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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20569

Form 10-Q

Ibis Technology Corporation
(Exact name of registrant as specified in its charter)

        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 ý    No o

        9,474,940 shares of Common Stock, par value $.008, were outstanding on April 29, 2003.

IBIS TECHNOLOGY CORPORATION

INDEX

2

IBIS TECHNOLOGY CORPORATION

BALANCE SHEETS

See accompanying notes to unaudited interim financial statements.

3

IBIS TECHNOLOGY CORPORATION

STATEMENTS OF OPERATIONS
(Unaudited)

See accompanying notes to unaudited interim financial statements.

4

IBIS TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS
(Unaudited)

See accompanying notes to unaudited interim financial statements.

5

IBIS TECHNOLOGY CORPORATION

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

(1)  Interim Financial Statements

        The accompanying financial statements are unaudited, except for the Balance Sheet as of December 31, 2002, and have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America.

        In the opinion of management, the interim financial statements include all adjustments which consist only of normal and recurring adjustments necessary for a fair presentation of the Company's financial position 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, 2002 which are included in the Company's Annual Report on Form 10-K.

(2)  Summary of Significant Accounting Policies

(a) Revenue Recognition

        The Company recognizes revenue from product sales, equipment sales and the sales of spare parts when all of the following criteria have been met: (1) evidence exists that the customer is bound to the transaction; (2) the product has been delivered to the customer; (3) the sales price to the customer has been fixed or is determinable; and (4) collectibility of the sales price is reasonably assured. Provisions for estimated sales returns and allowances are made at the time the products are sold. Revenue derived from services is recognized upon performance. Contract revenue is recognized on the percentage-of-completion method. Provisions for anticipated losses are made in the period in which such losses become determinable. Unbilled revenue under customer contracts represents revenue earned under the percentage-of-completion method but not yet billable under the terms of the contract. These amounts are billable based on the terms of the contract, which can include shipment of the product, achievement of milestones or completion of the contract.

(b) Stock-Based Compensation

        The Company accounts for its stock option plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees, and Related Interpretations." No stock-based compensation cost is reflected in net income (loss) for these plans, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and loss per share if we had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock Based Compensation", to stock based compensation:

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

        Pro-forma net loss reflects only options granted in 1995 through 2002. Therefore, the full impact of calculating compensation costs for stock options under SFAS No. 123 is not reflected because compensation costs for options granted prior to January 1, 1995, are not considered.

(3)  Inventories

        Inventories consist of the following:

(4)  Capitalization

        In March 2002, Ibis completed a public offering of 900,000 shares of common stock at $13 per share, and on April 1, 2002, 100,000 shares were exercised as an over allotment option by the underwriter. Net proceeds to the Company were approximately $12,100,000, of which approximately $10,900,000 was received as of March 31, 2002.

(5)  Net Loss Per Share

        Net loss per share of common stock is computed based upon the weighted average number of shares outstanding during each period and including the dilutive effect, if any, of stock options and warrants. SFAS 128 requires the presentation of basic and diluted earnings (loss) per share for all periods presented. As the Company was in a net loss position for the three months ended March 31,

7

2002 and March 31, 2003, common stock equivalents of 122,935, and 1,449, respectively, were excluded from the diluted loss per share calculation, as they would be antidilutive. As a result, diluted loss per share is the same as basic loss per share for all periods presented.

(6)  Industry Segments

        The Company's reportable segments are SIMOX Wafer Products, SIMOX Equipment and Other Products or Services. For purposes of segment reporting, equipment, equipment spares and field service revenue are combined and reported as SIMOX Equipment. Government contracts, other services and license revenue are combined and reported as Other Products or Services.

        The table below provides unaudited information for the three months ended March 31, 2002 and 2003 pertaining to the Company's three industry segments.

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        The table below provides the reconciliation of reportable segment operating loss and assets to Ibis' totals.

