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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 Form 10-K

(Mark One)

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

 For the fiscal year ended December 30, 2023

 or

 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 0-26946

 (Exact name of registrant as specified in its charter)

 Delaware

 94-3125814

 (State or other jurisdiction of

 incorporation or organization)

 (I.R.S. Employer

 Identification No.)

 3560 Bassett Street

 Santa Clara, California 95054

 (Address of principal executive office, including Zip Code)

 Registrant's telephone number, including area code: ( 408) 986-9888

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading

 Symbol(s)

 Name of each exchange on which registered

 Common Stock ($0.001 par value)

 IVAC

 The Nasdaq Stock Market LLC (Nasdaq Global Select)

 Securities registered pursuant to Section 12(g) of the Act:

 None.

 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
 filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2
 of the Exchange Act.:

 Large accelerated filer

 Accelerated filer

 Non-accelerated
 filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
 of the Exchange Act). Yes No
 As of July 1, 2023, the aggregate market value of voting and non-voting
 stock held by non-affiliates
 of the registrant was approximately $ 95,061,431 (based on the closing price for shares of the registrant's Common Stock as reported by the Nasdaq Stock Market for the last trading day prior to that date).
 Shares of Common Stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
 On February 14, 2024, 26,576,160 shares of the registrant's Common Stock, $0.001 par value, were outstanding.
 DOCUMENTS INCORPORATED BY REFERENCE.

 Portions of the registrant's Proxy Statement for the 2024 Annual Meeting of Stockholders are incorporated by reference into Part III. Such proxy statement will be filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

 INTEVAC, Inc.
 Index to the Form 10-K
 For the Fiscal Year Ended December 30, 2023

 Page

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Signatures

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 Certain information in this Annual Report on Form 10-K ("Annual Report" or "Form 10-K") of Intevac, Inc. and its subsidiaries ("Intevac", "we" or the "Company"), including in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," is forward-looking in nature. All statements in this Annual Report, including those made by the management of Intevac, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include statements regarding Intevac's future financial results, operating results, cash flows and cash deployment strategies, business strategies, costs, products, working capital, competitive positions, management's plans and objectives for future operations, research and development, acquisitions and joint ventures, growth opportunities, customer contracts, investments, liquidity, declaration of dividends, and legal proceedings, as well as market conditions and industry trends. These forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" and "continue," the negative of these terms, or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in Item 1A, "Risk Factors," below and elsewhere in this Annual Report. Other risks and uncertainties may be disclosed in Intevac's prior Securities and Exchange Commission ("SEC") filings. These and many other factors could affect Intevac's future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this Annual Report or elsewhere by Intevac or on its behalf. Intevac undertakes no obligation to revise or update any forward-looking statements.
 The following information should be read in conjunction with the consolidated financial statements and the accompanying Notes to Consolidated Financial Statements included in this Annual Report.

 Item 1.

 Business

 Overview
 Founded in 1991, Intevac is a leading provider of thin-film process technology and manufacturing platforms for high-volume manufacturing environments. As a long-time supplier to the hard disk drive ("HDD") industry, over the last 20 years we have delivered over 180 of our industry-leading 200 Lean systems, which currently represent the majority of the world's capacity for HDD disk media production. Today, we believe that all of the technology upgrade initiatives for next-generation media for the HDD industry, along with planned media capacity additions over the next several years, are being deployed on our 200 Lean platform. With over 30 years of leadership in designing, developing, and manufacturing high-productivity, thin-film processing systems, we also are leveraging our technology and know-how for additional applications, such as protective coatings for the advanced coatings ("ADVC") market, formerly known as the display cover panel ("DCP") market.
 In December 2021, Intevac sold its Photonics business, which consisted of developing, manufacturing and selling compact, high-sensitivity digital-optical products for the capture and display of extreme low-light images. As a result of this disposition, the results of operations from the Photonics business are reported as "net income (loss) from discontinued operations, net of taxes" in the consolidated financial statements in Item 8 of this Annual Report. For more information, see Note 2 "Divestiture and Discontinued Operations" to the consolidated financial statements in Item 8 of this Annual Report.
 Intevac also previously designed, developed and marketed manufacturing equipment for the photovoltaic ("PV") solar cell and advanced semiconductor packaging ("ASP") industries. In March 2022, the Company's management realigned its operational focus and eliminated several research and development ("R&D") programs and product offerings. As part of this realignment effort, the Company ceased its efforts to develop and market several of its manufacturing platforms for the ADVC, PV and ASP industries.
 HDD Equipment Market
 Intevac designs, manufactures, markets and services complex capital equipment used to deposit thin films and lubricants onto substrates to produce magnetic disks that are used in HDDs. Disk and disk drive manufacturers produce magnetic disks in a sophisticated manufacturing process involving many steps, including plating, annealing, polishing, texturing, sputtering,

etching, stripping and lubrication. Intevac believes its systems represent approximately 65% of the installed capacity for disk sputtering worldwide. Intevac's systems are used by manufacturers of magnetic media such as Seagate Technology and Western Digital Corporation (including its wholly-owned subsidiary HGST).
 HDDs are a primary storage medium for digital data in enterprise nearline "cloud" applications, enterprise performance and surveillance applications, and, to a lesser extent, in personal computers ("PCs"). Intevac believes that HDD media unit shipments will grow over time, driven by continued high growth rates in digitally-stored data, the slowing of areal density improvements, increased demand for nearline drives for cloud storage, continuing increases in the HDD tie ratio (the average number of disks per hard drive), and new and emerging applications. The projected growth rates for digitally-stored data on HDDs exceed the rate of areal density improvements, at the same time as the tie ratio is increasing, which results in demand for magnetic disks outpacing HDD units.
 In recent years HDD media units have been negatively impacted by an overall decline in desktop PC units, the adoption of solid state drives ("SSDs") in desktops, as well as laptops and other mobile devices, and the transition to centralized storage. Although the HDD industry continues to expect growth in the nearline data storage market segment, the transition to centralized storage combined with the negative growth in PC shipments has resulted in lower HDD shipments in recent years. However, Intevac continues to believe that long-term demand for hard disks required for high capacity HDDs will increase, driven by growth in demand for digital storage, a slowing growth rate in areal density improvements, and increased information technology spending to support the transition to cloud storage. The number of disk manufacturing systems needed to support this growth as well as future technology transitions and improvements is expected to vary from year to year depending on the factors noted above.
 Intevac expects that HDD manufacturers will extend their utilization of planar perpendicular media with the introduction of new technologies such as Heat Assisted Magnetic Recording ("HAMR") and Energy Assisted Magnetic Recording ("EAMR"). Initial shipments of HAMR and EAMR-based HDDs began in 2020. Intevac believes that leading manufacturers of magnetic media that are using Intevac systems will continue to advance these new technologies, which Intevac expects will create a significant market opportunity for Intevac to develop and install the HDD system upgrades that will be required by these new technologies.
 With the slowing of HDD media unit demand that occurred beginning in mid-2022, Intevac's customers elected to accelerate deployment of HAMR system upgrades during this period of lower capacity utilization, and at the same time elected to spread their expected media capacity additions more ratably over a two- to four-year period. Intevac's HDD revenues through the 2024 timeframe are expected to consist primarily of HDD upgrades, spares and field service.
 Advanced Coatings Market
 Intevac develops equipment to deposit optically transparent thin films onto DCPs typically found on consumer and automotive electronics products, including smartphones, foldable devices, smartwatches, wearable devices, tablet PCs, gaming systems, digital cameras, automotive infotainment systems, point-of-sale devices, and digital signage. In 2023, approximately 1.2 billion smartphones, 504 million smart watches, and 123 million tablet PCs were shipped to consumers worldwide. For smartphones alone, it is forecasted that nearly 1.25 billion units will ship in 2027.
 DCPs are typically made of tempered glass, such as soda-lime or aluminosilicate, or other materials such as sapphire, glass-ceramic and colorless polyimide. The primary function of the DCP is to provide a clear protective interface to the display it protects. In many cases, the DCP is treated with various coatings to enhance its protective performance as well as for clarity, readability and touch sensitivity. The types of coatings typically found on DCPs of electronic devices include: Scratch Protection ("SP"), Anti-Reflection ("AR"), Anti-Fingerprint ("AF") and Non-Conductive Vacuum Metallization ("NCVM") coatings.
 SP coatings generally consist of hard thin films deposited onto the surface of the DCP. Their primary function is to provide enhanced protection against the incidence of scratch, but they can also provide greater breakage resistance. Intevac developed its own SP coating for DCP applications, utilizing its production-proven carbon film technology that is also used on HDD media. This coating provides a hard protective layer which significantly improves the DCP's resistance to scratches and breakage. Intevac expects that the adoption of AR and NCVM coatings on mobile devices will create an increased need for SP coatings and provide a significant demand opportunity for ultra-durable protective glass coatings.
 AR coatings enable greater light transmission though the DCP by reducing the light reflected by the surface back to the user's eye. This allows the user to more easily read the display and reduces the required power needed to display the image

which results in extending the battery life. AR coatings are typically soft and must be applied to the outer surface of the DCP. A significant drawback to using AR coatings is their susceptibility to scratch. As a result, smartphone manufacturers have been reluctant to implement AR coatings on their products. Intevac believes its ADVC systems and applications of various protective thin film technologies to create ultra-durable and more scratch-resistant AR coatings could represent a significant market opportunity.
 AF coatings provide water and oil protection for the surface of the DCP. By preventing fingerprints, AF coatings provide greater aesthetics and increase the readability of the display. The drawback to AF coatings is their relatively low resistance to wear. The coating is soft and usually wears off within a few months of product purchase.
 In March 2022, as part of Intevac's realignment effort, the Company ceased pursuing several ADVC projects and instead started a focused effort to develop a new, modular platform that can be configured to handle a variety of form factors, including two-dimensional ("2D") and three-dimensional ("3D") shapes and both small and large surface area substrates. This platform was introduced as TRIO in March 2022.
 TRIO is a flexible, horizontal deposition tool platform that evolved from Intevac's decades of experience in delivering high-performance, cost-effective equipment for both the HDD and solar markets. TRIO leverages Intevac's materials science and coating equipment technology to deposit SP and AR coatings with enhanced durability for all types of mobile consumer devices, as well as auto display glass. The TRIO platform contains proprietary, patent-protected components and automation that allow fast, precise deposition of coatings with superior adhesion, hardness, strength, and optical properties.
 In December 2022, the Company announced it had entered a joint development agreement with Corning Inc. ("Corning"), a major provider of glass and glass ceramic materials, for the development of TRIO for consumer device applications. In December 2023, the Company announced that it had successfully completed the qualification of its first TRIO system within the initial twelve months of the agreement with Corning. Intevac expects to continue to develop additional customer relationships for TRIO for other glass coating applications, such as in the automotive sector and advanced packaging market.
 TFE Products
 Intevac's TFE product portfolio addressing the HDD and ADVC markets is based around common core technologies and competencies. Intevac believes its TFE product portfolio can be extended to support adjacent markets. Based on its history and market and technology leadership in the HDD industry, Intevac offers superior high-productivity vacuum handling of small substrates at the lowest cost of ownership. Lowest cost of ownership includes various advantages such as high target utilization, high throughput, small footprint, double-sided coating, and reduced materials costs.
 The following table presents a representative list of our TFE products.

 TFE Products

 Applications and Features

 HDD Equipment Market

 200 Lean Disk Sputtering System

 • Uses physical vapor deposition ("PVD") and chemical vapor deposition ("CVD") technologies.
 • Deposits magnetic films, non-magnetic films and protective carbon-based overcoats.
 • Provides high-throughput for small-substrate processing.
 • Over 180 units shipped.

 Upgrades, spares, consumables and services (non-systems business)

 • Upgrades to the installed base to support the continued growth in areal density or reduce the manufacturing cost per disk.

 Advanced Coatings Market

 TRIO

 • Uses proprietary sputtering technology for multiple film types.
 • Allows for precise deposition of thin film layering to manage film stress.
 • Uses patented deposition systems and designs.
 • Modular design enables expandability.
 • Can operate at low vacuum pressure and temperature, allowing coating of a variety of substrate types.
 • Can coat both 2D and 3D substrates of different sizes with high precision control of resultant performance.

 Customer Concentration
 Historically, a significant portion of Intevac's revenue in any particular period has been attributable to sales to a limited number of customers.
 The following customer accounted for at least 10 percent of Intevac's consolidated net revenues in fiscal 2023 and 2022.

 2023

 2022

 Seagate Technology

 %

 %

 Our reliance on sales to relatively few customers increased with the disposition of our Photonics business in December 2021, and we expect that sales of our products to relatively few customers will continue to account for a high percentage of our revenues in the foreseeable future.
 Foreign sales accounted for 91% of revenue in fiscal 2023 and 87% of revenue in fiscal 2022. The majority of Intevac's foreign sales are to companies in Asia or to U.S. companies for use in their Asian manufacturing or development operations. Intevac anticipates that foreign sales will continue to be a significant portion of Intevac's revenues. Intevac's disk sputtering equipment customers include magnetic disk manufacturers, such as Showa Denko, and vertically integrated HDD manufacturers, such as Seagate Technology and Western Digital Corporation (including its wholly owned subsidiary HGST). Intevac's ADVC customers include DCP manufacturers, such as Truly Opto-electronics, and providers of glass and glass ceramic materials, such as Corning. Intevac's customers' manufacturing facilities are primarily located in California, China, Taiwan, Japan, Malaysia, Portugal and Singapore.
 Competition
 The principal competitive factors affecting the markets for Intevac's products include price, product performance and functionality, ease of integration, customer support and service, reputation and reliability. Intevac has one major competitor, Canon Anelva, in the HDD equipment market and has historically experienced intense worldwide competition for magnetic disk sputtering equipment. Intevac faces competition in the ADVC market from optical coating equipment manufacturers such as Optorun and Shincron on drum coating systems and Von Ardenne on inline systems, as well as from glass manufacturers that may develop scratch resistant glass, touchscreen manufacturers that may adopt harder substrate materials, and other equipment companies, chemical companies or the DCP manufacturers themselves, which may offer competing protective coatings. These competitors generally have substantially greater financial, technical, marketing, manufacturing and other resources as compared to Intevac. Furthermore, any of Intevac's competitors may develop enhancements to, or future generations of, competitive products that offer superior price or performance features. In addition, new competitors with enhanced products may enter the markets that Intevac currently serves.
 Marketing and Sales
 Sales are made primarily through Intevac's direct sales force. Intevac also sells its products through distributors in Japan and China. The selling process for Intevac's products is multi-level and lengthy, involving individuals from marketing, engineering, operations, customer service and senior management.
 Installing and integrating new equipment requires a substantial investment by a customer. Sales of Intevac's systems depend, in significant part, upon the decision of a prospective customer to replace obsolete equipment or increase manufacturing capacity by upgrading or expanding existing manufacturing facilities or constructing new manufacturing facilities, all of which typically involve a significant capital commitment. Intevac's systems have a lengthy sales cycle, during which Intevac may expend substantial funds and management time and effort with no assurance that a sale will result.
 The production of large complex systems requires Intevac to make significant investments in inventory both to fulfill customer orders and to maintain adequate supplies of spare parts to service previously shipped systems. Intevac maintains inventories of spare parts in the United States, Singapore, Malaysia and China to support its customers. Intevac often requires its customers to pay for systems in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price and any sales tax due upon completion of installation and acceptance of the system at the customer's factory.

 Intevac provides process and applications support, customer training, installation, start-up assistance and post-installation service support to customers. Intevac supports U.S. customers from its headquarters in Santa Clara, California, and has field offices in Singapore, China, and Malaysia to support customers in Asia.
 Warranties for Intevac's products typically range between 12 and 24 months from customer acceptance. During the warranty period any necessary non-consumable parts are supplied and installed without charge.
 Research and Development and Intellectual Property
 Intevac's long-term growth strategy requires continued development of new products. Intevac works closely with its customers to design products that meet their planned technical and production requirements. Product development and engineering organizations are located primarily in the United States and Singapore.
 Intevac's competitive position significantly depends on its research, development, engineering, manufacturing and marketing capabilities, and not just on Intevac's patent position. However, protection of Intevac's technological assets by obtaining and enforcing intellectual property rights, including patents, is important. Therefore, Intevac's practice is to file patent applications in the United States and other countries for inventions that Intevac considers important. Although Intevac does not consider its business to be materially dependent upon any one patent, the rights of Intevac and the products made and sold under Intevac's patents along with other intellectual property, including trademarks, know-how, trade secrets and copyrights, taken as a whole, are a significant element of Intevac's business.
 Intevac enters into patent and technology licensing agreements with other companies when management determines that it is in Intevac's best interest to do so. Intevac pays royalties under existing patent license agreements for use of certain patented technologies in several of Intevac's products.
 In the normal course of business, Intevac periodically receives and makes inquiries regarding possible patent infringements. In dealing with such inquiries, it may be necessary or useful for Intevac to obtain or grant licenses or other rights. However, there can be no assurance that such licenses or rights will be available to Intevac on commercially reasonable terms, or at all. If Intevac is not able to resolve or settle claims, obtain necessary licenses and/or successfully prosecute or defend its position, Intevac's business, financial condition and results of operations could be materially and adversely affected.
 Manufacturing
 Intevac manufactures its products at its facilities in California and Singapore. Intevac's manufacturing operations include electromechanical assembly, vacuum processing, fabrication of sputter sources, and system assembly, alignment and testing.
 Government Regulations
 We are subject to various government regulations in the United States as well as various international locations where we operate. These regulations cover several diverse areas including environmental compliance, import and export controls, economic sanctions, data and privacy protection, transfer pricing rules, anti-bribery, anti-trafficking and anti-trust provisions. Our policies mandate compliance with applicable laws and regulations administered by various state, federal and international agencies. We instituted various training programs to educate our employees on compliance with governmental regulations, as well as applied legal and ethical practices in our everyday work. We are subject to international, federal, state, and local legislation, regulations, and other requirements relating to the use, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste; recycling and product packaging; worker health and safety; and other activities affecting the environment, our workforce, and the management of our manufacturing operations. We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws. We treat the cost of complying with government regulations and operating a safe workplace as a normal cost of business and allocate the cost of these activities to all functions, except where the cost can be isolated and charged to a specific function. The environmental standards and regulations promulgated by government agencies in California and Singapore are particularly rigorous and set a high standard of compliance. In addition, climate change legislation is a significant topic of recent discussion and has generated and may continue to generate federal, international or other regulatory responses in the near future. We believe our costs of compliance with these regulations and standards are comparable to other companies operating similar facilities in these jurisdictions. We are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we have operations or otherwise do business. These controls, tariffs, regulations, and restrictions (including those related to, or affected by,

