Onto Innovation Inc.: Form 10-Q for the period ended Jun 28, 2025

Forward-Looking Statements

Certain statements in this Form 10-Q, or incorporated by reference in this Form 10-Q, of Onto Innovation Inc. (referred to in this Form 10-Q, together with its consolidated subsidiaries, unless otherwise specified or suggested by the context, as the “Company,” “Onto Innovation,” “we,” “our” or “us”) are considered “forward-looking statements” or are based on “forward-looking statements,” including, but not limited to, those concerning:

• our business momentum and future growth;
• technology development, product introduction and acceptance of our products and services;
• our manufacturing practices and ability to deliver both products and services consistent with our customers’ demands and expectations and to strengthen our market position, including our ability to source components, materials, and equipment due to supply chain delays or shortages;
• the proposed acquisition of Semilab USA LLC (“Semilab USA”);
• our expectations of the semiconductor market outlook;
• future revenue, gross profits, research and development and engineering expenses, selling, general and administrative expenses, and cash requirements;
• the effects of political, economic, legal, and regulatory changes, including tariffs and trade disputes, or conflicts on our global operations;
• the effects of natural disasters or public health emergencies on the global economy and on our customers, suppliers, employees, and business;
• our dependence on certain significant customers and anticipated trends and developments in and management plans for our business and the markets in which we operate; and
• our ability to be successful in managing our cost structure and cash expenditures and results of litigation.

Statements contained or incorporated by reference in this Form 10-Q that are not purely historical are forward-looking statements and are subject to safe harbors under Section 27A of the Securities Act of 1933, as amended, Section 21E of the

Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as, but not limited to, “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “plan,” “should,” “may,” “could,” “will,” “would,” “forecast,” “project” and words or phrases of similar meaning, as they relate to our management or us.

Forward-looking statements contained herein reflect our current expectations, assumptions and projections with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially and adversely from those included in such forward-looking statements as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; fluctuations in customer capital spending; the Company’s ability to effectively manage its supply chain and adequately source components from suppliers to meet customer demand; the effects of political, economic, legal, and regulatory changes, including tariffs and trade disputes, or conflicts on the Company’s global operations; the Company’s ability to adequately protect its intellectual property rights and maintain data security; the effects of natural disasters or public health emergencies on the global economy and on the Company’s customers, suppliers, employees, and business; its ability to effectively maneuver global trade issues and changes in trade and export regulations, tariffs and license policies; the Company’s ability to maintain relationships with its customers and manage appropriate levels of inventory to meet customer demands; failure to consummate or a delay in consummating the acquisition of Semilab USA, including as a result of any failure to obtain the necessary regulatory approvals or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all; and the Company’s ability to successfully integrate acquired businesses and technologies, including the business of Semilab USA and to realize the anticipated benefits of such acquisitions. Additional information and considerations regarding the risks faced by Onto Innovation are available in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2025, in Part II, Item 1A. “Risk Factors” and elsewhere in this Form 10-Q, and in the other filings that we make with the SEC from time to time. Forward-looking statements reflect our position as of the date of this Form 10-Q and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Critical Accounting Estimates

The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. In addition, management is periodically faced with uncertainties, the outcomes of which are not within our control and will not be known for prolonged periods of time. Certain of these uncertainties are discussed in the 2024 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2025 in the Items entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no material changes in our critical accounting estimates from the information presented in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2024 Form 10-K.

For more information, please see our critical accounting estimates as previously disclosed in the 2024 Form 10-K and recent accounting pronouncements discussed in Note 1 to the Condensed Consolidated Financial Statements.

