1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20569
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996 Commission file number 0-23668
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Ibis Technology Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2987600
- -------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
32 Cherry Hill Drive, Danvers, MA 01923
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(Address of principal executive offices) (Zip Code)
(508) 777-4247
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(Registrant's telephone number, including area code)
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 X No
--- ---
5,169,352 shares of Common Stock, par value $.008, were outstanding on
August 5, 1996.
Total Number of Pages: 37
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Exhibit Index at Page 16
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IBIS TECHNOLOGY CORPORATION
INDEX
PART 1 - FINANCIAL INFORMATION PAGE
- ------------------------------- NUMBER
Item 1 - Financial Statements:
Balance Sheets
December 31, 1995 and June 30, 1996 ..................... 3
Statements of Operations
Three Months Ended June 30, 1995 and 1996 ................ 4
and Six Months Ended June 30, 1995 and 1996
Statements of Cash Flows
Six Months Ended June 30, 1995 and 1996 .................. 5
Notes to Financial Statements ................................ 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 7
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings ......................................... 13
Item 2 - Changes in Securities ..................................... 13
Item 3 - Defaults upon Senior Securities ........................... 13
Item 4 - Submission of Matters to a Vote of Security Holders ....... 13
Item 5 - Other Information ......................................... 13
Item 6 - Exhibits and Reports on Form 8-K .......................... 13
Signatures ......................................................... 15
Exhibit Index ...................................................... 16
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IBIS TECHNOLOGY CORPORATION
BALANCE SHEETS
(UNAUDITED)
DECEMBER 31, JUNE 30,
1995 1996
------------ -----------
ASSETS:
- ------
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 2,279,852 $ 11,798,964
Accounts receivable, net ........................... 2,743,090 1,013,170
Inventories, net (note 3) .......................... 696,965 2,135,523
Prepaid expenses and other assets .................. 80,786 157,047
------------ ------------
Total current assets ....................... 5,800,693 15,104,704
------------ ------------
Property and equipment, net ........................ 4,803,179 5,762,801
Patents and other assets, net ...................... 354,229 362,094
------------ ------------
Total assets ............................... $ 10,958,101 $ 21,229,599
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
- ------------------------------------
CURRENT LIABILITIES:
Bank notes payable, current (note 4) ............... $ 372,507 $ --
Capital lease obligation, current .................. 817,746 811,325
Accounts payable ................................... 484,044 782,869
Accrued liabilities ................................ 423,569 463,334
Deferred revenue, current .......................... 239,433 1,315,388
------------ ------------
Total current liabilities .................. 2,337,299 3,372,916
------------ ------------
Bank notes payable, long-term (note 4) ............. 473,281 --
Capital lease obligation, noncurrent ............... 1,630,421 1,239,812
Other accrued liabilities .......................... 1,708,007 1,923,433
------------ ------------
Total liabilities .......................... 6,149,008 6,536,161
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STOCKHOLDERS' EQUITY (NOTE 5):
Undesignated preferred stock, $.01 par value .....
Authorized 2,000,000 shares; none issued ......... -- --
Common stock, $.008 par value ....................
Authorized 10,000,000 shares; issued 3,511,746 and
5,165,175 shares in 1995 and 1996, respectively 28,094 41,321
Additional paid-in capital ....................... 14,925,304 25,342,178
Accumulated deficit .............................. (10,112,457) (10,668,869)
Less: Deferred compensation and
notes receivable stockholders ................... (31,848) (21,192)
------------ ------------
Total stockholders' equity ................. 4,809,093 14,693,438
------------ ------------
Total liabilities and stockholders' equity . $ 10,958,101 $ 21,229,599
============ ============
See accompanying notes to financial statements.
