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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
For the Quarterly Period Ended June 30, 2003
Or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______________ to ___________________
Commission file number 0-23150
-------
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
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(978) 777-4247
(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 ___
----
9,515,697 shares of Common Stock, par value $.008, were outstanding on August 7,
2003.
1
IBIS TECHNOLOGY CORPORATION
INDEX
PART 1 - FINANCIAL INFORMATION Page
- ------------------------------ Number
------
Item 1 - Financial Statements:
Balance Sheets
December 31, 2002 and June 30, 2003 (unaudited)................................................ 3
Statements of Operations
Three Months Ended June 30, 2002 and 2003 and
Six Months Ended June 30, 2002 and June 30, 2003 (unaudited).................................. 4
Statements of Cash Flows
Six Months Ended June 30, 2002 and 2003 (unaudited)............................................ 5
Notes to Unaudited Interim Financial Statements.................................................... 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................ 11
Item 3 - Quantitative and Qualitative Disclosure About Market Risk................................... 19
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings........................................................................... 19
Item 2 - Changes in Securities....................................................................... 19
Item 3 - Defaults upon Senior Securities............................................................. 19
Item 4 - Submission of Matters to a Vote of Security Holders......................................... 19
Item 5 - Other Information........................................................................... 19
Item 6 - Exhibits and Reports on Form 8-K ........................................................... 19
Signatures ......................................................................................... 20
2
IBIS TECHNOLOGY CORPORATION
BALANCE SHEETS
(Unaudited)
December 31, June 30,
2002 2003
----------------- -------------
Assets
Current assets:
Cash and cash equivalents.................................................... $ 11,745,918 $ 6,486,090
Accounts receivable, trade, net (note 6)..................................... 1,598,560 1,176,721
Unbilled revenue (note 6).................................................... -- 528,581
Inventories (note 3)......................................................... 1,231,559 2,230,930
Deferred costs............................................................... 2,621,580 --
Prepaid expenses and other current assets....................................... 112,729 234,062
---------------- ---------------
Total current assets................................................... 17,310,346 10,656,384
-------------- ---------------
Property and equipment.......................................................... 51,728,659 51,270,699
Less: Accumulated depreciation and amortization............................. (19,233,900) (20,522,279)
-------------- ---------------
Net property and equipment............................................. 32,494,759 30,748,420
Patents and other assets, net................................................... 1,893,854 1,757,262
-------------- ---------------
Total assets........................................................... $ 51,698,959 $ 43,162,066
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Capital lease obligation, current......................................... $ 1,501,415 $ 1,497,116
Accounts payable.......................................................... 897,212 2,119,217
Accrued liabilities....................................................... 2,394,601 3,002,498
Deferred revenue.......................................................... 6,966,325 252,000
--------------- ---------------
Total current liabilities.............................................. 11,759,553 6,870,831
Capital lease obligation, noncurrent........................................ 1,184,400 435,859
--------------- ---------------
Total liabilities...................................................... 12,943,953 7,306,690
-------------- --------------
Stockholders' equity:
Undesignated preferred stock, $.01 par value.
Authorized 2,000,000 shares; none issued.................................... -- --
Common stock, $.008 par value.
Authorized 50,000,000 shares; issued 9,474,940 shares and
9,506,605 shares in 2002 and 2003, respectively........................ 75,799 76,052
Additional paid-in capital.................................................. 79,101,032 79,261,476
Accumulated deficit......................................................... (40,421,825) (43,482,152)
-------------- -------------
Total stockholders' equity............................................. 38,755,006 35,855,376
-------------- -------------
Total liabilities and stockholders' equity............................. $ 51,698,959 $ 43,162,066
============= =============
See accompanying notes to unaudited interim financial statements.