Executive Summary

We are a worldwide leader in the design, development, manufacture and support of metrology and inspection tools for the semiconductor industry, including process control tools that perform optical metrology on patterned and unpatterned wafers, wafer macro-defect inspection, including macro-inspection of both 2D and 3D wafer features, wafer substrate and panel substrate lithography systems, and process control analytical software. Our products are primarily used by silicon wafer manufacturers, semiconductor integrated circuit fabricators, and advanced packaging manufacturers operating in the semiconductor market. Our products are also used for process control in a number of other specialty device manufacturing markets, including light emitting diodes (“LED”), vertical-cavity surface-emitting lasers (“VCSEL”), micro-electromechanical systems (“MEMS”), CMOS image sensors (“CIS”), silicon and compound semiconductor (SiC and GaN) power devices, analog devices, RF filters, data storage, and certain industrial and scientific applications.

We provide process and yield management solutions used in bare silicon wafer production and wafer processing facilities, often referred to as “front-end” manufacturing, and advanced packaging of chips and test facilities, or “back-end” manufacturing, through a portfolio of standalone systems for optical metrology, macro-defect inspection, packaging lithography, as well as transparent and opaque thin film measurements. Our automated and integrated metrology systems measure critical dimensions, device structures, topography, shape, and various thin film compositions, including three-dimensional features and film thickness, as well as optical and material properties. Our primary areas of focus include products that provide critical yield-enhancing and actionable information, which is used by microelectronic device manufacturers to improve yield and time to market of their next-generation devices. Our systems feature sophisticated software and production-worthy automation. In addition, our advanced process control software portfolio includes powerful solutions for standalone tools, groups of tools, and factory-wide and enterprise-wide suites to enhance productivity and achieve significant cost savings. Our systems are backed by worldwide customer service and applications support.

The semiconductor and electronics industries have been characterized by constant technological innovations. We believe that, over the long term, our customers will continue to invest in advanced technologies and new materials to enable smaller design rules and higher density applications that fuel demand for process control equipment.

The following table summarizes certain key financial information for the periods indicated below:

(in thousands, except for percentages and per share data)

• In the fiscal quarter ended June 28, 2025 (the “June 2025 quarter”), revenue decreased 5% compared to the fiscal quarter ended March 29, 2025 (the “March 2025 quarter”), primarily due to lower sales to OSAT, foundry and power customers in the specialty device and advanced packaging market.
• Gross profit as a percentage of revenue for the June 2025 quarter decreased by 6% compared to the March 2025 quarter primarily due to the write down of excess and obsolete inventory.
• Operating expenses for the June 2025 quarter increased by 12% compared to the March 2025 quarter primarily due to an increase in restructuring expenses, research and development project costs, and compensation cost.

Our cash, cash equivalents and marketable securities balance increased to $894.9 million at June 28, 2025, compared to $852.3 million at December 28, 2024. This increase was primarily the result of $149.9 million of cash generated from operating activities and $4.2 million of cash from issuance of shares through share-based compensation plans, partially offset by cash used for purchases of our common stock of $75.0 million, capital expenditures of $22.0 million, $12.4 million for tax payments related to net share settlement of employee stock-based compensation plans and purchases of non-marketable equity securities of $8.0 million. Employee headcount at June 28, 2025 was approximately 1,589.

On June 27, 2025, we entered into a definitive agreement to acquire all the outstanding membership interests of Semilab USA from Semilab International Zrt. (“Semilab”), for $475.0 million in cash (subject to certain customary purchase price adjustments) and 706,215 shares of our common stock. Based on the closing price of Onto Innovation’s common stock on June 27, 2025, the total transaction value is approximately $545.0 million. The transaction is expected to close in the second half of 2025, subject to the satisfaction of customary closing conditions, including U.S. and Hungarian regulatory approvals. See Note 2, “Acquisitions,” in the Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

The United States government has implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years. The U.S. government continues to issue new export licensing requirements, and additional updates and other requirements that have had the effect of further limiting our ability to provide certain products and services to customers outside the U.S., including in China.

The recent imposition of tariffs by the U.S. government, and countermeasures taken by foreign countries, has had and will likely continue to have an adverse impact on our business in the near-term. The full extent of the impact is currently uncertain and will depend both on future developments in global trade policy and the extent to which our efforts to mitigate tariffs impacts are successful. We are continuously assessing the impact of tariffs and related governmental actions on our business.

