1 As filed with the Securities and Exchange Commission on May 23, 1996 Registration No. 33-78440 SECURITIES AND EXCHANGE COMMISSION POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT ON FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 IBIS TECHNOLOGY CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts ------------------------------- (State or other jurisdiction of incorporation or organization) 04-2987600 ------------------- (I.R.S. Employer Identification No.) 32 Cherry Hill Drive, Danvers, Massachusetts 01923 (508) 777-4247 -------------------------------------------- (Address, including zip code, and telephone, including area code, of registrant's principal executive offices) Geoffrey Ryding, President Ibis Technology Corporation 32 Cherry Hill Drive Danvers, MA 01923 (508) 777-4247 --------------------------------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Richard A. Goldman, Esquire Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA 02111 (617) 542-6000 -------------------------------------- Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] 2 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x]. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering.[ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.[ ] ------------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ---------------- EXPLANATION NOTE ---------------- This Post-Effective Amendment No. 2 relates to (i) an aggregate of 1,689,051 shares (subject to certain adjustments) of Common Stock, $.008 par value per share ("Common Stock"), of Ibis Technology Corporation (the "Company") of which 1,434,653 shares of Common Stock are authorized for issuance upon exercise of redeemable warrants (the "Redeemable Warrants") to purchase shares of Common Stock, 124,752 shares of Common Stock are issuable upon exercise of warrants originally issued to the underwriter of the Company's initial public offering (the "IPO Underwriter's Warrants") and 129,646 shares of Common Stock are issuable upon exercise of redeemable warrants underlying the IPO Underwriter's Warrants (the "IPO Underwriter's Redeemable Warrants") and (ii) 120,000 IPO Underwriter's Redeemable Warrants issuable upon exercise of the IPO Underwriter's Warrants. A Registration Statement on Form S-1 (No. 33-78440) relating to the issuance of Common Stock upon exercise of the Redeemable Warrants, the IPO Underwriter's Warrants and the IPO Underwriter's Redeemable Warrants and to the issuance of the IPO Underwriter's Redeemable Warrants upon exercise of the IPO Underwriter's Warrants was declared effective by the Commission on May 20, 1994. The purpose of this Post-Effective Amendment No. 2 is to update the information in the prospectus contained in such Registration Statement. 3 PROSPECTUS IBIS TECHNOLOGY CORPORATION 1,689,051 SHARES OF COMMON STOCK 120,000 WARRANTS ---------------- The 1,689,051 shares of Common Stock, $.008 par value per share ("Common Stock"), of Ibis Technology Corporation, a Massachusetts corporation (the "Company" or "Ibis"), offered hereby are being sold by the Company upon exercise of (i) redeemable warrants (the "Redeemable Warrants") to purchase 1,434,653 shares of Common Stock, subject to adjustment upon the occurrence of certain anti-dilutive events, (ii) warrants originally issued by the Company to Josephthal Lyon & Ross Incorporated, ("Josephthal") the underwriter of the Company's initial public offering completed in May 1994 (the "IPO Underwriter's Warrants") to purchase 124,752 shares of Common Stock, subject to adjustment upon the occurrence of certain anti-dilutive events, and (iii) 120,000 redeemable warrants underlying the IPO Underwriter's Warrants (the "IPO Underwriter's Redeemable Warrants") to purchase 129,646 shares of Common Stock, subject to adjustment upon the occurrence of certain anti-dilutive events. In addition, the 120,000 IPO Underwriter's Redeemable Warrants offered hereby are being sold by the Company upon exercise of the IPO Underwriter's Warrants. The executive offices of the Company are located at 32 Cherry Hill Drive, Danvers, Massachusetts 01923. Its telephone number is (508) 777-4247. ---------------- THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- The Company is offering for sale (a) upon exercise of the Redeemable Warrants at an exercise price of $8.08 per share, 1,434,653 shares of Common Stock, subject to adjustment upon the occurrence of certain anti-dilutive events; (b) upon exercise of the IPO Underwriter's Warrants at an exercise price of $8.08 per share, 124,752 shares of Common Stock, subject to adjustment upon the occurrence of certain anti-dilutive events, (c) upon exercise of the IPO Underwriter's Warrants at an exercise price of $.24 per warrant, IPO Underwriter's Redeemable Warrants to purchase 129,646 shares of Common Stock; and (d) upon exercise of the IPO Underwriter's Redeemable Warrants at an exercise price of $9.33 per share, 129,646 shares of Common Stock subject to adjustment upon the occurrence of certain anti-dilutive events. If all of the Redeemable Warrants, the IPO Underwriter's Warrants and the IPO Underwriter's Redeemable Warrants (collectively, the "Warrants") were exercised, the proceeds to the Company would be $13,838,400, less any solicitation commissions and expenses. There can be no assurance, however, that any of the Warrants will be exercised or that the Company will receive any proceeds from the sale of Warrants. See "Risk Factors--No Assurance that Warrants Will Be Exercised." A commission equal to five percent (5%) of the exercise price for the Redeemable Warrants may be payable to Josephthal in connection with the solicitation of the exercise of Redeemable Warrants if certain conditions are met (the "Solicitation Commission"). See "Plan of Distribution." ---------------- No person is authorized in connection with any offering made hereby to give any information or to make any representations other than as contained in this Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company. This Prospectus is not an offer to sell, or a solicitation of an offer to buy, by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. Neither the delivery of this Prospectus nor any sales made hereunder shall under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date hereof. ---------------- The date of this Prospectus is May 23, 1996. 4 AVAILABLE INFORMATION --------------------- The Company is subject to certain informational reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). These reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024 of the Commission's office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its regional offices located at 7 World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such reports, proxy statements and other information can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549 at prescribed rates. Additional updating information with respect to the securities covered herein may be provided in the future to purchasers by means of appendices to this Prospectus. The Company has filed with the Commission in Washington, DC a registration statement (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the 1933 Act with respect to the securities offered or to be offered hereby. This Prospectus does not contain all of the information included in the Registration Statement, certain items of which are omitted in accordance with the rules and regulations of the Commission. For further information about the Company and the securities offered hereby, reference is made to the Registration Statement and the exhibits thereto. The Company will provide without charge to each person to whom this Prospectus is delivered, on the written or oral request of such person, a copy of any document incorporated herein by reference, excluding exhibits. Requests should be made to Ibis Technology Corporation, 32 Cherry Hill Drive, Danvers, MA 01923, telephone (508) 777-4247 and directed to the attention of Debra L. Carroll, Treasurer. - 2 - 5 TABLE OF CONTENTS PAGE RISK FACTORS............................................................... 4 USE OF PROCEEDS........................................................... 11 DILUTION.................................................................. 13 PLAN OF DISTRIBUTION...................................................... 14 DESCRIPTION OF IPO UNDERWRITER'S REDEEMABLE WARRANTS...................... 14 LEGALITY OF COMMON STOCK.................................................. 15 EXPERTS................................................................... 15 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 16 - 3 - 6 RISK FACTORS An investment in the securities being offered by this Prospectus involves a high degree of risk. In addition to the other information contained in this Prospectus or incorporated herein by reference, prospective investors should carefully consider the following risk factors before purchasing the shares of Common Stock and Warrants offered hereby. This Prospectus contains and incorporates by reference forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of the Company's plans and objectives for future operations, assumptions underlying such plans and objectives and other forward-looking statements included or incorporated in this Prospectus. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Factors which could cause such results to differ materially from those described in the forward-looking statements include those set forth in the risk factors below. History of Net Losses, Accumulated Deficit and Future Net Losses. The Company incurred net losses of $1,159,157, $1,474,299 and $3,992,795 for the years ended December 31, 1993, 1994 and 1995, respectively, and $284,210 for the three month period ended March 31, 1996, and at March 31, 1996 had an accumulated deficit of $10,396,667. The net loss incurred by the Company for the year ended December 31, 1994 and the accumulated deficit as of March 31, 1996 each would have been $2,000,000 greater if the Company had not received $2,000,000 in key-man life insurance proceeds in June 1994 as a result of the death of Dr. Michael Guerra, a founder of the Company and its former Chief Executive Officer and Chairman of the Board. The Company expects net losses to continue for the foreseeable future and there can be no assurance that the Company will be profitable. The Company anticipates that it may be required to raise substantial additional capital in the future in order to finance expansion of its manufacturing capacity and its research and development programs. There can be no assurance, however, that such capital will be available on acceptable terms, if at all. See "Selected Financial Data" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "1995 Form 10-K"), and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 1995 Form 10-K and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "March 31, 1996 Form 10-Q"), and "Risk Factors -- Availability of Capital." Quarterly Fluctuations in Operating Results. The Company has experienced and expects to continue to experience significant fluctuations in its quarterly operating results. The Company believes that fluctuations in quarterly results may cause the market price of its Common Stock to fluctuate, perhaps substantially. Factors which have had an influence on and may continue to influence the Company's operating results in a particular quarter include the timing of receipt of orders from major customers, product mix, product obsolescence and changes in pricing policies by the Company, its competitors or its suppliers, the relative proportions of sales for commercial and military applications, the Company's ability to manufacture and ship products on a cost-effective and timely basis, the development and introduction of new production Ibis 1000 implanters by the Company, market acceptance of new and enhanced versions of the Company's products or implanters, the cyclical nature of the semiconductor industry, the evolving and unpredictable nature of the markets for the products incorporating the Company's SIMOX wafers, the amount of research and development expenses associated with new or enhanced products or implanters and the availability of government funding. The Company places blanket orders to purchase its materials from independent vendors several months in advance, often prior to receiving orders from its customers. If customers cancel or reschedule shipments or if production difficulties delay shipments, expense and inventory levels could be disproportionately high. A significant portion of the Company's expenses is fixed and the timing of increases in variable expenses is based in large part on the Company's forecast of future revenues. As a result, if revenues do not meet the Company's expectations, it may be unable to quickly adjust expenses to levels appropriate given actual revenues, which could have a material - 4 - 7 adverse effect on the Company's business, operating results and financial condition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 1995 Form 10-K and the March 31, 1996 Form 10-Q. Development Stage of Commercial Market for SIMOX Wafers. The sources of the Company's revenue have shifted from primarily research and development contracts and sales of SIMOX wafers for military applications to primarily sales of SIMOX wafers for commercial applications. To date, most customers who have purchased SIMOX wafers from the Company in the commercial field have done so only for the purpose of characterizing and evaluating the wafers. The Company is aware of only one semiconductor manufacturer that is currently using SIMOX wafers in mainstream commercial applications. There can be no assurance that the performance advantages of SIMOX wafers will be realized commercially or that a commercial market for SIMOX wafers will continue to develop. Competition and Technological Advances. The semiconductor industry is highly competitive and has been characterized by rapid and significant technological advances. A number of established semiconductor and materials manufacturers, including certain of the Company's customers, have expended significant resources in developing improved wafer substrates. There can be no assurance that the Company's competitors or others, many of which have substantially greater financial, technical and other resources than the Company, will not succeed in developing technologies and products that are equal to or more effective than any which are being developed by the Company or which would render the Company's technology obsolete or noncompetitive. In addition to competition from other manufacturers of SIMOX wafers, the Company faces competition from manufacturers using bulk silicon and epitaxial wafer technology, compound materials technology such as silicon-germanium, gallium-arsenide and indium phosphide and SOI technology other than SIMOX technology. Although the Company believes that SIMOX wafers offer integrated circuit performance advantages, there is no assurance that semiconductor manufacturers will not develop improvements to existing bulk silicon or epitaxial wafer technology, or that competing compound materials or SOI technologies will not be more successfully developed, that would eliminate or diminish the performance advantages of SIMOX wafers. The Company's ability to compete with other manufacturers of SIMOX wafers and manufacturers of competing SOI wafers, as well as with bulk silicon, epitaxial and compound materials wafer manufacturers, will depend on numerous factors within and outside the Company's control, including the success and timing of product introductions by the Company and its competitors, product distribution, customer support, sufficiency of funding available to the Company and the price, quality and performance of competing products and technologies. No Assurances of Successful Large-Scale Manufacturing. The Company has only manufactured limited quantities of SIMOX wafers on the Ibis 1000 oxygen implanters for evaluation in commercial applications. To be successful, the Company's products must be manufactured in commercial quantities, at acceptable costs. Although to date the Company has produced its products successfully, future production in commercial quantities may create technical and financial challenges for the Company. The Company has limited manufacturing experience. No assurance can be given that the Company will be able to make the transition to volume commercial production successfully. The Company has completed one Ibis 1000 oxygen implanter and the prototype Ibis 1000 upon which it was based. The Company is currently constructing two Ibis 1000s and plans to construct additional Ibis 1000s with the proceeds of its April 1996 public offering. Any difficulty or delay in constructing additional Ibis 1000s could have a material adverse effect on the Company's business and results of operations. Dependence on Manufacturing, Marketing and Distribution Partners. One element of the Company's marketing strategy is to form alliances with strategic partners for the manufacturing, marketing and distribution of its products, in part to address possible customer concerns regarding Ibis being a sole source supplier. The Company recently entered into a strategic business development agreement with Motorola Corporation to fund capacity expansion. However, there can be no assurance that the Company will be successful in maintaining such alliance - 5 - 8 or forming and maintaining other alliances, including satisfying its contractual obligations with its strategic partners, or that the Company's partners will devote adequate resources to manufacture, market and distribute these products successfully or will not attempt to compete with the Company. The limited number of reliable second sources of supply may adversely affect or delay the integration of SIMOX wafers in mainstream commercial applications. Cyclical Nature of the Semiconductor Industry. The semiconductor industry into which the Company sells its products is highly cyclical and has historically experienced periodic downturns, which often have had a severe effect on the semiconductor industry's demand for semiconductor materials. Prior semiconductor industry downturns have resulted in negative effects on the Company's net sales, gross margin and net income. The Company's operations as a whole will continue to be dependent on the expenditures of semiconductor manufacturers, which in turn will be largely dependent on the current and anticipated market demand for integrated circuits and products utilizing integrated circuits. Any future weakness in demand in the semiconductor industry may have a material adverse effect on the Company's business and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 1995 Form 10-K and the March 31, 1996 