3
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2002 2003 2002 2003
-------------- ------------- -------------- --------------
Net Sales and revenue:
Product sales...................................... $ 1,574,987 $ 3,532,200 $ 2,981,317 $ 4,207,900
Contract and other revenue........................ 99,782 27,601 172,060 526,065
Equipment revenue................................. . 183,222 8,162,188 329,960 8,396,175
----------- ------------- ------------- --------------
Total net sales and revenue (notes 2 and 6) 1,857,991 11,721,989 3,483,337 13,130,140
Cost of sales and revenue:
Cost of product sales.............................. 3,314,286 4,631,928 6,282,638 7,505,843
Cost of contract and other revenue................ 5,374 9,845 87,257 28,002
Cost of equipment revenue......................... 94,579 3,685,849 158,844 3,805,702
---------- ------------- ------------- ---------------
Total cost of sales and revenue................ 3,414,239 8,327,622 6,528,739 11,339,547
---------- ------------- ------------- ---------------
Gross profit (loss)............................. (1,556,248) 3,394,367 (3,045,402) 1,790,593
----------- ------------- -------------- ---------------
Operating expenses:
General and administrative........................ 612,012 567,794 1,141,619 1,186,547
Marketing and selling............................. 400,855 305,936 773,400 660,469
Research and development.......................... 1,555,418 1,297,660 3,010,139 3,033,296
------------- ------------- ------------- ---------------
Total operating expenses....................... 2,568,285 2,171,390 4,925,158 4,880,312
------------- ------------- ------------- ---------------
Profit (loss) from operations.................. (4,124,533) 1,222,977 (7,970,560) (3,089,719)
------------- -------------- ------------- ---------------
Other income (expense):
Interest income.................................... 99,714 14,053 163,799 39,898
Interest expense................................... (3,021) (11,003) (6,385) (12,975)
Other.............................................. -- (1) -- 3,725
----------- ------------- -------------- ---------------
Total other income............................. 96,693 3,049 157,414 30,648
------------ -------------- ------------- ---------------
Profit (loss) before income taxes.............. (4,027,840) 1,226,026 (7,813,146) (3,059,071)
Income tax expense.................................. -- -- 1,256 1,256
------------ ------ --------- ---------------
Net income (loss) (note2)...................... $ (4,027,840) $ 1,226,026 $ (7,814,402) $ (3,060,327)
============= ============== =============== ===============
Net income (loss) per common share:
Basic............................................... $ (0.43) $ 0.13 $ (0.87) $ (0.32)
=========== ============== =============== ===============
Diluted............................................ $ (0.43) $ 0.13 $ (0.87) $ (0.32)
=========== =============== ================ ===============
Weighted average number of common shares outstanding:
Basic............................................ 9,420,391 9,485,507 8,968,823 9,480,252
========== ============== ============= ==============
Diluted (note5)................................. 9,420,391 9,501,079 8,968,823 9,480,252
========== ============== ============= ==============
See accompanying notes to unaudited interim financial statements.
4
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
2002 2003
---------------- ---------------
Cash flows from operating activities:
Net loss................................................................... $ (7,814,402) $ (3,060,327)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization........................................... 3,107,055 3,325,952
Changes in operating assets and liabilities:
Accounts receivable, trade.............................................. 4,728,222 421,839
Unbilled revenue........................................................ -- (528,581)
Inventories............................................................. (326,279) (999,371)
Prepaid expenses and other current assets............................... (701,723) 2,500,247
Accounts payable........................................................ 2,060,772 1,222,005
Accrued liabilities and deferred revenue................................ (789,751) (6,106,428)
------------- ----------------
Net cash provided (used) in operating activities........................ 263,894 (3,224,664)
-------------- ----------------
Cash flows from investing activities:
Additions to property and equipment, net................................... (3,235,682) (1,412,304)
Other assets............................................................... (83,774) (30,717)
--------------- ----------------
Net cash used in investing activities................................... (3,319,456) (1,443,021)
-------------- ---------------
Cash flows from financing activities:
Payments of capital lease obligations...................................... (756,178) (752,840)
Exercise of stock options and warrants..................................... 183,081 160,697
Proceeds from sale of common stock
net of issuance costs................................................. 12,113,469 --
-------------- ---------------
Net cash provided (used) by financing activities........................ 11,540,372 (592,143)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents.................... 8,484,810 (5,259,828)
Cash and cash equivalents, beginning of period............................. 13,087,799 11,745,918
-------------- ----------------
Cash and cash equivalents, end of period................................... $ 21,572,609 $ 6,486,090
============== ================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest.................................. $ 6,385 $ 12,975
=============== =================
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 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 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 sales 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.