For a discussion of the risks related to our business and operations, see Part I, Item 1A – Risk Factors of the 2024 Form 10-K and Part II, Item 1A – Risk Factors of this Form 10-Q.

Results of Operations for the Three and Six Months Ended June 28, 2025 and June 29, 2024

Revenue. Our revenue is primarily derived from the sale of our systems, software licensing, services and spare parts. Our revenue of $253.6 million increased 4.7% for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, for which revenue totaled $242.3 million. For the six-months ended June 28, 2025 and June 29, 2024, our revenue totaled $520.2 million and $471.2 million, respectively, representing a year-over-year increase of 10.4%.

The following table lists, for the periods indicated, the different sources of our revenue in dollars and as percentages of our total revenue:

(in thousands, except for percentages)

Total systems and software revenue increased $4.1 million and $40.4 million for the three and six months ended June 28, 2025, respectively, as compared to the three and six months ended June 29, 2024. The increases for the three and six months ended June 28, 2025 were primarily attributable to higher sales to DRAM and NAND customers in the advanced node market, partially offset by decreased sales to DRAM, power and logic customers in the specialty device and advanced packaging market. The increase in total parts and services revenue for the three and six months ended June 28, 2025, as compared to the three and six months ended June 29, 2024, was primarily due to higher parts sales as well as system upgrade and service contract revenue.

Gross Profit. Our gross profit has been and will likely continue to be affected by a variety of factors, including manufacturing efficiencies, provision for excess and obsolete inventory, pricing by competitors or suppliers, new product introductions, production volume, customization and reconfiguration of systems, international and domestic sales mix, system and software product mix and parts and service margins.

The following table lists, for the periods indicated, our gross profit in dollars and as percentages of our total revenue:

(in thousands, except for percentages)

The decrease in gross profit as a percentage of revenue for the three and six months ended June 28, 2025 as compared to the three and six months ended June 29, 2024 was primarily due to restructuring and other expenses for the write down of excess and obsolete inventory.

Operating Expenses.

Our operating expenses consist of:

• Research and Development. We believe that it is critical to continue to make substantial investments in research and development to ensure the availability of innovative technology that meets the current and projected requirements of our customers’ most advanced designs. We have maintained and intend to continue our commitment to investing in research and development in order to continue to offer new products and technologies. Accordingly, we devote a significant portion of our technical, management and financial resources to research and development programs. Research and development expenditures consist primarily of salaries and related expenses of employees engaged in research, design and development activities. These expenditures also include consulting fees, the cost of related supplies and legal costs to defend our patents. Our research and development expenses were $35.3 million and $63.3 million for the three and six-month periods ended June 28, 2025, respectively, as compared to $27.0 million and $53.6 million for the three and six-month periods ended June 29, 2024, respectively. The increase in research and development expenses of $8.3 million for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024 was primarily due to increases in compensation costs, production expenses and depreciation. The increase in research and development expenses of $9.7 million for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024 was primarily due to increases in compensation costs, production expenses, depreciation and outside service costs.
• Sales and Marketing. Sales and marketing expenses are primarily comprised of salaries, commissions and related costs for sales and marketing personnel, as well as other non-personnel related expenses. Our sales and marketing expenses were $14.9 million and $34.6 million for the three and six-month periods ended June 28, 2025, respectively, compared to $18.9 million and $37.2 million for the three and six-month periods ended June 29, 2024, respectively. The decrease in sales and marketing expenses of $4.0 million for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was primarily due to decreases in compensation and outside services costs, partially offset by an increase in production expenses. The decrease in sales and marketing expenses of $2.6 million for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was primarily due to a decrease in compensation costs, partially offset by an increase in production expense.
• General and Administrative. General and administrative expenses are primarily comprised of salaries and related costs for corporate and administrative personnel, as well as other non-personnel related expenses. Our general and administrative expenses were $25.0 million and $47.8 million for the three and six-month periods ended June 28, 2025, respectively, as compared to $19.7 million and $37.1 million for the three and six-month periods ended June 29, 2024, respectively. The increase in general and administrative expenses of $5.3 million for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was primarily due to increases in compensation and outside service costs, partially offset by decreases in other general expenses. The increase in general and administrative expenses of $10.7 million for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was primarily due to increases in compensation and outside service costs, partially offset by decreases in other general expenses.
• Amortization of Identifiable Intangible Assets. Amortization of identifiable intangible assets was $8.4 million and $16.9 million for the three and six-month periods ended June 28, 2025, respectively, compared to $13.1 million and $26.2 million for the three and six-month periods ended June 29, 2024, respectively. The decreases in amortization of identifiable intangible assets of $4.7 million and $9.3 million for the three and six-month periods ended June 28, 2025, as compared to the three and six-month periods ended June 29, 2024, was primarily due to certain assets becoming fully amortized.