United States-China relations) have had, and we believe may continue to have, a material impact on our business, including our ability to sell products and to manufacture or source components. The development of additional statutes and regulations and interpretation of existing statutes and regulations with respect to our industry can be expected to evolve over time. As with any commercial enterprise, we cannot predict with certainty the nature or direction of the development of federal statutes and regulations that will affect our business operations.
 Human Capital Resources
 General Information About Our Human Capital Resources
 As of December 30, 2023, we had 128 employees, including 2 contract employees. Approximately 58% of our employees are located in the United States and 42% are located in Asia. Of our total workforce, 34 employees are involved in research and development; 62 employees are involved in operations, manufacturing, service and quality assurance; and 32 employees are involved in sales, order administration, marketing, finance, information technology, general management and other administrative functions.
 Core Principles
 Our core values are integral to Intevac's culture. We pride ourselves in providing a safe and positive work environment where mutual respect and ethical conduct is a core value. We believe in continuous learning and professional development and provide employees with opportunities to grow.
 Community Involvement
 Our employees are committed to making a difference in the community by actively volunteering and fundraising for many charities, including the American Cancer Society, Second Harvest, Humane Society, Make-a-Wish Foundation, and Salvation Army.
 Health and Safety
 The health and safety of our employees is of utmost importance to us. We conduct regular self-assessments and audits to ensure compliance with our health and safety guidelines and regulatory requirements. Our ultimate goal is to achieve a level of work-related injuries as close to zero as possible through continuous investment in our safety programs. We provide protective gear (e.g., eye protection, masks and gloves) as required by applicable standards and as appropriate given employee job duties. Annual participation in trainings related to ethics, environment, health and safety, and emergency responses are at or near 100%.
 Talent Management
 We regularly monitor and review human capital metrics that are key to our business, including hiring statistics, promotion rates, turnover rates, career growth and development, and diversity and inclusion.
 Hiring Practices
 It is our policy to hire and promote the best-qualified person for the job and comply fully with all domestic, foreign and local laws relating to discrimination in the workplace. Our good faith outreach efforts are designed to ensure that there are no barriers for members of any group and to encourage interest by all qualified persons. We believe our actions enhance diversity, including recruiting at venues representing women, minorities and U.S. military veterans.
 Turnover
 We continually monitor employee turnover rates, both regionally and as a whole, as our success depends upon retaining our highly trained engineering, manufacturing and operating personnel. The average tenure of our employees is 9.5 years in the United States and 10.9 years in Asia.
 Diversity and Inclusion
 Recognizing and respecting our global presence, we strive to maintain a diverse and inclusive workforce everywhere we operate. We believe that a diverse and motivated workforce is vital to our success. We strive to advance diversity and inclusion

through various talent acquisition programs to attract, retain and develop a diverse, highly-skilled work force. We conduct employee surveys to provide on-going feedback on how we are doing against our commitment to treat all employees fairly and provide equal opportunity in an environment free of discrimination. Our diversity and inclusion principles are also reflected in our employee training, in particular by educating employees about our policies against harassment and bullying and about the elimination of bias in the workplace.
 Management Team
 We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Our chief executive officer has more than 25 years of industry experience. He is supported by an experienced and talented professional team.
 Training and Talent Development
 We are committed to the continued development of our employees. Strategic talent reviews and succession planning occur on a planned cadence annually – globally and across all business areas. We are committed to identifying and developing the talents of our next generation leaders. We have a robust talent and succession planning process and have established specialized programs to support the development of our talent pipeline for critical roles in management, engineering, and operations. We also provide technical, professional and leadership training to our employees. We recognize and support the growth and development of our employees and offer opportunities to participate in internal as well as external learning opportunities.
 Compensation and Benefits
 We strive to offer employees regionally competitive compensation and benefits that are aligned to our values. All employees receive a base salary, incentive compensation and welfare benefits. Depending on the region, benefits may include medical, dental and vision coverage, short and long-term disability income protection, flexible spending plans (health, dependent and limited flexible spending) and basic and supplemental life insurance, accidental death and dismemberment insurance and retirement savings plan. Intevac pays the majority or all of the costs for these benefits.
 We have various employee incentive plans. Our profit-sharing plan provides for the distribution of a percentage of pre-tax profits to substantially all of our employees not eligible for other performance-based incentive plans. Our executives, key contributors and employees participate in bonus plans based on the achievement of profitability and other individual performance goals and objectives.
 To foster a stronger sense of ownership and align the interests of employees with our stockholders we grant equity-based awards, including restricted stock units and performance-based restricted stock units to eligible employees. We also have an employee stock purchase plan, which provides employees with the opportunity to purchase Intevac common stock at a discount through payroll deductions. See Note 4 to the consolidated financial statements in Item 8 of this Annual Report for a description of these plans.
 Oversight and Management
 In accordance with its charter, our Human Capital Committee periodically reviews our employee programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices and strategies.
 Executive Officers of Intevac
 Certain information about our executive officers and other key officers as of February 15, 2024 is listed below:

 Name

 Age

 Position

 Executive Officers:

 Nigel D. Hunton

 President and Chief Executive Officer

 Kevin Soulsby

 Interim Chief Financial Officer, Secretary and Treasurer

 John Dickinson

 Vice President of Operations

 Other Key Officers:

 Samuel Harkness

 Vice President of Product Development and Technology

 Eva Valencia

 Vice President of Sales

 Mr. Hunton joined Intevac in January 2022 as President and Chief Executive Officer and a member of the Board of Directors. Prior to joining Intevac, Mr. Hunton served as President and Chief Executive Officer at Photon Control Inc., a fiber optics equipment manufacturing company, from May 2019 to July 2021. From July 2017 to May 2019, he was the President and Chief Executive Officer at Ferrotec (USA) Corporation, an electronics component manufacturing company. From April 2017 to July 2017, Mr. Hunton served as Special Projects Manager at Ferrotec GmbH. Mr. Hunton served as Managing Director at Hunton Associates Ltd, a management consulting company, from January 2016 to July 2017. From 2012 to 2015, Mr. Hunton served as Chief Executive Officer of MBA Polymers, Inc., a recycling company. From 1985 to 2012, Mr. Hunton served in various management roles at the Edwards Group, a global vacuum technology company. Mr. Hunton holds a BS in mechanical engineering from University of Manchester Institute of Science and Technology.
 Mr. Soulsby has served as interim Chief Financial Officer since July 2023. Mr. Soulsby joined Intevac in February 1991 and previously served as Corporate Controller from 1995 through 2019 and as Managing Director, Tax & Risk Management from 2019 through July 2023. Mr. Soulsby holds an MBA and a BSC in Accounting from Santa Clara University.
 Mr. Dickinson joined Intevac as Vice President of Operations in August 2022. Mr. Dickinson previously served as Director, Mechanical Engineer within the ICAPS group (encompassing chips for IoT, communications, automotive, power, and sensors) of Applied Materials, Inc. from April 2021 to August 2022. From January 2018 to April 2021, Mr. Dickinson served as Managing Director of the Livermore Business Unit of Ferrotec USA. From 2012 until April 2018, Mr. Dickinson served as Applications Engineering Director, Distinguished Member of the Technical Staff at Applied Materials, Inc. From 1995 to 2012, Mr. Dickinson held various management and engineering roles at the Edwards Group. Mr. Dickinson holds a MS in Mechanical Engineering and Materials from the University of London.
 Dr. Harkness has served as Vice President of Product Development and Technology since May 2022. Dr. Harkness re-joined Intevac in October 2018 as a Senior Member of the Technical Staff and accepted increasing responsible leadership positions to include his current role. From 2014 to 2018, Dr. Harkness served as Founder and President of HIA, Inc., a magnetron development company that was acquired by Intevac in August 2022. In 2013 to 2014, Dr. Harkness was a Technologist for Veeco Instruments, a global capital equipment company. From 2012 to 2013, Dr. Harkness was Device Physicist for Plextronics Inc., a start-up venture in OLED solution processing. From 1998 to 2009, Dr. Harkness held various technical leadership roles at Seagate Technology in the component development organization for hard disk drive products. From 2010 to 2012 and from 1996 to 1998, Dr. Harkness held various management and engineering roles at Intevac. Dr. Harkness holds a Ph. D. and a BS in material science and engineering from the University of Florida.
 Ms. Valencia joined Intevac as Vice President of Sales in November 2022. From August 2021 to November 2022, Ms. Valencia served as Senior Director, Semiconductor Sales at MKS Corporation, a provider of semiconductor manufacturing, advanced electronics and specialty industrial application products. From July 2019 to August 2021, Ms. Valencia served as Vice President at Photon Control Inc., a provider of optical sensors and systems to the semiconductor equipment industry. From March 2013 to July 2019, Ms. Valencia was Sales Director at Ferrotec (USA) Corporation, an electronics component manufacturing company. From 2011 until 2013, Ms. Valencia was Western Regional Sales Manager at Maine Machine, a manufacturer of high tolerance precision machined components and assemblies. From 2008 until 2011, Ms. Valencia served as Key Account Manager at Entegris Corporation, a provider of advanced materials and materials handling solutions for semiconductor manufacturing processes. From 2006 until 2008, Ms. Valencia served as Western Regional Sales Manager at SUSS MicroTec Inc., a supplier of equipment and process solutions for the semiconductor industry and adjacent markets such as advanced packaging, microelectromechanical systems (MEMS) and light emitting diode (LED). Ms. Valencia holds a BS in Biology from Notre Dame de Namur University.
 Available Information
 Intevac's website is www.intevac.com. Intevac makes available free of charge, on or through its website, its annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the SEC. Information contained on Intevac's website is not a part of, nor incorporated by reference into, this Annual Report or Intevac's other filings with the SEC.
 Trademarks
 Intevac's trademarks include the following: "200 Lean" and "INTEVAC TRIO "

 Item 1A.

 Risk Factors

 We face a variety of risks that may affect our business, financial condition or results of operations, and many of those risks are driven by factors that we cannot control or predict. Investors should carefully consider the risks described below and all of the other information set forth in this Annual Report, before deciding to invest in our common stock. If any of the risks described below occur, our business, financial condition, results of operations and prospects could be materially adversely affected. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations.
 Risks Related to Our Business
 The industries we serve are cyclical, volatile and unpredictable.
 A significant portion of our revenue is derived from the sale of equipment used to manufacture commodity technology products such as disk drives and cell phones. This subjects us to business cycles, the timing, length and volatility of which can be difficult to predict. When demand for commodity technology products exceeds production capacity, then demand for new capital equipment such as ours tends to be amplified. Conversely, when supply of commodity technology products exceeds demand, then demand for new capital equipment such as ours tends to be depressed. We cannot predict with any certainty when these cycles will begin or end. For example, our sales of systems for magnetic disk production increased in 2016 as a customer began upgrading the technology level of its manufacturing capacity. Sales of systems and upgrades for magnetic disk production in 2017 and 2018 were higher than in 2016 as this customer's technology upgrade continued. However, sales of systems and upgrades for magnetic disk production in each of 2019, 2020, 2021, 2022 and 2023 were down from the levels in 2018 as this customer took delivery of fewer or no (in the case of 2021 and 2022) systems. In 2023, this customer cancelled orders for ten 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and we recorded a backlog reduction of $66.0 million. We expect sales of systems and upgrades for magnetic disk production in 2024 will be lower than the levels in 2023.
 Our equipment represents only a portion of the capital expenditure that our customers incur when they upgrade or add production capacity. Accordingly, our customers generally commit to making large capital expenditures far in excess of the cost of our systems alone when they decide to purchase our systems. The magnitude of these capital expenditures requires our customers to have access to large amounts of capital. Our customers generally reduce their level of capital investment during downturns in the overall economy or during a downturn in their industries. Reductions in capital investment could be particularly pronounced during periods of higher interest rates due to the increased cost of obtaining capital.
 We must effectively manage our resources and production capacity to meet rapidly changing demand. Our business experiences rapid growth and contraction, which stresses our infrastructure, internal systems and managerial resources. During periods of increasing demand for our products, we must have sufficient manufacturing capacity and inventory to meet customer demand; attract, retain and motivate a sufficient number of qualified individuals; and effectively manage our supply chain. During periods of decreasing demand for our products, we must be able to align our cost structure with prevailing market conditions; motivate and retain key employees; and effectively manage our supply chain.
 We are exposed to risks associated with a highly concentrated customer base.
 Historically, a significant portion of our revenue in any particular period has been attributable to sales of our disk sputtering systems to a limited number of customers. Our reliance on sales to relatively few customers has increased with the disposition of our Photonics business in December 2021, and we expect that sales of our products to relatively few customers will continue to account for a high percentage of our revenues in the foreseeable future. This concentration of customers, when combined with changes in the customers' specific capacity plans and market share shifts, can lead to extreme variability in our revenue and financial results from period to period. The concentration of our customer base may also enable our customers to demand pricing and other terms unfavorable to Intevac and makes us more vulnerable to changes in demand by or issues with a given customer. The loss of one or more of these large customers, or delays in purchasing by any of them, would have a material and adverse effect on our revenues.
 Sales of our equipment are primarily dependent on our customers' upgrade and capacity expansion plans and whether our customers select our equipment.
 We have no control over our customers' upgrade and capacity expansion plans, and we cannot be sure they will select, or continue to select, our equipment when they upgrade or expand their capacity. The sales cycle for our equipment systems can be

a year or longer, involving individuals from many different areas of Intevac and numerous product presentations and demonstrations for our prospective customers. Our sales process also commonly includes production of samples and customization of our products. We do not typically enter into long-term contracts with our customers, and until an order is actually submitted by a customer there is no binding commitment to purchase our systems. In some cases, orders are also subject to customer acceptance or other criteria even in the case of a binding agreement.
 As of December 30, 2023, our total backlog was $42.4 million, which was primarily attributable to two customers. Our backlog includes orders under contracts that can extend for several years. Our backlog can be significantly affected by the timing of large orders. We may not realize all of the revenue included in our total backlog in the future. For example, in fiscal 2023, we removed $66.0 million from backlog upon receiving notices from a customer of the cancellation of orders for ten 200 Lean HDD systems due to the customer postponing previously planned media capacity additions. There can also be no assurance that our backlog will result in revenue in any particular period because the actual receipt, timing and amount of revenue under contracts included in backlog are subject to various contingencies, many of which are beyond our control. If our customers terminate, reduce or defer orders, we may be protected from certain costs and losses, but our sales will nevertheless be adversely affected, and we may not generate the revenue we expect.
 Sales of new manufacturing systems are also dependent on obsolescence and replacement of the installed base of our customers' existing equipment with newer, more capable equipment. If upgrades are developed that extend the useful life of the installed base of systems, then we tend to sell more upgrade products and fewer new systems, which can significantly reduce total revenue.
 Our 200 Lean HDD customers also experience competition from companies that produce alternative storage technologies like flash memory, which offer smaller size, lower power consumption and more rugged designs. These storage technologies are being used increasingly in enterprise applications and smaller form factors such as tablets, smart-phones, ultra-books, and notebook PCs instead of hard disk drives. Tablet computing devices and smart-phones have never contained, nor are they likely in the future to contain, a disk drive. Products using alternative technologies, such as flash memory, optical storage and other storage technologies are becoming increasingly common and could become a significant source of competition to particular applications of the products of our 200 Lean HDD customers, which could adversely affect our results of operations. If alternative technologies, such as flash memory, replace hard disk drives as a significant method of digital storage, then demand for our hard disk manufacturing products would decrease.
 Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products and manage product inventory in an effective and efficient manner.
 To ensure adequate inventory supply, we must forecast inventory needs and place orders with our suppliers before orders are placed by our customers. Factors that could affect our ability to accurately forecast demand for our products include: (1) an increase or decrease in customer demand for our products; (2) a failure to accurately forecast consumer acceptance for our new products such as the TRIO platform; (3) product introductions by competitors; (4) unanticipated changes in general market conditions or other factors (for example, because of effects on inventory supply and consumer demand caused by high inflation rates or other adverse macroeconomic conditions); (5) the uncertainties and logistical challenges that accompany operations on a global scale; and (6) terrorism or acts of war, or the threat thereof, political or labor instability or unrest, or public health crises..
 If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of product to deliver to our customers. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, and the sale of excess inventory at discounted prices, which could harm our gross margin. Conversely, if we underestimate the demand for our products, we may not be able to produce products to meet our customer requirements, which could result in delays in the shipment of our products, negatively impact our ability to recognize revenue, generate lost sales, and cause damage to our reputation and relationships with our customers. Challenges in forecasting demand can also make it difficult to estimate future results of operations and financial condition from period to period and meet investor expectations. A failure to accurately predict the level of demand for our products or manage product inventory in an effective and efficient manner could adversely impact our results of operations and cause us not to achieve our expected financial results.
 We are dependent on certain suppliers for parts used in our products.
 We are a manufacturing business. Purchased parts constitute the largest component of our product cost. Our ability to manufacture depends on the timely delivery of parts, components and subassemblies from suppliers. We obtain some of the key

components and subassemblies used in our products from a single supplier or a limited group of suppliers. If any of our suppliers fail to deliver quality parts on a timely basis, we may experience delays in manufacturing, which could result in delayed product deliveries, increased costs to expedite deliveries or develop alternative suppliers, or require redesign of our products to accommodate alternative suppliers. Some of our suppliers are thinly capitalized and may be vulnerable to failure, particularly during economic downturns and periods of higher interest rates and inflation.
 Supply chain and shipping disruptions could result in shipping delays, and increased product costs which may have a material adverse effect on our business, financial condition and results of operations.
 Supply chain disruptions have impacted, and may continue to impact, us and our suppliers. These disruptions have resulted in longer lead times and increased product costs and shipping expenses. While we have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers, prolonged supply chain disruptions could interrupt product manufacturing, increase lead times, increase product costs and continue to increase shipping costs, all of which could have a material adverse effect on our business, financial condition and results of operations.
 We operate in an intensely competitive marketplace, and our competitors have greater resources than we do.
 In the market for our disk sputtering systems, we experience competition primarily from Canon Anelva, which has sold a substantial number of systems worldwide. Some of our competitors have substantially greater financial, technical, marketing, manufacturing and other resources than we do, especially in the ADVC market. Our competitors may develop enhancements to, or future generations of, competitive products that offer superior price or performance features, and new competitors may enter our markets and develop such enhanced products. Moreover, competition for our customers is intense, and our competitors have historically offered substantial pricing concessions and incentives to attract our customers or retain their existing customers.
 Our operating results fluctuate significantly from quarter to quarter, which can lead to volatility in the price of our common stock.
 Our quarterly revenues and common stock price have fluctuated significantly. We anticipate that our revenues, operating margins and common stock price will continue to fluctuate for a variety of reasons, including: (1) changes in the demand, due to seasonality, cyclicality and other factors, in the markets for computer systems, storage subsystems and consumer electronics containing disks, as well as cell phones; (2) delays or problems in the introduction and acceptance of our new products, or delivery of existing products; (3) timing of orders, acceptance of new systems by our customers or cancellation or delay of those orders; (4) new products, services or technological innovations by our competitors or us; (5) changes in our manufacturing costs and operating expense; (6) changes in general economic, political, stock market and industry conditions; and (7) any failure of our operating results to meet the expectations of investment research analysts or investors.
 Any of these, or other factors, could lead to volatility and/or a rapid change in the trading price of our common stock. In the past, securities class action litigation has been instituted against companies following periods of volatility in the market price of their securities. Any such litigation, if instituted against Intevac, could result in substantial costs and diversion of management time and attention.
 Our success depends on international sales and the management of global operations.
 A significant portion of our revenue comes from regions outside the United States, and we expect that international sales will continue to account for a significant portion of our total revenue in future years. Most of our international sales are to customers in Asia, which includes products shipped to overseas operations of U.S. companies. We currently have manufacturing facilities in California and Singapore and international customer support offices in Singapore, China, and Malaysia. Certain of our suppliers are also located outside the United States.
 Managing our global operations presents challenges including, but not limited to, those arising from: (1) global trade issues; (2) variations in protection of intellectual property and other legal rights in different countries; (3) concerns of U.S. governmental agencies regarding possible national commercial and/or security issues posed by manufacturing businesses in Asia; (4) fluctuation of interest rates, raw material costs, labor and operating costs, and exchange rates; (5) variations in the ability to develop relationships with suppliers and other local businesses; (6) changes in the laws and regulations of the United States, including export restrictions, and other countries, as well as their interpretation and application; (7) the need to provide technical and spare parts support in different locations; (8) political and economic instability; (9) cultural differences;