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IBIS TECHNOLOGY CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ----------------------------
1995 1996 1995 1996
---------- ---------- ----------- ----------
NET SALES AND REVENUE:
Product sales ........................ $ 708,941 $1,099,400 $ 1,178,931 $2,390,388
Contract and other revenue ........... 280,325 111,611 578,310 524,394
Equipment revenue .................... -- 1,000,000 -- 1,240,000
---------- ---------- ----------- ----------
Total sales and revenue (note 2) 989,266 2,211,011 1,757,241 4,154,782
COST OF SALES AND REVENUE:
Cost of product sales ................ 925,841 971,562 1,896,363 2,031,531
Cost of contract and other revenue ... 83,290 35,249 229,287 57,261
Cost of equipment revenue ............ -- 750,000 -- 930,000
---------- ---------- ----------- ----------
Total cost of sales and revenue 1,009,131 1,756,811 2,125,650 3,018,792
---------- ---------- ----------- ----------
Gross profit (loss) ............ (19,865) 454,200 (368,409) 1,135,990
---------- ---------- ----------- ----------
OPERATING EXPENSES:
General and administrative ......... 322,254 367,426 619,820 722,422
Marketing and selling .............. 116,433 127,855 298,248 258,252
Research and development ........... 396,725 295,081 816,392 706,441
---------- ---------- ----------- ----------
Total operating expenses ....... 835,412 790,362 1,734,460 1,687,115
---------- ---------- ----------- ----------
Loss from operations ........... (855,277) (336,162) (2,102,869) (551,125)
---------- ---------- ----------- ----------
OTHER INCOME (EXPENSE):
Interest income .................... 52,040 160,016 99,735 206,243
Interest expense ................... (63,790) (96,771) (127,540) (209,202)
Other .............................. 1,427 715 1,798 (1,072)
---------- ---------- ----------- ----------
Total other income (expense) ... (10,323) 63,960 (26,007) (4,031)
---------- ---------- ----------- ----------
Loss before income taxes ....... (865,600) (272,202) (2,128,876) (555,156)
Income tax expense ................... -- -- (1,256) (1,256)
---------- ---------- ----------- ----------
Net loss ....................... $ (865,600) $ (272,202) $(2,130,132) $ (556,412)
========== ========== =========== ==========
Net loss per common share ............ $ (0.26) $ (0.05) $ (0.64) $ (0.13)
========== ========== =========== ==========
Weighted average number
of common shares outstanding ........ 3,378,004 5,009,467 3,348,512 4,264,107
========== ========== =========== ==========
See accompanying notes to financial statements.
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IBIS TECHNOLOGY CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-----------------------------
1995 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................... $(2,130,132) $ (556,412)
Depreciation and amortization .......................... 908,992 757,339
Amortization of deferred compensation .................. 12,175 10,656
Loss from sale of asset ................................ -- 1,788
Changes in operating assets and liabilities ............ (1,418,928) 1,845,072
----------- ------------
Net cash provided by (used in)
operating activities ............................. (2,627,893) 2,058,443
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net ............... (957,874) (1,692,012)
Decrease (increase) in other assets .................... 354,532 (34,602)
----------- ------------
Net cash used in investing activities .............. (603,342) (1,726,614)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable .............................. 515,111 --
Payments of bank notes payable ......................... (104,492) (845,788)
Payments of capital lease obligations .................. (288,433) (397,030)
Exercise of stock options
and issuance of warrants ............................. 19,223 43,952
Proceeds from sale of common stock,
net of issuance costs ................................ -- 10,386,149
----------- ------------
Net cash provided by financing activities ......... 141,409 9,187,283
----------- ------------
Net increase (decrease) in cash and cash equivalents (3,089,826) 9,519,112
Cash and cash equivalents, beginning of period ........... 5,134,494 2,279,852
----------- ------------
Cash and cash equivalents, end of period ................. $ 2,044,668 $ 11,798,964
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest ............... $ 80,693 $ 182,385
=========== ============
See accompanying notes to financial statements.
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IBIS TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) INTERIM FINANCIAL STATEMENTS
- --------------------------------
The accompanying financial statements are unaudited, except for the
Balance Sheet as of December 31, 1995, and have been prepared by the Company in
accordance with generally accepted accounting principles.
The interim financial statements are unaudited, but in the opinion of
management include all adjustments which consist only of normal and recurring
adjustments, necessary for a fair presentation of its financial and results of
operations. Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the financial statements of the
Company as of and for the year ended December 31, 1995.
(2) REVENUE RECOGNITION
- -----------------------
Product sales are recognized upon shipment. Contract and equipment
revenue are recognized on the percentage-of-completion method. Other revenue
consists primarily of non-refundable net license fees received from the
sublicense of the Company's beam scanning system.
