                           1,179,489        2,464,120
    Accounts receivable - net                        3,503,444        1,581,973
    Inventories - net                                  925,758          739,201
    Deferred income taxes                              356,000          223,000
    Prepaid expenses                                    46,438           46,935
                                                   -----------      -----------
                                                   
       Total current assets                          8,311,035        7,049,446
                                                   -----------      -----------
                                                   
                                                   
                                                   
                                                   
PROPERTY AND EQUIPMENT, AT COST:                   
                                                   
    Land and Building                                  408,623          373,380
    Leasehold improvements                             162,402          161,724
    Machinery and equipment                            452,835          432,435
    Furniture and fixtures                             649,983          608,972
                                                   -----------      -----------
                                                     1,673,843        1,576,511
  Less:  accumulated depreciation                  
                  and amortization                    (723,071)        (600,180)
                                                   -----------      -----------
                                                   
       Property and equipment - net                    950,772          976,331
                                                   -----------      -----------
                                                   
                                                   
                                                   
                                                   
OTHER ASSETS                                           185,844          432,837
                                                   -----------      -----------
                                                   
                                                   $ 9,447,651      $ 8,458,614
                                                   ===========      ===========

            See accompanying Notes to Condensed Financial Statements.
                                       2

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES

- --------------------------------------------------------------------------------

                           CONSOLIDATED BALANCE SHEETS
                    LIABILITIES AND STOCKHOLDERS' INVESTMENT

- --------------------------------------------------------------------------------



                                                    JUNE 30,       SEPTEMBER 30,
                                                      1997             1996
                                                   -----------     -------------
                                                   (Unaudited)
CURRENT LIABILITIES:

    Accounts payable                               $ 1,236,965      $   652,771
    Accrued liabilities:                           
      Compensation and related taxes                   466,967          442,785
      Warranty and installation expenses               377,495          185,450
      Other accrued liabilities                        212,280          143,988
    Income taxes payable                               291,000          144,000
                                                   -----------      -----------
                                                   
        Total current liabilities                    2,584,707        1,568,994
                                                   -----------      -----------
                                                   
                                                   
LONG-TERM DEBT                                         222,364          265,355
                                                   -----------      -----------
                                                   
                                                   
STOCKHOLDERS' INVESTMENT:                          
                                                   
    Preferred stock, no specified                  
     terms; 100,000,000 shares                     
     authorized; none issued                              --               --
    Common stock, $.01 par value;                  
     100,000,000 shares authorized;                
     4,154,718 shares outstanding at               
     June 30, 1997 and 4,109,668                   
     shares at September 30, 1996                       41,547           41,097
    Additional paid-in capital                       7,120,978        7,043,803
    Cumulative foreign currency                    
     translation adjustment                           (276,310)         (48,548)
    Accumulated deficit                               (245,635)        (412,087)
                                                   -----------      -----------
                                                   
       Total stockholders' investment                6,640,580        6,624,265
                                                   -----------      -----------
                                                   
                                                   $ 9,447,651      $ 8,458,614
                                                   ===========      ===========

            See accompanying Notes to Condensed Financial Statements.
                                       3

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES

- --------------------------------------------------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996

- --------------------------------------------------------------------------------


                                               THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    JUNE 30,                         JUNE 30,
                                         ----------------------------     ----------------------------
                                             1997             1996            1997             1996
                                         -----------      -----------     -----------      -----------
                                         (Unaudited)      (Unaudited)     (Unaudited)      (Unaudited)

                                                                                       
Net product sales                        $ 2,805,830      $ 3,232,173     $ 7,396,157      $ 6,311,328
Cost of product sales                      1,851,029        2,023,705       5,071,545        4,191,125
                                         -----------      -----------     -----------      -----------
  Gross margin                               954,801        1,208,468       2,324,612        2,120,203

Selling and general                          932,831          723,264       2,140,633        1,827,112
Research & development                        60,517           96,769         191,411          214,042
Gain on asset disposal                          --               --          (115,487)            --
                                         -----------      -----------     -----------      -----------