(7)  New Accounting Pronouncements

        Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," effective for fiscal years beginning May 15, 2002 or later that rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements, and FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers. This Statement Amends FASB Statement No. 4 and FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company adopted SFAS 145 during the first quarter of 2003 without a material impact on its financial condition or results of operations.

        Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," effective for exit or disposal activities that are initiated after December 31, 2002. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. The Company adopted SFAS 146 during the first quarter of 2003 without a material impact on its financial condition or results of operations.

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        In November 2002, the FASB issued Interpretation No. 45 (FIN 45), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which clarifies disclosure and recognition/measurement requirements related to certain guarantees. The disclosure requirements are effective for financial statements issued after December 15, 2002 and the recognition/measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2002. The application of the requirements of FIN 45 did not have a material impact on the Company's financial position or results of operations.

        Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123," effective for fiscal years ending after December 15, 2002. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted SFAS 148 during the first quarter of 2003 without a material impact on its financial condition or results of operations.

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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") was formed in October 1987 and commenced operations in January 1988. Ibis' initial activities consisted of producing and selling SIMOX-SOI wafers and conducting research and development activities. This research led to the development of proprietary next generation oxygen implanters, the Ibis 1000, which we began selling in 1996, and the i2000, and also to other proprietary process technology.

        Initially, much of our revenue was derived from research and development contracts and sales of wafers for military applications. Over the years, there was a shift in revenue to sales of SIMOX-SOI wafers for commercial applications and the nature of our business has evolved through stages where sometimes our revenues primarily resulted from selling wafers for evaluation purposes, and sometimes our revenue was generated primarily from equipment sales. This is a normal path to follow while developing and promoting a fundamental new technology, especially when it relates to the semiconductor industry embracing any change that affects fabrication operations. This trend is expected to continue in the near-term as our customers continue to sample SOI and the early adopters work to achieve stable production processes and enter pilot production. We believe that we are in the technology rollout stage of our corporate life cycle. Our fundamental SIMOX-SOI technology has been developed, refined, and proven over the last dozen years. In 2002, Ibis introduced the next generation production-worthy SIMOX-SOI, which includes both the modified low dose ("MLD") wafer process licensed to Ibis by IBM and the i2000, our next-generation oxygen implanter, which is capable of producing eight and twelve inch (or 200 and 300 mm) SIMOX-SOI wafers. In 1999, we commenced a program to design and develop the i2000, introduced it in March 2002 and began shipping 300 mm wafers implanted from this machine shortly thereafter. In September 2002, we received an order valued at approximately $8 million for an i2000 oxygen implanter from a major semiconductor manufacturer. The implanter was shipped to this customer in the last quarter of 2002 and is undergoing factory acceptance.

        Wafer product sales this quarter were down, as expected, mainly because wafer production was delayed while our largest wafer customer was evaluating multiple types of MLD wafers for 300 mm production. During the quarter, we also applied several reliability upgrades to our internal i2000 implanter. Although these events took somewhat longer than anticipated and limited our ability to ship 300 mm wafers, we achieved a significant number of goals that position us for near-term growth:

•

Working under the terms of the Joint Development Agreement (JDA) with our largest customer, we made a number of significant process improvements, leading to a new, advanced SIMOX process that we believe meets the needs of the newest, most advanced integrated circuits.



•

Our largest customer finalized the process "recipes' to be used to manufacture the 300 mm production wafers they have on order.



•

We have completed several reliability and performance enhancements on our i2000 implanter, and it is now back in production.



•

We have completed the qualification of an additional i2000 implanter, which is now on line predominantly for production of 300-millimeter wafers within our Danvers, Mass. facility.

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•

Our second balance-of-process line has been fully qualified and is now available for completing the manufacture of 300-millimeter SIMOX-SOI wafers following the implantation process.