(10) varying government incentives to promote development; (11) shipping costs and delays; (12) adverse conditions in capital and credit markets; (13) variations in tariffs, quotas, tax codes and other market barriers; and (14) barriers to movement of cash.
 We must regularly assess the size, capability and location of our global infrastructure and make appropriate changes to address these issues. Our failure to manage the risks and challenges associated with global operations could have a material adverse effect on our business.
 Our success is dependent on recruiting and retaining a highly talented work force.
 Our employees are vital to our success, and our key management, engineering and other employees are difficult to replace. We do not maintain key person life insurance on any of our employees. The expansion of high technology companies worldwide has increased demand and competition for qualified personnel and has made companies increasingly protective of prior employees. It may be difficult for us to locate employees who are not subject to non-competition agreements and other restrictions.
 The majority of our U.S. operations are located in California where the cost of living and of recruiting employees is high. Our operating results depend, in large part, upon our ability to retain and attract qualified management, engineering, marketing, manufacturing, customer support, sales and administrative personnel. Furthermore, we compete with industries such as the hard disk drive, semiconductor, and solar industries for skilled employees. Failure to retain existing key personnel, or to attract, assimilate or retain additional highly qualified employees to meet our needs in the future, could have a material and adverse effect on our business, financial condition and results of operations.
 Risks Related to Our Intellectual Property
 Our growth depends on development of technically advanced new products and processes.
 We have invested heavily, and continue to invest, in the development of new products, such as our 200 Lean HDD and our TRIO platform for ADVC. Our success in developing and selling new products depends upon a variety of factors, including our ability to: (1) predict future customer requirements; (2) make technological advances; (3) achieve a low total cost of ownership for our products; (4) introduce new products on schedule; (5) manufacture products cost-effectively including transitioning production to volume manufacturing; (6) commercialize and attain customer acceptance of our products; and (7) achieve acceptable and reliable performance of our new products in the field. Our new product decisions and development commitments must anticipate continuously evolving industry requirements significantly in advance of sales. In addition, we are attempting to expand into new or related markets, including the ADVC market. Our expansion into the ADVC market is dependent upon the success of our customers' development plans. To date we have not recognized material revenue from such products. Failure to correctly assess the size of the market, successfully develop products on a timely basis, successfully develop cost effective products to address the market, or establish effective sales and support of new products would have a material adverse effect on future revenues and profits. In addition, if we invest in products for which the market does not develop as anticipated, we may incur significant charges related to such investments.
 Rapid technological change in our served markets requires us to rapidly develop new technically advanced products. Our future success depends in part on our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products have reliability or quality problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance and payment for new products and additional service and warranty expenses.
 Our business depends on the integrity of our intellectual property rights.
 The success of our business depends upon the integrity of our intellectual property rights, and we cannot ensure that: (1) any of our pending or future patent applications will be allowed or that any of the allowed applications will be issued as patents or will issue with claims of the scope we sought; (2) any of our patents will not be invalidated, deemed unenforceable, circumvented or challenged; (3) the rights granted under our patents will provide competitive advantages to us; (4) other parties will not develop similar products, duplicate our products or design around our patents; or (5) our patent rights, intellectual property laws or our agreements will adequately protect our intellectual property or competitive position.
 From time to time, we have received claims that we are infringing third parties' intellectual property rights or seeking to invalidate our rights. We cannot ensure that third parties will not in the future claim that we have infringed current or future

patents, trademarks or other proprietary rights relating to our products. Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us.
 Risks Related to Government Regulation
 We are subject to risks of non-compliance with environmental and other governmental regulations.
 We are subject to a variety of governmental regulations relating to the use, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste. If we fail to comply with current or future regulations, such failure could result in suspension of our operations, alteration of our manufacturing process, remediation costs or substantial civil penalties or criminal fines against us or our officers, directors or employees. Additionally, these regulations could require us to acquire expensive remediation or abatement equipment and incur substantial expenses to comply with them.
 In addition, climate change legislation is a significant topic of recent discussion and has generated and may continue to generate federal, international or other regulatory responses in the near future. If we or our suppliers, customers or partners fail to timely comply with applicable legislation, certain customers may refuse to purchase our products or we may face increased operating costs as a result of taxes, fines or penalties, or incur legal liability and reputational damage, which could harm our business, financial condition and results of operations.
 General Risk Factors
 Global economic conditions may harm our industry, business and results of operations.
 We operate globally and as a result our business, revenue and profitability are impacted by global macroeconomic conditions. The success of our activities is affected by general economic and market conditions, including, among others, inflation, interest rates, tax rates, economic uncertainty, political instability, changes in laws, and trade barriers and sanctions. Inflation and government efforts to combat inflation, such as raising the benchmark interest rate, have increased and could continue to increase market volatility and have an adverse effect on the financial market and global economy. Volatility and adverse conditions in the capital and credit markets have negatively affected levels of business and consumer spending, heightening concerns about the likelihood of a global recession and potential default of various national bonds and debt backed by individual countries. Such developments, as well as the politics impacting these, could adversely affect our financial results. Uncertainty about worldwide economic conditions poses a risk as businesses may further reduce or postpone spending in response to reduced budgets, tight credit, negative financial news and declines in income or asset values, which could adversely affect our business, financial condition and results of operations. Geopolitical destabilization could continue to impact global currency exchange rates, commodity prices, trade and movement of resources, which may adversely affect the ability of our customers and potential customers to incur the capital expenditures necessary to purchase our products and services.
 Our business could be negatively impacted by cyber and other security threats or disruptions.
 We face various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. These threats could lead to losses of sensitive information or capabilities; financial liabilities and damage to our reputation. If we are unable to maintain compliance with security standards applicable to defense contractors, we could lose business or suffer reputational harm. Cyber threats to businesses are evolving and include, but are not limited to, malicious software, destructive malware, attempts to gain unauthorized access to data, disruption or denial of service attacks, and other electronic security breaches that could lead to disruptions in our systems, unauthorized release of confidential, personal or otherwise protected information (ours or that of our employees, customers or partners), and corruption of data, networks or systems. We have experienced cybersecurity threats and incidents involving our systems and expect these incidents to continue. While none of the cybersecurity events have been material to date, a successful breach or attack could have a material adverse effect on our results of operations, financial condition or business, harm our reputation and relationships with our customers, business partners, employees or other third parties, and subject us to consequences such as litigation and direct costs associated with incident response. In addition, we could be impacted by cyber threats or other disruptions or vulnerabilities found in products we use or in our partners' or customers' systems that are used in connection with our business. These events, if not prevented or effectively mitigated, could damage our reputation, require remedial actions and lead to loss of business, regulatory actions, potential liability and other financial losses.

 Changes to our effective tax rate affect our results of operations.
 As a global company, we are subject to taxation in the United States, Singapore and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future effective tax rate could be affected by: (1) changes in tax laws; (2) the allocation of earnings to countries with differing tax rates; (3) changes in worldwide projected annual earnings in current and future years: (4) accounting pronouncements; or (5) changes in the valuation of our deferred tax assets and liabilities. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be different from the treatment reflected in our historical income tax provisions and accruals, which could result in additional payments by Intevac.
 Difficulties in integrating past or future acquisitions or implementing strategic divestitures could adversely affect our business.
 We have completed a number of acquisitions and dispositions during our operating history. We have spent and may continue to spend significant resources identifying and pursuing future acquisition opportunities. Acquisitions involve numerous risks including: (1) difficulties in integrating the operations, technologies and products of the acquired companies; (2) the diversion of our management's attention from other business concerns; and (3) the potential loss of key employees of the acquired companies. Failure to achieve the anticipated benefits of the prior and any future acquisitions or to successfully integrate the operations of the companies we acquire could have a material and adverse effect on our business, financial condition and results of operations. Any future acquisitions could also result in potentially dilutive issuance of equity securities, acquisition or divestiture-related write-offs or the assumption of debt and contingent liabilities. In addition, we have made and will continue to consider making strategic divestitures, such as the disposition of our Photonics business. With any divestiture, there are risks that future operating results could be unfavorably impacted if targeted objectives, such as cost savings or earnout payments associated with the financial performance of the divested business, are not achieved or if other business disruptions occur as a result of the divestiture or activities related to the divestiture.
 We could be involved in litigation.
 From time to time, we may be involved in litigation of various types, including litigation alleging infringement of intellectual property rights and other claims and customer disputes. For example, in 2022 we settled an action against us under the Private Attorneys General Act ("PAGA") for $1.0 million. Litigation is expensive, subjects us to the risk of significant damages, requires significant management time and attention, and could have a material and adverse effect on our business, financial condition and results of operations.
 Business interruptions could adversely affect our operations.
 Our operations are vulnerable to interruption by fire, earthquake, floods or other natural disaster, quarantines or other disruptions associated with infectious diseases, national catastrophe, terrorist activities, war, disruptions in our computing and communications infrastructure due to power loss, telecommunications failure, human error, physical or electronic security breaches and computer viruses, and other events beyond our control. We do not have a detailed disaster recovery plan. Despite our implementation of network security measures, our tools and servers may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems and tools located at customer sites. Political instability could cause us to incur increased costs in transportation, make such transportation unreliable, increase our insurance costs or cause international currency markets to fluctuate. All these unforeseen disruptions and instabilities could have the same effects on our suppliers and their ability to timely deliver their products. In addition, we do not carry sufficient business interruption insurance to compensate us for all losses that may occur, and any losses or damages incurred by us could have a material adverse effect on our business and results of operations. For example, we self-insure earthquake risks because we believe this is the prudent financial decision based on the high cost of the limited coverage available in the earthquake insurance market. An earthquake could significantly disrupt our operations, most of which are conducted in California. It could also significantly delay our research and engineering effort on new products, most of which is also conducted in California. We take steps to minimize the damage that would be caused by business interruptions, but there is no certainty that our efforts will prove successful.
 We could be negatively affected as a result of a proxy contest and the actions of activist stockholders.
 A proxy contest with respect to election of our directors, or other activist stockholder activities, could adversely affect our business because: (1) responding to a proxy contest and other actions by activist stockholders can be costly and

 time-consuming, disruptive to our operations and divert the attention of management and our employees; (2) perceived uncertainties as to our future direction caused by activist activities may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; and (3) if individuals are elected to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plans.
 We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.
 Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management must perform evaluations of our internal control over financial reporting. Although our assessment, testing, and evaluation resulted in our conclusion that as of December 30, 2023, our internal control over financial reporting was effective, we cannot predict the outcome of our testing in future periods. Ongoing compliance with this requirement is complex, costly and time-consuming. If we fail to maintain effective internal control over financial reporting, then we could be subject to restatement of previously reported financial results, regulatory sanctions and a decline in the public's perception of Intevac, which could have a material and adverse effect on our business, financial condition and results of operations.

 Item 1B.

 Unresolved Staff Comments

 None.

 Item 1C.

 Cybersecurity

 Risk Management and Strategy
 We have established processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes. To prevent, detect and respond to information security threats, we maintain a cyber risk management program that employs a combination of Zero Trust security model and Cyber Security Framework ("CSF") in accordance with the National Institute of Standards and Technology ("NIST") security framework. Zero Trust is a security framework requiring all users to be authenticated, authorized, and continuously validated for security configuration before being granted access to applications and data. CSF is a set of voluntary guidelines that help organizations assess and improve their cybersecurity posture by implementing processes for identifying and mitigating risk, and detecting, responding to and recovering from cyberattacks.
 We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks. Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
 We engage a third-party outsourced security operations center in connection with our risk assessment processes. This service provider performs daily monitoring and testing of our safeguards for intrusion and vulnerabilities. We require this third-party service provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect Intevac.
 Our Security Awareness Program includes training that reinforces our information technology risk and security management policies, standards and practices, as well as the expectation that employees comply with these policies. The Security Awareness Program engages personnel through training on how to identify potential cybersecurity risks and protect the Company's resources and information. This training is mandatory for all employees globally on a periodic basis, and it is supplemented by Company-wide testing initiatives, including periodic phishing tests. The Company provides specialized security training for certain employee roles such as application developers. Training includes information about confidentiality and security, as well as responding to unauthorized access to or use of information.

 Governance
 One of the key functions of our Board of Directors is informed oversight of our risk management processes, including risks from cybersecurity threats. Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Audit Committee of the Board of Directors (the "Audit Committee"). The Audit Committee has primary responsibility for oversight of information security risks, including fraud, vendor, data protection and privacy, business continuity and resilience, and cybersecurity risks, and provides regular updates to the Board of Directors on such matters. The Audit Committee receives regular reports from our Director of Information Technology on, among other things, the Company's cyber risks and threats, the status of projects to strengthen the Company's information security systems, assessments of the Company's security program and the emerging threat landscape. Information security risk is a significant oversight focus area for the Audit Committee, as well as the entire Board of Directors. Over the course of fiscal year 2023, the Audit Committee received four separate cybersecurity briefings from our Director of Information Technology.
 Our Director of Information Technology and our management committee on cybersecurity, which includes our CEO, interim CFO, and VP of Operations, are primarily responsible for assessing and managing our material risks from cybersecurity threats. Our Director of Information Technology, who leads a team responsible for enterprise-wide cybersecurity strategy, policy, standards, architecture and processes, has extensive experience and background in information technology, platform software, cloud computing, cybersecurity, enterprise strategy, risk management, and large complex system development, delivery, and deployment. Additionally, our Director of Information Technology chairs our Cybersecurity Incident Response Team, which is responsible for prevention, identification, containment, eradication and remediation of cybersecurity incidents. While we have not experienced a material information security (cybersecurity) incident, we maintain an information security (cybersecurity) risk insurance policy as a matter of good practice.

 Item 2.

 Properties

 Intevac maintains its corporate headquarters in Santa Clara, California. The location, approximate size and type of facility of the principal properties are listed below. Intevac leases all of its properties and does not own any real estate.

 Location

 Square Footage

 Principal Use

 Santa Clara, California

 169,583

 (a),(b)

 Corporate Headquarters;
 Marketing, Manufacturing, Engineering and Customer Support

 Singapore

 31,947

 Manufacturing and Customer Support

 Malaysia

 1,291

 Customer Support

 Shenzhen, China

 2,568

 Customer Support

 (a)

 In connection with the disposition of our Photonics business, we entered into a lease assignment agreement that assigns the lease obligation for two buildings in our California campus consisting of 94,890 square feet of rentable space to the buyer. As part of the assignment, we agreed to subsidize a portion of the buyer's lease payments through the remainder of the lease term which expires in March 2024.

 (b)

 On November 30, 2023, we entered into an amendment to the lease for our California campus. The lease amendment provides for (i) effective as of April 1, 2024, our surrender of an aggregate area of approximately 94,207 rentable square feet and (ii) the extension of the expiration date of the term of the lease agreement with respect to the remaining 75,376 rentable square feet from April 1, 2024 to June 30, 2029.

 Intevac considers these properties adequate to meet its current and future requirements. Intevac regularly assesses the size, capability and location of its global infrastructure and periodically makes adjustments based on these assessments.

 Item 3.

 Legal Proceedings

 From time to time, Intevac is involved in claims and legal proceedings that arise in the ordinary course of business. Intevac expects that the number and significance of these matters will increase as Intevac's business expands. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require us to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to us or at all. Intevac is not presently a party

to any lawsuit or proceeding that, in Intevac's opinion, is likely to seriously harm Intevac's business. For a description of our material pending legal proceedings, see Note 12 "Commitments and Contingencies" to the consolidated financial statements in Item 8 of this Annual Report.

 Item 4.

 Mine Safety Disclosures

 Not applicable.

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Market Information
 Intevac common stock is traded on The Nasdaq Stock Market (NASDAQ Global Select) under the symbol "IVAC." As of February 15, 2024, there were 69 holders of record. This figure does not reflect the beneficial ownership of shares held in street name.
 Recent Sales of Unregistered Securities
 None.
 Dividend Policy
 We currently anticipate that we will retain our earnings, if any, for use in the operation of our business and do not expect to pay cash dividends on our capital stock in the foreseeable future.
 Issuer Purchases of Equity Securities
 On November 21, 2013, Intevac announced that its Board of Directors approved a stock repurchase program authorizing up to $30.0 million in repurchases, with no expiration date. On August 15, 2018, Intevac announced that its Board of Directors approved a $10.0 million increase to the original stock repurchase program for an aggregate authorized amount of $40.0 million. Our last repurchase under this authorization occurred during the first quarter of fiscal 2020. At December 30, 2023, $10.4 million remains available for future stock repurchases under the repurchase program.

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Management's Discussion and Analysis ("MD&A") is intended to facilitate an understanding of Intevac's business and results of operations. This MD&A should be read in conjunction with Intevac's Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10- K. The following discussion contains forward-looking statements and should also be read in conjunction with the cautionary statement set forth at the beginning of this Form 10-K. MD&A includes the following sections:

 •

 Overview: a summary of Intevac's business, measurements and opportunities.

 •

 Results of Operations: a discussion of operating results.

 •

 Liquidity and Capital Resources: an analysis of cash flows, sources and uses of cash, and financial position.

 •

 Critical Accounting Policies and Estimates: a discussion of estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

 Overview
 Intevac is a leading provider of thin-film process technology and manufacturing platforms for high-volume manufacturing environments. With over 30 years of leadership in designing, developing, and manufacturing high-productivity, thin-film processing systems, the Company leverages its technology and know-how to provide process manufacturing equipment solutions to the hard disk drive ("HDD") and advanced coatings ("ADVC") markets (formerly known as the display cover panel ("DCP") market). Intevac's customers include HDD and DCP manufacturers. Intevac operates in a single segment: Thin-film Equipment ("TFE"). Product development and manufacturing activities occur in North America and Asia. Intevac also has field offices in Asia to support its customers. Intevac's products are highly technical and are sold primarily through Intevac's direct sales force.
 Intevac's results of operations are driven by a number of factors including success in its equipment growth initiatives in the ADVC market and by worldwide demand for HDDs. Demand for HDDs depends on the growth in digital data creation and storage, the rate of areal density improvements, and the end-user demand for PCs, enterprise data storage, nearline "cloud" applications, video players and video game consoles that include such drives. Intevac continues to execute its strategy of diversification beyond the HDD industry by focusing on the Company's ability to provide proprietary tools to enhance scratch protection and durability for the ADVC market and by working to develop the next generation of high volume ADVC manufacturing equipment. Intevac believes that its renewed focus on the ADVC market will result in incremental equipment revenues for Intevac and decrease Intevac's dependence on the HDD industry. Intevac's equipment business is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for HDDs and cell phones, as well as other factors such as global economic conditions and technological advances in fabrication processes.
 In December 2021, the Company sold its Photonics business. As a result of the disposition, the results of operations from the Photonics reporting segment are reported as "Income (loss) from discontinued operations, net of taxes" in the consolidated financial statements in Item 8 of this Annual Report.
 In March 2022, the Company realigned its operational focus and eliminated several research and development ("R&D") programs and product offerings. As part of this realignment effort, the Company ceased its efforts to develop and market several of its manufacturing platforms for the ADVC, photovoltaic ("PV") solar cell and advanced semiconductor packaging ("ASP") industries and ceased offering certain legacy products within these industries.
 The following table presents certain significant measurements for fiscal year 2023 and 2022:

 2023

 2022

 (in thousands, except percentages and per share amounts)

 Net revenues

 $

 $

 $

 16,904

 Gross profit

 $

 20,226

 $

 15,086

 $

 5,140

 Gross margin percent

 38.4

 %

 42.2

 %

 (3.8) points

 Operating loss

 $

 (13,244

)

 $

 (16,512

)

 $

 3,268

 Net loss from continuing operations

 $

 (12,610

)

 $

 (16,754

)

 $

 4,144

 Income (loss) from discontinued operations, net of tax

 $

 $

 (321

)

 $

 $

 (12,190

)

 $

 (17,075

)

 $

 4,885

 Net loss per basic and diluted share

 $

 (0.47

)

 $

 (0.68

)

 $

 0.21

 Fiscal 2022 financial results reflected a challenging environment as we did not recognize revenue on any 200 Lean HDD systems. Gross margin in fiscal 2022 reflects the higher-margin contribution from HDD upgrades, offset in part by $755,000 in charges for excess and obsolete inventory as part of a restructuring program we implemented in March 2022 (the "2022 Cost Reduction Plan"). R&D expenses for fiscal 2022 included $1.5 million in expenditures related to the disposal of certain lab equipment as part of the 2022 Cost Reduction Plan. The cost of employee severance associated with the 2022 Cost Reduction Plan of $1.2 million was offset in full by stock-based compensation forfeitures related to the employees affected by the reduction in workforce. In connection with the sale of our Photonics business in December 2021, we entered into a Transition Service Agreement ("TSA") with the buyer. TSA fees were $989,000 for fiscal 2022, of which $23,000 was reported as a reduction of cost of net revenues and $966,000 was reported as a reduction of selling, general and administrative expenses. The agreed-upon charges for such services were generally intended to allow the service provider to recover all costs and expenses of providing such services. During fiscal 2022, we did not recognize an income tax benefit on our U.S. net operating loss.
 Fiscal 2023 financial results improved over fiscal 2022 but reflected a continued challenging environment. Net revenues increased compared to fiscal 2022, and we recognized revenue on one 200 Lean HDD system and one refurbished 200 Lean HDD system in fiscal 2023. Lower gross margins in fiscal 2023, versus fiscal 2022, reflected higher inventory obsolescence charges, severance costs, the lower-margin contributions from the 200 Lean HDD system and the refurbished 200 Lean HDD system and lower factory utilization. Inventory obsolescence charges during fiscal 2023 included $1.7 million in expenditures primarily related to certain TRIO inventory that become obsolete resulting from engineering change orders to the product. Inventory obsolescence charges during fiscal 2022 included $755,000 in expenditures primarily related to eliminated product offerings as part of our 2022 Cost Reduction Plan. The cost of employee severance associated with our restructuring program implemented in fiscal 2023 (the "2023 Cost Reduction Plan") of $2.0 million was offset in part by $462,000 of stock-based compensation forfeitures related to the employees affected by the reduction in workforce. We reported a smaller net loss for fiscal 2023 compared to fiscal 2022 due to higher revenues and higher gross profit, offset in part by higher operating costs. During fiscal 2023, we did not recognize an income tax benefit on our U.S. net operating loss.
 We believe fiscal 2024 will continue to be a challenging year, and we do not expect to be profitable in fiscal 2024. In fiscal 2024, we expect to begin recognizing revenue from our TRIO platform as the product completes qualifications. However, we expect that HDD equipment sales and upgrades for magnetic disk production in fiscal 2024 will be lower than 2023 levels. In addition, our results of operations and growth prospects could be impacted by macroeconomic conditions such as a global economic slowdown, global economic instability and political conflicts, wars, and public health crises. In addition, rising inflation and interest rates may impact demand for our products and services and our cost to provide products and services.
 Results of Operations
 Net revenues

 2023

 2022

 Change 2023 vs. 2023

 $

 $

 $

 16,904

 Net revenues consist primarily of sales of equipment used to manufacture thin-film disks, PV cells, DCPs, and ASP and related equipment.
 The increase in revenues in fiscal 2023 versus fiscal 2022 was due primarily to higher sales of systems and technology upgrades, offset in part by lower sales of spare parts and field service. In fiscal 2023, we recognized revenue on one 200 Lean HDD system and one refurbished 200 Lean HDD system, technology upgrades, service and spare parts. In fiscal 2022, we recognized revenue on technology upgrades, service and spare parts. Revenue in fiscal 2023 includes $444,000 of cancellation fees, when we applied $444,000 of billings against customer advances in connection with inventory scrapped at the customer's direction associated with a cancelled order.
 Backlog

 December 30, 2023

 December 31, 2022

 Total backlog

 $

 42,415

 $

 121,743

 Backlog at December 30, 2023 did not include any 200 Lean HDD systems. Backlog at December 31, 2022 included eleven 200 Lean HDD systems. In May 2023, a customer cancelled an order for eight 200 Lean HDD systems and we recorded a backlog reduction of $54.6 million. In December 2023, a customer cancelled an order for two 200 Lean HDD systems and we recorded a backlog reduction of $11.4 million. On December 30, 2023, we had $42.4 million of backlog and expect to recognize as revenue: 79% in 2024 and 21% in 2025. However, our customers may cancel their contracts with us prior to contract completion. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed.
 Significant portions of Intevac's revenues in any particular period have been attributable to sales to a limited number of customers. The following customers accounted for at least 10 percent of Intevac's consolidated net revenues in fiscal 2023 and 2022.