Interest income, net. Net interest income was $8.6 million and $17.9 million for the three and six-month periods ended June 28, 2025, respectively, as compared to $8.5 million and $15.9 million for the three and six-month periods ended June 29, 2024, respectively. The increases in net interest income for the three and six-month periods ended June 28, 2025, as compared to the three and six-month periods ended June 29, 2024, were due to higher cash and marketable securities balances, partially offset by lower interest rates during the 2025 period.

Other (expense) income, net. Other expense, net was $1.1 million for the three-month period ended June 28, 2025, as compared to other expense, net of $0.1 million for the three-month period ended June 29, 2024. Other expense, net was $1.9 million for the six-month period ended June 28, 2025, as compared to other income, net of $0.7 million for the six-month period ended June 29, 2024 Foreign exchange losses during the 2025 period versus foreign exchange gains in the 2024 period were the primary drivers contributing to the period over period changes.

Income Taxes. We recorded an income tax provision of $5.8 million and $13.4 million for the three and six-month periods ended June 28, 2025, respectively, as compared to $4.3 million and $8.4 million for the three and six-month periods ended June 29, 2024, respectively. Our effective tax rate of 14.7% and 12.0% for the three and six-month periods ended June 28, 2025, respectively, each differed from the statutory rate of 21%, primarily due to (i) research and development tax credits, (ii) the deduction related to foreign derived intangible income (“FDII”), and (iii) excess tax benefits associated with equity compensation. Our effective tax rate of 7.5% and 7.7% for the three and six-month periods ended June 29, 2024, respectively, each differed from the statutory rate of 21%, primarily due to (i) research and development tax credits, (ii) the deduction related to FDII, and (iii) excess tax benefits associated with equity compensation.

Our future effective income tax rate depends on various factors, such as possible changes in tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with business combinations, and research and development tax credits as a percentage of aggregate pre-tax income.

We currently have a partial valuation allowance recorded for certain foreign and state loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt. Each quarter we assess the likelihood that we will be able to recover our deferred tax assets primarily relating to state research and development credits. We consider available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. As a result of our analysis, we concluded that it is more likely than not that a portion of our net deferred tax assets will not be realized. Therefore, we continue to provide a valuation allowance against certain net deferred tax assets. We continue to monitor available evidence and may reverse some or all of the valuation allowance in future periods, if appropriate.