Operating profit (loss)                      (38,547)         388,435         108,055           79,049
                                         -----------      -----------     -----------      -----------

Interest income - net                         39,248           39,558         133,397          167,967
                                         -----------      -----------     -----------      -----------

Income from continuing
 operations before
 income taxes                                    701          427,993         241,452          247,016
Income tax provision                            --            150,000          75,000          100,000
                                         -----------      -----------     -----------      -----------

INCOME FROM
 CONTINUING OPERATIONS                           701          277,993         166,452          147,016
                                         -----------      -----------     -----------      -----------

DISCONTINUED OPERATIONS:
- ------------------------
Income from discontinued
 operations                                     --               --              --             21,757
Gain on disposal of
 discontinued segment                           --             23,834            --            284,335
                                         -----------      -----------     -----------      -----------
                                                --             23,834            --            306,092
                                         -----------      -----------     -----------      -----------

NET INCOME                               $       701      $   301,827     $   166,452      $   453,108
                                         ===========      ===========     ===========      ===========



PRIMARY EARNINGS PER SHARE (Note 5):
 Continuing Operations                   $      --        $       .05     $       .04      $       .04
 Net Income                              $      --        $       .05     $       .04      $       .09


WEIGHTED AVERAGE
 OUTSTANDING SHARES                        4,153,103        6,315,734       4,145,255        6,381,556


            See accompanying Notes to Condensed Financial Statements.
                                       4

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES

- --------------------------------------------------------------------------------
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996

- --------------------------------------------------------------------------------

                                                         NINE MONTHS ENDED
                                                              JUNE 30,
                                                     --------------------------
                                                         1997          1996
                                                     -----------    -----------

                                                      (Unaudited)   (Unaudited)
OPERATING ACTIVITIES:
- ---------------------
  Net income                                         $   166,452    $   453,108
  
  Adjustments to reconcile net income
   to net cash provided by operating activities:
      Depreciation and amortization                      159,725        131,251
      Inventory and receivable write-downs                46,123         81,553
      Less gain on disposal of assets                   (115,487)      (251,470)
      Deferred tax benefit                              (133,000)       (60,000)
  Changes in operating assets and liabilities:
      Increase in accounts receivable                 (2,202,755)    (1,138,776)
      Increase in inventories and prepaid expenses      (316,474)      (194,675)
      Increase in other assets                          (136,678)        (8,429)
      Increase in accounts payable                       670,384        351,439
      Increase in income taxes payable)                  147,000         58,000
      Increase in accrued liabilities                    412,820        175,869
                                                     -----------    -----------
     Net cash used by operating activities            (1,301,890)      (402,130)
  

INVESTING ACTIVITIES:
- ---------------------
  Maturities of short-term investments,
      net of purchases                                 1,284,631      1,045,035
  Investment in unconsolidated subsidiary                   --         (425,000)
  Proceeds from disposition of assets                    475,047         28,383
  Purchase of property and equipment                    (186,170)      (487,121)
  Cash distributed in disposal of Echelon                   --         (109,698)
                                                     -----------    -----------
     Net cash provided by investing activities         1,573,508         51,599
                                                     -----------    -----------
  
  
FINANCING ACTIVITIES:
- ---------------------
  Principal payments on mortgage loan                    (10,169)       232,474
  Net proceeds from exercise of stock options             35,201           --
                                                     -----------    -----------
     Net cash provided by financing activities            25,032        232,474
                                                     -----------    -----------
  
EFFECT OF EXCHANGE RATE CHANGES                            9,039        (11,175)
                                                     -----------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         305,689       (129,232)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR           1,994,217        833,820
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD             $ 2,299,906    $   704,588
                                                     ===========    ===========

            See accompanying Notes to Condensed Financial Statements.
                                       5

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES

- --------------------------------------------------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996

- --------------------------------------------------------------------------------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:



                                                         1997         1996
                                                      ---------    ---------

Cash paid during the period for:

        Interest expense                              $ 12,347     $   --

        Income taxes                                  $ 60,000     $132,000





SUPPLEMENTAL INFORMATION OF NONCASH INVESTING
    AND FINANCING ACTIVITIES:

        Value of stock bonuses issued in exchange
         for services rendered in a prior period      $ 42,424     $   --

        Value received in the form of the
         Company's stock in exchange for
         the net assets of Echelon Service Co.        $   --       $808,638



            See accompanying Notes to Condensed Financial Statements.
                                       6

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     ---------------------------------------

                   THREE AND NINE MONTHS ENDED JUNE 30, 1997

(1)       BASIS OF PRESENTATION
          ---------------------

          The  accompanying   consolidated   financial  statements  include  the
accounts of Amtech  Systems,  Inc.  and its  wholly-owned  subsidiary,  Tempress
Systems, Inc., based in Heerde, The Netherlands,  hereinafter referred to as the
Company.  Echelon Service Company, which comprised the discontinued  operations,
is included in these financial  statements through the date of disposition.  See
Note 4 regarding discontinued operations.  All significant intercompany accounts
and transactions have been eliminated in consolidation.

(2)      INTERIM REPORTING
         -----------------

         The  accompanying  consolidated  financial  statements  are  unaudited;
however,  these financial  statements  contain all adjustments which are, in the
opinion of management,  necessary for a fair  presentation  of the  consolidated
financial position of the Company as of June 30, 1997 and September 30, 1996 and
the  consolidated  results of its operations for the three and nine months ended
June 30,  1997 and 1996,  and its  consolidated  cash flows for the nine  months
ended June 30, 1997 and 1996.

         The accounting policies followed by the Company are set forth in Note 2
to the consolidated  financial statements in the Company's 1996 Annual Report on
Form 10-K for the year ended September 30, 1996, which is incorporated herein by
reference.

         Inventories  as of June  30,  1997  and  September  30,  1996  included
work-in-process of $228,048 and $211,880,  respectively. The remaining inventory
primarily consists of purchased parts and completed sub-assemblies.

         The  consolidated  results of operations  for the three and nine months
ended June 30, 1997 and 1996, are not  necessarily  indicative of the results to
be expected for the full year.

(3)      INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
         ---------------------------------------

         During the first  quarter of fiscal  1996,  the Company  entered into a
joint venture agreement pursuant to which it would have a 45% ownership interest
and a 50% voting  interest in Seil  Semicon,  Inc. in return for a commitment to
invest $500,000 in cash. The joint venturers' plan was to operate a silicon test
wafer reclaiming  business through Seil Semicon,  Inc. During the fourth quarter
of fiscal 1996, it was determined that the joint venture

                                                     Continued on next page.....
                                       7

         NOTES TO CONDENSED FINANCIAL STATEMENTS - continued


(3)      INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - Continued
         ---------------------------------------

required  significantly more capital than originally  anticipated.  In the first
quarter of fiscal  1997,  the  Company  disposed  of its  interest  in the joint
venture because management believed that raising the Company's  commitment to $3
million,  without obtaining majority control, was more risk than was appropriate
for the Company. The Company received $475,000 during December 1996, in exchange
for its interest in the joint  venture,  thereby  recovering  its investment and
related  expenses.  Because  the Company  disposed of its  interest in the joint
venture and recovered  its equity in the first year start-up  losses and certain
expenses  related  to that  venture  incurred  last year,  a  $115,000  gain was
recorded in the first quarter of fiscal 1997.


(4)      DISCONTINUED OPERATIONS
         -----------------------

         Effective December 29, 1995, the Company exchanged all of its ownership
in the technical contract personnel business, represented by all of the stock of
Echelon Service  Company,  for 196,034 shares of the Company's  outstanding $.01
par value Common Stock  previously  owned by Eugene R. Hartman,  then an officer
and director of the Company.  The  transaction  was preceded by a dividend  from
Echelon to the Company in order to  equalize  the values.  The  transaction  was
structured to be a tax-free  reorganization  and, as such, no provision was made
for income taxes.