 2023

 2022

 Seagate Technology

 %

 %

 Western Digital Corporation

 *

 %

 *

 Less than 10%

 Revenue by geographic region

 2023

 2022

 United States

 $

 4,499

 $

 4,558

 Asia

 48,058

 31,103

 Europe

 $

 $

 International sales include products shipped to overseas operations of U.S. companies. The decrease in sales to the U.S. region in fiscal 2023 versus fiscal 2022, reflected lower spare parts and lower field service sales, offset in part by higher HDD upgrade sales. The increase in sales to the Asia region in fiscal 2023 versus fiscal 2022, reflected higher HDD system and HDD upgrade sales, offset in part by lower spare parts and field service sales. Sales to the Asia region in fiscal 2023 included one 200 Lean HDD system and one refurbished 200 Lean HDD system. Sales to the Asia region in fiscal 2022 did not include any systems.
 Gross margin

 2023

 2022

 (in thousands, except percentages)

 Total gross profit

 $

 20,226

 $

 15,086

 $

 5,140

 % of net revenues

 38.4

 %

 42.2

 %

 Cost of net revenues consists primarily of purchased materials and also includes assembly, test and installation labor and overhead, customer-specific engineering costs, warranty costs, provisions for inventory reserves and scrap.
 Gross margin was 38.4% in fiscal 2023 compared to 42.2% in fiscal 2022. The decrease in the gross margin percentage for fiscal 2023 compared to fiscal 2022 was due primarily to higher inventory obsolescence charges, severance charges associated with the 2023 Cost Reduction Plan, lower-margin contributions from the 200 Lean HDD system and the refurbished 200 Lean HDD system, and lower factory utilization. Excess and obsolete inventory charges during fiscal 2023 included $1.7 million in expenditures primarily related to certain TRIO inventory that became obsolete resulting from engineering change orders to the product. Gross margins will continue to vary depending on a number of factors, including product mix, product cost, system configuration and pricing, factory utilization, and provisions for excess and obsolete inventory.

 Research and development

 2023

 2022

 Research and development expense

 $

 15,125

 $

 13,722

 $

 1,403

 R&D expense consists primarily of salaries and related costs of employees engaged in, and prototype materials used in ongoing research, design and development activities for TRIO equipment and HDD sputtering equipment.
 R&D spending in fiscal 2023 increased compared to fiscal 2022 due to higher spending on our TRIO platform, offset in part by lower spending on HDD R&D programs. R&D spending during fiscal 2022 includes $1.5 million in expenditures related to the disposal of certain lab equipment as part of our 2022 Cost Reduction Plan.
 Selling, general and administrative

 2023

 2022

 Selling, general and administrative expense

 $

 18,345

 $

 17,876

 $

 Selling, general and administrative expense consists primarily of selling, marketing, customer support, financial and management costs. All domestic sales and the majority of international sales of HDD sputtering products in Asia are made through Intevac's direct sales force. Intevac has offices in Singapore, Malaysia and China to support Intevac's customers in Asia.
 Selling, general and administrative expenses increased in fiscal 2023 over the amount spent in fiscal 2022 as higher severance charges, higher legal fees, higher training expenses, higher travel expenses, and higher variable compensation expenses were offset in part by lower stock-based compensation expenses and lower consulting fees. Selling, general and administrative expense in fiscal 2022 is net of $966,000 in TSA and shared services fees earned since the Photonics divestiture.
 Cost reduction plans
 During the third quarter of fiscal 2023, Intevac substantially completed implementation of the 2023 Cost Reduction Plan, which is intended to reduce expenses by reducing our workforce by 23 percent, including employees and contractors. Intevac incurred restructuring costs of $2.0 million in severance, $2,000 in stock-based compensation associated with the modification of certain stock-based awards and other employee-related expenses associated with the 2023 Cost Reduction Plan. Additionally as part of the 2023 Cost Reduction Plan the Company incurred a benefit of $462,000 related to the stock-based compensation forfeitures related to the employees affected by the reduction in workforce. Substantially all cash outlays in connection with the 2023 Cost Reduction Plan occurred in the third quarter of fiscal 2023. The cost of implementing the 2023 Cost Reduction Plan was reported under cost of net revenues ($490,000) and operating expenses ($1.3 million in selling, general and administrative expense and $117,000 in R&D expense) in the consolidated statements of operations. Implementation of the 2023 Cost Reduction Plan is expected to reduce salary, wages and other employee-related expenses and contractor payments by approximately $4.6 million on an annual basis.
 During the first quarter of 2022, the Company implemented the 2022 Cost Reduction Plan to realign the Company's operational focus, scale the business and improve costs. The 2022 Cost Reduction Plan included (i) reducing the Company's workforce by 6% and (ii) eliminating several R&D programs and product offerings. We incurred restructuring costs of $1.2 million for estimated severance and the related modification of certain stock-based awards. Other costs incurred as part of the 2022 Cost Reduction Plan include: (i) a benefit of $1.3 million related to the stock-based compensation forfeitures related to the employees affected by the reduction in workforce, (ii) $1.5 million for fixed asset disposals, and (iii) $755,000 for write-offs of excess inventory. Substantially all cash outlays in connection with the 2022 Cost Reduction Plan were completed in the fourth quarter of fiscal 2022. The cost of implementing the 2022 Cost Reduction Plan was reported under cost of net revenues and operating expenses in the consolidated statements of operations. Implementation of the 2022 Cost Reduction Plan reduced salary, wages and other employee-related expenses by approximately $2.1 million on an annual basis and reduced depreciation expense by $720,000 on an annual basis.

 Interest income and other income (expense), net

 2023

 2022

 Interest income and other income (expense), net

 $

 2,456

 $

 1,085

 $

 1,371

 Interest income and other income (expense), net in fiscal 2023 included $2.5 million of interest income on investments and other income of $113,000, offset in part by $165,000 of foreign currency losses. Interest income and other income (expense), net in fiscal 2022 included $1.2 million of interest income on investments and other income of $31,000, offset in part by $186,000 of foreign currency losses. The increase in interest income in 2023 over 2022 reflected higher interest rates on Intevac's investments, offset in part by lower invested balances.
 Provision for income taxes

 2023

 2022

 Provision for income taxes

 $

 1,822

 $

 1,327

 $

 Intevac's effective tax rate from continuing operations was (16.9%) for fiscal 2023 and (8.6%) for fiscal 2022 and we recorded income tax expense of $1.8 million in fiscal 2023 and $1.3 million in fiscal 2022. The income tax expense consists primarily of income taxes in foreign jurisdictions in which we conduct business and foreign withholding taxes. We maintain a full valuation allowance for domestic deferred tax assets, including net operating loss carryforwards and certain domestic tax credits. Intevac's effective tax rate differs from the U.S. statutory rate in both fiscal 2023 and fiscal 2022 primarily due to the Company not recognizing an income tax benefit on the domestic loss.
 We assess the likelihood that our deferred tax assets will be recovered based upon our consideration of many factors, including the current economic climate, our expectations of future taxable income, and our ability to project such income. We maintain a full valuation allowance for our U.S. deferred tax assets due to uncertainty regarding their realization as of December 30, 2023.
 Discontinued Operations

 2023

 2022

 Income (loss) from discontinued operations, net of tax

 $

 $

 (321

)

 $

 Income (loss) from discontinued operations consists primarily of the results of operations of the Photonics business which we sold to EOTECH, LLC ("EOTECH") on December 30, 2021. The income (loss) from discontinued operations in fiscal 2023 increased to a net income of $420,000 in fiscal 2023 as compared to a net loss of $321,000 in fiscal 2022. Income from discontinued operations for fiscal 2023 is comprised primarily of a stock-based compensation forfeiture benefit related to the termination of certain employees upon the completion of the assignment and novation of all government contracts to EOTECH in the first quarter of fiscal 2023 and accretion on the lease liability that was assigned to EOTECH. The loss from discontinued operations for fiscal 2022 includes salaries and wages and employee benefits up to and including January 4, 2022, the date when employees were conveyed to EOTECH, severance for several employees that were not hired by EOTECH, stock-based compensation expense associated with the acceleration of stock awards, contract termination costs associated with software maintenance agreements, settlement of the net working capital adjustment and incremental legal expenses associated with the divestiture, offset in part by a stock-based compensation divestiture-related forfeiture benefit.
 Liquidity and Capital Resources
 At December 30, 2023, Intevac had $72.2 million in cash, cash equivalents, restricted cash and investments compared to $112.8 million at December 31, 2022. During fiscal 2023, cash, cash equivalents, restricted cash and investments decreased by $40.6 million due primarily to cash used by operating activities, purchases of fixed assets, and tax payments related to the net share settlement of restricted stock units offset in part by cash received from the sale of Intevac common stock to Intevac's employees through Intevac's employee benefit plans.

 Cash, cash equivalents, restricted cash and investments consist of the following:

 December 30, 2023

 December 31, 2022

 Cash and cash equivalents

 $

 51,441

 $

 68,904

 Restricted cash

 Short-term investments

 17,405

 25,541

 Long-term investments

 2,687

 17,585

 Total cash, cash-equivalents, restricted cash and investments

 $

 72,233

 $

 112,816

 Cash used by operating activities totaled $35.1 million in fiscal 2023 compared to cash used by operating activities of $7.4 million in fiscal 2022. Lower operating cash flow in fiscal 2023 was a result of investments made in working capital, offset in part by a smaller loss recognized from continuing operations.
 Accounts receivable totaled $18.6 million at December 30, 2023 and $15.8 million at December 31, 2022. The number of days outstanding for Intevac's accounts receivable was 128 at December 30, 2023 compared to 123 at December 31, 2022. Net inventories totaled $43.8 million at December 30, 2023 compared to $30.0 million at December 31, 2022. Inventory turns were 0.5 in fiscal 2023 and 1.1 in fiscal 2022. Accounts payable decreased to $5.8 million at December 30, 2023 compared to $11.6 million at December 31, 2022 primarily related to decreased purchases of inventory in second half of fiscal 2023. Other accrued liabilities were $1.8 million at December 30, 2023 and $5.4 million at December 31, 2022. Other accrued liabilities at December 31, 2022 included a $1.0 million accrual for the settlement of the PAGA lawsuit which was paid on January 20, 2023. Accrued payroll and related liabilities increased to $3.5 million at December 30, 2023 compared to $3.1 million at December 31, 2022 as a result of higher variable compensation accruals. Customer advances decreased from $24.7 million at December 31, 2022 to $21.9 million at December 30, 2023 primarily as a result of recognition of revenue, offset in part by the recognition of new orders. Customer advances for orders with deliveries beyond one year are included in long term liabilities.
 Investing activities generated cash of $18.3 million in fiscal 2023 and used cash of $28.4 million in fiscal 2022. Proceeds from sales and maturities of investments, net of purchases totaled $23.6 million in fiscal 2023 as the Company liquidated investments from its investment portfolio to fund operating costs and inventory purchases. Purchases of investments, net of proceeds from sales and maturities of investments, totaled $25.7 million in fiscal 2022. Capital expenditures were $5.4 million in fiscal 2023 and $1.9 million in fiscal 2022.
 During fiscal 2022, the Company acquired the outstanding shares of Hia, Inc, a supplier of magnetic bars, to bring the manufacturing of these magnetic bars in-house and to protect our technology and product quality while continuing to improve our products. The Company paid $700,000 on the closing date of the acquisition. Further contingent consideration will consist of amounts payable upon achievement of certain development and commercialization milestones, which is estimated to be up to $500,000, and a royalty arrangement. Contingent consideration is not recorded in an asset acquisition until the contingency is resolved (when the contingent consideration is paid or becomes payable) or when probable and reasonably estimable. The first milestone was achieved and contingent consideration in the amount of $250,000 was paid on January 17, 2023 and was accrued in the fourth quarter of fiscal 2022. Transaction costs incurred in connection with the Hia acquisition totaled $63,000.
 Financing activities used cash of $624,000 in fiscal 2023 and generated cash of $2.4 million in fiscal 2022. The sale of Intevac common stock to Intevac's employees through Intevac's employee benefit plans provided $1.4 million in fiscal 2023 and $3.1 million in fiscal 2022. Tax payments related to the net share settlement of restricted stock units were $1.7 million in fiscal 2023 and $724,000 in fiscal 2022.
 Intevac's investment portfolio consists principally of investment grade money market mutual funds, U.S. treasury and agency securities, asset backed securities, certificates of deposit, commercial paper, municipal bonds and corporate bonds. Intevac regularly monitors the credit risk in its investment portfolio and takes measures, which may include the sale of certain securities, to manage such risks in accordance with its investment policies.
 As of December 30, 2023, approximately $31.1 million of cash and cash equivalents and $2.5 million of investments were domiciled in foreign tax jurisdictions. Intevac expects a significant portion of these funds to remain offshore in the short term. If the Company chose to repatriate these funds to the United States, it would be required to accrue and pay additional taxes on any portion of the repatriation subject to foreign withholding taxes.

 We believe that our existing cash, cash equivalents and investments and cash flows from operating activities will be adequate to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. Our significant funding requirements include procurement of manufacturing inventories, operating expenses, non-cancelable operating lease obligations, capital expenditures, contingent consideration payments and variable compensation. We have flexibility over some of these uses of cash, including capital expenditures and discretionary operating expenses, to preserve our liquidity position. Capital expenditures for fiscal 2024 are projected to be approximately $3.0 million to $4.0 million related to network infrastructure and security, and laboratory and test equipment to support our R&D programs.
 Off-Balance Sheet Arrangements
 Off-balance sheet firm commitments relating to outstanding letters of credit amounted to approximately $700,000 as of December 30, 2023. These letters of credit and bank guarantees are collateralized by $700,000 of restricted cash. We do not maintain any other off-balance sheet arrangements, transactions, obligations, or other relationships that would be expected to have a material current or future effect on the consolidated financial statements.
 Climate Change
 We believe that neither climate change, nor governmental regulations related to climate change, have had any material effect on our business, financial condition or results of operations.
 Critical Accounting Policies and Estimates
 The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 1 of Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies. Note that these critical accounting policies and estimates relate solely to our continuing operations. The accounting policies related to our discontinued operations are discussed in Note 2, "Divestiture and Discontinued Operations," to our consolidated financial statements.
 A critical accounting policy is defined as one that is both material to the presentation of Intevac's consolidated financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on Intevac's financial condition or results of operations. Specifically, these policies have the following attributes: (1) Intevac is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates Intevac could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on Intevac's financial condition or results of operations.
 Estimates and assumptions about future events and their effects cannot be determined with certainty. Intevac bases its 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 Intevac's operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. These uncertainties are discussed in the section above entitled "Risk Factors." Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that Intevac's consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America and provide a meaningful presentation of Intevac's financial condition and results of operations.
 Management believes that the following are Intevac's critical accounting policies:
 Revenue Recognition
 A majority of our equipment sales revenue, which includes systems, technology upgrades, service and spare parts is recognized when products are shipped from our manufacturing facilities. We recognize revenue for equipment sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Intevac recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has

passed to the customer, the customer has made a written fixed commitment to purchase the finished goods, the customer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by Intevac. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms granted. Our contracts with customers may include multiple performance obligations. Under the revenue standard we allocate revenue for such arrangements to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or by using expected cost plus margin. The expected costs associated with our base warranties are recognized as expense when the equipment is sold.
 Inventories are valued using average actual costs and are stated at the lower of cost or net realizable value. The carrying value of inventory is reduced for estimated obsolescence by the difference between its cost and the net realizable value based upon assumptions about future demand. Intevac evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand. In addition, inventories are evaluated for potential obsolescence due to the effect of known and anticipated engineering change orders and new products. If actual demand were to be substantially lower than estimated, additional inventory adjustments for excess or obsolete inventory might be required, which could have a material adverse effect on Intevac's business, financial condition and results of operations.
 Warranty
 Intevac estimates the costs that may be incurred under the warranty it provides and records a liability in the amount of such costs at the time the related revenue is recognized. Estimated warranty costs are determined by analyzing specific product and historical configuration statistics and regional warranty support costs. Intevac's warranty obligation is affected by product failure rates, material usage, and labor costs incurred in correcting product failures during the warranty period. As Intevac's customer service engineers and process support engineers are highly trained and deployed globally, labor availability is a significant factor in determining labor costs. The quantity and availability of critical replacement parts is another significant factor in estimating warranty costs. Unforeseen component failures or exceptional component performance can also result in changes to warranty costs. If actual warranty costs differ substantially from our estimates, revisions to the estimated warranty liability would be required.
 Income Taxes
 Intevac accounts for income taxes by recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards. Deferred tax assets are also reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. Management has determined that it is more likely than not that its future taxable income will not be sufficient to realize its entire deferred tax assets.
 In determining whether to establish or maintain a valuation allowance against a deferred tax asset, the Company reviews available evidence to determine whether it is more likely than not that all or a portion of the Company's net deferred tax assets will be realized in future periods. Consideration is given to various positive and negative factors that could affect the realization of the net deferred tax assets. In making such a determination, the Company considers, among other things, future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, historical financial performance, the length of statutory carry forward periods, experience with operating loss and tax credit carry forwards not expiring unused. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
 The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, non-tax deductible expenses and availability of tax credits. Management carefully monitors the changes in many factors and adjusts the effective income tax rate as required. If actual results differ from these estimates, Intevac could be required to record additional valuation allowances on deferred tax assets or adjust its effective income tax rate, which could have a material adverse effect on Intevac's business, financial condition and results of operations.
 The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with Intevac's expectations could have a material impact on Intevac's results of operations and financial condition.

 Equity-Based Compensation
 Restricted stock units ("RSUs") granted to employees and directors are measured at their fair value on the grant date. All RSUs granted in fiscal years 2023 and 2022 were granted for no consideration; therefore, their fair value was equal to the share price at the date of grant. The fair value of performance-based restricted stock units ("PRSUs") granted in fiscal year 2022 with market-based conditions was calculated using the Monte Carlo model. This model requires Intevac to estimate the expected volatility of the price of Intevac's common stock and the expected life of the equity-based awards. Estimating volatility and expected life requires significant judgment and an analysis of historical data. Intevac may have to increase or decrease compensation expense for equity-based awards if actual results differ significantly from Intevac's estimates. The fair value of PRSUs granted in fiscal year 2023 with performance conditions was equal to the share price at the date of grant. Stock-based compensation expense is recorded based on the probability of achievement of the performance conditions specified in the 2023 PRSU grant. The Company evaluates the strategic goals and determines the probability of achieving each goal for accounting purposes commencing in the quarter granted. Management expectations related to the achievement of performance goals associated with 2023 PRSUs with performance conditions are assessed regularly to determine whether such grants are expected to vest. Intevac accounts for forfeitures as they occur rather than estimating expected forfeitures.

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Not applicable for smaller reporting companies.

 P3YP3YP3Y

 Item 8.

 Financial Statements and Supplementary Data

 CONSOLIDATED FINANCIAL STATEMENTS

 Contents

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 207)

 Consolidated Balance Sheets

 Consolidated Statements of Operations

 Consolidated Statements of Comprehensive Loss

 Consolidated Statements of Stockholders' Equity

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 Board of Directors and Stockholders of
 Intevac, Inc.
 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated balance sheets of Intevac, Inc. (a Delaware corporation) and its subsidiaries (the "Company") as of December 30, 2023 and December 31, 2022, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the two years in the period ended December 30, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
 Basis for Opinion

 These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
 Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
 Critical Audit Matter

 The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 Inventory Valuation—Adjustments for Excess or Obsolete Inventories

 As described in Notes 1 and 7 to the consolidated financial statements, the Company's consolidated inventories balance was $43.8 million as of December 30, 2023. The Company's inventories are valued using average actual costs and are stated at the lower of cost or net realizable value. The Company adjusts the carrying value of inventories for estimated excess quantities and obsolescence equal to the difference between the costs of inventories and the net realizable value based upon assumptions about future demand, market conditions and product life expectancy. If actual demand were to be substantially lower than estimated, there could be a significant adverse impact on the carrying value of inventories and results of operations.
 The principal considerations for our determination that performing procedures relating to net realizable value adjustments to inventories is a critical audit matter are the significant amount of judgement by management in developing the assumptions of

 the forecasted product demand, which in turn led to significant auditor judgement, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the forecasted product demand. Additionally, for certain new product launches there may be limited historical data with which to evaluate forecasts.
 Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal controls relating to management's adjustments for excess or obsolete inventories, including internal controls over the development of assumptions related to forecasted product demand. The procedures also included, among others, testing management's process for developing the estimate of the adjustments for excess or obsolete inventories, testing the completeness and accuracy of the underlying data used in the estimate, and evaluating management's assumptions of forecasted product demand. Evaluating management's demand forecast for reasonableness involved considering historical sales by product, and determining whether the demand forecast used was consistent with evidence obtained in other areas of the audit.