(3) INVENTORIES
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Inventories consist of the following:
DECEMBER 31, JUNE 30,
1995 1996
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Raw materials................ $486,043 $ 475,342
Work in process.............. 15,323 46,830
Finished goods............... 195,599 231,454
Equipment in process......... - 1,381,897
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$696,965 $2,135,523
======== ==========
(4) BANK NOTES PAYABLE:
- ----------------------
During May 1996, the Company paid off amounts outstanding under its
term loan totaling $721,619.
(5) CAPITALIZATION
- ------------------
On April 9, 1996, the Company completed a public offering of 1,600,000
shares of common stock at $7.25 per share. The Company's net proceeds from the
offering were approximately $10,386,000.
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Ibis Technology Corporation ("Ibis" or the "Company") was formed in
October 1987 and commenced operations in January 1988. The Company's initial
activities consisted of producing and selling SIMOX wafers and conducting funded
and unfunded research and development activities. This research led to the
Company's development of a proprietary second generation implanter, the Ibis
1000, and to other proprietary process technology.
Until 1993, much of the Company's revenue was derived from research and
development contracts and sales of SIMOX wafers for military applications. Over
the past few years, there has been a shift in revenue to sales of SIMOX wafers
for commercial applications. For the six months ended June 30, 1996 and for the
fiscal year ended December 31, 1995, commercial product sales (measured in
dollar volume) represented 91% and 82%, respectively, of total product sales
compared with 23% of total product sales for the fiscal year ended December 31,
1991. To date, most customers of the Company that have purchased wafers for what
the Company believes are commercial applications have done so solely for the
purpose of characterizing and evaluating the wafers. Thus, historical sales are
not necessarily indicative of future operations because such sales would not be
considered of a recurring nature.
The Company currently has three oxygen implanters on-line (the Ibis
1000 production implanter and two NV-200s) and is currently constructing four
additional Ibis 1000 implanters, one of which will be primarily dedicated to
Motorola's production requirements and another of which is intended to be sold
to a semiconductor manufacturer to supplement its internal requirements. The
demand for material produced by the Ibis 1000 currently exceeds supply, whereas
the older NV-200 implanters have surplus capacity. This current capacity
constraint will continue to present a major challenge until the second Ibis 1000
production unit is in production, which is anticipated to be in the third
quarter of 1996. Two additional implanters are anticipated to be in operation in
the first quarter of 1997. As the Company expands its production capacity in
anticipation of expected increases in demand, it is anticipated that gross
margins on product sales will initially be adversely affected until the
implanters operate at or near full capacity. There can be no assurance that the
Company will succeed in attracting a sufficient number of customers and/or
orders for SIMOX wafers to offset such production costs or that the Company will
succeed over its competition.
RESULTS OF OPERATIONS
SECOND QUARTER ENDED JUNE 30, 1996 COMPARED TO SECOND QUARTER ENDED
JUNE 30, 1995
PRODUCT SALES. Total revenue for the second quarter ended June 30,
1996, was $2,211,011, an increase of $1,221,745 or 123.5% from total revenue of
$989,266 for the second quarter ended June 30, 1995. Product sales increased to
$1,099,400 for the second quarter ended June 30, 1996, an increase of $390,459
or 55.1% from $708,941 for the second quarter ended June 30, 1995. Product sales
for commercial applications increased approximately 103% over the prior fiscal
quarter. The increase in product sales is attributable to the increased
commercial demand and a higher average sales price per wafer for the second
quarter of 1996 compared to 1995, due to larger wafer sizes.
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CONTRACT AND OTHER REVENUE. Contract and other revenue decreased for
the second quarter ended June 30, 1996 to $111,611 from $280,325 for the second
quarter ended June 30, 1995, a decrease of $168,714 or 60.2%. This decrease
resulted from decreased government contract backlog. Government contracts are
subject to negotiated overhead rates, and work performed under government
contracts is subject to audit and retroactive adjustments of amounts paid to the
Company. The Company has been audited by the Defense Contract Audit Agency
("DCAA") in connection with the Company's 1990 through 1995 overhead and general
and administrative rates. It has been determined that retroactive adjustments of
amounts previously paid to the Company are not material.