        Commercial shipments of our wafers have been used principally for evaluation purposes or pilot production in products, including microprocessors, gate arrays, ASICs (application specific integrated circuits), memories (DRAMs, SRAMs, etc.), and cellular and mobile radio components. From our customers' perspective, the pathway to SOI adoption is complex and time consuming. Typically, a customer will go through three major stages:

•

Sampling, where preliminary performance characteristics are explored and verified;



•

R&D, where specific customer specifications are tested and developed; and



•

Production, where yield and cost benefits are optimized.

        Each of these stages has many steps, and customers must evaluate each new wafer technology that essentially lays a new foundation for substantially all other processes they have spent billions of dollars and decades of time developing. Accordingly, it takes anywhere from 12 to 36 months for a customer to proceed from initial sampling through R&D to initial production, which is not unlike the standard process for qualifying any new wafer material. These steps apply each time there is a change in the customer's fabrication process, such as a feature-size change or new material. To date, most of our customers have purchased wafers for the purpose of characterizing and evaluating the wafers, developing prototype products or for pilot production, consequently historical sales are not necessarily an indication of future operations.

        At March 31, 2003, Ibis had eight Ibis 1000 implanters, two of which are owned by a customer, available to produce up to 200 mm SIMOX wafers and two i2000's available to produce 300 mm SIMOX wafers. One more Ibis 1000 implanter is available for sale and an additional one is dedicated as a research and development tool. We also have one additional i2000 implanter under construction that will be available for sale or utilized internally for wafer production. Although our 200 mm and smaller wafer size production line is currently underutilized, considering our future plans, current potential business prospects and alternatives, Management believes that we do not have an impairment issue at this time. However, if our future plans and potential business prospects do not materialize, if semiconductor manufacturers fail to adopt SIMOX technology during the current process cycle (which typically last two to three years) or our customers transition to the 300 mm wafer size sooner than we anticipate, our 200 mm and smaller wafer size production line may become obsolete and we would be required to reduce our income by an impairment loss which could be material.

        We will continue to review our assumptions about our long-lived assets on a periodic basis for potential impairment in future quarters. We cannot be sure that our implanters or other long-lived assets will not become impaired in the future. In addition, the impairment factors evaluated by Management may change in subsequent periods, given the current trends of the business environment.

        Ibis has experienced quarterly and annual fluctuations in revenue and results of operations due to the timing of receipt of equipment orders and dependence on a limited number of customers. We expect to continue to experience fluctuations in revenue due to equipment sales and shifts in customer demands during various stages of the SIMOX-SOI sales cycle. We recognize implanter revenue in accordance with SAB 101, which includes among other criteria, the shipment and factory installation of the implanter at the customer's location. As a result, deferral of revenue may extend longer due to meeting these criteria.

Critical Accounting Policies

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that have a

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significant impact on the results we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our most critical accounting policies include: revenue recognition, inventory valuation and reserves, accounts receivable reserves and the assessment of long-lived asset impairment. Actual results may differ from these estimates under different assumptions or conditions. Below, we discuss these policies further, as well as the estimates and judgments involved.

        Revenue Recognition.    We recognize revenue from product sales, equipment sales and the sales of spare parts when all of the following criteria have been met: (1) evidence exists that the customer is bound to the transaction; (2) the product has been delivered to the customer and, when applicable, the product has been installed and accepted by the customer; (3) the sales price to the customer has been fixed or is determinable; and (4) collectibility of the sale price is reasonably assured. Provisions for estimated sales returns and allowances are made at the time the products are sold. Revenue derived from contracts and services is recognized upon performance. Significant management judgments and estimates must be made and used in connection with revenue recognized in any period. Management analyzes various factors, including a review of specific transactions, historical experience, credit worthiness of customers and current market and economic conditions. Changes in judgments based upon these factors could impact the timing and amount of revenue and cost recognized.