 /s/ BPM LLP

 We have served as the Company's auditor since 2015.

 San Jose, California

 CONSOLIDATED BALANCE SHEETS

 2023

 2022

 (In thousands, except par

 value)

 ASSETS

 Current assets

 Cash and cash equivalents

 $

 51,441

 $

 68,904

 Short-term investments

 17,405

 25,541

 Trade and other accounts receivable, net of allowances of $ 0 at both December 30, 2023 and December 31, 2022

 18,613

 15,823

 43,795

 30,003

 Prepaid expenses and other current assets

 2,123

 1,898

 Total current assets

 133,377

 142,169

 Property, plant and equipment, net

 7,664

 3,658

 Operating lease right-of-use

 assets

 7,658

 3,390

 Long-term investments

 2,687

 17,585

 Restricted cash

 Intangible assets, net of amortization of $ 178 at December 30, 2023 and $ 42 at December 31, 2022

 1,090

 Deferred income taxes and other long-term assets

 3,466

 4,381

 Total assets

 $

 156,506

 $

 173,059

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Current operating lease liabilities

 $

 1,008

 $

 3,404

 Accounts payable

 5,800

 11,610

 Accrued payroll and related liabilities

 3,475

 3,087

 Other accrued liabilities

 1,820

 5,430

 Customer advances

 20,407

 2,444

 Total current liabilities

 32,510

 25,975

 Noncurrent liabilities:

 Noncurrent operating lease liabilities

 6,976

 1,417

 Customer advances

 1,482

 22,215

 Other long-term liabilities

 —

 Total noncurrent liabilities

 8,479

 23,632

 Commitments and contingencies

 Stockholders' equity:

 Undesignated preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued and outstanding

 —

 —

 Common stock, $ 0.001 par value:

 Authorized shares — 50,000 issued and outstanding shares — 26,396 and 25,548 at December 30, 2023 and December 31, 2022, respectively

 Additional paid-in
 capital

 210,320

 206,355

 Treasury stock, 5,087 shares at both December 30, 2023 and December 31, 2022

)

)

 Accumulated other comprehensive income (loss)

 ( 193

)

 Accumulated deficit

 ( 65,375

)

 ( 53,185

)

 Total stockholders' equity

 115,517

 123,452

 Total liabilities and stockholders' equity

 $

 156,506

 $

 173,059

 CONSOLIDATED
STATEMENTS OF OPERATIONS

 Year Ended

 2023

 2022

 (In thousands, except per share

 amounts)

 Net revenues

 $

 $

 Cost of net revenues

 32,439

 20,675

 Gross profit

 20,226

 15,086

 Operating expenses:

 Research and development

 15,125

 13,722

 Selling, general and administrative

 18,345

 17,876

 Total operating expenses

 33,470

 31,598

 Operating loss

 ( 13,244

)

 ( 16,512

)

 Interest income

 2,509

 1,240

 Other income (expense), net

 ( 53

)

 ( 155

)

 Loss from continuing operations before provision for income taxes

 ( 10,788

)

 ( 15,427

)

 Provision for income taxes

 1,822

 1,327

 Net loss from continuing operations

 ( 12,610

)

 ( 16,754

)

 Income (loss) from discontinued operations, net of tax

 ( 321

)

 $

)

 $

)

 Net income (loss) per share:

 Basic and diluted—continuing operations

 $

 ( 0.48

)

 $

 ( 0.67

)

 Basic and diluted—discontinued operations

 $

 0.02

 $

 ( 0.01

)

 Basic and diluted—net income (loss)

 $

 ( 0.47

)

 $

 ( 0.68

)

 Weighted average shares outstanding:

 Basic and diluted

 26,121

 25,192

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 Year Ended

 2023

 2022

 $

)

 $

)

 Other comprehensive income (loss), before tax

 Change in unrealized net loss on available-for-sale

 investments

 ( 454

)

 Foreign currency translation losses

 ( 132

)

 ( 317

)

 Other comprehensive income (loss), before tax

 ( 771

)

 Income tax expense related to items in other comprehensive income (loss)

 —

 —

 Other comprehensive income (loss), net of tax

 ( 771

)

 Comprehensive loss

 $

 ( 11,900

)

 $

 ( 17,846

)

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 Common Stock

 Additional

 Paid-In

 Capital

 Treasury Stock

 Accumulated

 Other

 Comprehensive

 Income (Loss)

 Accumulated

 Deficit

 Total

 Stockholders'

 Equity

 Amount

 Amount

 Balance at January 1, 2022

 24,636

 $

 $

 199,073

 5,087

 $

)

 $

 $

 ( 36,110

)

 $

 134,015

 Shares issued in connection with:

 Exercise of stock options

 1,872

 —

 —

 —

 —

 1,873

 Settlement of RSUs

 —

 —

 —

 —

 —

 —

 —

 Employee stock purchase plan

 —

 1,244

 —

 —

 —

 —

 1,244

 Shares withheld in connection with net share settlement of RSUs

 ( 126

)

 —

 ( 724

)

 —

 —

 —

 —

 ( 724

)

 Equity-based compensation expense

 —

 —

 4,890

 —

 —

 —

 —

 4,890

 —

 —

 —

 —

 —

 —

)

)

 Other comprehensive loss

 —

 —

 —

 —

 —

 ( 771

)

 —

 ( 771

)

 Balance at December 31, 2022

 25,548

 $

 $

 206,355

 5,087

 $

)

 $

 ( 193

)

 $

 ( 53,185

)

 $

 123,452

 Shares issued in connection with:

 Exercise of stock options

 —

 —

 —

 —

 —

 Settlement of RSUs

 —

 —

 —

 —

 —

 —

 —

 Employee stock purchase plan

 —

 1,059

 —

 —

 —

 —

 1,059

 Shares withheld in connection with net share settlement of RSUs

 ( 285

)

 —

 ( 1,739

)

 —

 —

 —

 —

 ( 1,739

)

 Equity-based compensation expense

 —

 —

 4,373

 —

 —

 —

 —

 4,373

 —

 —

 —

 —

 —

 —

)

)

 Other comprehensive income

 —

 —

 —

 —

 —

 —

 Balance at December 30, 2023

 26,396

 $

 $

 210,320

 5,087

 $

)

 $

 $

 ( 65,375

)

 $

 115,517

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year Ended

 2023

 2022

 Operating activities

 $

)

 $

)

 Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:

 Depreciation and amortization

 1,402

 1,446

 Net amortization (accretion) of investment premiums and discounts

 ( 191

)

 ( 196

)

 Amortization of intangible assets

 Equity-based compensation

 4,373

 4,890

 Straight-line rent adjustment and amortization of lease incentives

 ( 1,105

)

 ( 843

)

 Foreign currency loss on liquidation of entity

 —

 (Gain) loss on disposal of fixed assets

 ( 41

)

 1,467

 Deferred income taxes

 1,014

 Changes in assets and liabilities:

 Accounts receivable

 ( 2,824

)

 ( 1,528

)

 ( 13,792

)

 ( 24,105

)

 Prepaid expenses and other assets

 ( 324

)

 Accounts payable

 ( 5,810

)

 6,290

 Accrued payroll and other accrued liabilities

 ( 2,951

)

 ( 1,266

)

 Customer advances

 ( 2,770

)

 22,552

 Total adjustments

 ( 22,883

)

 9,641

 Net cash and cash equivalents used in operating activities

 ( 35,073

)

 ( 7,434

)

 Investing activities

 Purchase of investments

 ( 14,780

)

 ( 52,385

)

 Proceeds from sales and maturities of investments

 38,427

 26,649

 Proceeds from sales of property and equipment

 —

 Purchase of Hia, Inc., net of cash acquired

 —

 ( 763

)

 Purchase of leasehold improvements and equipment

 ( 5,431

)

 ( 1,919

)

 Net cash and cash equivalents provided by (used in) investing activities

 18,281

 ( 28,418

)

 Financing activities

 Proceeds from issuance of common stock

 1,365

 3,083

 Payment of acquisition-related contingent consideration

 ( 250

)

 —

 Taxes paid related to net share settlement

 ( 1,739

)

 ( 724

)

 Net cash and cash equivalents provided by (used in) financing activities

 ( 624

)

 2,359

 Effect of exchange rate changes on cash

 ( 133

)

 ( 331

)

 Net decrease in cash, cash equivalents and restricted cash

 ( 17,549

)

 ( 33,824

)

 Cash, cash equivalents and restricted cash at beginning of period

 69,690

 103,514

 Cash, cash equivalents and restricted cash at end of period

 $

 52,141

 $

 69,690

 Cash paid (received) for:

 Income taxes

 $

 $

 Income tax refund

 $

 $

 —

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1. Description of Business and Basis of Presentation

 Description of Business

 Intevac, Inc. (together with its subsidiaries, "Intevac", the "Company" or "we") is a leader in the design and development of high-productivity, thin-film processing systems. Intevac's production-proven platforms are designed for high-volume manufacturing of substrates with precise thin-film properties, such as for the hard disk drive ("HDD") and advanced coatings ("ADVC") (formerly known as display cover panel ("DCP")) markets.
 Principles of Consolidation and Basis of Presentation

 The consolidated financial statements include the accounts of Intevac, Inc. and its subsidiaries after elimination of inter-company balances and transactions.
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
 Fiscal Year End Date

 Intevac operates under a 52-53
 week fiscal year ending on the Saturday nearest to December 31 of each year in order to improve the alignment of financial and business processes and to streamline financial reporting. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary, for the fiscal year to end on the Saturday nearest to December 31. The Company's fiscal 2023 and fiscal 2022 years ended on December 30, 2023 and December 31, 2022, respectively.
 Reportable Segment

 During fiscal 2021, we sold the business of one of our reporting segments, Photonics. Therefore, we have one reportable segment remaining. See Note 2 for additional disclosure related to discontinued operations.
 The remaining segment, Thin Film Equipment ("TFE"), designs, develops and markets vacuum process equipment solutions for high-volume manufacturing of small substrates with precise thin-film properties, such as for the HDD and ADVC markets, as well as other adjacent thin-film markets. The TFE segment also previously designed, developed and marketed manufacturing equipment for the photovoltaic ("PV") solar cell and advanced semiconductor packaging ("ASP") industries.
 In March 2022, the Company's management realigned its operational focus and eliminated several research and development ("R&D") programs and product offerings. As part of this realignment effort, the Company ceased its efforts to develop and market several of its manufacturing platforms for the ADVC, PV and ASP industries.
 Discontinued Operations

 On December 30, 2021, the Company sold its Photonics business. Due to the sale of the Photonics business during the fourth quarter of 2021, we have classified the results of the Photonics business as discontinued operations in our consolidated statements of operations for all periods presented. All amounts included in the Notes to Consolidated Financial Statements relate to continuing operations unless otherwise noted. See Note 2.
 Cash, Cash Equivalents and Investments

 Intevac considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Available-for-sale

 securities, comprised of certificates of deposit, commercial paper, obligations of the U.S. government and its agencies, corporate debt securities, asset backed securities and municipal bonds, are carried at fair value, with unrealized gains and losses recorded within accumulated other comprehensive income (loss) as a separate component of

 stockholders' equity. Realized gains and losses and declines in value judged to be other than temporary, if any, on available-for-sale

 securities are included in earnings. Purchases and sales of investment securities are recognized on a trade date basis. The cost of investment securities sold is determined by the specific identification method.
 Restricted Cash

 Restricted cash of $ 600,000 as of December 30, 2023 secures a standby letter of credit obligation associated with a lease obligation and the restriction on the cash will be removed when the letter of credit expires. In addition, Intevac pledged $ 100,000 as collateral for various guarantees with its bank.
 Derivative Instruments and Hedging Arrangements

 Foreign Exchange Exposure Management

 — Intevac enters into forward foreign currency contracts that economically hedge the gains and losses generated by the re-measurement
 of certain recorded assets and liabilities in a non-functional
 currency and to offset certain operational exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company's operations, assets and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Singapore dollar. These foreign currency exchange contracts are entered into to support transactions made in the normal course of business, and accordingly, are not speculative in nature. The contracts are for periods consistent with the terms of the underlying transactions, generally one year or less. Changes in the fair value of these undesignated hedges are recognized in other income (expense), net immediately as an offset to the changes in the fair value of the asset or liability being hedged.
 Fair Value Measurement—Definition and Hierarchy

 Intevac reports certain financial assets and liabilities at fair value. Intevac defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
 Fair value measurements are classified and disclosed in one of the following three categories:
 Level 1

—Valuations based on quoted prices in active markets for identical assets or liabilities.
 Level 2

—Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 Level 3

—Valuations based on inputs that are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.
 Trade Accounts Receivable and Allowance for Credit Losses

 The Company's accounts receivable are recorded at invoiced amounts less allowance for any credit losses. In accordance with the Financial Accounting Standards Board ("FASB")'s Accounting Standards Update ("ASU") 2016-13 that
 we adopted on January 1, 2023, the Company recognizes credit losses based on forward-looking current expected credit losses ("CECL"). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses is recognized in the consolidated statement of operations. The uncollectible accounts receivable are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The total allowance for credit losses was $ 0 at both December 30, 2023 and December 31, 2022, and there was no write-off
 of accounts receivable for the periods presented.

 Inventories are generally stated at the lower of cost or net realizable value, with cost determined on an average cost basis.
 Property, Plant and Equipment

 Equipment and leasehold improvements are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: computers and software, 3 years; machinery and equipment, 5 years; furniture, 7 years; vehicles, 4 years; and leasehold improvements, remaining lease term.
 Impairment of Long-Lived Assets

 Long-lived assets and certain identifiable finite-lived intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability of long-lived assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value.
 Acquisitions

 Acquisition Method. Acquisitions that meet the definition of a business under Accounting Standards Codification ("ASC") 805, "Business Combinations," ("ASC 805") are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired, liabilities assumed, contractual contingencies, and contingent consideration, when applicable, are recorded at fair value at the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The application of the acquisition method of accounting requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in connection with the allocation of the purchase price consideration to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in the consolidated statements of operations. Contingent consideration, if any, is recognized and measured at fair value as of the acquisition date.
 Cost Accumulation Model. Acquisitions that do not meet the definition of a business under ASC 805 are accounted for as an asset acquisition, utilizing a cost accumulation model. Assets acquired and liabilities assumed are recognized at cost, which is the consideration the acquirer transfers to the seller, including direct transaction costs, on the acquisition date. The cost of the acquisition is then allocated to the assets acquired based on their relative fair values. Goodwill is not recognized in an asset acquisition. Direct transaction costs include those third-party costs that can be directly attributable to the asset acquisition and would not have been incurred absent the acquisition transaction.
 Contingent consideration, representing an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable. Contingent consideration recognized is included in the initial cost of the assets acquired, with subsequent changes in the recorded amount of contingent consideration recognized as an adjustment to the cost basis of the acquired assets. Subsequent changes are allocated to the acquired assets based on their relative fair value.
 Income Taxes

 Intevac accounts for income taxes by recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between book and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized.

 In determining whether to establish or maintain a valuation allowance against a deferred tax asset, the Company reviews available evidence to determine whether it is more likely than not that all or a portion of the Company's net deferred tax assets will be realized in future periods. Consideration is given to various positive and negative factors that could affect the realization of the net deferred tax assets. In making such a determination, the Company considers, among other things, future reversals of existing taxable temporary differences, projected future taxable income, tax-planning
 strategies, historical financial performance, the length of statutory carry forward periods, experience with operating loss and tax credit carry forwards not expiring unused. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
 The effective tax rate is highly dependent upon the level of Intevac's projected earnings, the geographic composition of worldwide earnings, tax regulations governing each region, net operating loss carryforwards, availability of tax credits and the effectiveness of Intevac's tax planning strategies. Intevac carefully monitors the changes in many factors and adjust its effective income tax rate on a timely basis. If actual results differ from the estimates, this could have a material effect on Intevac's business, financial condition and results of operations.
 The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with Intevac's expectations could have a material effect on Intevac's business, financial condition and results of operations.
 Intevac recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.
 Sales and Value Added Taxes

 Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying consolidated statements of operations.
 Revenue Recognition

 A majority of our equipment sales revenue, which includes systems, technology upgrades, service and spare parts is recognized when products are shipped from our manufacturing facilities. We recognize revenue for equipment sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Intevac recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the finished goods, the customer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by Intevac. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms granted. Our contracts with customers may include multiple performance obligations. For such arrangements, under the revenue standard we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or by using expected cost plus margin. Under the revenue standard, the expected costs associated with our base warranties are recognized as expense when the equipment is sold.
 Advertising Costs

 Advertising costs are expensed as incurred. Advertising costs were not material for all periods presented.
 Foreign Currency Translation

 The functional currency of Intevac's foreign subsidiaries in Singapore and Hong Kong is the U.S. dollar. The functional currency of Intevac's foreign subsidiaries in China and Malaysia is the local currency of the country in which the respective subsidiary operates. Assets and liabilities recorded in foreign currencies are translated at year-end
 exchange rates; revenues and expenses are translated at average exchange rates during the year. The effects of foreign currency translation adjustments are

 included in stockholders' equity as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. The effects of foreign currency transactions are included in other income (expense), net in the determination of net income. Losses from foreign currency transactions were $ 165,000 and $ 186,000 in 2023 and 2022, respectively.
 Comprehensive Income (Loss)

 The changes in accumulated other comprehensive income (loss) by component, were as follows for the years ended December 30, 2023 and December 31, 2022:

 Foreign

 currency

 Unrealized holding

 gains (losses) on

 available-for-sale

 investments

 Total

 Balance at January 1, 2022

 $

 $

 ( 30

)

 $

 Other comprehensive loss before reclassification

 ( 331

)

 ( 454

)

 ( 785

)

 Amounts reclassified from other comprehensive income (loss)

 —

 Net current-period other comprehensive loss

 ( 317

)

 ( 454

)

 ( 771

)

 Balance at December 31, 2022

 $

 ( 484

)

 ( 193

)

 Other comprehensive income (loss) before reclassification

 ( 132

)

 Amounts reclassified from other comprehensive income (loss)

 —

 —

 —

 Net current-period other comprehensive income (loss)

 ( 132

)

 Balance at December 30, 2023

 $

 $

 ( 62

)

 $

 Employee Stock Plans

 Intevac has equity-based compensation plans that provide for the grant to employees of equity-based awards, including incentive or non-statutory
 stock options, performance-based stock options ("PSOs"), restricted stock, stock appreciation rights, restricted stock units ("RSUs"), performance-based restricted stock units ("PRSUs") and performance shares. In addition, these plans provide for the grant of non-statutory
 stock options and RSUs to non-employee
 directors and consultants. Intevac also has an employee stock purchase plan, which provides Intevac's employees with the opportunity to purchase Intevac common stock at a discount through payroll deductions. See Note 4 for a complete description of these plans and their accounting treatment.
 Recent Accounting Pronouncements Not Yet Adopted

 In November 2023, the FASB issued ASU 2023-07,
 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures.
 In December 2023, the FASB issued ASU 2023-09,
 Income Taxes (Topic 740): Improvements to Tax Disclosures. This ASU expands disclosures in an entity's income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. We are assessing the effect of this update on our consolidated financial statements and related disclosures.
 We have assessed all other ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact.