EQUIPMENT REVENUE. Equipment revenue for the second quarter ended June
30, 1996 was $1,000,000. This represents revenue recognized using the
percentage-of-completion method in connection with the sale of an Ibis 1000
implanter to a major semiconductor manufacturer to supplement its internal
requirements.
TOTAL COST OF REVENUE. Cost of product sales for the second quarter
ended June 30, 1996 was $971,562, as compared to $925,841 for the second quarter
ended June 30, 1995, an increase of $45,721 or 4.9%. Cost of contract and other
revenue for the second quarter ended June 30, 1996 was $35,249, as compared to
$83,290 for the second quarter ended June 30, 1995, a decrease of $48,041, or
57.7%. Cost of equipment revenue for the second quarter ended June 30, 1996 was
$750,000. The increase in cost of revenue results primarily from increases in
cost of equipment revenue, materials, including the cost to add epitaxy to
wafers, and wafer processing payroll and fringes as a result of operating
implanters extra shifts. The gross margin for all sales was 20.5% for the second
quarter ended June 30, 1996, as compared to a negative gross margin of 2% for
the second quarter ended June 30, 1995. The gross margin significantly improved
for the second quarter ended June 30, 1996 primarily due to more effective
utilization of the production capacity, which consists primarily of fixed costs,
caused by a 55.1% increase in product sales, and profit recognized on equipment
sales. In addition, depreciation expense decreased 30% from the prior year
quarter due to the write-off of the prototype implanter in the third quarter of
1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the second quarter ended June 30, 1996 were $367,426 (or 16.6% of
total revenue) as compared to $322,254 (or 32.6% of total revenue) for the
second quarter ended June 30, 1995. The increase is due to increases in investor
relations expenses, transfer agent fees, and training costs.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses for the
second quarter ended June 30, 1996 were $127,855 (or 5.8% of total revenue) as
compared to $116,433 (or 11.8% of total revenue) for the second quarter ended
June 30, 1995, an increase of $11,422 or 9.8%. The increase in marketing and
selling expenses is primarily a result of additional personnel. Other marketing
and selling expenses remained relatively stable.
RESEARCH AND DEVELOPMENT. Internally funded research and development
expenses decreased by $101,644, or 25.6%, to $295,081 (or 13.3% of total
revenue) for the second quarter ended June 30, 1996, as compared to $396,725 (or
40.1% of total revenue) for the second quarter ended June 30, 1995. The decrease
is primarily a result of certain personnel's time and effort being deployed and
capitalized in connection with the Ibis 1000 implanter machines in process
during the second quarter of 1996.
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOSS FROM OPERATIONS. The loss from operations for the second quarter
ended June 30, 1996 was $336,162 as compared to a loss of $855,277 for the
second quarter ended June 30, 1995. The decrease in loss from operations
primarily resulted from the 123.5% increase in revenue combined with improved
gross margins and reduced operating expenses.
OTHER INCOME (EXPENSE). Total other income for the second quarter ended
June 30, 1996 was $63,960 as compared to total other expense of $10,323 for the
second quarter June 30, 1995. Total other income is a result of interest income
earned on the proceeds from the April 1996 public offering, which was offset by
interest on capitalized leases and notes payable.
LOSS BEFORE INCOME TAXES. The loss before income taxes was $272,202 for
the second quarter ended June 30, 1996, as compared to $865,600 for the second
quarter ended June 30, 1995.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
PRODUCT SALES. Total revenue for the six months ended June 30, 1996,
was $4,154,782, an increase of $2,397,541 or 136.4% from total revenue of
$1,757,241 for the six months ended June 30, 1995. Product sales increased to
$2,390,388 for the six months ended June 30, 1996, an increase of $1,211,457 or
102.8% from $1,178,931 for the six months ended June 30, 1995. Product sales for
commercial applications increased approximately 2.9 times over the prior six
month period. The increase in product sales is attributable to the increased
commercial demand and a higher average sales price per wafer for the six months
ended June 30, 1996 compared to 1995, due to larger wafer sizes. In addition, in
the first quarter of 1995 substantially all of the product sales were generated
on the older NV-200 implanters as the production Ibis 1000 was placed in service
in the second quarter of 1995.