(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 income (loss) and income (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:
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2002 2003 2002 2003
---- ---- ---- ----
Net income (loss), as reported............... $ (4,027,840) $ 1,226,026 $ (7,814,402) $ (3,060,327)
Add: Stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax
effects..................................... (296,171) (39,802) (2,691,340) (1,512,517)
-------------- ------------ ---------- ----------
Pro-forma net income (loss).................. $ (4,324,011) $ 1,186,224 $ (10,505,742) $ (4,572,844)
Net income (loss) per share:
Basic and diluted - as reported.............. $ (0.43) $ 0.13 $ (0.87) $ (0.32)
Basic and diluted - pro-forma............... $ (0.46) $ (0.12) $ (1.17) $ (0.48)
6
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
Pro-forma net loss reflects only options granted in 1995 through 2003.
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:
December 31, June 30,
2002 2003
Raw materials............................................... $ 810,740 $ 606,915
Work in process............................................. 94,090 1,193,625
Finished goods.............................................. 326,729 430,390
------------ -----------
Total inventory............................................. $ 1,231,559 $ 2,230,930
=========== ===========
(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.
(5) Net Income (Loss) Per Share
Net income (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 and six
months ended June 30, 2002 and the six months ended June 30, 2003, common stock
equivalents of 104,023, 150,236 and 8,896, 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 the three and six
months ended June 30, 2002 and the six months ended June 30, 2003. For the three
months ended June 30, 2003 common stock equivalents of 15,572 were included in
the diluted income per share calculation.
(6) Significant Customers and Concentration of Business Risk
The Company sells its products to a limited number of semiconductor and
optical components manufacturers primarily in the United States, the Pacific Rim
and the United Kingdom.
Sales for significant customers are shown in dollar amounts and as a
percentage of total revenue as follows:
Significant
Customers Amount %
------------ ------------ -----
Three Months Ended June 30, 2002 3 $ 1,310,799 71%
Three Months Ended June 30, 2003 1 $ 11,561,638 99%
Six Months Ended June 30, 2002 3 $ 2,536,889 73%
Six Months Ended June 30, 2003 1 $ 12,139,784 92%
Accounts receivable and unbilled revenue from significant customers at
June 30, 2003 and December 31, 2002 amounted to $1,721,000 and $769,000,
respectively.
7
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
(7) 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 and six months
ended June 30, 2002 and 2003 pertaining to the Company's three industry
segments.
SIMOX Wafer SIMOX Other Products
Products Equipment or Services Total
Net Sales and Revenue
Three Months Ended June 30, 2002 $ 1,574,987 $ 183,222 $ 99,782 $ 1,857,991
Three Months Ended June 30, 2003 3,532,200 8,162,188 27,601 11,721,989
Six Months Ended June 30, 2002 2,981,317 329,960 172,060 3,483,337
Six Months Ended June 30, 2003 4,207,900 8,396,175 526,065 13,130,140
Operating Income (Loss)
Three Months Ended June 30, 2002 (2,438,456) (1,168,472) 94,408 (3,512,520)
Three Months Ended June 30, 2003 (1,301,999) 3,075,013 17,757 1,790,771
Six Months Ended June 30, 2002 (4,640,304) (2,273,439) 84,803 (6,828,940)
Six Months Ended June 30, 2003 (4,205,152) 1,803,917 498,064 (1,903,171)
Assets
June 30, 2003 31,925,745 3,972,959 64,529 35,963,233
Capital Expenditures
Three Months Ended June 30, 2002 2,456,123 69,296 -- 2,525,419
Three Months Ended June 30, 2003 586,934 -- -- 586,934
Six Months Ended June 30, 2002 3,075,275 103,778 -- 3,179,053
Six Months Ended June 30, 2003 1,391,061 -- -- 1,391,061
Depreciation and Amortization of Property and SIMOX Wafer SIMOX Other Products
Equipment Products Equipment or Services Total
- --------- -------- --------- ----------- -----
Three Months Ended June 30, 2002 1,164,293 353,509 -- 1,517,802
Three Months Ended June 30, 2003 1,286,730 351,294 -- 1,638,024
Six Months Ended June 30, 2002 2,303,554 758,077 -- 3,061,631
Six Months Ended June 30, 2003 2,548,253 710,823 -- 3,259,076
8
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
The table below provides the reconciliation of reportable segment
operating loss and assets to Ibis' totals.