         The  fiscal  1996  income  from  discontinued  operations  are those of
Echelon  Service  Company  through the date of disposal and is net of applicable
income taxes of $30,000.  Revenues of discontinued operations during that period
were $1,235,000.


(5)      EARNINGS PER SHARE
         ------------------

         Fully diluted earnings per share (EPS) for the periods covered by these
financial statements are the same as primary EPS.

         The Financial  Accounting  Standards  Board  ("FASB") has released FASB
Statement 128, Earnings Per Share ("FASB 128"),  which will become effective for
fiscal years ending after December 15, 1997. Pro forma diluted EPS calculated in
accordance with FASB 128 are as follows:
                                       8

         NOTES TO CONDENSED FINANCIAL STATEMENTS - continued



                                       Three Months         Nine Months
                                      Ended June 30,       Ended June 30,
                                     ---------------       ---------------
                                      1997     1996          1997    1996
                                     ------- -------       ------- -------
BASIC EARNINGS PER SHARE:                                  
 Continuing Operations               $   --   $  .07       $  .04   $  .03
 Net Income                          $   --   $  .07       $  .04   $  .11
                                                           
DILUTED EARNINGS PER SHARE:                                
 Continuing Operations               $   --   $  .05       $  .04   $  .03
 Net Income                          $   --   $  .06       $  .04   $  .08
                                                           
                                                           
(6)      SUBSEQUENT EVENT                               
         ----------------


         On July 1, 1997, the Company purchased  substantially all of the assets
of  P.R.  Hoffman  Machine  Products  Corporation  , an "S"  corporation  ("P.R.
Hoffman") based in Carlisle,  Pennsylvania. P.R. Hoffman develops, manufactures,
and  markets  double  sided  precision   lapping  and  polishing   machines  for
semiconductor   silicon  wafers  and  related  products,   including   carriers,
templates,  and  replacement  parts.  For the years ended  December 31, 1996 and
1995, P.R. Hoffman had sales of $6.6 million and $4.9 million, respectively. Net
income  generated during the years ended December 31, 1996 and 1995 was $458,215
and $160,938,  respectively.  After making  unaudited pro forma  adjustments for
income taxes,  net income generated during the years ended December 31, 1996 and
1995 was $338,215 and  $161,938,  respectively.  At closing the Company paid the
seller  $2.2  million in cash and  $65,000  in the  Company's  common  stock and
assumed the operating  liabilities of P.R. Hoffman.  The purchase price is to be
adjusted based upon the book value of the net assets as of June 30, 1997,  which
is expected to raise the purchase price by approximately $227,000,  resulting in
an initial purchase price of $2,900,000,  including the assumed liabilities. The
Company  will also pay in either cash or stock an  earn-out  equal to 50% of the
pre-tax income of the P.R.  Hoffman in excess of $800,000 per year, for the next
five (5) years. The maximum earn-out payable under the purchase  agreement is $2
million.  This additional purchase price will be treated as part of the purchase
price to the extent earned. 
                                       9

                              AMTECH SYSTEMS, INC.
                                AND SUBSIDIARIES
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Financial Condition and Working Capital.
- ----------------------------------------

          As of June 30, 1997, the Company has  $3,479,000 of readily  available
liquidity in the form of cash and cash equivalents and short-term investments, a
decrease of $979,000 since September 30, 1996. During the nine months ended June
30, 1997, working capital increased by $246,000 to $5,726,000,  primarily as the
result of the proceeds  received upon  disposition of the Company's  interest in
Seil  Semicon,  Inc., an  unconsolidated  joint  venture,  which was owned until
December 1996. Cash and short-term  investments comprise 37% of total assets and
stockholders'  investment is 52% of total capitalization.  The current ratio was
3.2:1 as of June 30,  1997,  compared to 4.5:1 as of September  30, 1996.  While
there has been a decline in the current  ratio since the  beginning of the year,
management  believes that the ratio and the continued liquidity are a reflection
of the Company's strong financial condition.