        Inventory Valuation and Reserves.    Our policy for the valuation of inventory, including the determination of obsolete or excess inventory, requires us to estimate the future demand for our products within specific time horizons, generally twelve months or less. If our estimated demand for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to record additional inventory reserves, which would have a negative impact on our gross margin. We reserve for a possible over supply of wafers utilizing inventory aging records and for obsolescence when engineering changes or other technological advances indicate that obsolescence has occurred. We also adjust the valuation of inventory when estimated actual cost is significantly different than standard cost and value inventory at the lower of cost or market. Once established, any write-downs of inventory are considered permanent adjustments to the cost basis of the inventory.

        Accounts Receivable Reserves.    Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on a specific analysis of accounts in the receivable portfolio and a general reserve based on the aging of receivables and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required and could materially impact our financial position and results of operations.

        Valuation of Long-Lived Assets.    Ibis reviews the valuation of long-lived assets, including property and equipment and licenses, under the provisions of SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. Management is required to assess the recoverability of its long-lived assets whenever events and circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include the following:

•

Significant underperformance relative to expected historical or projected future operating results;



•

Significant changes in the manner of our use of the acquired assets or the strategy of our overall business;



•

Significant negative industry or economic trends;



•

Significant decline in our stock price for a sustained period; and



•

Our market capitalization relative to book value.

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        In accordance with SFAS No. 144, when we determine that the carrying value of applicable long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we evaluate whether the carrying amount of the asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of that asset. If such a circumstance exists, we would measure an impairment loss to the extent the carrying amount of the particular long-lived asset or group exceeds its fair value. We would determine the fair value based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. We adopted SFAS No. 144 during the first quarter of 2002 without a material impact on our financial position or results of operations.

Results of Operations

First Quarter Ended March 31, 2003 Compared to First Quarter Ended March 31, 2002

        Product Sales.    Wafer product sales decreased $730,630 or 52%, to $675,700 for the first quarter ended March 31, 2003 from $1,406,330 for the first quarter ended March 31, 2002. Wafer product sales this quarter were down mainly because wafer production was delayed while our largest wafer customer was evaluating multiple types of MLD wafers for 300 mm production. During the quarter, we also applied several reliability upgrades to our internal i2000 implanter. These events took somewhat longer than anticipated, so we were limited in our ability to ship 300 mm wafers, which accounted for 39% of wafer sales.

        Contract and Other Revenue.    Contract and other revenue includes revenue derived from government contracts, license agreements, characterization and other services. Contract and other revenue increased for the first quarter ended March 31, 2003 to $498,464 from $72,278 for the first quarter ended March 31, 2002, an increase of $426,186 or 590%. This is attributable to revenue recognized from the transfer of wafer technology to Shanghai Simgui pursuant to a license agreement. Royalty fees also increased, but these were offset by a decrease in government contract work.

        Equipment Revenue.    Equipment revenue represents revenue recognized from sales of implanters, spare parts and field service. Equipment revenue increased to $233,987 for the first quarter ended March 31, 2003 from $146,738 for the first quarter ended March 31, 2002, an increase of $87,249 or 59%. Equipment revenue in both quarters consisted solely of parts and service revenue. Field service revenue accounted for $70,550 for the first quarter ended March 31, 2003 as compared to $70,800 for the same period last year. Sales of spare parts accounted for $163,437 of equipment revenue for the first quarter ended March 31, 2003 as compared to $75,938 of equipment revenue for the first quarter ended March 31, 2002.

        Total Net Sales and Revenue.    Total net revenue for the first quarter ended March 31, 2003 was $1,408,151, a decrease of $217,195, or 13%, from total revenue of $1,625,346 for the first quarter ended March 31, 2002. This resulted from a decrease in wafer product sales.