The Organization for Economic Co-operation and Development (“OECD”) has been working on a Base Erosion and Profits Shifting project that, upon implementation, would change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we operate. In this regard, the OECD has proposed policies aiming to modernize global tax systems, including a country-by-country 15% minimum effective tax rate (“Pillar Two”) for multinational companies. Numerous countries have enacted, or are in the process of enacting, legislation to implement the Pillar Two model rules with a subset of the rules becoming effective during the current year, and the remaining rules becoming effective in later periods. At this point in time, we do not expect any material tax impact associated with Pillar Two rules in the countries where we operate. As these rules continue to evolve with new legislation and guidance, we will continue to monitor and account for the enactment of Pillar Two and the potential impacts such rules may have on our effective tax rate and cash flows in future years.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. As a result of the enactment of the legislation, we expect an increase to tax expense during the third and fourth quarters of 2025, primarily related to changes in the taxation of profits derived from foreign operations, and more specifically, the foreign-derived intangible income deduction. We continue to evaluate the impact the new legislation will have on our Consolidated Financial Statements. However, as the assessment is ongoing, we are not able to quantify the impact on our Consolidated Financial Statements at this time.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities consist of the following in dollars for the periods indicated:

(in thousands)

25

Sources and Uses of Cash

A summary of cash provided by (used in) operating, investing, and financing activities is as follows in dollars for the periods indicated:

(in thousands)

Operating Activities

Net cash and cash equivalents provided by operating activities for the six months ended June 28, 2025 were $149.9 million. The net cash and cash equivalents provided by operating activities during the six months ended June 28, 2025 resulted primarily from net income, adjusted to exclude the effect of non-cash operating charges, of $151.1 million. Significant non-cash operating charges included depreciation, amortization, share-based compensation, provision for inventory valuation and deferred income taxes. Cash provided by operating activities for the first six months of fiscal 2025 increased compared to the corresponding period in fiscal 2024 primarily due to improved inventory management, higher cash collections and higher investment income.

Our working capital was $1,338.6 million at June 28, 2025 and $1,307.4 million at December 28, 2024.

Investing Activities

Net cash and cash equivalents used in investing activities for the six months ended June 28, 2025 were $64.8 million. During the six months ended June 28, 2025, net cash and cash equivalents used in investing activities included purchases of marketable securities of $419.3 million, capital expenditures of $22.0 million and purchases of non-marketable equity securities of $8.0 million, partially offset by proceeds from maturities and sales of marketable securities of $384.6 million.

From time to time, we evaluate whether to acquire new or complementary businesses, products or technologies. We may fund all of or a portion of the price of these investments or acquisitions in cash, stock, or a combination of cash and stock.

Financing Activities

Net cash and cash equivalents used in financing activities for the six months ended June 28, 2025 were $83.2 million. During the six months ended June 28, 2025, financing activities used cash primarily for purchases of common stock of $75.0 million and tax payments related to shares withheld to satisfy employee tax obligations in connection with the vesting of awards under share-based compensation plans of $12.4 million, partially offset by proceeds from sales of shares through share-based compensation plans of $4.2 million.

In February 2024, the our Board of Directors approved a share repurchase authorization, which allows the Company to repurchase up to $200 million worth of shares of its common stock. Repurchases may be made through both public market and private transactions from time to time. During the three and six months ended June 28, 2025, we repurchased 0 and 492 thousand shares of common stock under this repurchase authorization, respectively. As of June 28, 2025, there was $99.9 million available for future share repurchases under this share repurchase authorization.

We have a credit agreement with a bank that provides for a variable-rate line of credit that is secured by the marketable securities we have with the bank. We are permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed, up to a maximum of $100.0 million. As of June 28, 2025, the available line of credit was $100.0 million with an available interest rate of 5.0%. The credit agreement is available to us until such time that either party terminates the arrangement at its discretion. As of the date of this filing, we have not utilized the line of credit.

Our future capital requirements will depend on many factors, including the timing and amount of our revenue and our investment decisions, which will affect our ability to generate additional cash. We expect that our existing cash, cash equivalents, marketable securities and availability under our line of credit will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures and other cash needs for the next 12 months following the filing of this Form 10-Q. Thereafter, if cash generated from operations and financing activities is insufficient to satisfy our working capital requirements, we may seek additional funding through bank borrowings, sales of securities or other means. A reduction in or volatility with respect to our stock price or a general market downturn could materially impact our ability to sell securities on favorable terms or at all. There can be no assurance that we will be able to raise any such capital on terms acceptable to us or at all.