 2. Divestiture and Discontinued Operations

 Sale of Photonics

 On December 30, 2021, the Company entered into an asset purchase agreement (the "Purchase Agreement") with EOTECH, LLC ("EOTECH") governing the sale of the Company's Photonics business to EOTECH in exchange for (i) $ 70.0 million in cash consideration, (ii) up to $ 30.0 million in earnout payments and (iii) the assumption by EOTECH of certain liabilities of the Photonics business as specified in the Purchase Agreement. The transaction closed on December 30, 2021. Under the Purchase Agreement, EOTECH also agreed to pay to the Company, if earned, earnout payments of up to an aggregate of $ 30.0 million based on achievement of fiscal year 2023, 2024 and 2025 Photonics segment revenue targets for the Integrated Visual Augmentation System ("IVAS") program as specified in the Purchase Agreement. At any time prior to December 31, 2024, EOTECH may elect to pay to the Company $ 14.0 million, which would terminate EOTECH's obligations with respect to any remaining earnout payments. As of December 30, 2023, there have been no earnout payments under the Purchase Agreement. The cash proceeds do not include any estimated future payments from the revenue earnout as the Company has elected to record the proceeds when the consideration is deemed realizable. The Company believes the disposition of the Photonics business will allow it to benefit from a streamlined business model, simplified operating structure, and enhanced management focus.
 In connection with the Photonics sale, the Company and EOTECH also entered into a Transition Service Agreement (the "TSA") and a Lease Assignment Agreement. The TSA, which expired on June 30, 2022, outlined the information technology, people, and facility support the parties provided to each other for a period after the closing of the sale. The Lease Assignment Agreement assigns the lease obligation for two buildings in the Company's California campus to EOTECH. As part of the assignment, the Company has agreed to subsidize a portion of EOTECH's lease payments through the remainder of the lease term which expires in March 2024. In August 2022, Intevac and EOTECH entered into a Shared Services Agreement (the "Shared Services Agreement") to share certain building maintenance costs.
 TSA fees of $ 989,000 were earned in fiscal 2022. The agreed-upon charges for such services were generally intended to allow the service provider to recover all costs and expenses of providing such services. The TSA and shared service fees were included in selling, general and administrative expenses and cost of sales, respectively, in the Company's consolidated statement of operations. Additionally, during fiscal 2022, the Company sold inventory in the amount of $ 148,000 to EOTECH. Charges for fiscal 2023 and fiscal 2022 associated with the Shared Services Agreement were $ 143,000 and $ 40,000, respectively. Accounts receivable from EOTECH of $ 62,000 at December 30, 2023 and $ 49,000 at December 31, 2022 were included in trade and other accounts receivable in the Company's consolidated balance sheets.
 Discontinued Operations

 Based on its magnitude and because the Company exited certain markets, the sale of the Photonics segment represents a significant strategic shift that has a material effect on the Company's operations and financial results, and the Company has separately reported the results of its Photonics segment as discontinued operations in the consolidated statements of operations for the years ended December 30, 2023 and December 31, 2022.
 The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the Photonics segment that have been eliminated from continuing operations. The key components from discontinued operations related to the Photonics segment are as follows (in thousands):

 Year Ended,

 2023

 2022

 (In thousands, except per share amounts)

 Operating expenses:

 Selling, general and administrative

 $

 ( 420

)

 $

 Total operating expenses

 ( 420

)

 Operating income (loss)—discontinued operations

 ( 321

)

 Year Ended,

 2023

 2022

 (In thousands, except per share amounts)

 Other income (expense)—discontinued operations

 —

 —

 Income (loss) discontinued operations before provision for (benefit from) income taxes

 ( 321

)

 Provision for (benefit from) income taxes

 —

 —

 Net income (loss) discontinued operations net of tax

 $

 $

 ( 321

)

 The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows. The following table presents cash flow and non-cash
 information related to discontinued operations for the years ended December 30, 2023 and December 31, 2022, respectively (in thousands):

 2023

 2022

 Equity-based compensation

 $

 ( 260

)

 $

 ( 229

)

 3. Revenue

 The following tables represent a disaggregation of revenue from contracts with customers for fiscal 2023 and 2022.
 Major Products and Service Lines

 2023

 2022

 HDD

 PV

 ASP

 Total

 HDD

 ADVC

 PV

 ASP

 Total

 Systems, upgrades and spare parts

 $

 47,846

 $

 $

 $

 47,891

 $

 29,507

 $

 $

 $

 $

 29,881

 Field service

 4,677

 —

 4,774

 5,647

 —

 5,880

 $

 52,523

 $

 $

 $

 $

 35,154

 $

 $

 $

 $

 Primary Geography Markets

 2023

 2022

 United States

 $

 4,499

 $

 4,558

 Asia

 48,058

 31,103

 Europe

 $

 $

 Timing of Revenue Recognition

 2023

 2022

 Products transferred at a point in time

 $

 $

 Products and services transferred over time

 —

 —

 $

 $

 The following table reflects the changes in our contract assets, which we classify as accounts receivable, unbilled and our contract liabilities which we classify as deferred revenue and customer advances for fiscal 2023:

 2023

 2022

 Change

 Contract assets:

 Accounts receivable, unbilled

 $

 $

 $

 ( 31

)

 Contract liabilities:

 Deferred revenue

 $

 $

 2,446

 $

 ( 2,070

)

 Customer advances

 21,889

 24,659

 ( 2,770

)

 $

 22,265

 $

 27,105

 $

 ( 4,840

)

 Accounts receivable, unbilled represents a contract asset for revenue that has been recognized in advance of billing the customer. For our system and certain upgrade sales, our customers generally pay in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price due upon completion of installation and acceptance of the system at the customer's factory. Accounts receivable, unbilled generally represents the balance of the system price that is due upon completion of installation and acceptance less the amount that has been deferred as revenue for the performance of the installation tasks. During fiscal 2023, contract assets decreased by $ 31,000 primarily due to billing of spare parts that were accrued and unbilled at December 31, 2022, offset in part by the accrual of revenue for a system delivered during fiscal 2023, which was pending acceptance as of December 30, 2023 and the accrual of revenue related to spare parts sold to a customer as of December 30, 2023.
 Customer advances generally represent amounts billed to the customer prior to transferring goods which represents a contract liability. The Company has elected to use the practical expedient to disregard the effect of the time value of money in a significant financing component when its payment terms are less than one year. These contract advances are liquidated when revenue is recognized. Customer advances with deliveries beyond one year are included in long term liabilities. Deferred revenue generally represents amounts billed to a customer for completed systems at the customer site that are undergoing installation and acceptance testing where transfer of control has not yet occurred as Intevac does not yet have a demonstrated history of meeting the acceptance criteria upon the customer's receipt of product and represents a contract liability. During fiscal 2023, we recognized revenue of $ 3.6 million and $ 2.2 million that was included in customer advances and deferred revenue, respectively, at the beginning of the period.
 In May 2023, the Company received notice of the cancellation of a $ 54.6 million order for eight 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The customer contract associated with the cancelled order requires the customer to pay the Company a prorated price based upon the percentage of work completed on the order. The Company has received customer advances in the amount of $ 19.1 million associated with the cancelled order, all of which will be utilized to settle this customer obligation. In September 2023, the Company applied $ 444,000 of billings against these advances in connection with inventory scrapped at the customer's direction. In December 2023, the Company received notice of the cancellation of a $ 11.4 million order for two 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The Company has not received any customer advances associated with the cancelled order. The Company expects to invoice the customer in the first quarter of fiscal 2024 for the cancellation fee associated with this order.
 On December 30, 2023, we had $ 42.4 million of remaining performance obligations, which we also refer to as backlog and expect to recognize as revenue: 79 % in 2024 and 21 % in 2025.
 4. Equity-Based Compensation

 Intevac accounts for share-based awards in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants and directors based upon the grant-date fair value of those awards. The estimated fair value of Intevac's equity-based awards is amortized over the awards' service periods using the graded vesting attribution method.

 Descriptions of Plans

 Equity Incentive Plans

 At December 30, 2023, Intevac had equity-based awards outstanding under the 2020 Equity Incentive Plan and the 2012 Equity Incentive Plan (the "Plans") and the 2003 Employee Stock Purchase Plan (the "ESPP"). Intevac's stockholders approved all of these plans.
 The Plans are a broad-based, long-term retention program intended to attract and retain qualified management and employees, and align stockholder and employee interests. The Plans permit the grant of incentive or non-statutory
 stock options, PSOs, restricted stock, stock appreciation rights, RSUs, PRSUs and performance shares. Option price, vesting period, and other terms are determined by the administrator of the Plans, but the option price shall generally not be less than 100 % of the fair market value per share on the date of grant. As of December 30, 2023, 6.5 million shares of common stock were authorized for future issuance under the Plans. The 2020 Equity Incentive Plan expires no later than May 13, 2030.
 On January 19, 2022, the Board of Directors adopted the 2022 Inducement Equity Incentive Plan (the "Inducement Plan") and, subject to the adjustment provisions of the Inducement Plan, reserved 1,200,000 shares of the Company's common stock for issuance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan provides for the grant of equity-based awards, including nonstatutory stock options, restricted stock units, restricted stock, stock appreciation rights, performance shares and performance units, and its terms are substantially similar to the Company's 2020 Equity Incentive Plan. The Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with that rule, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors
 of the Company (or following such individuals' bona fide period of non-employment with
 the Company), as an inducement material to the individuals' entry into employment with the Company.
 2003 Employee Stock Purchase Plan

 The ESPP provides that eligible employees may purchase Intevac's common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchase interval. Offering periods are generally two years in length, and consist of a series of six-month
 purchase intervals. Eligible employees may join the ESPP at the beginning of any six-month
 purchase interval. Under the terms of the ESPP, employees can choose to have up to 50 % of their base earnings withheld to purchase Intevac common stock (not to exceed $ 25,000 per year). As of December 30, 2023, 445,878 shares remained available for issuance under the ESPP.
 The effect of recording equity-based compensation for fiscal 2023 and 2022 was as follows (in thousands):

 2023

 2022

 Equity-based compensation by type of award:

 Stock options

 $

 ( 14

)

 $

 ( 156

)

 RSUs

 2,154

 2,184

 PRSUs

 1,592

 2,379

 Employee stock purchase plan

 Total equity-based compensation

 $

 4,373

 $

 4,890

 Included in the table above:

 (a)

 A reversal of $ 462,000 in equity-based compensation expense related to forfeitures of awards due to our 2023 cost reduction plan for fiscal 2023. A reversal of $ 1.3 million in equity-based compensation expense related to forfeitures of awards due to our 2022 cost reduction plan and a $ 37,000 benefit related to the modification of certain stock-based awards for fiscal 2022. (See Note 13. Restructuring and Other Costs, Net); and

 (b)

 Equity-based compensation reported in discontinued operations of ($ 260,000) for fiscal 2023, and ($ 229,000) for fiscal 2022. Equity-based compensation expense allocated to discontinued operations for fiscal 2022 includes $ 75,000 related to the modification of certain stock-based awards and is net of a divestiture-related forfeiture benefit of $ 446,000 that was recognized when employees were conveyed to EOTECH upon closing of the Photonics divestiture. (See Note 2. Divestiture and Discontinued Operations.)

 Equity-based compensation expense is based on awards which vest. Intevac accounts for forfeitures as they occur, rather than estimating expected forfeitures.
 Stock Options

 The exercise price of each stock option equals the market price of Intevac's stock on the date of grant. Most options are scheduled to vest over three
 and/or four years and expire no later than ten years after the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. Intevac's employee stock options have characteristics significantly different from those of publicly traded options.
 The computation of the expected volatility assumption used in the Black-Scholes calculations for new grants is based on historical volatility of Intevac's stock price. The risk-free interest rate is based on the yield available on U.S. Treasury Strips with an equivalent remaining term. The expected life of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The dividend yield assumption is based on Intevac's history of not paying dividends and the assumption of not paying dividends in the future. The Company did not grant any stock options in fiscal 2023 and fiscal 2022.
 A summary of the stock option activity is as follows:

 Exercise
 Price

 Remaining
 Contractual
 Term
 (years)

 Aggregate

 Intrinsic

 Value

 Options outstanding at December 31, 2022

 383,099

 $

 7.07

 2.40

 $

 327,711

 Options cancelled and forfeited

 ( 188,286

)

 $

 7.97

 Options exercised

 ( 52,813

)

 $

 5.15

 Options outstanding at December 30, 2023

 142,000

 $

 6.57

 1.57

 $

 Options exercisable at December 30, 2023

 141,750

 $

 6.58

 1.57

 $

 The total intrinsic value of options exercised during fiscal years 2023 and 2022 was $ 99,000 and $ 206,000, respectively. At December 30, 2023, Intevac had no unrecognized compensation expense related to stock options.
 RSUs

 A summary of the RSU activity is as follows:

 Grant Date

 Remaining
 Contractual
 Term
 (years)

 Aggregate
 Intrinsic

 Value

 Non-vested
 RSUs at December 31, 2022

 1,309,792

 $

 5.14

 1.21

 $

 8,474,354

 Granted

 452,444

 $

 4.66

 Vested

 ( 584,627

)

 $

 5.16

 Cancelled

 ( 262,522

)

 $

 5.12

 Non-vested
 RSUs at December 30, 2023

 915,087

 $

 4.89

 1.04

 $

 3,953,176

 Time-based RSUs are converted into shares of Intevac common stock upon vesting on a one-for-one

 basis. Time-based RSUs typically are scheduled to vest over three
 and/or four years. Vesting of time-based RSUs is subject to the grantee's continued service with Intevac. The compensation expense related to these awards is determined using the fair market value of

 Intevac common stock on the date of the grant, and the compensation expense is recognized over the vesting period. At December 30, 2023, Intevac had $ 2.0 million of total unrecognized compensation expense related to RSUs that will be recognized over the weighted-average period of 1.04 years.
 A summary of the PRSU activity is as follows:

 Grant Date

 Remaining
 Contractual
 Term
 (years)

 Aggregate
 Intrinsic

 Value

 Non-vested
 PRSUs at December 31, 2022

 1,089,339

 $

 3.54

 0.49

 $

 7,048,023

 Granted

 525,656

 $

 4.92

 Vested

 ( 190,903

)

 $

 4.26

 Cancelled

 ( 263,799

)

 $

 3.57

 Non-vested
 PRSUs at December 30, 2023

 1,160,293

 $

 4.04

 1.99

 $

 5,012,466

 At December 30, 2023, Intevac had $ 2.0 million of total unrecognized compensation expense related to PRSUs that will be recognized over the weighted-average period of 1.16 years.
 In May 2023, we granted to members of our senior management awards of performance-based restricted stock units (the "2023 PRSU Awards") covering an aggregate of 525,656 shares of Intevac common stock (at maximum performance). The 2023 PRSU Awards are eligible to be earned based on achievement of five strategic goals during a three-year performance period commencing on May 18, 2023 and ending on May 31, 2026 (the "2023-2026 Performance Period"). The 2023 PRSU Awards will vest, if at all, in five possible tranches. Each of the five tranches will vest only if the applicable strategic goal is achieved within the 2023-2026 Performance Period, and each tranche may only be achieved once during the 2023-2026 Performance Period. If a strategic goal is not achieved within the 2023-2026 Performance Period, the corresponding PRSUs will not vest, and all unvested PRSUs at the end of the 2023-2026 Performance Period will immediately be forfeited. Stock compensation expense is recorded based on the probability of achievement of the performance conditions specified in the PRSU grant. The Company evaluated the strategic goals in the context of its current long-range financial plan and its product development roadmap and determined the probability of achieving each goal for accounting purposes commencing in the quarter granted. Management expectations related to the achievement of performance goals associated with PRSUs with performance conditions are assessed regularly to determine whether such grants are expected to vest. The fair value of each PRSU is the Company's stock price on the date of grant. Over the 2023-2026 Performance Period, the number of shares expected to be issued may be adjusted upward or downward based upon the probability of achievement of the performance conditions.
 In fiscal 2022, we granted to members of our senior management awards of PRSUs ("2022 PRSU Awards") covering an aggregate of 1.2 million shares of Intevac common stock (at maximum performance). The 2022 PRSU Awards are eligible to be earned based on achievement of certain stock prices based on the average closing price of the Company's stock over a 30-day
 period (the "Company Stock Price Hurdle") during a performance period commencing on the grant date and ending on May 31, 2025 (or earlier, upon a change in control, as defined in the Company's 2022 Inducement Equity Incentive Plan or 2020 Equity Incentive Plan, as applicable) (the "2022-2025 Performance Period"). The 2022 PRSU Awards will vest, if at all, in five possible tranches. Each of the five tranches will vest only if the applicable Company Stock Price Hurdle is achieved within the 2022-2025 Performance Period, and each tranche may only be achieved once during the Performance Period. If a Company Stock Price Hurdle is not achieved within the 2022-2025 Performance Period, the corresponding 2022 PRSUs will not vest, and all unvested 2022 PRSUs at the end of the 2022-2025 Performance Period will immediately be forfeited. The fair value of each 2022 PRSU award was estimated on the date of grant using a Monte Carlo simulation.

 Intevac estimated the weighted-average fair value of 2022 PRSU Awards using the following weighted-average assumptions:

 2022

 Weighted-average fair value of grants per share

 $

 3.58

 Expected volatility

 56.70

 %

 Risk-free interest rate

 3.11

 %

 Dividend yield

 None

 ESPP

 The fair value of the employee stock purchase right is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

 2023

 2022

 Stock Purchase Rights:

 Weighted-average fair value of grants per share

 $

 0.91

 $

 1.26

 Expected volatility

 40.33

 %

 52.57

 %

 Risk free interest rate

 5.15

 %

 1.94

 %

 Expected term of purchase rights (in years)

 1.08

 1.24

 Dividend yield

 None

 None

 The expected life of purchase rights is the period of time remaining in the current offering period.
 The ESPP activity during fiscal 2023 and 2022 is as follows:

 2023

 2022

 (in thousands, except per share amounts)

 Shares purchased

 Weighted-average purchase price per share

 $

 3.48

 $

 4.46

 Aggregate intrinsic value of purchase rights exercised

 $

 $

 As of December 30, 2023, Intevac had $ 494,000 of total unrecognized compensation expense related to purchase rights that will be recognized over the weighted-average period of 0.7 years.
 5. Earnings Per Share

 Intevac calculates basic earnings per share ("EPS") using net loss and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuance of common stock pursuant to the exercise of employee stock options and vesting of RSUs.
 The following table sets forth the computation of basic and diluted net loss per share:

 2023

 2022

 (in thousands, except per share amounts)

 Net loss from continuing operations

 $

 ( 12,610

)

 $

 ( 16,754

)

 Net income (loss) from discontinued operations, net of tax

 ( 321

)

 $

)

 $

)

 Weighted-average shares – basic

 26,121

 25,192

 Effect of dilutive potential common shares

 —

 —

 Weighted-average shares – diluted

 26,121

 25,192

 2023

 2022

 (in thousands, except per share amounts)

 Basic and diluted net income (loss) per share:

 Continuing operations

 $

 ( 0.48

)

 $

 ( 0.67

)

 Discontinued operations

 $

 0.02

 $

 ( 0.01

)

 Net loss per share

 $

 ( 0.47

)

 $

 ( 0.68

)

 As the Company is in a net loss position from continuing operations, all of the Company's equity instruments are considered antidilutive.
 6. Concentrations

 Credit Risk and Significant Customers

 Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash equivalents, short- and long-term investments, restricted cash, and accounts receivable. Intevac generally invests its excess cash in money market funds, certificates of deposit, commercial paper, obligations of the U.S. government and its agencies, corporate debt securities, asset backed securities and municipal bonds. The Company has adopted an investment policy and established guidelines relating to credit quality, diversification and maturities of its investments in order to preserve principal and maintain liquidity. All investment securities in Intevac's portfolio have an investment grade credit rating.
 Intevac's accounts receivable tend to be concentrated in a limited number of customers. The following customer accounted for at least 10 percent of Intevac's accounts receivable at December 30, 2023 and December 31, 2022.

 2023

 2022

 Seagate Technology

 %

 %

 Intevac's largest customers tend to change from period to period. Historically, a significant portion of Intevac's revenues in any particular period have been attributable to sales to a limited number of customers. Intevac performs credit evaluations of its customers' financial condition and generally requires deposits on system orders but does not generally require collateral or other security to support customer receivables.
 The following customers accounted for at least 10 percent of Intevac's consolidated net revenues in fiscal 2023 and/or 2022.

 2023

 2022

 Seagate Technology

 %

 %

 Western Digital Corporation

 *

 %

 *

 Less than 10%

 Products

 Disk manufacturing products contributed a significant portion of Intevac's revenues in fiscal 2023 and 2022. Intevac expects that the ability to maintain or expand its current levels of revenues in the future will depend upon continuing market demand for its products; its success in enhancing its existing systems and developing and manufacturing competitive disk manufacturing equipment, such as the 200 Lean; its success in utilizing Intevac's expertise in complex manufacturing equipment to develop and sell new manufacturing equipment products for ADVC.