CONTRACT AND OTHER REVENUE. Contract and other revenue decreased for
the six months ended June 30, 1996 to $524,394 from $578,310 for the six months
ended June 30, 1995, a decrease of $53,916 or 9.3%. This decrease resulted from
decreased government contract backlog which was offset by the receipt of
non-refundable net license fees for the Company's proprietary beam scanning
system for certain applications other than oxygen implantation. Government
contracts are subject to negotiated overhead rates, and work performed under
government contracts is subject to audit and retroactive adjustments of amounts
paid to the Company. The Company has been audited by the Defense Contract Audit
Agency ("DCAA") in connection with the Company's 1990 through 1995 overhead and
general and administrative rates. It has been determined that retroactive
adjustments of amounts previously paid to the Company are not material.
EQUIPMENT REVENUE. Equipment revenue for the six months ended June 30,
1996 was $1,240,000. This represents revenue recognized using the
percentage-of-completion method in connection with the sale of an Ibis 1000
implanter to a major semiconductor manufacturer to supplement its internal
requirements.
TOTAL COST OF REVENUE. Cost of product sales for the six months ended
June 30, 1996 was $2,031,531 as compared to $1,896,363 for the six months ended
June 30, 1995, an increase of $135,168 or 7.1%. Cost of contract revenue for the
six months ended June 30, 1996 was $57,261, as compared to $229,287 for the six
months ended
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
June 30, 1995, a decrease of $172,026, or 75.0%. Cost of equipment revenue for
the six months ended June 30, 1996 was $930,000. The increase in cost of revenue
results primarily from increases in cost of equipment revenue, materials,
including the cost to add epitaxy to wafers, and wafer processing payroll and
fringes as a result of operating implanters extra shifts. The gross margin for
all sales was 27.3% for the six months ended June 30, 1996, as compared to a
negative gross margin of 21.0% for the six months ended June 30, 1995. The gross
margin significantly improved for the six months ended June 30, 1996 primarily
due to more effective utilization of the production capacity, which consists
primarily of fixed costs, caused by a 102.8% increase in product sales, and
profit recognized on equipment sales. In addition, depreciation expense
decreased 23% due to the write-off of the prototype implanter in the third
quarter of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the six months ended June 30, 1996 were $722,422 (or 17.4% of total
revenue) as compared to $619,820 (or 35.3% of total revenue) for the six months
ended June 30, 1995. The increase is due to increases in investor relations and
consulting expenses, transfer agent fees, amortization expense relating to lease
warrants and training costs.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses for the
six months ended June 30, 1996 were $258,252 (or 6.2% of total revenue) as
compared to $298,248 (or 17.0 % of total revenue) for the six months ended June
30, 1995, a decrease of $39,996 or 13.4%. The decrease in marketing and selling
expenses is a result of the accrual of severance costs for a former Vice
President of Marketing in the first quarter of 1995. Other marketing and selling
expenses remained relatively stable.
RESEARCH AND DEVELOPMENT. Internally funded research and development
expenses decreased by $109,951, or 13.5%, to $706,441 (or 17.0% of total
revenue) for the six months ended June 30, 1996, as compared to $816,392 (or
46.5% of total revenue) for the six months ended June 30, 1995. The decrease is
primarily a result of certain personnel's time and effort being deployed and
capitalized in connection with the Ibis 1000 implanter machines in process
during the six months ended June 30, 1996.
LOSS FROM OPERATIONS. The loss from operations for the six months ended
June 30, 1996 was $551,125 as compared to a loss of $2,102,869 for the six
months ended June 30, 1995. The decrease in loss from operations primarily
resulted from the 136.4% increase in revenue combined with improved gross
margins and reduced operating expenses.
OTHER INCOME (EXPENSE). Total other expense for the six months ended
June 30, 1996 was $4,031 as compared to $26,007 for the six months ended June
30, 1995. The decrease in total other expense is due to interest income earned
on proceeds from the April 1996 public offering, which was offset by increased
interest expense on capitalized leases.
LOSS BEFORE INCOME TAXES. The loss before income taxes was $555,156 for
the six months ended June 30, 1996, as compared to $2,128,876 for the six months
ended June 30, 1995.
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
On April 9, 1996, the Company completed a public offering of 1,600,000
shares of common stock at $7.25 per share. The Company's net proceeds were
approximately $10,386,000, after deducting approximately $1,214,000 for
Underwriting discounts, commissions and other associated expenses.