        Total Cost of Sales and Revenue.    Cost of wafer product sales for the first quarter ended March 31, 2003 was $2,873,915, compared to $2,968,352 for the first quarter ended March 31, 2002, a decrease of $94,437, or 3%. This decrease is attributable to the decrease in production volume during the quarter which was offset by increased fixed costs, mainly depreciation and amortization of 300 mm equipment. In addition, the optimum production yield on our 300 mm wafer products has not yet been realized which resulted in higher costs this quarter. Cost of contract and other revenue consists of labor and materials expended during the quarter. Cost of contract and other revenue for the first quarter ended March 31, 2003 was $18,157, as compared to $81,883 for the first quarter ended March 31, 2002, a decrease of $63,726, or 78%. This is attributable to a decrease of work performed on contracts. Cost of equipment revenue represents the cost of equipment and spare parts, along with labor incurred for field service. Cost of equipment revenue for the first quarter ended March 31, 2003 was $119,853, as

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compared to $64,265 for the first quarter ended March 31, 2002. This increase is due to the increase in the volume of parts sold during this quarter. Total cost of sales and revenue for the first quarter ended March 31, 2003 was $3,011,925 as compared to $3,114,500 for the first quarter ended March 31, 2002, a decrease of $102,575 or 3%. The gross margin for all sales was a negative 114% for the first quarter ended March 31, 2003 as compared to a negative gross margin of 92% for the first quarter ended March 31, 2002. This decrease in the gross margin for all sales is attributable to decreased wafer sales and an increase in fixed wafer costs. Our wafer production line for smaller wafer sizes is currently underutilized and the optimum production yield on 300 mm wafer products has not yet been realized. We believe that as these conditions improve the wafer product gross margins will increase.

        General and Administrative Expenses.    General and administrative expenses for the first quarter ended March 31, 2003 were $618,753 (or 44% of total revenue) as compared to $529,607 (or 33% of total revenue) for the first quarter ended March 31, 2002, an increase of $89,146, or 17%. This is a result of increased payroll and payroll related expenses related to the hire of Ibis' Chief Operating Officer in March 2002. Director's & Officer's liability insurance also increased.

        Marketing and Selling Expenses.    Marketing and selling expenses for the first quarter ended March 31, 2003 were $354,533 (or 25% of total revenue) as compared to $372,545 (or 23% of total revenue) for the first quarter ended March 31, 2002, a decrease of $18,012, or 5%. This is a result of a decrease in promotional expenses.

        Research and Development Expenses.    Internally funded research and development expenses increased by $280,915 or 19%, to $1,735,636 (or 123% of total revenue) for the first quarter ended March 31, 2003, as compared to $1,454,721 (or 90% of total revenue) for the first quarter ended March 31, 2002. This is due to a Joint Development Agreement Ibis entered into in January 2003 to develop an enhanced, modified low-dose (MLD) process for the manufacture of SIMOX-SOI wafers. Consulting services relating to the i2000 implanters also increased.

        Other Income (Expense).    Total other income for the first quarter ended March 31, 2003 was $27,599 as compared to $60,721 for the first quarter ended March 31, 2002, a decrease of $33,122, or 55%. The decrease in total other income is attributable to decreased interest income earned as a result of lower average cash balances and a reduction in the interest rates.

Liquidity and Capital Resources

        As of March 31, 2003, Ibis had cash and cash equivalents of $8,363,711, reflecting the receipt of a majority of the proceeds from the sale of an i2000 implanter in December 2002 which was due upon shipment. In addition, in March 2002, Ibis completed a public offering of 900,000 shares of common stock at $13 per share, and on April 1, 2002, 100,000 shares were exercised as an over allotment by the underwriter. The shares were included in a shelf registration statement filed with the Securities and Exchange Commission on July 8, 1999 and declared effective on July 26, 1999. Net proceeds from the offering were approximately $12.1 million and were used primarily to fund research and development, capital expenditures and working capital.

        During the three months ended March 31, 2003, Ibis used $2,186,868 in cash for operating activities compared to providing $1,552,023 for the same period in 2002. Depreciation and amortization expense for the three months ended March 31, 2003 and 2002 was $1,653,779 and $1,577,998, respectively. This accounted for 117% and 97% of total revenue, respectively. Due to the capital intensive nature of Ibis' business and the recent expansion of our 300 mm SIMOX-SOI wafer production line, Management expects that depreciation and amortization will continue to be a significant portion of its expenses. To date, Ibis' working capital requirements have been funded primarily through debt and equity financings. Ibis also used $804,127 during the three months ended March 31, 2003 to fund additions to property and equipment. At March 31, 2003, Ibis had commitments to purchase approximately $1,991,498 of material to be used for manufacturing wafers and i2000 implanter parts and $251,634 in capital equipment purchases.