 7. Balance Sheet Details

 Balance sheet details were as follows as of December 30, 2023 and December 31, 2022:
 Trade and Other Accounts Receivable, Net

 2023

 2022

 Trade receivables and other

 $

 18,220

 $

 15,399

 Unbilled costs and accrued profits

 Less: allowance for credit losses

 —

 —

 $

 18,613

 $

 15,823

 Inventories are stated at the lower of average cost or net realizable value and consist of the following:

 2023

 2022

 Raw materials

 $

 37,346

 $

 19,116

 Work-in-progress

 6,449

 9,499

 Finished goods

 —

 1,388

 $

 43,795

 $

 30,003

 Finished goods inventory at December 31, 2022 is comprised of a refurbished system at a customer location where the sales transaction did not meet our revenue recognition criteria as set forth in Note 1.
 In May 2023, the Company received notice of the cancellation of a $ 54.6 million order for eight 200 Lean HDD systems. In December 2023, the Company received notice of the cancellation of a $ 11.4 million order for two 200 Lean HDD systems. The customer contract associated with the cancelled orders requires the customer to pay the Company a prorated price based upon the percentage of work completed on the order. The Company has received customer advances in the amount of $ 19.1 million associated with the cancelled order for eight 200 Lean HDD systems, all of which will be utilized to settle this customer obligation. The Company has not received any customer advances associated with the cancelled order for two 200 Lean HDD systems. The Company expects to invoice the customer in the first quarter of 2024 for the cancellation fee associated with this order. In fiscal 2024, as part of the cancellation of the orders for the ten 200 Lean HDD systems, the customer is expected to take delivery of $ 12.5 million of inventory on hand at December 30, 2023 and $ 3.2 million of inventory on order plus reimburse us for any supplier cancellation charges and the costs associated with managing the inventory. Some portion of the inventory will be utilized to satisfy other outstanding purchase orders from this customer in backlog.
 Property, Plant and Equipment, Net

 2023

 2022

 Leasehold improvements

 $

 8,959

 $

 9,567

 Machinery and equipment

 20,964

 19,016

 29,923

 28,583

 Less accumulated depreciation and amortization

 22,259

 24,925

 Total property, plant and equipment, net

 $

 7,664

 $

 3,658

 Net property, plant and equipment by geographic region at December 30, 2023 and December 31, 2022 was as follows:

 2023

 2022

 United States

 $

 7,018

 $

 3,143

 Asia

 Net property, plant & equipment

 $

 7,664

 $

 3,658

 Deferred Income Taxes and Other Long-Term Assets

 2023

 2022

 Deferred income taxes

 $

 3,342

 $

 4,356

 Prepaid expenses

 $

 3,466

 $

 4,381

 Accounts Payable

 Included in accounts payable is $ 93,000 and $ 99,000 of book overdraft at December 30, 2023 and December 31, 2022, respectively.
 Other Accrued Liabilities

 2023

 2022

 Other taxes payable

 $

 $

 Deferred revenue

 2,446

 Accrued product warranties

 Income taxes payable

 Other

 Litigation settlement

 —

 1,012

 Restructuring

 —

 Acquisition–related contingent consideration payable (See Note 15. Acquisition of Hia, Inc.)

 —

 Total other accrued liabilities

 $

 1,820

 $

 5,430

 Other Long-Term Liabilities

 2023

 2022

 Accrued product warranties

 $

 $

 —

 Total other long-term liabilities

 $

 $

 —

 8. Financial Instruments

 Cash, Cash Equivalents and Investments

 Cash and cash equivalents, short-term investments and long-term investments consist of:

 December 30, 2023

 Amortized

 Cost

 Holding Gains

 Holding Losses

 Cash and cash equivalents:

 Cash

 $

 19,050

 $

 —

 $

 —

 $

 19,050

 Money market funds

 15,090

 —

 —

 15,090

 14,659

 —

 14,655

 U.S. treasury securities

 2,646

 —

 —

 2,646

 Total cash and cash equivalents

 $

 51,445

 $

 —

 $

 $

 51,441

 Short-term investments:

 $

 $

 —

 $

 —

 $

 Certificates of deposit

 1,850

 —

 —

 1,850

 3,506

 —

 3,505

 5,373

 —

 5,337

 Municipal bonds

 —

 U.S. treasury and agency securities

 6,498

 6,482

 Total short-term investments

 $

 17,460

 $

 $

 $

 17,405

 Long-term investments:

 $

 $

 —

 $

 $

 2,230

 —

 2,231

 Total long-term investments

 $

 2,690

 $

 $

 $

 2,687

 Total cash, cash equivalents, and investments

 $

 71,595

 $

 $

 $

 71,533

 December 31, 2022

 Amortized

 Cost

 Holding Gains

 Holding Losses

 Cash and cash equivalents:

 Cash

 $

 26,465

 $

 —

 $

 —

 $

 26,465

 Money market funds

 9,589

 —

 —

 9,589

 32,856

 —

 32,850

 Total cash and cash equivalents

 $

 68,910

 $

 —

 $

 $

 68,904

 Short-term investments:

 $

 2,012

 $

 —

 $

 $

 1,999

 Certificates of deposit

 3,850

 —

 3,840

 9,443

 —

 9,415

 4,210

 —

 4,178

 Municipal bonds

 1,486

 —

 1,461

 U.S. treasury securities

 4,771

 —

 4,648

 Total short-term investments

 $

 25,772

 $

 —

 $

 $

 25,541

 Long-term investments:

 $

 6,749

 $

 —

 $

 $

 6,664

 5,366

 —

 5,264

 Municipal bonds

 —

 U.S. treasury and agency securities

 5,493

 —

 5,439

 Total long-term investments

 $

 17,832

 $

 —

 $

 $

 17,585

 Total cash, cash equivalents, and investments

 $

 112,514

 $

 —

 $

 $

 112,030

 The contractual maturities of investment securities at December 30, 2023 are presented in the following table.

 Amortized Cost

 Due in one year or less

 $

 49,855

 $

 49,796

 Due after one through five years

 2,690

 2,687

 $

 52,545

 $

 52,483

 Our investment portfolio includes both corporate and government securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost

 show a mark-to-market

 unrealized loss. Most of our unrealized losses are due to changes in market interest rates and bond yields. We believe that we have the ability to realize the full value of all these investments upon maturity. As of December 30, 2023, we had 70 investments in a gross unrealized loss position. The following table provides the fair market value of Intevac's investments with unrealized losses that are not deemed to be other-than temporarily impaired as of December 30, 2023.

 December 30, 2023

 In Loss Position for

 Less than 12 Months

 In Loss Position for

 Greater than 12 Months

 Fair

 Value

 Gross

 Losses

 Gross

 Losses

 $

 —

 $

 —

 $

 $

 18,160

 —

 —

 1,091

 4,845

 Municipal bond

 —

 —

 U.S. treasury and agency securities

 —

 —

 1,981

 $

 19,251

 $

 $

 7,501

 $

 All prices for the fixed maturity securities including U.S. treasury and agency securities, asset backed securities, certificates of deposit, commercial paper, corporate bonds, and municipal bonds are received from independent pricing services utilized by Intevac's outside investment manager. This investment manager performs a review of the pricing methodologies and inputs utilized by the independent pricing services for each asset type priced by the vendor. In addition, on at least an annual basis, the investment manager conducts due diligence visits and interviews with each pricing vendor to verify the inputs utilized for each asset class. The due diligence visits include a review of the procedures performed by each vendor to ensure that pricing evaluations are representative of the price that would be received to sell a security in an orderly transaction. Any pricing where the input is based solely on a broker price is deemed to be a Level 3 price. Intevac uses the pricing data obtained from its outside investment manager as the primary input to make its assessments and determinations as to the ultimate valuation of the above-mentioned securities and has not made, during the periods presented, any material adjustments to such inputs.
 The following table represents the fair value hierarchy of Intevac's investment securities measured at fair value on a recurring basis as of December 30, 2023.

 Fair Value Measurements

 at December 30, 2023

 Total

 Level 1

 Level 2

 Recurring fair value measurements:

 Money market funds

 $

 15,090

 $

 15,090

 $

 —

 U.S. treasury and agency securities

 9,128

 5,628

 3,500

 —

 Certificates of deposit

 1,850

 —

 1,850

 Fair Value Measurements

 at December 30, 2023

 Total

 Level 1

 Level 2

 18,160

 —

 18,160

 7,568

 —

 7,568

 Municipal bonds

 —

 Total recurring fair value measurements

 $

 52,483

 $

 20,718

 $

 31,765

 Derivatives

 The Company uses foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement
 of certain monetary assets and liabilities denominated in foreign currencies and to offset certain operational exposures from the impact of changes in foreign currency exchange rates. These derivatives are carried at fair value with changes recorded in interest income and other, net in the consolidated statements of operations. Changes in the fair value of these derivatives are largely offset by re-measurement
 of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. The derivatives have maturities of approximately 30 days
. There were no outstanding derivatives at December 30, 2023.
 The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of December 31, 2022:

 At December 31, 2022

 Derivative Instrument

 Notional Amount

 Balance

 Sheet

 Line Item

 Derivative Assets

 Undesignated Hedges:

 Forward Foreign Currency Contracts

 $

 2,240

 (a

)

 $

 Total Hedges

 $

 2,240

 $

 (a)

 Other current assets

 9. Equity

 Stock Repurchase Program

 On November 21, 2013, Intevac's Board of Directors approved a stock repurchase program authorizing up to $ 30.0 million in repurchases. On August 15, 2018, Intevac's Board of Directors approved a $ 10.0 million increase to the original stock repurchase program authorizing up to $ 40.0 million. Under this authorization, Intevac may purchase shares of its common stock under a systematic stock repurchase program and may also make supplemental stock repurchases from time to time, depending on market conditions, stock price and other factors. At December 30, 2023, $ 10.4 million remains available for future stock repurchases under the repurchase program. The Company did not make any stock rep
urchases in fiscal 2023 and 2022.
 Intevac records treasury stock purchases under the cost method using the first-in,
 first-out
 (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid-in
 capital. If Intevac reissues treasury stock at an amount below its acquisition cost and additional paid-in
 capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against the accumulated deficit.

 10. Income Taxes

 The provision for income taxes on income from operations for fiscal 2023 and 2022 consists of the following (in thousands):

 2023

 2022

 Federal:

 Current

 $

 —

 $

 —

 Deferred

 —

 ( 121

)

 —

 ( 121

)

 State:

 Current

 Deferred

 —

 —

 Foreign:

 Current

 Deferred

 1,014

 1,819

 1,444

 Total

 $

 1,822

 $

 1,327

 Income taxes on discontinued operations

 $

 —

 $

 —

 Income taxes on continuing operations

 $

 1,822

 $

 1,327

 Income (loss) before income taxes for fiscal 2023 and 2022 consisted of the following (in thousands):

 2023

 2022

 U.S

 $

 ( 17,089

)

 $

 ( 20,570

)

 Foreign

 6,301

 5,143

 $

 ( 10,788

)

 $

 ( 15,427

)

 Effective tax rate

 ( 16.9

 %)

 ( 8.6

 %)

 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of deferred tax assets are as follows (in thousands):

 2023

 2022

 Deferred tax assets:

 Vacation, warranty and other accruals

 $

 $

 Depreciation and amortization

 Purchased technology

 Inventory valuation

 1,116

 Equity-based compensation

 Lease liability

 2,101

 Section 174 R&D adjustment

 4,701

 2,440

 Net operating loss, research and other tax credit carryforwards

 53,940

 56,310

 Other

 62,574

 62,380

 Valuation allowance for deferred tax assets

 ( 56,923

)

 ( 57,310

)

 Total deferred tax assets

 5,651

 5,070

 2023

 2022

 Deferred tax liabilities:

 Intangible amortization

 ( 283

)

 ( 160

)

 ROU asset

 ( 2,026

)

 ( 554

)

 Total deferred tax liabilities

 ( 2,309

)

 ( 714

)

 Net deferred tax assets

 $

 3,342

 $

 4,356

 As reported on the consolidated balance sheets:

 Non-current
 deferred tax assets

 $

 3,342

 $

 4,356

 Intevac accounts for income taxes in accordance with ASC 740, Income Taxes

, which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the financial reporting and tax bases of recorded assets and liabilities.
 Accounting standards also require that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion of or all of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In fiscal 2014, a valuation allowance of $ 9.4 million was established to record the portion of the Singapore deferred tax assets that more likely than not will not be realized. The Company concluded that, as of December 29, 2018, it is more likely than not that the Company will generate sufficient taxable income in Singapore to realize its deferred tax assets and reversed the valuation allowance during the fourth quarter of 2018. This reversal resulted in the recognition of a non-cash
 income tax benefit of $ 7.9 million for fiscal 2018. The Company has considered all positive and negative evidence regarding the ability to fully realize the deferred tax assets, including past operating results and the forecast of future taxable income. This conclusion, and the resulting reversal of the deferred tax asset valuation allowance, was based upon consideration of a number of factors, including the Company's completion of 7 consecutive quarters of profitability and its forecast of future profitability under multiple scenarios that support the utilization of net operating loss carryforwards. After recognizing the reversal, the Company does not have a remaining valuation allowance against the deferred tax assets in Singapore at December 30, 2023.
 In fiscal 2012, a valuation allowance of $ 23.4 million was established to record the portion of the U.S. federal deferred tax asset that more likely than not will not be realized. For fiscal 2023 a valuation allowance increase of $ 321,000 and for fiscal 2022 a valuation allowance increase of $ 3.1 million were recorded for the U.S. federal deferred tax assets. A valuation allowance is recorded against the entire state deferred tax assets, which consists of state income tax temporary differences and deferred research and other tax credits that are not realizable in the foreseeable future.
 As of December 30, 2023, our federal, foreign and state net operating loss carryforwards for income tax purposes were approximately $ 43.4 million, $ 18.6 million and $ 112.1 million, respectively. The federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal net operating loss carryforwards and the state net operating loss carryforwards will begin to expire in 2034 and 2028, respectively. The foreign net operating loss carryforwards do not expire. As of December 30, 2023, our federal and state tax credit carryforwards for income tax purposes were approximately $ 18.9 million and $ 13.4 million, respectively. If not utilized, the federal tax credit carryforwards will begin to expire in 2024 and the state tax credits carry forward indefinitely.
 We account for Global Intangible Low-Taxed
 Income ("GILTI") earned by certain foreign subsidiaries in the year the tax is incurred.
 On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into U.S. law. The IRA includes implementation of a new alternative minimum tax, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. The Company is evaluating the provisions included under the IRA and does not expect the provisions to have a material impact to the Company's consolidated financial statements.
 A provision of the Tax Cuts and Jobs Act ("TCJA") took effect on January 1, 2022 that amended Section 174 to require capitalization and amortization of research and experimental ("R&E") expenditures and software development costs. The

 capitalized R&E and software development costs associated with research conducted in the United States is amortized ratably over a 5-year
 period (15-year
 period for research conducted outside of the United States), beginning with the midpoint of the taxable year in which such expenditures are paid or incurred. This new provision of the TCJA will increase the Company's annual taxable income.
 The difference between the tax provision at the statutory federal income tax rate and the tax provision for fiscal 2023 and 2022 on continuing operations was as follows (in thousands):

 2023

 2022

 Income tax (benefit) at the federal statutory rate

 $

 ( 2,266

)

 $

 ( 3,240

)

 State income taxes, net of federal benefit

 Change in valuation allowance:

 U.S

 3,129

 Foreign

 —

 —

 Effect of foreign operations taxed at various rates

 ( 266

)

 ( 219

)

 Research tax credits

 ( 1,009

)

 ( 788

)

 Effect of tax rate changes, permanent differences and adjustments of prior deferrals

 5,039

 2,441

 Unrecognized tax benefits

 —

 —

 Total provision for income taxes on continuing operations

 $

 1,822

 $

 1,327

 Intevac has not provided for foreign withholding taxes on approximately $ 1.9 million of undistributed earnings from non-U.S.
 operations as of December 30, 2023 because Intevac intends to reinvest such earnings indefinitely outside of the United States. If Intevac were to distribute these earnings, foreign withholding tax would be payable. For all other undistributed foreign earnings, Intevac also intends to reinvest such earnings indefinitely outside of the United States.
 The total amount of gross unrecognized tax benefits was $ 7.6 million as of December 30, 2023, none of which would affect Intevac's effective tax rate if realized. The aggregate changes in the balance of gross unrecognized tax benefits were as follows for fiscal 2023 and 2022:

 2023

 2022

 Beginning balance

 $

 $

 Additions based on tax positions related to the current year

 Increases for tax positions of prior years

 6,448

 —

 Lapse of statute of limitations

 ( 9

)

 —

 Ending balance

 $

 7,599

 $

 The Company does not anticipate any changes in the amount of unrecognized tax benefits in the next twelve months. It is Intevac's policy to include interest and penalties related to unrecognized tax benefits in the provision for income taxes on the consolidated statements of operations. During fiscal 2023 and 2022, Intevac recognized a net tax expense (benefit) of $ 0. As of December 30, 2023, Intevac did no t have any accrued interest related to unrecognized tax benefits. Intevac did not accrue any penalties related to these unrecognized tax benefits because Intevac has other tax attributes which would offset any potential taxes due.
 Intevac is subject to income taxes in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. As of December 30, 2023, all of the tax years remained open to examination by the federal and state taxing authorities, for three
 or four years from the tax year in which net operating losses or tax credits are utilized completely. Singapore is open to examination from 2020 forward.
 The Inland Revenue Authority of Singapore ("IRAS") conducted a review of the fiscal 2017 through 2019 tax returns of the Company's wholly-owned subsidiary, Intevac Asia Pte. Ltd. IRAS had challenged the Company's tax position with respect

 to certain aspects of the Company's transfer pricing. The IRAS has concluded their audit and notified us on January 18, 2024 that there are no adjustments to our tax returns for years 2017 through 2019. Presently, there are no other active income tax examinations in the jurisdictions where Intevac operates.
 11. Employee Benefit Plans

 Employee Savings and Retirement Plan

 In 1991, Intevac established a defined contribution retirement plan with 401(k) plan features. The plan covers all United States employees eighteen years and older. Employees may make contributions by a percentage reduction in their salaries, not to exceed the statutorily prescribed annual limit. Intevac made cash contributions of $ 154,000 for fiscal 2023 and $ 151,000 for fiscal 2022. Employees may choose among several investment options for their contributions and their share of Intevac's contributions, and they are able to move funds between investment options at any time. Intevac's common stock is not one of the investment options. Administrative expenses relating to the plan are insignificant.
 Employee Bonus Plans

 Intevac has various employee incentive plans. Bonus plans award annual cash bonuses to Intevac's executives, key contributors and employees based on the achievement of profitability and other specific performance criteria. Prior to fiscal 2023, Intevac had a profit-sharing plan that provided for the distribution of a percentage of pre-tax
 profits to substantially all of Intevac's employees not eligible for other performance-based incentive plans, up to a maximum percentage of compensation. Charges to expense under these plans were $ 1.4 million and $ 1.2 million, respectively, for fiscal 2023 and 2022.
 12. Commitments and Contingencies

 Leases

 Intevac leases certain manufacturing facilities, warehouses, office space, and equipment under non-cancelable
 operating leases that expire at various times up to June 2029 and has options to renew most leases, with rentals to be negotiated. Certain of Intevac's leases contain provisions for rental adjustments. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date we take possession of the property. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured. The exercise of lease renewal options is at our sole discretion. The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
 The Company and EOTECH have entered into a Lease Assignment Agreement that assigns a portion of the Company's lease obligation regarding its Santa Clara, California campus to EOTECH. The Company is contingently liable should EOTECH default on future lease obligations through the lease termination date of March 2024. The aggregate amount of the future lease obligations under this arrangement is $ 293,000 as of December 30, 2023. As the Company is not being released as the primary obligor under the original lease, the lease assignment has been accounted for as a sublease.
 In consideration of EOTECH's assumption of the above-mentioned lease obligations, which assumed lease obligations pertain in part to excess space beyond that required for EOTECH's currently anticipated operation of the Photonics business, the Company agreed to pay to EOTECH the amount of $ 2.1 million (the "Unused Space Amount"), which Unused Space Amount was payable in (i) one initial installment of $ 308,000 on January 10, 2022 and (ii) seven ( 7) equal quarterly installments of $ 259,000. The final payment was made in October 2023.
 The following table reflects our lease assets and our lease liabilities at December 30, 2023 and December 31, 2022.

 2023

 2022

 Assets:

 Operating lease ROU assets

 $

 7,658

 $

 3,390

 2023

 2022

 Liabilities:

 Current operating lease liabilities

 $

 1,008

 $

 3,404

 Noncurrent operating lease liabilities

 6,976

 1,417

 $

 7,984

 $

 4,821

 Lease Costs:

 The components of lease costs were as follows:

 2023

 2022

 Operating lease cost

 $

 1,613

 $

 1,624

 Operating lease cost subleased / assigned property

 Short-term lease cost

 Less: sublease income

 ( 869

)

 ( 974

)

 Total lease cost, net

 $

 1,738

 $

 1,667

 As of December 30, 2023 the maturity of operating lease liabilities was as follows:

 Continuing

 Operations

 Discontinued

 Operations (b)

 Total

 2024

 $

 1,335

 (a)

 $

 1,631

 2025

 2,110

 —

 2,110

 2026

 1,852

 —

 1,852

 2027

 1,799

 —

 1,799

 2028

 1,841

 —

 1,841

 2029

 —

 Total lease payments

 $

 9,723

 $

 10,019

 Less: Interest

 ( 2,032

)

 ( 3

)

 ( 2,035

)

 Present value of lease liabilities

 $

 7,691

 $

 7,984

 (a)

 The amount is net of a tenant improvement allowance of $ 292,000 that the Company expects to receive from the landlord.

 (b)

 The operating lease liabilities in discontinued operations represent the lease obligations that were assigned to EOTECH but which are being accounted for as a sublease as the Company has not been relieved of its primary obligations with the landlord.