Form 10-Q. Limited Availability of Materials and Components. Due to the increasing demand in the semiconductor industry for silicon wafers, there is no assurance that the Company will be able to purchase an adequate supply of such silicon wafers for manufacture of its products at or near current prices, if at all. Any shortages in the availability of silicon wafers or a significant increase in the price of silicon wafers could have a material adverse effect on the Company's business and results of operations. The Company manufactures its Ibis 1000 oxygen implanters from standard components and from components manufactured in-house or by other vendors according to the Company's design specifications. Although the Company has not experienced significant production delays due to unavailability or delay in procurement of component parts or raw materials to date, there can be no assurance that a disruption or termination of certain of these vendors will not occur and any such disruption or termination could have a material adverse effect on the Company's business and results of operations. Dependence on Key Personnel. The Company is dependent upon a number of key scientific and management personnel, including its President and Chief Executive Officer, Dr. Geoffrey Ryding. The Company maintains key-man life insurance on Dr. Ryding, of which it is the sole beneficiary. The loss of the services of one or more key individuals will have a material adverse impact on the Company. The Company's success may also depend on its ability to attract and retain other qualified scientific, marketing, manufacturing and other key management personnel. The Company faces competition for such personnel and there can be no assurance that the Company will be able to attract or retain such personnel. Furthermore, although the Company has an employment agreement with Dr. Ryding and its employees are subject to certain confidentiality and non-competition obligations, there can be no assurance that the Company's key personnel will remain with the Company or will not become employed by a competitor. Dependence on Research and Development Funding. To date, a significant portion of the Company's revenue has been derived from research and development agreements with agencies of the U.S. government. During the three-month period ended March 31, 1996, and the fiscal years ended 1993, 1994 and 1995, revenues from government sponsored research and development contracts were approximately $24,000, $1,331,000, $890,000 and $764,000, or 1%, 33%, 27% and 16% of the Company's revenues, respectively. The research and development agreements are subject to termination at the election of the relevant agency. Additionally, these agreements are subject to negotiated overhead rates, and work performed under these agreements is subject to audit and retroactive adjustments of amounts paid to the Company. The Company is currently being audited by the Defense Contract Audit Agency ("DCAA") in connection with the Company's 1990 through 1995 overhead and general and administrative rates, as well as incurred costs for the same periods. The discussions with the DCAA concerning this audit are at a preliminary stage and it is, therefore, not possible to determine at this time if any retroactive - 6 - 9 adjustments of amounts previously paid to the Company will be required. The loss of revenue from the research and development agreements and/or the payment of any such retroactive adjustments could have a material adverse impact on the Company. Dependence on Key Customers. During the three-month period ended March 31, 1996 and the fiscal years ended 1993, 1994 and 1995, revenues from Honeywell, IBM, Motorola, and Texas Instruments accounted in the aggregate for approximately $931,000, $1,576,000, $1,266,000, $2,554,000, or approximately 48%, 39%, 39% and 55% of the Company's revenues, respectively. The loss of one or more of these major customers and the failure of the Company to obtain other sources of revenue could have a material adverse impact on the Company. Centralization of Manufacturing Facilities. The Company manufactures all of its products at its facility in Danvers, Massachusetts. Due to the centralization of all of its manufacturing equipment in one location, the Company is susceptible to business interruptions resulting from power outages, natural disasters, equipment failures, and other localized conditions. Although the Company maintains business interruption insurance, prolonged business interruption could have a material adverse effect on the Company's business and its results of operations. Availability of Capital. The Company has invested, and intends to continue to invest, in facilities and state-of-the-art equipment in order to increase its research, development and manufacturing capabilities. In 1995, these capital expenditures totaled approximately $1.7 million. The Company believes that there is a need to use much of the net proceeds it received from its April 1996 public offering to construct additional Ibis 1000 oxygen implanters, expand its facilities and purchase additional equipment. Changes in technology or sales growth beyond currently established capabilities would require further investment. As a result, the Company anticipates that it may be required to raise substantial additional capital in the future in order to finance expansion of its manufacturing capacity and its research and development programs. The Company has previously financed its working capital requirements through debt and equity financings, equipment lines of credit, a working line of credit, a term loan, sale-leaseback arrangements and government contracts. There can be no assurance that additional capital will be available on acceptable terms, if at all. If additional funds are raised by issuing equity securities, further dilution to the Company's then existing stockholders may result. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 1995 Form 10-K and the March 31, 1996 Form 10-Q, "Use of Proceeds" and "Risk Factors--Dilution." Failure to Comply with Bank Covenants. The Company's ability to borrow under its existing credit facility is dependent, among other things, upon its continued compliance with various financial covenants. The Company's ability to remain in compliance with the financial covenants in the future depends largely on its future results of operations and its ability to raise additional financing. If the Company were not in compliance with such covenants, absent an amendment or waiver agreed to by the bank, the Company would not be permitted to make additional borrowings under the facility and the outstanding amounts thereunder could be declared immediately due and payable. As of the end of the quarters ended in June, September and December 1995 and March 1996, the Company was not in compliance with certain of these covenants. However, in each instance, the bank agreed to waive the Company's breach of covenants and/or amended the facility such that the Company is currently in compliance with the revised covenants. In addition, the bank recently amended two covenants relating to the first quarter of 1996. There can be no assurance that the Company would be able to obtain from the bank any necessary amendments or waivers in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" in the 1995 Form 10-K and the March 31, 1996 Form 10Q. Rights to Implanters. Pursuant to a sale-lease back arrangement, the Ibis 1000 implanter currently in production is owned by Financing for Science International, Inc. ("FSI") and is leased to the Company, with the Company having an option to purchase the Ibis 1000 at the expiration of the lease. In addition, Motorola will have a security interest in the Ibis 1000 that is currently being constructed and will be dedicated to Motorola's production requirements. If the Company fails to meet certain contractual obligations under its agreements with either FSI or - 7 - 10 Motorola, the Company could lose its ability to use the implanter and FSI or Motorola, as the case may be, could sell the implanter to a competitor of the Company, which would have an adverse effect on the Company's operations. The Company is currently constructing an additional Ibis 1000 implanter to be sold to a major semiconductor manufacturer. The manufacturer has issued a purchase order to the Company for the purchase of the implanter and has made certain advance payments. Although the use of the implanter by this manufacturer and its ability to sell SIMOX wafers will be subject to certain restrictions, there can be no assurance that such manufacturer, which has substantially greater financial, technical and other resources than the Company, will not attempt to compete with the Company's business. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" in the 1995 Form 10-K and the March 31, 1996 Form 10-Q. Patents and Protection of Proprietary Technology. The Company's ability to compete effectively with other companies will depend, in part, on the ability of the Company to maintain the proprietary nature of its technology. Although the Company has been awarded or has filed applications for a number of patents in the United States and foreign countries, there can be no assurance as to the degree of protection offered by these patents, or as to the likelihood that pending patents will be issued. There can be no assurance that competitors in both the United States and foreign countries, many of which have substantially greater resources and have made substantial investments in competing technologies, do not have or will not obtain patents that will prevent, limit or interfere with the Company's ability to make and sell its products or intentionally infringe the Company's patents. The defense and prosecution of patent suits is both costly and time-consuming, even if the outcome is favorable to the Company. In addition, there is an inherent unpredictability regarding obtaining and enforcing patents. An adverse outcome in the defense of a patent suit could subject the Company to significant liabilities to third parties, require disputed rights to be licensed from third parties, or require the Company to cease selling its products. The Company also relies in large part on unpatented proprietary technology and there can be no assurance that others, including strategic partners, may not independently develop the same or similar technology or otherwise obtain access to the Company's proprietary technology. To protect its rights in these areas, the Company currently requires all of its employees to enter into confidentiality agreements. There can be no assurance, however, that these agreements will provide meaningful protection for the Company's trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. Public Market for Securities; Volatility of Price. There can be no assurance that an active trading market for any of the Company's securities will develop or be sustained. Additionally, there can be no assurance as to the liquidity of any such markets. The market prices of the Company's securities have been and may continue to be highly volatile and there can be no assurance as to the market price of the Common Stock at any given time. Factors such as quarter-to-quarter variations in the Company's revenues and earnings and announcements or introductions of technological innovations, new products or new prices by the Company or its competitors, customers or suppliers could cause the market price of the Company's securities to fluctuate significantly. Sales of a substantial number of shares of Common Stock by existing stockholders or the exercise of Redeemable Warrants may also have an adverse effect on the market price of the Common Stock. In addition, in recent years the stock market in general, and the market prices for high technology companies in particular, have experienced significant volatility, which often may have been unrelated to the operating performance of the affected companies. Effect of Shares Eligible for Future Sale on Market Price. Future sales of Common Stock by existing stockholders could adversely affect the prevailing market price for the Common Stock and the Company's ability to raise additional capital. As of March 31, 1996, assuming the sale of 1,600,000 shares of Common Stock at $7.25 per share in the Company's public offering, which was completed in April 1996, occurred prior to such date, the Company would have had on a pro forma basis 5,129,171 shares of Common Stock outstanding. Of such shares, the 2,800,000 shares sold in the Company's public offerings generally are freely tradeable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"). Of the remaining 2,329,171 shares of Common Stock, approximately 521,715 shares were previously sold by certain stockholders of the Company under Rules 144, 144(k) - 8 - 11 or 701 of the Securities Act or pursuant to the Company's S-8 Registration Statement (the "S-8") and are now freely tradeable, and approximately 1,807,456 shares are or will become eligible for sale under Rules 144 and 144(k) or pursuant to the S-8. In connection with the April 1996 public offering, the holders of approximately 1,015,543 shares of Common Stock have agreed not to sell or otherwise dispose of their shares for a period ending on July 31, 1996 (the "lock-up period"), without the prior written consent of the managing underwriter of that offering, Allen & Company Incorporated. In addition, the Securities and Exchange Commission has proposed an amendment to Rule 144 which would reduce the holding period before shares subject to Rule 144 become eligible for sale in the public market. This proposal, if adopted, would substantially increase the number of shares of the Company's Common Stock eligible for immediate sale following the expiration of the lock-up period. No prediction can be made as to the effect, if any, that market sales of such shares or the availability of such shares for future sale will have on the market price of shares of Common Stock prevailing from time to time. The holders of up to approximately 1,542,000 shares of Common Stock are entitled to certain registration rights with respect to such shares. If such holders, by exercising their registration rights, cause a large number of shares to be registered and sold in the public market, such sales may have an adverse effect on the market price for the Common Stock. In addition, if the Company is required to include in a Company-initiated registration shares held by such holders pursuant to the exercise of their "piggyback" registration rights, such sales may have an adverse effect on the Company's ability to raise needed capital. Government Regulation. The Company is subject to a variety of federal, state and local environmental regulations related to the storage, treatment, discharge or disposal of chemicals used in its operations and exposure of its personnel to occupational hazards. Although the Company believes that it has all permits necessary to conduct its business, the failure to comply with present or future regulations could result in fines being imposed on the Company, suspension of production or a cessation of operations. The Company's future activities may result in it being subject to additional regulation. Such regulations could require the Company to acquire significant equipment or to incur other substantial expenses to comply with regulations. Any failure by the Company to control the use of, or to restrict adequately the discharge of, hazardous substances or properly control other occupational hazards could subject it to substantial financial liabilities. Impact of Warrants. Initially, each Redeemable Warrant was exercisable for one share of Common Stock at a price equal to $8.40, each IPO Underwriter's Warrant was exercisable for one share of Common Stock at a price equal to $8.40 and one IPO Underwriter's Redeemable Warrant at a price equal to $0.24, and each IPO Underwriter's Redeemable Warrant was exercisable for one share of Common Stock at a price equal to $10.08. The exercise prices of the Warrants and the number of shares issuable upon exercise thereof are subject to adjustment in certain circumstances, including upon the issuance of certain securities by the Company having an issue price or exercise price lower than the exercise price of the respective Warrants. As a result of certain issuances and sales of Common Stock (and securities exercisable for shares of Common Stock) by the Company below the exercise prices of the Warrants, the exercise price of each Redeemable Warrant is $8.08 per share of Common Stock and such Warrants are exercisable for an aggregate of 1,434,653 shares of Common Stock. The exercise price of each IPO Underwriter's Warrant is $8.08 per share of Common Stock and $.24 per IPO Underwriter's Redeemable Warrant, and the IPO Underwriter's Warrants are exercisable for an aggregate of 124,752 shares of Common Stock and 120,000 IPO Underwriter's Redeemable Warrants. The exercise price of each IPO Underwriter's Redeemable Warrant is $9.33 and such Warrants are exercisable for an aggregate of 129,646 shares of Common Stock. Exercise of the Warrants may have an adverse effect upon the trading price of and market for the Common Stock and will result in dilution of the outstanding shares. It is also possible that, as long as the Warrants remain outstanding, their existence may place downward pressure on the price of Common Stock above certain levels. Dilution. The exercise prices of the Warrants are substantially higher than the net tangible book value per share of Common Stock as of March 31, 1996. If the holders of the Warrants were to have exercised such Warrants as of March 31, 1996, they would have incurred immediate and substantial dilution in net tangible book value per share. Additional dilution will occur upon exercise of outstanding stock options and other warrants and - 9 - 12 may occur in connection with future financings to meet the Company's capital requirements. At a weighted average exercise price per Warrant of $8.19 and based upon certain other assumptions set forth under the caption "Dilution" below, including an assumption that all of the Warrants are exercised, the weighted average net tangible book value dilution per share to the holders of the Warrants would have been $4.09 as of March 31, 1996, or approximately 50%. The dilutive effect would be substantially greater if less than all of the Warrants are exercised. There can be no assurance that such dilution per share will not increase at the times the Warrants are exercised. See "Risk Factors -- Availability of Capital" and "Dilution." Certain Charter and By-Law Provisions; Possible Issuance of Preferred Stock. The Company's Restated Articles of Organization and Restated By-Laws contain certain provisions that may make it more difficult for a third party to acquire, or discourage acquisition bids for, the Company. This could limit the price that certain investors might be willing to pay in the future for shares of the Company's Common Stock. In addition, shares of the Company's Preferred Stock may be issued in the future without future stockholder approval and upon such terms and conditions, and having such rights, privileges and preferences, as the Board of Directors may determine. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred Stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from acquiring, a majority of the outstanding voting stock of the Company. The Company has no present plans to issue any shares of Preferred Stock. No Dividends. The Company has not paid dividends since its inception and does not anticipate paying any dividends in the foreseeable future. Pursuant to the terms of the Company's working capital line of credit, the Company is prohibited from paying any dividends, other than dividends payable solely in capital stock of the Company, without the prior written consent of the lender. The Company plans to retain any earnings to finance the development and expansion of its business. No Assurance that Warrants Will Be Exercised. If all of the Warrants are exercised to purchase the shares of Common Stock offered hereby, the Company would receive net proceeds of approximately $13,208,800. However, there can be no assurance that any or all of the Warrants will be exercised by the holders thereof prior to their expiration on May 20, 1999. Accordingly, there can be no assurance that the Company will receive any proceeds from the sale of the shares of Common Stock offered in this Prospectus. Moreover, even if Warrants are exercised, the timing of such exercise cannot be predicted and may not coincide with the Company's needs for additional capital. Current Prospectus and State "Blue Sky" Registration Required to Exercise the Warrants. The Company will be able to issue shares of its Common Stock upon exercise of the Warrants only if there is a current prospectus relating to the Common Stock issuable upon the exercise of said Warrants under an effective registration statement filed with the Commission, and only if such Common Stock is qualified for sale or exempt from qualification under applicable state securities laws of the jurisdictions in which the various holders of the Warrants reside. Although the Company has agreed to use its best efforts to meet such regulatory requirements, there can be no assurance that the Company will be able to do so. Although the Warrants were not knowingly sold to purchasers in jurisdictions in which the Warrants were not registered or otherwise qualified for sale, purchasers have bought or may in the future buy Warrants in the aftermarket or may move to jurisdictions in which the shares of Common Stock issuable upon exercise of the Warrants are not so registered or qualified. In this event, the Company would be unable to issue shares of Common Stock to those persons upon exercise of the Warrants unless and until the shares of Common Stock issuable upon exercise of the Warrants are qualified for sale or exempt from qualification in jurisdictions in which such persons reside. There is no assurance that the Company will be able to effect any required registration or qualification. The Warrants may be deprived of any value if a then current prospectus covering the Common Stock issuable upon exercise of the Warrants is not effective pursuant to an effective - 10 - 13 registration statement or if such Common Stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the Warrants reside. Potential Adverse Effect of Redemption of Redeemable Warrants. The Redeemable Warrants and the IPO Underwriter's Redeemable Warrants are redeemable by the Company in whole or in part, upon 30 days' prior written notice, for $.20 per Warrant, provided certain specified market conditions are met. The Company may choose to redeem such Warrants for $.20 per Warrant rather than incur the cost of keeping a registration statement current with the Commission for the shares of Common Stock underlying the Warrants. Redemption of such Warrants could force the holders to exercise the Warrants and pay the exercise price at a time when it may be disadvantageous for the holders to do so, to sell the Warrants at the then current market price when they might otherwise wish to hold the Warrants for possible additional appreciation, or to accept the redemption price, which is likely to be substantially less than the market value of the Warrants at the time of redemption. Any holder who does not exercise its Warrants prior to their expiration or redemption, as the case may be, will forfeit its right to purchase the shares of Common Stock underlying the Warrants. USE OF PROCEEDS The net proceeds to the Company from the sale of the securities offered hereby (after deducting the estimated offering expenses of $50,000 and assuming the payment in full of the 5% Solicitation Commission which is payable to Josephthal in certain circumstances upon the exercise of the Redeemable Warrants) are estimated to be approximately $13,208,800 if all of the Warrants are exercised. However, there can be no assurances that any or all of the Warrants will be exercised or as to the timing of such exercises. If none of the Warrants are exercised and there are no proceeds therefrom, the Company currently anticipates using approximately $8 million from the net proceeds of approximately $10,448,000 from its public offering that was completed in April 1996 to construct Ibis 1000 oxygen implanters which will be in addition to the Ibis 1000 implanter currently in production and the two under construction. The Company anticipates using approximately $1 million of the net proceeds from the offering for acquisitions of capital equipment, including test equipment, and approximately $1 million to expand the Company's manufacturing facilities. The remaining net proceeds, together with existing capital resources, have or will be used for general corporate purposes, including hiring additional personnel, particularly for marketing and equipment manufacturing, supporting internally funded research and development activities and repaying amounts which are outstanding under the Company's credit facility. If all of the Warrants are exercised, based upon its current expectations as to the growth of the commercial applications market for SIMOX wafers, the Company currently anticipates using, in addition to the use of the net proceeds from the offering described above, approximately $8 million of the net proceeds to construct additional Ibis 1000 oxygen implanters, approximately $1.5 million to acquire capital equipment and approximately $1.5 million to further expand the Company's manufacturing facilities. The remaining net proceeds, together with existing capital resources, will be used for general working capital purposes including hiring additional personnel and supporting internally funded research and development activities. If half of the Warrants are exercised, based upon its current expectations as to the growth of the commercial applications market for SIMOX wafers, the Company currently anticipates using, in addition to the use of the net proceeds from the offering described above, approximately $4 million of the net proceeds to construct additional Ibis 1000 oxygen implanters, approximately $.5 million to acquire capital equipment and approximately $.5 million to expand the Company's manufacturing facilities. The remaining net proceeds, together with existing capital resources, will be used for general working capital purposes including hiring additional personnel and supporting internally funded research and development activities. - 11 - 14 If less than half of the Warrants are exercised, the Company currently anticipates that, in addition to the use of the net proceeds from the offering described above, the net proceeds from any such exercise will first be applied to construct an additional Ibis 1000 oxygen implanter. To the extent such net proceeds exceed the funds needed to construct the Ibis 1000 implanter, the Company currently anticipates that any excess amounts together with existing capital resources will be used for general working capital purposes including hiring additional personnel and supporting internally funded research and development activities. The use of the net proceeds could vary significantly depending on the amount of funds actually received from the exercises of the Warrants and the Company's needs and financial position at such times in the future if and when the Warrants are exercised. The amounts actually expended for each purpose described above may vary significantly depending on numerous factors, including, but not limited to, market demand for SIMOX wafers, management's determination as to how best to satisfy such demand, progress of the Company's research and development activities, technological changes, competition and the ability of the Company, when it deems appropriate, to establish strategic alliances for the manufacturing, marketing and distribution of its products. The Company expects that it may be required to raise substantial additional capital in the future in order to finance expansion of its manufacturing capacity and its research and development programs. Such capital may be raised through