Liquidity and Capital Resources.
- --------------------------------

          Management  believes the  Company's  liquidity is  sufficient  for its
current  operations.  The  Company is  continuing  to perform  research  on high
intensity  lamps  to be used in  conjunction  with its  patented  photo-assisted
chemical  vapor  deposition  ("CVD")  technology  prior  to  making  a  decision
regarding  development of a commercial  product  incorporating  that technology.
Also, on July 1, 1997,  the Company  acquired the assets of P.R.  Hoffman for an
initial  purchase  price  of $2.9  million  paid  mostly  in  cash.  See Note 6,
Subsequent  Event, to the financial  statements as of June 30, 1997 and the nine
months then ended, for further information  regarding that acquisition.  See the
management's  discussion  and  analysis  included in the  Company's  1996 annual
report on Form 10-K for further information regarding the Company's strategy for
acquisitions  and  development  of  a  product  based  upon  the  Company's  CVD
technology.  In addition, the Company continues to evaluate potential product or
business  acquisitions  that  may  complement  its  business.  There  can  be no
assurance of the sufficiency of existing  working capital or the availability of
any  other  source  of  financing  necessary  to permit  the  Company  to pursue
simultaneously  both its acquisition  strategy and to complete  development of a
photo-assisted CVD product.

         The semiconductor equipment order backlog was approximately $3,800,000,
as of June 30, 1997, as compared to $4,600,000 as of June 30, 1996.  The decline
in the order backlog reflects shipments of a multi-year order and an increase in
                                       10

shipments  due to an expansion  of the  production  capacity of the  Netherlands
operation.   While orders are  ordinarily  filled within three to nine months of
receipt,  the current backlog includes  approximately  [$1,000,000] of orders to
one customer that will not be shipped until fiscal 1998.

THREE MONTHS ENDED JUNE 30,
1997 vs. 1996

Continuing Operations.
- ----------------------

         Revenues declined $426,000,  or 13%, to $2,806,000 in the third quarter
of fiscal 1997,  from $3,232,000 of product sales reported in the second quarter
of the  fiscal  1996 year.  Revenue  for the third  quarter  of fiscal  1996 was
significantly  higher  than  the  most  recently  completed  quarter  due to the
Company's  ability to ship items in the third quarter of fiscal 1996  previously
delayed due to long  lead-times of important  quartz  parts.  While there may be
similar  delays in the future,  none were incurred in the quarter ended June 30,
1997. The allocation of greater  resources to merger and acquisition  activities
during the most recent quarter also  contributed to the decrease in consolidated
revenue.

          Gross margin decreased $253,000, or 21%, to $955,000,  and amounted to
34% of sales,  in the third quarter of fiscal 1997,  compared to $1,208,000,  or
37% of sales,  in the third  quarter of fiscal  1996.  The  decline in  revenues
accounted for 62% of the reduction in gross margin.  Furnace sales, which have a
lower gross profit margin,  comprised a larger  percentage of the total revenue.
This less  profitable  product  mix and the  spreading  of the fixed  portion of
manufacturing  costs over the reduced  sales volume  accounted for the remaining
38% of the decline in gross margin.

          The selling, general and administrative expenses for the third quarter
of fiscal 1997 were  $210,000  higher than in  comparable  period of last fiscal
year. The increased  expenses  primarily from expanded overhead costs related to
the larger office and manufacturing  facilities in The Netherlands and increased
selling,  marketing and installation  activities on a world-wide basis. Research
and development costs were $36,000 lower than in the three months ended June 30,
1996, as the  Company's  photo-CVD  research has slowed  pending the delivery of
higher intensity lamps that are required for that research.

Income (Loss) From Continuing Operations.
- -----------------------------------------

         As a result of the above, for the three months ended June 30, 1997, the
Company had an operating loss of $39,000 as compared to
                                       11

operating income of $388,000 for the third quarter of fiscal 1996.