 Lease Term and Discount Rate:

 2023

 2022

 Weighted-average remaining lease term (in years)

 5.01

 1.69

 Weighted-average discount rate

 8.37

 %

 5.81

 %

 Other information:

 Supplemental cash flow information related to leases was as follows (in thousands):

 2023

 2022

 Operating cash outflows from operating leases

 $

 1,831

 $

 1,757

 ROU assets obtained in exchange for new operating lease liabilities

 $

 6,520

 $

 1,122

 Guarantees

 Officer and Director Indemnifications

 As permitted or required under Delaware law and to the maximum extent allowable under that law, Intevac has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was, serving at Intevac's request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments Intevac could be required to make under these indemnification obligations is unlimited; however, Intevac has a director and officer insurance policy that mitigates Intevac's exposure and enables Intevac to recover a portion of any future amounts paid. As a result of Intevac's insurance policy coverage, Intevac believes the estimated fair value of these indemnification obligations is not material.
 Other Indemnifications

 As is customary in Intevac's industry, many of Intevac's contracts provide remedies to certain third parties such as defense, settlement, or payment of judgments for intellectual property claims related to the use of its products. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.
 Letters of Credit

 As of December 30, 2023, we had letters of credit and bank guarantees outstanding totaling $ 700,000, including the standby letter of credit outstanding under the Santa Clara, California facility lease and various other guarantees with its bank. These letters of credit and bank guarantees are collateralized by $ 700,000 of restricted cash.
 Warranty

 Intevac provides for the estimated cost of warranty when revenue is recognized. Intevac's warranty is subject to contract terms and, for its systems, the warranty typically ranges between 12 and 24 months from customer acceptance. During this warranty period any defective non-consumable
 parts are replaced and installed at no charge to the customer. Intevac uses estimated repair or replacement costs along with its historical warranty experience to determine its warranty obligation. The provision for the estimated future costs of warranty is based upon historical cost and product performance experience. Intevac exercises judgment in determining the underlying estimates.
 On the consolidated balance sheets, the short-term portion of the warranty provision is included in other accrued liabilities, while the long-term portion is included in other long-term liabilities. The expense associated with product warranties issued or adjusted is included in cost of net revenues on the consolidated statements of operations.
 The following table displays the activity in the warranty provision account for fiscal 2023 and 2022:

 2023

 2022

 Beginning balance

 $

 $

 Expenditures incurred under warranties

 ( 214

)

 ( 312

)

 Accruals for product warranties

 Adjustments to previously existing warranty accruals

 ( 6

)

 ( 18

)

 Ending balance

 $

 $

 Legal Matters

 From time to time, Intevac receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions in connection with claims made against them. In

 addition, from time to time, Intevac receives notification from third parties claiming that Intevac may be or is infringing their intellectual property or other rights. Intevac also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business. Although the outcome of these claims and proceedings cannot be predicted with certainty, Intevac does not believe that any of these other existing proceedings or claims will have a material adverse effect on its consolidated financial condition or results of operations.
 In July 2020, Robin Quiusky, a former contract employee who worked for us via a staffing agency, filed an action against us under the Private Attorneys General Act ("PAGA") in California state court (Quiusky v. Intevac, Inc., et al) alleging that the Company failed to provide rest and meal breaks, pay overtime and reimburse business expenses for non-exempt
 California employees. The former employee subsequently added class action claims to his original complaint. The parties participated in a confidential mediation on February 1, 2022, and reached a settlement resolving the case. The court approved the settlement in November 2022 and payment on the claims was made on January 20, 2023. The settlement effectively extinguishes the Quiusky v. Intevac, Inc., et al lawsuit. The settlement includes the dismissal of all claims against the Company and related parties in the Quiusky lawsuit and claim under the PAGA, without any admission of liability or wrongdoing attributed to the Company. Because of the uncertainty surrounding this litigation, no litigation reserve had been previously established by the Company resulting in the full $ 1.0 million settlement expense being recognized in the fourth quarter of fiscal 2021.
 13. Restructuring Charges

 During the third quarter of fiscal 2023, Intevac substantially completed implementation of a cost reduction plan (the "2023 Cost Reduction Plan"), which is intended to reduce expenses by reducing our workforce by 23 percent including employees and contractors. Intevac incurred restructuring costs of $ 2.0 million in severance, $ 2,000 in stock-based compensation associated with the modification of certain stock-based awards and other employee-related expenses associated with the 2023 Cost Reduction Plan. Additionally, as part of the 2023 Cost Reduction Plan the Company incurred a benefit of $ 462,000 related to the stock-based compensation forfeitures related to the employees affected by the reduction in workforce. Substantially all cash outlays in connection with the 2023 Cost Reduction Plan occurred in the third quarter of fiscal 2023. The cost of implementing the 2023 Cost Reduction Plan was reported under cost of net revenues and operating expenses in the consolidated statements of operations. Implementation of the 2023 Cost Reduction Plan is expected to reduce salary, wages and other employee-related expenses and contractor payments by approximately $ 4.6 million on an annual basis.
 During the first quarter of fiscal 2022, Intevac substantially completed implementation of the 2022 cost reduction plan (the "2022 Cost Reduction Plan"), which was intended to reduce our overall cost structure and optimize our operational design, inclusive of the stranded overhead associated with the divestiture of the Photonics business. The restructuring program includes management reorganization and the right sizing of certain technology development, marketing and administrative functions. We incurred restructuring costs of $ 1.2 million in estimated severance and the related modification of certain stock-based awards. Other costs incurred as part of the 2022 Cost Reduction Plan include: (i) a benefit of $ 1.3 million related to the stock-based compensation forfeitures related to the employees affected by the reduction in workforce, (ii) $ 1.5 million for fixed asset disposals and (iii) $ 755,000 for write-offs of excess inventory. The 2022 Cost Reduction Plan reduced the workforce by 6 percent. The cost of implementing the 2022 Cost Reduction Plan was reported under cost of net revenues and operating expenses in the consolidated statements of operations. Implementation of the 2022 Cost Reduction Plan reduced salary, wages and other employee-related expenses by approximately $ 2.1 million on an annual basis.
 During the fourth quarter of fiscal 2021, the Company recorded asset impairment and restructuring charges associated with the sale of the Photonics division including (i) $ 693,000 in severance and other employee-related costs related to the termination of the Photonics general manager; (ii) $ 1.2 million in asset impairment charges on the Company's ROU asset and (iii) $ 665,000 in accruals for common area charges associated with an unused space commitment to EOTECH. In consideration of EOTECH's assumption of certain lease obligations related to the Company's Santa Clara, California campus, which assumed lease obligations pertain in part to excess space beyond that required EOTECH's currently anticipated operation of the Photonics division, the Company agreed to pay EOTECH the amount of $ 2.1 million, which is payable in (i) one initial installment of $ 308,000 on January 10, 2022 and (ii) seven equal quarterly installments of $ 259,000. The Company recorded an asset impairment charge against its ROU asset in the amount of $ 1.2 million associated with the excess space noted above. The Company recorded a liability to EOTECH in the amount of $ 665,000, the amount related to common area charges which are not included in the base rental payments or the lease liability on the Company's consolidated balance sheets.

 The following table summarizes the significant activities within, and components of, the restructuring liabilities.

 Employee

 Termination

 Costs

 Other

 Exit

 Costs

 Total

 Balance at January 1, 2022

 $

 $

 $

 1,023

 Provision for restructuring charges under the 2022 Cost Reduction Plan

 1,232

 —

 1,232

 Cash payments made

 ( 1,269

)

 —

 ( 1,269

)

 Non-cash
 utilization

 (a)

 —

 Provision for restructuring charges associated with Photonics sale (b)

 Cash payments made

 ( 395

)

 ( 362

)

 ( 757

)

 Non-cash
 utilization

 ( 75

)(a)

 —

 ( 75

)

 Balance at December 31, 2022

 $

 —

 $

 $

 Provision for restructuring charges under the 2023 Cost Reduction Plan

 1,950

 —

 1,950

 Cash payments made

 ( 1,948

)

 —

 ( 1,948

)

 Non-cash
 utilization

 ( 2

)(a)

 —

 ( 2

)

 Provision for restructuring charges associated with Photonics sale (b)

 —

 Cash payments made

 —

 ( 325

)

 ( 325

)

 Balance at December 30, 2023

 $

 —

 $

 —

 $

 —

 (a) Acceleration of equity awards.
 (b) Included in discontinued operations.
 14. Related Party Transaction

 A member of the Company's Board of Directors through November 2022, Mark Popovich, rendered professional services to the Company at a rate of $ 3,125 per week plus expenses commencing May 23, 2022 through October 7, 2022. The Company incurred charges of approximately $ 62,500 associated with the professional services arrangement with Mr. Popovich in fiscal 2022.
 15. Acquisition of Hia, Inc.

 On August 26, 2022 (the "Closing Date"), the Company completed the acquisition of Hia, Inc., a supplier of magnetic bars, to bring the manufacturing of these magnetic bars in-house
 and to protect our technology and product quality while continuing to improve our products. Pursuant to the Stock Purchase Agreement, dated August 26, 2022, between the Company, Hia and the other parties thereto, the Company paid an aggregate purchase price of $ 700,000 to Hia's stockholders on the Closing Date. Further contingent consideration will consist of amounts payable upon achievement of certain development and commercialization milestones, which consideration is estimated to be up to $ 500,000. The first milestone was achieved and contingent consideration in the amount of $ 250,000 was paid on January 17, 2023 and was accrued in the fourth quarter of 2022. The Company is also obligated pay a royalty of $ 1,500 for each magnetic bar sold through December 31, 2030. If at any time prior to December 31, 2030, the Company effects a change of control or a sale, license, transfer or other disposition to a third party (other than an affiliate of Intevac) of all or substantially all of the assets or rights associated with the magnetic bars, then, upon the closing of such transaction, a payment of $ 1.7 million (minus any royalty payments previously paid) will immediately become due and payable, which payment shall fulfill the Company's royalty obligations. Transaction costs incurred in connection with the Hia acquisition totaled $ 63,000, which are included as a component of the purchase price paid in connection with the Hia acquisition.
 The Company determined this transaction represented an asset acquisition as substantially all of the value was in the technology intangible assets of Hia. Contingent consideration is not recorded in an asset acquisition until the contingency is resolved (when the contingent consideration is paid or becomes payable) or when probable and reasonably estimable. The first milestone was achieved and contingent consideration in the amount of $ 250,000 was paid on January 17, 2023 and was accrued

 in the fourth quarter of 2022. Upon recognition, the amount, including the tax effect of $ 67,000, is included in the measurement of the acquired asset. The technology intangible assets are being amortized on a straight-line basis over a period of 8.3 years. Total amortization expense during fiscal 2023 and fiscal 2022 was $ 136,000 and $ 42,000, respectively. Annual amortization expense related to the acquired technology intangible assets in each of the succeeding years is estimated to be approximately $ 136,000 per year from fiscal 2024 through fiscal 2030.
 The Hia acquisition was treated for tax purposes as a nontaxable transaction and, as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of Hia will carryover. As a result, there is no step-up
 to fair value of the underlying tax bases of the acquired net assets in connection with the Hia acquisition. The acquisition method of accounting includes the establishment of a net deferred tax asset or liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. When an acquisition of a group of assets is purchased in a transaction that is not accounted for as a business combination under ASC 805, "Business Combinations", a difference between the book and tax bases of the assets arises. ASC 740, "Income Taxes," requires the use of simultaneous equations to determine the assigned value of the asset and the related deferred tax asset or liability. As goodwill is not recognized in an asset acquisition, recognizing deferred tax assets or liabilities for temporary differences in an asset acquisition results in adjusting the carrying amount of the acquired assets and liabilities.

 The purchase price was allocated to the technology intangible assets and the deferred tax asset and liability as follows:

 Consideration:

 Cash payment

 $

 Transaction costs

 Less cash acquired

 ( 2

)

 Total consideration

 $

 Assets acquired:

 Technology intangible assets

 $

 Deferred tax asset

 Total assets acquired

 $

 Liability assumed:

 Deferred tax liability

 $

 ( 171

)

 $

 The following table represents the gross carrying amount of the technology intangible assets at December 30, 2023:

 Initial cost of technology intangible assets recognized on the acquisition date

 $

 Achievement of the first milestone and recognition of contingent consideration payable

 Deferred tax liability associated with the recognition of the first milestone

 Gross carrying amount at December 30, 2023

 $

 1,132

 Information regarding the technology
intangible assets
is as follows (in thousands):

 2023

 2022

 Technology intangible assets:

 Gross carrying amount

 $

 1,132

 $

 1,132

 Accumulated Amortization

 ( 178

)

 ( 42

)

 Net carrying amount

 $

 $

 1,090

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 None.

 Item 9A.

 Controls and Procedures

 Management's Report on Assessment of Internal Controls Over Financial Reporting

 Evaluation of Disclosure Controls and Procedures

 Intevac's management, with the participation of Intevac's Chief Executive Officer (the "CEO") and Chief Financial Officer (the "CFO"), evaluated the effectiveness of Intevac's disclosure controls and procedures (as defined in Rules 13a-15(e)
 and 15d-15(e)
 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Annual Report. Based on this evaluation, the CEO and CFO concluded that Intevac's disclosure controls and procedures were effective as of December 30, 2023 in providing reasonable assurance that information required to be disclosed by Intevac in reports that Intevac files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to Intevac's management, including Intevac's CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
 Management's Annual Report on Internal Control over Financial Reporting

 Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
 and 15d-15(f)
 under the Exchange Act) for Intevac. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 Intevac's management, with the participation of the CEO and CFO, conducted an evaluation of the effectiveness of Intevac's internal control over financial reporting based on criteria established in the 2013 Internal Control—Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that Intevac's internal control over financial reporting was effective as of December 30, 2023.
 Changes in Internal Control over Financial Reporting

 Beginning January 1, 2023, we implemented ASC 326, Financial Instruments—Credit Losses. Although the new standard is expected to have an immaterial impact on our ongoing results of operations, we did implement changes to our processes related to the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where probability is considered remote, reporting of credit losses and the control activities within them.
 There was no change in our internal control over financial reporting during our fourth quarter of fiscal 2023 that has materially affected, or is reasonably likely to materially affect, Intevac's internal control over financial reporting.

 Item 9B.

 Other Information

 Securities Trading Plans of Directors and Executive Officers

 During our last fiscal quarter, no director or officer, as defined in Rule 16a-1(f),
 adopted or terminated a "Rule 10b5-1
 trading arrangement" or a "non-Rule
 10b5-1
 trading arrangement," each as defined in Regulation S-K
 Item 408.

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Not applicable.

 6 5

 Item 10.

 Directors, Executive Officers and Corporate Governance

 The information required by this item relating to the Company's executive officers and key employees is included under the caption "Executive Officers of Intevac" under Item 1 of this Annual Report. The other information required by this item is included under the captions "Election of Directors," [and] "Corporate Governance Matters" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

 Item 11.

 Executive Compensation

 The information required by this item is included under the caption "Executive Compensation and Related Information" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The information required by this item is included under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 The information required by this item is included under the captions "Certain Relationships and Related Party Transactions" and "Corporate Governance Matters" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

 Item 14.

 Principal Accountant Fees and Services

 The information required by this item is included under the caption "Principal Accountant Fees and Services" in the Company's Proxy Statement for the 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

 Item 15.

 Exhibits and Financial Statement Schedules

 (a) The following documents are filed as part of this Annual Report on Form 10-K:
 1. Financial Statements:
 See "Index to Consolidated Financial Statements" in Item 8 of this Form 10-K.
 All other schedules have been omitted since the required information is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements or notes thereto.
 2. Exhibits

 Exhibit
 Number

 Incorporated by Reference

 Description

 Form

 Exhibit

 File Date

 2.1

 Asset Purchase Agreement, dated as of December 30, 2021, by and between Intevac, Inc., Intevac Photonics, Inc. and EOTECH, LLC

 2.1

 January 30, 2022.

 2.2

 First Amendment to Asset Purchase Agreement, dated March 7, 2022, by and among Intevac, Inc., Intevac Photonics, Inc. and EOTECH, LLC

 2.1

 May 10, 2022

 3.1

 Certificate of Incorporation of the Registrant

 3.1

 July 23, 2007

 3.2

 Bylaws of the Registrant, as amended

 3.1

 March 15, 2012

 4.1

 Description of the Registrant's Common Stock

 4.1

 February 12, 2020

 10.1+

 The Registrant's 2003 Employee Stock Purchase Plan, as amended February 15, 2023

 DEF 14A

 A

 April 12, 2023

 10.2+

 The Registrant's 2012 Equity Incentive Plan, as amended March 21, 2018

 DEF 14A

 B

 April 11, 2018

 10.3+

 Form of Restricted Stock Unit Agreement for 2012 Equity Incentive Plan

 10.4

 May 1, 2012

 10.4+

 Form of Restricted Stock Agreement for 2012 Equity Incentive Plan

 10.5

 May 1, 2012

 10.5+

 Form of Stock Option Agreement for 2012 Equity Incentive Plan

 10.6

 May 1, 2012

 10.6

 Lease dated March 20, 2014 regarding the space located at 3544, 3560, 3570 and 3580 Bassett Street, Santa Clara, California

 10.8

 April 29, 2014

 10.7

 Lease Assignment Agreement dated as of December 30, 2021, by and between Intevac, Inc., and EOTECH, LLC

 10.10

 February 17, 2022

 10.8

 First Amendment to Lease, dated as of November 21, 2023, by and between the Company and HGIT BASSETT CAMPUS LP, for premises located in Santa Clara, California

 10.1

 December 6, 2023

 10.9+

 The Registrant's 2020 Equity Incentive Plan as amended February 15, 2023

 DEF 14A

 B

 April 12, 2023

 10.10+

 Form of Restricted Stock Unit Agreement for 2020 Equity Incentive Plan

 S-8
 (No. 33-238262)

 4.5

 May 14, 2020

 10.11+

 Form of Stock Option Agreement for 2020 Equity Incentive Plan

 S-8
 (No. 33-238262)

 4.7

 May 14, 2020

 10.12+

 Form of Outside Director Restricted Stock Unit Agreement for 2020 Equity Incentive Plan

 S-8
 (No. 33-238262)

 4.8

 May 14, 2020

 Exhibit
 Number

 Incorporated by Reference

 Description

 Form

 Exhibit

 File Date

 10.13+

 Intevac, Inc. 2022 Inducement Equity Incentive Plan

 10.2

 January 20, 2022

 10.14+

 Form of RSU Agreement under the Intevac, Inc. 2022 Inducement Equity Incentive Plan

 10.3

 January 20, 2022

 10.15+

 The Registrant's 401(k) Profit Sharing Plan (P)

 S-1
 (No. 33-97806)

 10.16+

 Form of Director and Officer Indemnification Agreement

 10.9

 March 14, 2008

 10.17+

 The Registrant's Executive Incentive Plan

 10.1

 May 4, 2023

 10.18+

 Employment Agreement, dated January 18, 2022, by and between Nigel Hunton and Intevac, Inc.

 10.1

 January 20, 2022

 10.19+

 Form of 2022 PRSU Award Agreement (Company Stock Price Hurdle) under the 2022 Inducement Equity Incentive Plan

 10.1

 May 19, 2022

 10.20+

 Form of 2022 PRSU Award Agreement (Company Stock Price Hurdle) under the 2020 Equity Incentive Plan

 10.2

 May 19, 2022

 10.21+

 Form of the 2023 PRSU Award Agreement under the 2020 Equity Incentive Plan

 10.1

 August 3, 2023

 10.22+

 Change in Control Agreement with John Dickinson dated June 20, 2023

 10.2

 August 3, 2023

 10.23+

 Transition Agreement and Release with James Moniz dated August 2, 2023

 10.3

 August 3, 2023

 21.1

 Subsidiaries of the Registrant

 23.1

 Consent of Independent Registered Public Accounting Firm

 24.1

 Power of Attorney (see signature page)

 31.1

 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2

 Certification of Interim Chief Financial Officer, Secretary and Treasurer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1

 Certifications Pursuant to U.S.C. 1350, adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1

 Compensation Recovery Policy

 (P)

 Paper exhibit.

 +

 Management compensatory plan or arrangement

 Item 16.

 Form 10-K Summary

 Not applicable.

 SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 15, 2024.

 /s/ KEVIN SOULSBY

 Kevin Soulsby

 Interim Chief Financial Officer, Secretary and Treasurer

 POWER OF ATTORNEY
 KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nigel D. Hunton and Kevin Soulsby and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/ NIGEL D. HUNTON

 President,

 (Nigel D. Hunton)

 Chief Executive Officer and Director
 (Principal Executive Officer)

 /s/ KEVIN SOULSBY
 (Kevin Soulsby)

 Interim Chief Financial Officer, Secretary
 and Treasurer (Principal Financial and Accounting Officer)

 /s/ DAVID S. DURY

 Chairman of Board

 (David S. Dury)

 /s/ KEVIN D. BARBER

 Director

 (Kevin D. Barber)

 /s/ DOROTHY D. HAYES

 Director

 (Dorothy D. Hayes)

 /s/ MICHELE F. KLEIN

 Director

 (Michele F. Klein)