additional equity offerings, as well as collaborative relationships, borrowings and other available sources. There can be no assurance that such funding will be available on acceptable terms, if at all. See "Risk Factors -- Availability of Capital." - 12 - 15 DILUTION The following information concerning net tangible book value and dilution as of March 31, 1996 has been adjusted to include the sale of 1,600,000 shares of Common Stock at $7.25 per share in the Company's public offering completed on April 9, 1996 and the estimated net proceeds of $10,448,000 therefrom. The net tangible book value of the Company's Common Stock as of March 31, 1996 was $14,716,591 or $2.87 per share. Net tangible book value per share represents the amount of the Company's stockholders' equity, less intangible assets, divided by 5,129,171 shares of Common Stock outstanding on March 31, 1996. For purposes hereof, net tangible book value dilution per share represents the difference between (i) $8.19 (which is the weighted average exercise price of each Warrant, subject to additional adjustment in certain circumstances), and (ii) the net tangible book value per share of Common Stock as of March 31, 1996. After giving effect to the net proceeds to be received by the Company upon exercise of the Warrants (taking into account the expenses of the Company and assuming payment of the full Solicitation Commission payable to Josephthal if certain conditions are satisfied), the net tangible book value of the Company as of March 31, 1996 would have been (i) if Warrants to purchase 422,263 shares of Common Stock are exercised (25% of the total outstanding Warrants), $18,018,791 or $3.25 per share, (ii) if Warrants to purchase 844,525 shares of Common Stock are exercised (50% of the total outstanding Warrants), $21,320,991 or $3.57 per share and (iii) if Warrants to purchase 1,689,051 shares of Common Stock are exercised (100% of the total outstanding Warrants), $27,925,391 or $4.10 per share. This would have represented as of March 31, 1996 an immediate increase in net tangible book value of $.38, $.70 and $1.23 per share, respectively to existing stockholders and an immediate dilution in net tangible book value of $4.94, $4.62 and $4.09 per share to the holders of the Warrants upon exercise thereof. The following table illustrates this per share dilution: Percentage of Warrants Exercised -------------------------------- 25% 50% 100% ------------ ------------ ------------- Weighted average exercise price of the Warrants ................ $8.19 $8.19 $8.19 Net tangible book value per share ............................ $2.87 $2.87 $2.87 Increase per share attributable to exercise of Warrants ...... .38 .70 1.23 ----- ----- ----- Net tangible book value per share after exercise of Warrants ... 3.25 3.57 4.10 ----- ----- ----- Net tangible book value dilution per share to holders of Warrants. $4.94 $4.62 $4.09 ===== ===== ===== The following table summarizes, as of March 31, 1996, the difference between the existing stockholders and the holders of Warrants that will receive shares of Common Stock assuming all of the Warrants are exercised, with respect to the number of shares purchased from the Company, the total consideration paid and the average price per share paid (assuming a weighted average exercise price of $8.19 per Warrant): Shares Purchased Total Consideration Average price -------------------- ------------------- ------------- Number Percent Amount Percent Per Share ------ ------- ------ ------- --------- Existing holders of Common Stock. 5,129,171 75.2% $27,834,478 66.8% $5.43 Shares of Common Stock issued upon exercise of Warrants........... 1,689,051 24.8% 13,838,400 33.2% $8.19 --------- ----- ----------- ----- Total 6,818,222 100.0% $41,672,878 100.0% ========= ===== =========== ===== The foregoing computations exclude an aggregate of 460,939 shares of Common Stock reserved for issuance upon exercise of outstanding stock options and warrants as of March 31, 1996, which have a weighted average exercise price of $3.98 per share. See "Risk Factors -- Dilution." - 13 - 16 PLAN OF DISTRIBUTION The shares of Common Stock and Warrants offered hereby may be offered and sold from time to time by the Company upon exercise of the Warrants by the holders thereof. Such securities may be exercised by tendering the exercise price, together with the warrant certificate and exercise form, to the Company before May 20, 1999, the expiration date of the Warrants. Upon the exercise of any Redeemable Warrants which exercise was solicited by Josephthal, and to the extent not inconsistent with the guidelines of the National Association of Securities Dealers, Inc. and the Rules and Regulations of the Securities and Exchange Commission (the "Commission"), the Company has agreed to pay to Josephthal a commission which shall not exceed five percent (5%) of the aggregate exercise price of such Redeemable Warrants. However, no compensation will be paid to Josephthal in connection with the exercise of the Redeemable Warrants if (a) the market price of the Common Stock is lower than the exercise price, (b) the Redeemable Warrants were held in a discretionary account, (c) the Redeemable Warrants are exercised in a transaction not solicited by Josephthal, or (d) Josephthal has not been designated in writing as the soliciting agent with respect to such solicitation. The Company has agreed that it will not solicit the exercise of the Redeemable Warrants through any third party other than Josephthal. Unless otherwise permitted under Rule 10b-6A, Josephthal will be prohibited by Rule 10b-6 under the Securities Exchange Act of 1934, as amended, from engaging in any market-making activities with regard to the Company's securities for the period from two to nine business days, whichever is applicable (or such other applicable periods as Rule 10b-6 may provide) prior to any solicitation of the exercise of the Redeemable Warrants until the later of the termination of such solicitation activity or the termination (by waiver or otherwise) of any right Josephthal may have to receive a fee. As a result, Josephthal may be unable to continue to provide a market for the Company's securities during certain periods while the Redeemable Warrants are exercisable. If Josephthal has engaged in any of the activities prohibited by Rule 10b-6 during the periods described above, Josephthal undertakes to waive unconditionally its right to receive a commission on the exercise of such Redeemable Warrants. DESCRIPTION OF IPO UNDERWRITER'S REDEEMABLE WARRANTS The Company sold to Josephthal for nominal consideration the IPO Underwriter's Warrants to initially purchase from the Company up to 120,000 shares of Common Stock and/or up to 120,000 IPO Underwriter's Redeemable Warrants pursuant to a Warrant Agreement dated as of May 1994 (the "Warrant Agreement"). The IPO Underwriter's Redeemable Warrants issuable upon exercise of the IPO Underwriter's Warrants are identical to the Redeemable Warrants, except that the initial exercise price of the IPO Underwriter's Redeemable Warrants was equal to $10.08. The following discussion of certain terms and provisions of the IPO Underwriter's Redeemable Warrants is qualified in its entirety by reference to the detailed provisions of the Warrant Agreement, the form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Each IPO Underwriter's Redeemable Warrant initially entitled the holder to purchase one share of Common Stock at a price of $10.08 (the "Purchase Price") until May 20, 1999 (the "Expiration Date"), and is redeemable by the Company at a redemption price of $.20 at any time after May 20, 1995 on not less than 30 days' prior written notice, provided that the closing sale price of the Common Stock on the primary exchange on which the Common Stock is traded (if then traded on a national securities exchange) or the average closing bid price for such shares in the over-the-counter market as reported by the Nasdaq Stock Market (if then traded in the over-the-counter market), for a period of 20 consecutive trading days ending within 10 days prior to the date of the notice of redemption delivered by the Company has been at least $10.50 per share. The IPO Underwriter's Redeemable Warrants will be entitled to the benefit of adjustments in the Purchase Price and in the number of shares of Common Stock and/or other securities deliverable upon the exercise thereof in the event of certain stock dividends, stock splits, reclassification, reorganizations, consolidations or mergers and upon certain issuances of shares of Common Stock, or securities convertible into or exercisable for shares of Common Stock, at a price per share below the - 14 - 17 exercise price of the IPO Underwriter's Redeemable Warrants. As a result of certain issuances and sales of Common Stock (and securities exercisable for shares of Common Stock) by the Company below the Purchase Price, each IPO Underwriter's Redeemable Warrant will be exercisable for approximately 1.08 shares of Common Stock (129,646 shares in the aggregate) at a Purchase Price of $9.33 per share. On or after the Expiration Date, the IPO Underwriter's Redeemable Warrants become wholly void and of no value. The Company may at any time extend the Expiration Date of all outstanding IPO Underwriter's Redeemable Warrants for such increased period of time as it may determine. The IPO Underwriter's Redeemable Warrants