          The income from continuing  operations  includes the operating  profit
(loss) from continuing  operations discussed above, net interest income, and the
provision for income taxes. During the third quarter of the current fiscal year,
net  interest  income  was  $39,000,  just $310  less than in the  corresponding
quarter of the preceding year.

          Income tax expense  decreased  $150,000,  because income for the three
months ended June 30, 1997 was break-even. The $150,000 provision for income tax
for the third  quarter of fiscal  1996 is  approximately  $5,000 more than would
result from applying the statutory rates to the before tax loss,  because of the
effects of the permanent  differences between financial and taxable income. As a
result of the above,  continuing operations produced income of $701 for the 1997
period,  compared  to  $278,000,  or  $.05  per  share,  recognized  during  the
corresponding quarter of fiscal 1996.

Discontinued Operations.
- ------------------------

          As a  result  of the  December  1995  sale of the  technical  contract
personnel  segment,  there was no income  from  discontinued  operations  in the
second  quarter of fiscal  1997 or 1996.  However,  during the third  quarter of
fiscal 1996, there was an adjustment  increasing the gain on disposition of that
segment of the business by $23,834.

Total Company.
- --------------

          The three  months  ended June 30,  1997,  resulted  in a net income of
$701,  compared to a net income of  $302,000,  or $.05 per share,  in the second
quarter  of  fiscal  1996.  The most  significant  factors  contributing  to the
reduction in earnings was the $426,000  decrease in sales and the less favorable
product mix discussed above and the resulting decline in gross margins.


NINE MONTHS ENDED JUNE 30,
1997 vs. 1996

Continuing Operations.
- ----------------------

          Revenues  increased 17% to $7,396,000  during the first nine months of
fiscal  1997,  from  $6,311,000  for the first nine months of fiscal  1996.  The
higher  revenues were made possible by the expanded  production  capacity of The
Netherlands  operations  resulting from larger  facilities and the hiring of new
employees.  This  increase  also results from the  Company's  success in further
penetrating the horizontal diffusion furnace market.
                                       12

          Gross margin  increased  $205,000,  or 10%, to $2,325,000,  during the
first nine months of fiscal 1997,  from  $2,120,000 in the comparable  period in
fiscal  1996.  The  increase  in gross  margin  related to the higher  volume of
shipments  was  partially  offset by the lower gross margin as a  percentage  of
sales  resulting  from a less favorable  product mix. While  spreading the fixed
portion of manufacturing costs over the higher sales volume caused such costs to
decrease as a percentage of sales, this benefit was offset by a product mix with
a higher  material  cost  content  than in the prior  year.  As a result,  gross
margins  as a  percentage  of revenue  were 31% during the first nine  months of
fiscal 1997, compared to 34% during the comparable period in fiscal 1996.

          The selling and general expenses of the semiconductor  segment for the
first nine months of fiscal  1997 were  $314,000  higher than in the  comparable
period of last fiscal year.  The  increased  expenses  primarily  resulted  from
expanded sales,  marketing and field service activities on a world-wide basis in
order to promote the entire  product  line,  with the  greatest  emphasis on the
horizontal diffusion furnace developed in The Netherlands.  The costs associated
with  the  larger  facilities  in  The  Netherlands,   including  the  costs  of
re-locating  the  operations  to  Heerde,  contributed  to the  increase.  These
increases were partially  offset by reductions in the sales and marketing  costs
of the  U.S.  based  operations  associated  with  the  decision  to  defer  the
introduction of low-cost furnaces.

          Research and  development  costs were $23,000  lower than in the three
quarters  ended June 30,  1996,  as the  Company's  photo-CVD  ("chemical  vapor
deposition")  research has slowed pending the delivery of higher intensity lamps
that are required for that research.

          Because the  Company  disposed  of its  interest  in the Korean  joint
venture, Seil Semicon, Inc., and recovered its equity in the first year start-up
losses and  certain  expenses  related to that  venture  incurred  last year,  a
$115,000 gain was recorded in the first quarter of fiscal 1997. This gain offset
much of the increase in expenses discussed above.