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        As part of our cash management plan, we initiated additional cost saving measures during the first quarter of 2003. This included the lay-off of sixteen employees, so our headcount is now 94 employees. We also increased the number of days off that all employees, except wafer manufacturing and customer support, must use over the next three months. We expect these measures to save us in excess of $1 million on an annual basis.

        In September 2001, Ibis entered into a $4.5 million equipment lease line with Heller Financial's Commercial Equipment Finance Group. The lease line was used to finance the purchase of process equipment for wafer production, primarily for 300 mm wafers. This line was fully drawn down in two sale-leaseback transactions, bearing interest at approximately 8% with a term of three years, and a monthly net payment of $131,212. Ibis has a fair market value purchase option at the end of the lease term. The lease line is secured by the underlying assets and all other property and equipment of Ibis.

        Our existing cash resources are believed to be sufficient to support Ibis' operations on our anticipated scale for at least the next twelve months. Our anticipated scale of operations assumes a continuous increase of wafer sales for the balance of the year, primarily 300 mm SIMOX wafers. We also anticipate that our spending rates for 2003 will reduce to more normal levels now that we have completed the build of our second 300 mm wafer production line. In addition, the cost reductions implemented in the first quarter of 2003 will further reduce these spending rates. Our outlook also includes the receipt of orders for one to three implanters. We continue to explore equity offerings and other forms of financing and anticipate that we may be required to raise additional capital in the future in order to finance future growth and our research and development programs.

        This Form 10-Q contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including statements regarding the impact that the MLD process and i2000 oxygen implanter is expected to have on future financial results, belief that in future years our business is more likely to include a growing component of equipment sales, the adoption by our customers of SIMOX-SOI technology in their mainstream manufacturing processes, the expectation that gross margins on wafer product sales will increase as volumes and production yields improve, the continuation of fluctuations in revenue and results of operations, the expectation that depreciation and amortization will continue to be a significant portion of expenses, the need for future additional capital, the sufficiency of our capital resources, and the anticipated scale of Ibis' operations. Such statements are based on our 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 are referenced in the Company's SEC filings from time to time, including, but not limited to those described above and in our Form 10-K for the year ended December 31, 2002. All information set forth in this Form 10-Q is as of the date of this Form 10-Q, and Ibis undertakes no duty to update this information, unless required by law.

Effects Of Inflation

        Ibis believes that over the past three years inflation has not had a significant impact on Ibis' sales or operating results.

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IBIS TECHNOLOGY CORPORATION

PART I—ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The exposure of market risk associated with risk-sensitive instruments is not material to the Company, as the Company does not transact its sales denominated in other than United States dollars, invests primarily in money market funds and short-term commercial paper, holds its investments until maturity and has not entered into hedging transactions.

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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

None

Item 5—Other Information

None

Item 6—Exhibits and Reports on Form 8-K

(a)    Exhibits furnished as Exhibits hereto:

None

(b)    Reports on Form 8-K:

None

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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.

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CERTIFICATIONS

I, Martin J. Reid, President and Chief Executive Officer, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Ibis Technology Corporation;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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CERTIFICATIONS

I, Debra L. Nelson, Chief Financial Officer, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Ibis Technology Corporation;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned President & Chief Executive Officer and Chief Financial Officer of the Company, certifies, that to their knowledge:

        1)    the Company's Form 10-Q for the quarter ended March 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

        2)    the information contained in the Company's Form 10-Q for the quarter ended March 31, 2003 fairly presents, in all material respects, the financial condition and results of operations of the Company.

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