As of June 30, 1996, the Company had cash and cash equivalents of
$11,798,964. During the six months ended June 30, 1996, the Company generated
$2,058,443 in cash from operating activities as compared to cash used by
operations in the amount of $2,627,893 for the same period in 1995. Depreciation
and amortization expense for the six months ended June 30, 1996 and 1995 was
$757,339 and $908,992, respectively. This accounted for 18.2% and 51.7% of total
revenue, respectively. Due to the capital intensive nature of the Company's
business and the anticipated expansion of its production capacity, management
expects that depreciation and amortization will continue to be a significant
portion of its expenses. To date, the Company's working capital requirements
have been funded through debt and equity financings, equipment lines of credit,
a working capital line of credit, a term loan, sale leaseback arrangements,
collaborative relationships and government contracts. The principal uses of cash
were to fund the Company's operations, construction of Ibis 1000's and other
additions to property and equipment. As of June 30, 1996, the Company had
invested approximately $13.4 million in property and equipment. At June 30,
1996, the Company had commitments to purchase approximately $1.9 million in
material or subassemblies to be used to manufacture additional Ibis 1000 oxygen
implanters.
The Company has a bank credit facility that consists of a $2 million
term loan for equipment purchases and a $1.5 million revolving line of credit
for working capital purposes. Borrowings under the line of credit are limited to
a percentage of eligible accounts receivable. As of June 30, 1996, the Company
could borrow up to approximately $700,000 under the line of credit. The proceeds
from the term loan portion of this borrowing facility are available to fund
purchases of capital equipment. The line of credit is available for working
capital needs related to the Company's anticipated increase in wafer processing
activities. During the second quarter of 1996, the Company paid off amounts
outstanding under the term loan totaling $721,619 and there were no amounts
outstanding under the line of credit. Both facilities mature August 31, 1996 and
the Company does not intend to extend either facility at this time.
During the first quarter of 1996, a major semiconductor manufacturer
issued a purchase order to Ibis for the purchase of one Ibis 1000 implanter and
as of June 30, 1996, has made advance payments to the Company equaling
approximately 37% of the purchase price. During the second quarter of 1996 the
Company finalized a definitive agreement with respect to the purchase of the
implanter and possible current purchases of additional implanters. The agreement
provides that the use of the implanter by this manufacturer and its ability to
sell SIMOX wafers will be subject to certain restrictions.
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's
existing cash resources (including the proceeds from the April 1996 public
offering), together with funds generated from operations, are believed to be
sufficient to support the Company's operations on their anticipated scale for
two years. Management of the Company currently believes that this anticipated
scale of operations will include additional Ibis 1000 oxygen implanters (in
addition to its three oxygen implanters currently
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IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
on-line: the production Ibis 1000 and two NV-200s), the purchase of support
equipment and expansion of the Company's facilities. The new implanters are
expected to be transferred to production at various times, beginning in the
third quarter of 1996.
EFFECTS OF INFLATION
The Company believes that over the past three years inflation has not
had a significant impact on the Company's sales or operating results.
BUSINESS OUTLOOK
The Form 10-Q contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. 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. Such factors and uncertainties include, but are not limited to, the
uncertainty that the performance advantages of SIMOX wafers will be realized
commercially or that a commercial market for SIMOX wafers will continue to
develop; the dependence by the Company on key customers (during 1993, 1994 and
1995, revenues from four customers averaged in the aggregate between 39% and 55%
of the Company's revenues, so that 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); the loss of the services
of one or more of the Company's key individuals, which could have a material
adverse impact on the Company; the development of competing or superior
technologies and products from manufacturers, many of which have substantially
greater financial, technical and other resources than the Company; the Company's
lack of experience in producing commercial quantities of its products at
acceptable costs; the Company's ability to develop and maintain strategic
alliances for the manufacturing, marketing and distribution of its products; the
cyclical nature of the semiconductor industry, which has negatively affected the
Company's sales of SIMOX wafers during industry downturns and which could
continue to do so in the future; the limited availability of critical materials
and components for wafer products and implanters, as a shortage of such
materials and components or a significant increase in the price thereof could
have a material adverse effect on the Company's business and results of
operations; the availability of additional capital to fund expansion on
acceptable terms, if at all; and general economic conditions.