There have been no material changes in market risk from the information presented in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” in the 2024 Form 10-K.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and forms. These controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating disclosure controls and procedures, we have recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply judgment in evaluating its controls and procedures.

We performed an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to assess the effectiveness of the design and operation of our disclosure controls and procedures under the Exchange Act as of June 28, 2025. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of June 28, 2025 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our fiscal quarter ended June 28, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the 2024 Form 10-K, as updated by the risk factors previously disclosed under the heading “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2025, filed with the SEC on May 7, 2025, except as set forth below. We may disclose additional changes to risk factors or additional factors from time to time in our future filings with the SEC.

Risks Related to the Proposed Acquisition of Semilab USA LLC.

Our ability to complete the acquisition of Semilab USA is subject to various closing conditions, including the receipt of consents and approvals from governmental authorities, which may impose conditions that could adversely affect us or cause the acquisition not to be completed.

On June 27, 2025, we entered into a definitive agreement (the Purchase Agreement) to acquire Semilab USA, an independent manufacturer of metrology equipment for the semiconductor industry, from Semilab. The acquisition is subject to customary conditions to closing as specified in the Purchase Agreement. These closing conditions include, among others, (i) the expiration or termination of any waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of Hungarian foreign direct investment approval, (ii) the absence of any law or order issued by any governmental authority preventing consummation of the transaction and (iii) the accuracy of the representations and warranties of, and compliance with covenants by, each of the parties to the Purchase Agreement. No assurance can be given that the required governmental approvals will be obtained or that the required conditions to closing will be satisfied, and, if all required approvals are obtained and the required conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such approvals. Any delay in completing the acquisition could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the acquisition is successfully completed within its expected time frame. Additionally, either we or Semilab may terminate the Purchase Agreement under certain circumstances, including, (i) if the transaction is not consummated within nine (9) months following the date of the Purchase Agreement, subject to one extension of three (3) months at either the Company’s or Semilab’s election if on such date all of the closing conditions except those relating to regulatory approvals have been satisfied or waived, (ii) upon entry by a governmental authority of a final order restraining or permanently enjoining the transaction or (iii) if the other party breaches the Purchase Agreement and such breach would cause the failure of any condition to closing (subject to a cure period). We can provide no assurance that the various closing conditions will be satisfied and that the necessary approvals will be obtained, or that any required conditions will not materially adversely affect the combined company following the acquisition. In addition, we can provide no assurance that these conditions will not result in the abandonment or delay of the acquisition. The occurrence of any of these events individually or in combination could have a material adverse effect on our results of operations and the trading price of our common stock.

Integrating Semilab USA’s business may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the acquisition, which may adversely affect our business results and negatively affect the value of our common stock.

The success of the Semilab USA acquisition, including the realization of anticipated benefits, will depend, in part, on our ability to successfully combine our and Semilab USA’s businesses. The integration may be more difficult, costly or time consuming than expected. It is possible that the integration process could result in the loss of key employees or the disruption of each company’s ongoing businesses or that the alignment of standards, controls, procedures and policies may adversely affect the combined company’s ability to maintain relationships with clients, customers, suppliers and employees or to fully achieve the anticipated benefits and cost savings of the transaction. The loss of key employees could adversely affect our ability to successfully conduct our business in the markets in which Semilab USA now operates, which could have an adverse effect on our financial results. Other potential difficulties of combining our and Semilab USA’s businesses include unanticipated issues in integrating manufacturing, logistics, information communications and other systems. If we experience difficulties with the integration process, the anticipated benefits of the Semilab USA acquisition may not be realized fully or at all, or may take longer to realize than expected. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of us and Semilab USA during this transition period and for an undetermined period after completion of the Semilab USA acquisition on the combined company.