Three Months Ended Six Months Ended
June 30, June 30,
Segment Reconciliation 2002 2003 2002 2003
- ---------------------- ---- ---- ---- ----
Income (Loss) Before Income Taxes:
Total operating income (loss)for reportable
segments $ (3,512,520) $ 1,790,771 $ (6,828,940) $ (1,903,171)
Corporate general & administrative expenses (612,013) (567,794) (1,141,620) (1,186,548)
Net other income 96,693 3,049 157,414 30,648
-------------- --------------- -------------- -------------
Income (loss) before income taxes $ (4,027,840) 1,226,026 (7,813,146) (3,059,071)
============== ============= ============== ============
Capital Expenditures:
Total capital expenditures for reportable segments 2,525,419 586,934 3,179,053 1,391,061
Corporate capital expenditures 31,048 21,243 56,629 21,243
-------------- --------------- ----------------- ---------------
Total capital expenditures $ 2,556,467 608,177 3,235,682 1,412,304
============= ============== =============== =============
Depreciation and Amortization:
Total depreciation and amortization for
reportable segments 1,517,802 1,638,024 3,061,631 3,259,076
Corporate depreciation and amortization 11,255 34,149 45,424 66,876
------------- ------------- ---------------- ---------------
Total depreciation and amortization $ 1,529,057 1,672,173 3,107,055 3,325,952
============= =========== ============== =============
Balance as of
6/30/03
Assets:
Total assets for reportable segments $ 35,963,233
Cash & cash equivalents not allocated to
segments 6,486,090
Other unallocated assets 712,743
-------------
Total assets $ 43,162,066
============
(8) 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.
9
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
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.
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.
In April 2003, FASB issued Statement No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities (SFAS 149), which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS 149 is effective prospectively for contracts entered into or modified after
June 30, 2003, except as stated below and for hedging relationships designated
after June 30, 2003. The provisions of this Statement that relate to Statement
133 Implementation Issues that have been effective for fiscal quarters that
began prior to June 15, 2003, should continue to be applied in accordance with
their respective effective dates. In addition, paragraphs 7 (a) and 23 (a),
which relate to forward purchases or sales of when-issued securities or other
securities that do not yet exist, should be applied to both existing contracts
and new contracts entered into after June 30, 2003. The Company does not expect
the adoption of this Statement to have a material impact on its financial
condition or results of operations.
In May 2003, FASB issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS
150), which establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003, except for mandatory redeemable
preferred financial instruments of nonpublic companies. It is to be implemented
by reporting the cumulative effect of a change in accounting principle for
financial instruments created before the issuance date of the Statement and
still existing at the beginning of the interim period of adoption. Restatement
is not permitted. The Company does not expect the adoption of this Statement to
have a material impact on its financial condition or results of operations.
10
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. During the quarter, the i2000 implanter we shipped
to our largest customer late last year was accepted. As a result, we recognized
revenue of approximately $8 million in the second quarter ended June 30, 2003.
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.
11
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
At June 30, 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. Our second balance-of-process
line (annealing, cleaning, metrology) has been fully qualified and is now
available for completing the manufacture of 300-millimeter SIMOX-SOI 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 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.
12
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
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.
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.
13
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations
Second Quarter Ended June 30, 2003 Compared to Second Quarter Ended June 30,
2002
Product Sales. Wafer product sales increased $1,957,213 or 124%, to
$3,532,200 for the second quarter ended June 30, 2003 from $1,574,987 for the
second quarter ended June 30, 2002. Wafer product sales this quarter were higher
due to increased 300 mm SIMOX wafer shipments to one customer. Our largest wafer
customer completed their evaluation of multiple types of 300 mm MLD wafers in
the first quarter of this year, which allowed us to begin shipping against our
backlog during the second quarter of 2003. In addition, we qualified a second
300 mm SIMOX wafer production line at Ibis which increased our ability to ship
300 mm wafers. Sales of 300 mm wafers this quarter accounted for 97% of wafer
sales compared to 13% the same quarter last year.