12
13
IBIS TECHNOLOGY CORPORATION
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
-----------------
None
Item 2 - Changes in Securities
---------------------
None
Item 3 - Defaults upon Senior Securities
-------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on May 16,
1996. The following matters were voted upon at the meeting:
(1) Two persons were elected to the Board of Directors of the Company
to serve for a term ending in 1999 and until their successors are duly
elected and qualified. The following is a table setting forth the
number of votes cast for and withheld for each nominee for Director:
Name Vote For Vote Withheld
---- -------- -------------
Gordon Baty 3,156,786 6,830
Peter H. Rose 3,156,786 6,830
Richard Hodgson and Geoffrey Ryding continue to serve as Directors for
a term which expires in 1997 and Ted R. Dintersmith continues to serve
as Director for a term which expires in 1998, and until their
successors are duly elected and qualified.
(2) The stockholders of the Company ratified the appointment of KPMG
Peat Marwick LLP as the Company's independent public accountants for
the fiscal year ending December 31, 1996. This proposal was approved
with 3,142,717 votes for, 16,299 votes against and 4,600 abstentions.
(3) The stockholders of the Company approved the adoption of an
amendment to the 1993 Employee, Director and Consultant Stock Option
Plan to increase by 500,000 the aggregate number of shares for which
stock options may be granted under the Plan. This proposal was approved
with 1,943,420 votes for, 77,199 votes against, 17,900 abstentions and
1,125,097 broker non-votes.
Item 5 - Other Information
-----------------
None
13
14
IBIS TECHNOLOGY CORPORATION
PART II
OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits furnished as Exhibits hereto:
* 10.1 Equipment Purchase Master Agreement dated as of May 22, 1996
between the Company and a leading semiconductor
manufacturer (previously filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K (File No. 0-13078)
filed under the Securities Exchange Act of 1934 on June 5,
1996, and incorporated herein by reference).
10.15 Ibis Technology Corporation 1993 Employee, Director and
Consultant Stock Option Plan, as amended on May 16, 1996.
10.31 Contract dated May 25, 1994, between the Company and the
Defense Nuclear Agency, as amended on March 29, 1996.
11 Statement regarding computation of per share loss.
27 Financial Data Schedule
------------------
* Confidential Treatment has been requested as to portions of this
document and a confidential treatment request has been filed
separately with the Securities and Exchange Commission.
(b) The Company filed a Current Report on Form 8-K for the May 22, 1996
event with the Securities and Exchange Commission reporting the public
dissemination of a press release announcing that it had entered into an
Equipment Purchase Master Agreement (the "Agreement") for the sale, by
the Company, of its proprietary Ibis 1000 oxygen implanters to a
leading semiconductor manufacturer (the "Manufacturer").
14
15
IBIS TECHNOLOGY CORPORATION
SIGNATURES
Pursuant to the requirements 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.
Ibis Technology Corporation
Date: August 8, 1996 By: /s/ Debra L. Carroll
---------------------------
Debra L. Carroll
Controller and Treasurer
Date: August 8, 1996 By: /s/ Timothy J. Burns
---------------------------
Timothy J. Burns
Chief Financial Officer
15
16
IBIS TECHNOLOGY CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
*10.1 Equipment Purchase Master Agreement dated as of May 22, 1996 between
the Company and a leading semiconductor manufacturer (previously
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K
(File No. 0-13078) filed under the Securities Exchange Act of 1934 on
June 5, 1996, and incorporated herein by reference).
10.15 Ibis Technology Corporation 1993 Employee, Director and Consultant
Stock Option Plan (filed as Exhibit 10.15 to the Company's
Registration Statement filed on Form S-1, File No. 333-1174), as
amended on May 16, 1996 (filed herewith). 17
10.31 Contract, dated May 25, 1994, between the Company and Defense Nuclear
Agency (filed as Exhibit 10.31 to the Company's Registration Statement
filed on Form S-1, File No. 333-1174), as amended on March 29, 1996
(filed herewith). 34
11 Statement regarding computation of per share loss. 36
27 Financial Data Schedule
- --------------------
<FN>
* Confidential Treatment has been requested as to portions of this
document and a confidential treatment request has been filed
separately with the Securities and Exchange Commission.
16