may be exercised at the office of Continental Stock Transfer and Trust Company. If any IPO Underwriter's Redeemable Warrants are called for redemption, such IPO Underwriter's Redeemable Warrants must be exercised prior to the close of business on the last business day before the date of such redemption or the right to purchase the applicable shares of Common Stock is forfeited. No holder, as such, of IPO Underwriter's Redeemable Warrants shall be entitled to vote or receive dividends or be deemed the holder of shares of Common Stock for any purpose whatsoever until such IPO Underwriter's Redeemable Warrants have been duly exercised and the Purchase Price has been paid in full. Holders of the IPO Underwriter's Redeemable Warrants will have the right to exercise the IPO Underwriter's Redeemable Warrants to purchase shares of Common Stock only if a current prospectus relating to such shares is then in effect and only if the shares are qualified for sale under the securities laws of the state or states in which the various holders of the IPO Underwriter's Redeemable Warrants reside. The Company has undertaken to use its best efforts to maintain the effectiveness of the Registration Statement of which this Prospectus is a part so as to permit the purchase and sale of the Common Stock underlying the IPO Underwriter's Redeemable Warrants, but there can be no assurance that the Company will be able to do so. Although the IPO Underwriter's Redeemable Warrants were not knowingly sold by the Company to purchasers in jurisdictions in which the IPO Underwriter's Redeemable Warrants are not registered or otherwise qualified for sale, purchasers may buy IPO Underwriter's Redeemable Warrants in the aftermarket or may move to jurisdictions in which the shares of Common Stock issuable upon exercise of the IPO Underwriter's Redeemable Warrant are not so registered or qualified. In this event, the Company would be unable to issue the shares of Common Stock to those persons desiring to exercise their IPO Underwriter's Redeemable Warrants unless and until the shares of Common Stock could be qualified for sale in jurisdictions in which such purchasers reside, or an exemption from such qualification exists in such jurisdiction. No assurances can be given that the Company will be able to effect any required registration or qualification. The IPO Underwriter's Redeemable Warrants may be deprived of any value if a current prospectus covering the shares issuable upon the exercise thereof is not kept effective or if such Common Stock is not qualified or exempt from qualification in the jurisdiction in which the holders of the IPO Underwriter's Redeemable Warrants reside. As a result of the Warrants being outstanding, the Company may be deprived of favorable opportunities to obtain additional equity capital, if it should then be needed, for its business. See "Risk Factors -- Impact of Redeemable Warrants. LEGALITY OF COMMON STOCK The validity of the issuance of the shares of Common Stock offered hereby is being passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. EXPERTS The balance sheets of the Company as of December 31, 1995 and 1994 and the statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1995, and related schedule, - 15 - 18 incorporated by reference in this Prospectus and Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein and upon the authority of that firm as experts in accounting and auditing. In October 1995, The Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which established financial accounting and reporting standards for stock-based employee compensation plans. Companies are encouraged, rather than required, to adopt a new method that accounts for stock compensation awards based on their fair value using an option pricing model. Companies that do not adopt this new method will be required to make pro forma footnote disclosure of net income as if the fair value-based method of accounting required by SFAS No. 123 has been applied. The Company is required to adopt SFAS No. 123 beginning in 1996. Adoption of this pronouncement is not expected to have a material impact on the Company's financial position or results of operations because the Company intends to make pro forma footnote disclosure instead of adopting the new accounting method. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, filed pursuant to Section 13 or 15(d) of the 1934 Act (File Number 0-23668). (b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act (File No. 0-23668). (c) The Company's Current Report on Form 8-K for the December 19, 1995 event. (d) The Company's Current Report on Form 8-K for the March 14, 1996 event. (e) The description of the Company's capital stock contained in the Company's Registration Statement on Form 8-A (File No. 0-23668) filed with the Commission on May 6, 1994, including amendments or reports filed for the purpose of updating such description. All reports and other documents subsequently filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act, prior to the filing of a post-effective amendment which indicates that all securities covered by this Prospectus have been sold or which deregisters all such securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. - 16 - 19 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS -------------------------------------- Item 14. Other Expenses of Issuance and Distribution - ----------------------------------------------------- The following expenses incurred in connection with the sale of the securities being registered will be borne by the Registrant. Other than the registration fee, the amounts stated are estimates. Registration Fees $ 5,453 Legal Fees and Expenses 20,000 Accounting Fees and Expenses 5,000 Blue Sky Fees and Expenses 15,000 Miscellaneous 4,547 ------- TOTAL $50,000 ======= Item 15. Indemnification of Officers and Directors - --------------------------------------------------- The Company's Restated Articles of Organization and its Restated By-Laws provide for indemnification of all persons permitted by the Massachusetts Business Corporation Law to the maximum extent permitted thereby. In addition, the Company's Restated Articles of Organization limit the liability of directors to the maximum extent permitted by the Massachusetts Business Corporation Law. Massachusetts law permits a corporation's articles of organization to provide that the directors of a Massachusetts corporation will not be personally liable to such corporation or its stockholders for monetary damages for breach of their fiduciary duties as directors, except for liability (i) for any breach of their duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions, or for certain loans to officers and directors of the corporation that are not repaid, as provided in Section 61 and Section 62, respectively, of the Massachusetts Business Corporation Law; or (iv) for any transaction from which the director derives an improper personal benefit. The indemnification provisions relating to officers and directors of the Registrant are as follows: Article 6B of the Registrant's Amended and Restated Charter provides as follows: B. Limitation of Liability of Directors No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, that this Article shall not eliminate or limit any liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 61 or 62 of the Massachusetts Business Corporation Law, or (iv) with respect to any transaction from which the director derived an improper personal benefit. The provisions of this Article shall not eliminate or limit the liability of a director of this Corporation for any act or omission occurring prior to the date on which this Article became effective, provided, however, that neither any provision of this Article nor the adoption of this Article shall affect the effectiveness of any predecessor provision of these Restated Articles of Organization pertaining to the elimination or limitation of the liability of a director of this Corporation for any act or omission occurring prior to the date on which this Article shall adversely affect the rights and protection afforded to a director of this Corporation under this Article for acts or omissions occurring prior to such amendment or repeal. II-1 20 If the Massachusetts Business Corporation Law is subsequently amended to further eliminate or limit the personal liability of directors or to authorize corporation action to further eliminate or limit such liability, then the liability of the directors of this Corporation shall, without any further action of the Board of Directors or the stockholders of this Corporation, be eliminated or limited to the fullest extent permitted by the Massachusetts Business Corporation Law as so amended. ARTICLE V, Section 9 of the Registrant's Restated By-Laws provides as follows: (a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, agent, partner or trustee of another corporation, including, without limitation, any corporation or other entity of which a majority of any class of equity security is owned directly or indirectly, by the Corporation (a "Subsidiary") or any Affiliate of the Corporation as such term is defined in Rule 12b-2 of the General Rules and Regulations under the 1934 Act or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent, partner or trustee or in any other capacity while serving as a director, officer, employee, agent, partner or trustee shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Massachusetts Business Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including, without limitations, attorneys fees, judgments, fines, ERISA excise taxes or penalties, costs of investigation and preparation of defense and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, expect as provided in Section (c) hereof with respect to proceedings to enforce rights of indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. (b) Advance of Expenses. The right to indemnification conferred in Section (a) of this Section 9 shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that an advancement of expenses incurred by an indemnitee shall be made only upon delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Section 9 or otherwise. The rights to indemnification and to the advancement of expenses conferred in Sections (a) and (b) of this Section 9 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators. (c) Right of Indemnitee to Bring Suit. If a claim under Section (a) or (b) of this Section 9 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be thirty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set II-2 21 forth in the Massachusetts Business Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Massachusetts Business Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section 9 or otherwise shall be on the Corporation. (d) Rights Not Exclusive. The rights to indemnification and to the advancement of expenses conferred in this Section 9 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Articles of Organization, these By-Laws, or any agreement, vote of stockholders or disinterested directors or otherwise. (e) Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise, including, without limitation, any Subsidiary or Affiliate or any employee benefit plan, against any expense, liability or loss, whether or not the Corporation would have the power to indemnity such person against expense, liability or loss under the Massachusetts Business Corporation Law. The Corporation's obligation to provide indemnification under this Section 9 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the Corporation or any other person. (f) Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation or any Subsidiary or Affiliate to the fullest extent of the provisions of this Section 9 with respect to the indemnification of the advancement of expenses to directors and officers of the Corporation. (g) Agreements. The Corporation may, to the extent authorized from time to time by the Board of Directors, enter into agreements with any director, officer, employee or agent of the Corporation or any Subsidiary or Affiliate to the fullest extent of the provisions of this Section 9 with respect to the indemnification of and advancement of expenses to such person (h) Amendment. Without the consent of a person entitled to the indemnification and other rights provided in this Section 9 (unless otherwise required by the Massachusetts Business Corporation Law), no amendment modifying or terminating such rights shall adversely affect such person's rights under this Section 9 with respect to the period prior to such amendment. (i) Savings Clause. If this Section 9 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnity each indemnitee as to any liabilities and expenses with respect to any proceeding to the fullest extent permitted by any applicable portion of this Section 9 that shall not have been invalidated and to the fullest extent permitted by applicable law. The Registrant has obtained insurance which insures the officers and directors of the Registrant against certain losses and which insures the Registrant against certain of its obligations to indemnity such officers and directors. II-3 22 In addition, the Underwriting Agreement, the form of which is filed as Exhibit 1 hereto, contains provisions for indemnification by the Underwriters of the Registrant and its officers, directors and controlling stockholders against certain liabilities under the Securities Act. The Amended and Restated Shareholders Agreement, as amended, the form of which is filed as Exhibit 4.4 hereto, contains provisions for indemnification by selling stockholders of the Registrant exercising their registration rights thereunder of the Registrant and its officers, directors and controlling stockholders against certain liabilities under the Securities Act. Item 16. Exhibits. - ------------------ Exhibit Number Description - ------ ----------- 1 Form of Underwriting Agreement with Josephthal (previously filed) 4.1 Article 4 of the Form of Restated Articles of Organization (previously filed) 4.2 Form of Common Stock Certificate (previously filed) 4.3 Form of Underwriter's Warrant Agreement to be entered into between Registrant and Josephthal (previously filed) 4.4 Amended and Restated Shareholders Agreement dated as of August 17, 1989, as amended, among the Registrant, certain holders of Common Stock and the holders of Preferred Stock (previously filed) 4.4A Amendment to Amended and Restated Shareholders Agreement (previously filed) 4.5 Form of Warrant Agreement between the Registrant and Continental Stock Transfer and Trust Company to be entered into upon the consummation of the offering (previously filed) 4.6 Form of Redeemable Warrant Certificate (previously filed) 4.7 Form of Redeemable Warrant Certificate included in the IPO Underwriter's Warrants (previously filed) 5 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with respect to the legality of the securities being registered (previously filed) 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5) 24 Power of Attorney (previously filed in Part II of this Registration Statement) Item 17. Undertakings. - ---------------------- A. Rule 415 Offering ----------------- The undersigned registrant hereby undertakes: II-4 23 (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the 1933 Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) ([section]230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. Filings Incorporating Subsequent Exchange Act Documents by Reference -------------------------------------------------------------------- The undersigned registrant hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Request for Acceleration of Effective Date or Filing of ------------------------------------------------------- Registration Statement on Form S-8 ---------------------------------- Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. II-5 24 SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 2 on Form S-3 to the Registration Statement on Form S-1, File No. 33-78440, to be signed on its behalf by the undersigned, thereunto duly authorized, in Danvers, Massachusetts on May 23, 1996. IBIS TECHNOLOGY CORPORATION By: /s/ Geoffrey Ryding ------------------------------ Geoffrey Ryding, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 2 on Form S-3 to the Registration Statement on Form S-1, File No. 33-78440, has been signed by the following persons in the capacities and on the dates indicated. Signatures Title Date - ---------- ----- ---- * Chairman of the Board of Directors May 23, 1996 - --------------------------- and Director Richard Hodgson /s/ Geoffrey Ryding President, Chief Executive Officer May 23, 1996 - --------------------------- (principal executive officer) Geoffrey Ryding, Ph.D. and Director /s/ Timothy J. Burns Chief Financial Officer, May 23, 1996 - --------------------------- (principal financial officer) Timothy J. Burns * Treasurer, Controller and Clerk May 23, 1996 - --------------------------- (principal accounting officer) Debra L. Carroll * Director May 23, 1996 - --------------------------- Peter H. Rose, Ph.D. II-6 25 Signatures Title Date - ---------- ----- ---- * Director May 23, 1996 - --------------------------- Ted R. Dintersmith * Director May 23, 1996 - --------------------------- Gordon Baty *By: /s/ Geoffrey Ryding --------------------------- Geoffrey Ryding, Ph.D., as attorney-in-fact II-7 26 IBIS TECHNOLOGY CORPORATION --------------------------- INDEX TO EXHIBITS FILED WITH FORM S-3 REGISTRATION STATEMENT Exhibit Sequential Number Description Page No. ------ ----------- -------- 1 Form of Underwriting Agreement with Josephthal (previously filed) 4.1 Article 4 of the Form of Restated Articles of Organization (previously filed) 4.2 Form of Common Stock Certificate (previously filed) 4.3 Form of Underwriter's Warrant Agreement to be entered into between Registrant and Josephthal (previously filed) 4.4 Amended and Restated Shareholders Agreement dated as of August 17, 1989, as amended, among the Registrant, certain holders of Common Stock and the holders of Preferred Stock (previously filed) 4.4A Amendment to Amended and Restated Shareholders Agreement (previously filed) 4.5 Form of Warrant Agreement between the Registrant and Continental Stock Transfer and Trust Company to be entered into upon the consummation of the offering (previously filed) 4.6 Form of Redeemable Warrant Certificate (previously filed) 4.7 Form of Redeemable Warrant Certificate included in the IPO Underwriter's Warrants (previously filed) 5 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with respect to the legality of the securities being registered (previously filed) 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5) 24 Power of Attorney (previously filed in Part II of this Registration Statement) II-8