Contract and Other Revenue. Contract and other revenue includes revenue
derived from government contracts, license agreements, characterization and
other services. Contract and other revenue decreased for the second quarter
ended June 30, 2003 to $27,601 from $99,782 for the second quarter ended June
30, 2002, a decrease of $72,181 or 72%. This is attributable to 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 $8,162,188 for the second quarter ended June 30, 2003 from $183,222 for the
second quarter ended June 30, 2002, an increase of $7,978,966 or 4,355%. During
the quarter ended June 30, 2003, the i2000 implanter we shipped to our largest
customer late last year was accepted. As a result, we recognized revenue of
approximately $8 million in this quarter. Equipment revenue in the prior year
quarter consisted solely of parts and service revenue. Field service revenue
accounted for $69,300 for the second quarter ended June 30, 2003 as compared to
$70,050 for the same period last year. Sales of spare parts accounted for
$99,982 of equipment revenue for the second quarter ended June 30, 2003 as
compared to $113,172 of equipment revenue for the second quarter ended June 30,
2002.
Total Net Sales and Revenue. Total net revenue for the second quarter ended
June 30, 2003 was $11,721,989, an increase of $9,863,998, or 531%, from total
net revenue of $1,857,991 for the second quarter ended June 30, 2002. This
resulted from revenue of approximately $8 million recognized on the i2000
implanter we shipped to our customer late last year and the increase in 300 mm
SIMOX wafer sales.
Total Cost of Sales and Revenue. Cost of wafer product sales for the second
quarter ended June 30, 2003 was $4,631,928, compared to $3,314,286 for the
second quarter ended June 30, 2002, an increase of $1,317,642, or 40%. This is
attributable to increased sales of 300 mm wafers along with increased fixed
costs, mainly depreciation and amortization of 300 mm equipment. Cost of
contract and other revenue consists of labor and materials expended during the
quarter. Cost of contract and other revenue for the second quarter ended June
30, 2003 was $9,845, as compared to $5,374 for the second quarter ended June 30,
2002, an increase of $4,471, or 83%. This is attributable to an increase in
material costs associated with other revenue. 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 second quarter ended June 30,
2003 was $3,685,849, as compared to $94,579 for the second quarter ended June
30, 2002. Costs this quarter include the cost of the i2000 implanter which was
recognized as revenue this quarter in accordance with SAB 101.
14
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Total cost of sales and revenue for the second quarter ended June 30, 2003
was $8,327,622 as compared to $3,414,239 for the second quarter ended June 30,
2002, an increase of $4,913,383 or 144%. The gross margin for all sales was 29%
for the second quarter ended June 30, 2003 as compared to a negative gross
margin of 84% for the second quarter ended June 30, 2002. This increase in the
gross margin for all sales is attributable to a 55% gross margin achieved on the
i2000 implanter sale, as well as improved margins on wafer sales due to
increased volumes. Our wafer production line for smaller wafer sizes is
currently underutilized and we believe that as sales volumes of all wafer sizes
increase, the wafer product gross margins should improve.
General and Administrative Expenses. General and administrative expenses
for the second quarter ended June 30, 2003 were $567,794 (or 5% of total
revenue) as compared to $612,012 (or 33% of total revenue) for the second
quarter ended June 30, 2002, a decrease of $44,218, or 7%. This is due to
decreased payroll, payroll related expenses and professional services as a
result of cost savings initiated by Ibis. These savings were offset by an
increase in Director's & Officer's liability insurance.
Marketing and Selling Expenses. Marketing and selling expenses for the
second quarter ended June 30, 2003 were $305,936 (or 3% of total revenue) as
compared to $400,855 (or 22% of total revenue) for the second quarter ended June
30, 2002, a decrease of $94,919, or 24%. This is a result of a decrease in
promotional expenses and payroll and payroll related expenses resulting from
cost savings initiatives.
Research and Development Expenses. Internally funded research and
development expenses decreased by $257,758 or 17%, to $1,297,660 (or 11% of
total revenue) for the second quarter ended June 30, 2003, as compared to
$1,555,418 (or 84% of total revenue) for the second quarter ended June 30, 2002.
This is due to the reduction in payroll and payroll related expenses along with
consulting services relating to the i2000 implanters, which were initiated
through cost savings programs implemented this year.
Other Income (Expense). Total other income for the second quarter ended
June 30, 2003 was $3,049 as compared to $96,693 for the second quarter ended
June 30, 2002, a decrease of $93,644, or 97%. 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.
Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002
Product Sales. Wafer product sales increased $1,226,583 or 41%, to
$4,207,900 for the six months ended June 30, 2003 from $2,981,317 for the six
months ended June 30, 2002. This is attributable to sales of 300 mm SIMOX wafers
increasing more than twelve times the prior period. Sales of 300 mm wafers
accounted for 87% and 10% of total product sales for the six months ended June
30, 2003 and 2002, respectively.
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 six months ended
June 30, 2003 to $526,065 from $172,060 for the six months ended June 30, 2002,
an increase of $354,005 or 206%. This increase is attributable to revenue
recognized from the transfer of wafer technology to a customer pursuant to a
license transfer agreement. Royalty fees also increased, but these were offset
by a decrease in government contract work.
15
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Equipment Revenue. Equipment revenue represents revenue recognized from
sales of implanters, spare parts and field service revenue. Equipment revenue
increased to $8,396,175 for the six months ended June 30, 2003 from $329,960 for
the six months ended June 30, 2002, an increase of $8,066,215 or 2,445%. During
the quarter ended June 30, 2003, the i2000 implanter we shipped to our largest
customer late last year was accepted. As a result, we recognized revenue of
approximately $8 million in the quarter. Equipment revenue in the first half of
2002 consists solely of parts and service revenue. Field service revenue
accounted for $139,850 of equipment revenue for the six months ended June 30,
2003 as compared to $140,850 of equipment revenue for the same period last year.
Sales of spare parts accounted for $263,419 of equipment revenue for the six
months ended June 30, 2003 as compared to $189,110 of equipment revenue for the
six months ended June 30, 2002.
Total Net Sales and Revenue. Total net revenue for the six months ended
June 30, 2003 was $13,130,140, an increase of $9,646,803, or 277%, from total
net revenue of $3,483,337 for the six months ended June 30, 2002.
Total Cost of Sales and Revenue. Cost of wafer product sales for the six
months ended June 30, 2003 was $7,505,843, compared to $6,282,638 for the six
months ended June 30, 2002, an increase of $1,223,205, or 19%. This is
attributable to increased sales of 300 mm wafers along with increased fixed
costs, mainly depreciation and amortization of 300 mm equipment. In addition,
the optimum production yield on our 300 mm wafer products had not been realized
which resulted in higher costs in the first quarter of 2003. Cost of contract
and other revenue consists of labor and materials expended during the quarter.
Cost of contract and other revenue for the six months ended June 30, 2003 was
$28,002, as compared to $87,257 for the six months ended June 30, 2002, a
decrease of $59,255, or 68%. This decrease is primarily attributable to a
decrease in work performed on contracts. Cost of equipment revenue represents
the cost of equipment, the cost for spare parts, along with labor incurred for
field service. Cost of equipment revenue for the six months ended June 30, 2003
was $3,805,702, as compared to $158,844 for the six months ended June 30, 2002,
an increase of $3,646,858 or 2,296%. This increase is due to the costs
recognized for the i2000 implanter sold during this period as well as the
increase in parts sold. As a result of the foregoing, the total cost of sales
and revenue for the six months ended June 30, 2003 was $11,339,547 as compared
to $6,528,739 for the six months ended June 30, 2002, an increase of $4,810,808
or 74%. The gross margin for all sales was a negative 14% for the six months
ended June 30, 2003 as compared to a negative gross margin of 87% for the six
months ended June 30, 2002. This improvement in the gross margin for all sales
is attributable to a 55% gross margin achieved on the i2000 implanter sale, as
well as improved margins on wafer sales due to increased volumes.
General and Administrative Expenses. General and administrative expenses
for the six months ended June 30, 2003 were $1,186,547 (or 9% of total revenue)
as compared to $1,141,619 (or 33% of total revenue) for the six months ended
June 30, 2002, an increase of $44,928, or 4%. This is primarily a result of
increases in D&O insurance which were offset by decreases in professional
services.
Marketing and Selling Expenses. Marketing and selling expenses for the six
months ended June 30, 2003 were $ 660,469 (or 5% of total revenue) as compared
to $773,400 (or 22% of total revenue) for the six months ended June 30, 2002, a
decrease of $112,931, or 15%. The decrease in marketing and selling expenses is
primarily a result of decreases in payroll and payroll related expenses, travel
and promotional expenses due to cost savings initiatives.