Income From Continuing Operations.
- ----------------------------------

          For the first nine months of fiscal 1997,  the  operating  profit from
continuing  operations  was  $108,000 as compared to $79,000 for the first three
quarters  of  fiscal  1996.  This  improvement  results  from  the  gain  on the
disposition of the Company's interest in Seil Semicon, Inc.

          The income from continuing  operations  includes the operating profit,
discussed above,  net interest  income,  and the provision for income taxes. Net
interest income declined by $35,000 during the first nine months of fiscal 1997,
as interest bearing investments were
                                       13

liquidated  to finance the growth in  accounts  receivable  associated  with the
higher sales volume.

          During  the first  nine  months of fiscal  1997  there was  income tax
expense of $75,000,  compared to an income tax expense of $100,000  reported for
the corresponding period of fiscal 1996. The $100,000 income tax expense for the
first three quarters of fiscal 1996 is approximately  $16,000 greater than would
result from applying the statutory rates to the before tax loss,  because of the
effects of the permanent  differences  between financial and taxable income. The
income tax expense in the first three  quarters of fiscal 1997 is  approximately
$7,000 less than what would result by applying the statutory rates to the before
tax income,  as the  disposition of the Korean joint venture allowed the Company
realized in the current year a tax benefit from the equity in losses  recognized
for  financial  statement  purposes in fiscal 1996.  This benefit was  partially
offset by differences  between  financial and taxable income as reflected in the
Company's  estimated effective tax rate which was applied to pre-tax book income
for the fiscal year.

          As a result of the above, continuing operations produced net income of
$166,000,  or  $.04  per  share,  in the  first  nine  months  of  fiscal  1997,
representing an improvement of $19,000,  from the net loss of $147,000,  or $.04
per share, reported in the first nine months of fiscal 1996.

Discontinued Operations.
- ------------------------

          Operating profits of the technical  contract  personnel  business were
$22,000 in the first nine months of fiscal 1996. There was no comparable  income
in the current year because of the sale of this  discontinued  operation  during
December 1995.

          During  December 1995,  the Company  exchanged all of its ownership in
the technical contract  personnel  business  represented by the stock of Echelon
Service  Company for 196,034  shares of the Company's  outstanding  Common Stock
previously  owned by Eugene R.  Hartman,  then an officer  and  director  of the
Company.  The transaction was preceded by a dividend from Echelon to the Company
in order to equalize the values. The transaction was structured to be a tax-free
reorganization and, as such, no provision was made for income taxes. As a result
of the transaction, the Company recognized a gain of $284,000.

Total Company
- -------------

For the nine  months  ended June 30, 1997 there was net income of  $166,000,  or
$.04 per share,  as compared to net income of $453,000,  or $.09 per share,  for
the  comparable  period of fiscal 1996. The net income for the first nine months
of last  fiscal  year was  generated  entirely  by the sale of the  discontinued
operations.
                                       14

FORWARD-LOOKING STATEMENTS

          This  report  contains   certain   forward-looking   statements.   The
forward-looking  statements contained herein are based upon current expectations
that involve a number of risks and uncertainties. The forward-looking statements
are based  upon a number of  assumptions,  including  without  limitation  those
enumerated in the related  section of the  Management's  Discussion and Analysis
included  in the  Company's  1996 annual  report on Form 10-K,  which are hereby
incorporated  by  reference.   Assumptions  related  to  the  foregoing  involve
judgments with respect to, among other things, future economic,  competitive and
market conditions,  and future business  decisions,  all of which are beyond the
control of the  Company.  Although  the Company  believes  that the  assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could  prove  inaccurate  and,  therefore,  there can be no  assurance  that the
results  contemplated  in  forward-looking   statements  will  be  realized.  In
addition,  the business and operations of the Company are subject to substantial
risks  which  increase  the   uncertainty   inherent  in  such   forward-looking
statements.   In  light  of  the  significant  uncertainties  inherent  in  such
forward-looking  information  included herein, the inclusion of such information
should not be regarded as a representation by the Company,  or any other person,
that the objectives or plans for the Company will be achieved.
                                       15

                                     PART II

Item 1.  Legal Proceedings.
         -----------------

                  None.


Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

                  None.


Item 5.  Other Matters
         -------------

               On July 1, 1997, the Company  acquired  substantially  all of the
               assets and related operating  liabilities of P.R. Hoffman Machine
               Products Corporation, a Carlisle,  Pennsylvania-based corporation
               ("P.R.  Hoffman")  (the  "Acquisition").  P.R.  Hoffman  will  be
               operated  through the  Company's  wholly owned  subsidiary,  P.R.
               Hoffman  Machine  Products,   Inc.  and  is  expected  to  remain
               headquartered in Carlisle.

               P.R.  Hoffman   specializes  in  developing,   manufacturing  and
               marketing double sided precision  lapping and polishing  machines
               and  related  products   including   carriers  and  semiconductor
               polishing templates.  Double sided lapping and polishing machines
               are designed to process wafer type products such as semiconductor
               silicon wafers,  computer disk media, and ceramic  components for
               wireless  communication devises to exact tolerances of thickness,
               flatness,  parallelism  and surface finish.  Carriers,  which are
               produced  by P.R.  Hoffman  for its own  machines  as well as for
               competitors' systems, consist of holders where silicon wafers are
               nested during the lapping and  polishing  process.  P.R.  Hoffman
               also  produces an  assortment  of plates,  gears,  parts and wear
               items  for  its   machines  as  well  as  for  the   machines  of
               competitors.

               Management  believes that the addition of P.R.  Hoffman's product
               line  to the  Company's  existing  products  (used  primarily  by
               customers in the manufacture of  semiconductors)  will enable the
               Company  to offer a more  diversified  product  line,  provide  a
               variety of possible  solutions  for new and  existing  customers,
               enhance the Company's ability to serve its customers and markets,
               and enable the Company to access markets currently served by P.R.
               Hoffman  with the  Company's  technology  and  product  line.  In
               addition,  management believes that the Company's larger and more
               established  international operations will enhance and accelerate
               P.R.    Hoffman's    ability   to    distribute    its   products
               internationally.
                                       16

               The  aggregate  consideration  paid by the Company in  connection
               with the Acquisition was approximately  $2,900,000,  comprised of
               $2,435,000 cash, 32,338  unregistered shares of Common Stock, and
               the assumption of liabilities  (approximately $400,000). The cash
               portion  of  the  purchase  price  includes  an  estimate  for  a
               post-closing  adjustment based upon P.R. Hoffman's June 30, 1997,
               balance  sheet.  The  acquisition  also  provided  for an earnout
               formula  which,  in  the  aggregate,  could  result  in  up to an
               additional $2 million  payment to the seller.  Under the terms of
               the earnout  formula,  P.R. Hoffman is entitled to fifty (50%) of
               P.R. Hoffman's pre-tax profits in excess of $800,000 per year for
               a period  of five  (5)  years up to a  cumulative  maximum  of $2
               million.  This additional  purchase price will be treated as part
               of the purchase price to the extent earned.

Item 6.  Exhibits and Reports on Form 8-K.
         --------------------------------

               a) EXHIBITS -
               Exhibit 10,  Employment  Agreement  between  Company and Jong S.
               Whang,  President and Chief Executive Officer,  dated 28th day of
               February, 1997.

               The Company  also  incorporates  by this  reference  the exhibits
               filed with the Company's Form 8-K dated July 8, 1997

               b) Reports of Form 8-K
               The  Company  did not file any  reports on Form 8-K during  three
               months ended June 30, 1997


                                   SIGNATURES
         Pursuant to the  requirements  of the  Securities  and  Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


                                     AMTECH SYSTEMS INC.


                                     by /s/   Robert T. Hass
                                        -----------------------------------
                                        Robert T. Hass, Vice-President and
                                        Chief Financial Officer

                                        DATED:  August 19, 1997

                                       17