Research and Development Expenses. Internally funded research and
development expenses increased by $23,157 or 1%, to $3,033,296 (or 23% of total
revenue) for the six months ended June 30, 2003, as compared to $3,010,139 (or
86% of total revenue) for the six months ended June 30, 2002. This increase is
mainly due to increased material expenses on joint SIMOX-SOI wafer development
programs. This was offset by decreased R&D activity on the i2000 implanter
program.
16
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Other Income (Expense). Total other income for the six months ended June
30, 2003 was $30,648 as compared to $157,414 for the six months ended June 30,
2002, a decrease of $126,766, or 81%. The decrease in total other income is
primarily attributable to decreased interest income earned as a result of lower
average cash balances and a reduction in interest rates.
Liquidity and Capital Resources
As of June 30, 2003, Ibis had cash and cash equivalents of $6,486,090,
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 six months ended June 30, 2003, Ibis used $3,224,664 in cash for
operating activities compared to cash provided by operations of $263,894 for the
same period in 2002. Depreciation and amortization expense for the six months
ended June 30, 2003 and 2002 was $3,325,952 and $3,107,055, respectively. This
accounted for 25% and 89% 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 $1,412,304 during the six months ended June
30, 2003 to fund additions to property and equipment as compared to $3,235,682
during the six months ended June 30, 2002. At June 30, 2003, Ibis had
commitments to purchase approximately $2,341,909 of material to be used for
manufacturing wafers and i2000 implanter parts and $348,530 in capital equipment
purchases.
As part of our cash management plan, we initiated additional cost saving
measures during the first half 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. We expect these measures to save us in excess of $1 million on an
annual basis.
In June 2003, Ibis entered into an agreement with an agent to obtain
payment for products from its largest customer on an expedited basis. The
discount rate associated with this agreement is based on the prime rate and may
fluctuate.
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.
17
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
We estimate that we have adequate cash available for the foreseable future
in 2004. We anticipate that wafer sales, primarily 300 mm SIMOX wafers, in
the second half of 2003 will increase compared to the first half of 2003 and
that our spending rates during the second half of 2003 will be lower 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 also
contribute to our reduced spending rates, which we continue to monitor and
adjust accordingly. Our outlook for the year also includes the receipt of orders
for one to three implanters. We continue to carefully manage our cash position
and are planning to take measures necessary to insure the availability of
sufficient cash to expand and invest in the business. 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.
18
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.
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 Ibis was held on May 8, 2003. The
following matters were voted on at the meeting:
(1) One person was elected to the Board of Directors of the
Company to serve for a term ending in 2006 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 the nominee for Director.
Name Vote For Vote Withheld
---- -------- -------------
Leslie B. Lewis 8,985,625 16,870
(2) The stockholders of the Company ratified the appointment of
KPMG LLP as the Company's independent public accountants for
the fiscal year ending December 31, 2003. This proposal was
approved with 8,987,050 votes for, 10,385 votes against and
5,060 abstentions.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits furnished as Exhibits hereto:
Exhibit
No. Description
------- -----------
31.1 Certification of Martin J. Reid pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Debra L. Nelson pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
The Company filed with the Securities and Exchange Commission
on April 23, 2003 a Current Report on Form 8-K for the April
23, 2003 event announcing its financial results for the First
Quarter ended March 31, 2003.
19
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 7, 2003 By: /s/Debra L. Nelson
------------------------------------------
Debra L. Nelson
Chief Financial Officer, Treasurer and Clerk
(principal financial and accounting officer)
Date: August 7, 2003 By: /s/Martin J. Reid
---------------------------------------
Martin J. Reid
President and Chief Executive Officer
20
EXHIBIT 31.1
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 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 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-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 7, 2003 /s/Martin J. Reid
----------------- -------------------------------
Martin J. Reid
President and Chief Executive Officer
21
EXHIBIT 31.2
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 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 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-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 7, 2003 /s/Debra L. Nelson
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Debra L. Nelson
Chief Financial Officer
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EXHIBIT 32.1
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 June 30, 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 June 30, 2003 fairly presents,
in all material respects, the financial condition and results of operations of
the Company.
/s/Martin J. Reid /s/Debra L. Nelson
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Martin J. Reid Debra L. Nelson
President & Chief Executive Officer Chief Financial Officer
Date: August 7, 2003 Date: August 7, 2003
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