<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20569
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997 Commission file number 0-23668
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)
(508) 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
--- ---
5,204,054 shares of Common Stock, par value $.008, were outstanding on May 7,
1997.
Total Number of Pages 23
Exhibit Index at Page 14
1
<PAGE> 2
IBIS TECHNOLOGY CORPORATION
INDEX
PART 1 - FINANCIAL INFORMATION PAGE
NUMBER
Item 1 - Financial Statements:
Balance Sheets
December 31, 1996 and March 31, 1997 ........................ 3
Statements of Operations
Three Months Ended March 31, 1996 and 1997 ................... 4
Statements of Cash Flows
Three Months Ended March 31, 1996 and 1997 ................... 5
Notes to Financial Statements .................................... 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 7
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings ........................................... 12
Item 2 - Changes in Securities ....................................... 12
Item 3 - Defaults upon Senior Securities ............................. 12
Item 4 - Submission of Matters to a Vote of Security Holders ......... 12
Item 5 - Other Information ........................................... 12
Item 6 - Exhibits and Reports on Form 8-K ............................ 12
Signatures ........................................................... 13
Exhibit Index ........................................................ 14
2
<PAGE> 3
IBIS TECHNOLOGY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................. $ 9,201,016 $ 6,767,108
Accounts receivable, trade, net ........................... 920,388 1,256,796
Unbilled revenue .......................................... 77,860 150,544
Inventories (note 3) ..................................... 732,975 1,047,402
Prepaid expenses and other current assets ................. 45,460 52,140
------------ ------------
Total current assets .............................. 10,977,699 9,273,990
------------ ------------
Property and equipment ...................................... 14,392,843 16,780,008
Less: Accumulated depreciation and amortization ........... (6,240,062) (6,745,035)
------------ ------------
Net property and equipment ........................ 8,152,781 10,034,973
Patents and other assets, net ............................... 411,902 319,039
------------ ------------
Total assets ...................................... $ 19,542,382 $ 19,628,002
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Capital lease obligation, current ......................... $ 657,070 $ 549,860
Accounts payable .......................................... 955,781 1,620,224
Accrued liabilities ....................................... 1,297,266 1,119,062
------------ ------------
Total current liabilities ......................... 2,910,117 3,289,146
------------ ------------
Capital lease obligation, noncurrent ........................ 973,351 860,861
Other accrued liabilities ................................... 1,294,963 1,548,688
------------ ------------
Total liabilities ................................. 5,178,431 5,698,695
STOCKHOLDERS' EQUITY:
Undesignated preferred stock, $.01 par value
Authorized 2,000,000 shares; none issued ................ -- --
Common stock, $.008 par value
Authorized 10,000,000 shares; issued 5,182,148 shares and
5,197,278 shares in 1996 and 1997, respectively ......... 41,457 41,578
Additional paid-in capital ................................ 25,292,217 25,294,815
Accumulated deficit ....................................... (10,952,573) (11,389,936)
Less: Notes receivable from stockholders .................. (17,150) (17,150)
------------ ------------
Total stockholders' equity ........................ 14,363,951 13,929,307
------------ ------------
Total liabilities and stockholders' equity ........ $ 19,542,382 $ 19,628,002
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1996 1997
----------- -----------
<S> <C> <C>
SALES AND REVENUE:
Product sales ..................................... $ 1,290,988 $ 1,113,948
Contract and other revenue ........................ 412,783 524,753
Equipment revenue ................................. 240,000 --
----------- -----------
Total sales and revenue (note 2) ......... 1,943,771 1,638,701
COST OF SALES AND REVENUE:
Cost of product sales ............................. 1,059,969 980,454
Cost of contract and other revenue ................ 22,013 343,629
Cost of equipment revenue ......................... 180,000 --
----------- -----------
Total cost of sales and revenue ........... 1,261,982 1,324,083
----------- -----------
Gross profit .............................. 681,789 314,618
----------- -----------
OPERATING EXPENSES:
General and administrative ........................ 354,995 337,583
Marketing and selling ............................. 130,397 110,049
Research and development .......................... 411,359 347,694
----------- -----------
Total operating expenses .................. 896,751 795,326
----------- -----------
Loss from operations ..................... (214,962) (480,708)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income ................................... 46,226 103,288
Interest expense .................................. (112,431) (58,703)
Other ............................................. (1,787) 16
----------- -----------
Total other income (expense) .............. (67,992) 44,601
----------- -----------
Loss before income taxes ................. (282,954) (436,107)
Income tax expense .................................. 1,256 1,256
----------- -----------
Net loss ................................. $ (284,210) $ (437,363)
=========== ===========
Net loss per common share ........................... $ (0.08) $ (0.08)
=========== ===========
Weighted average number of common shares outstanding 3,518,746 5,190,839
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1996 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................ $ (284,210) $ (437,363)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization ........................ 376,714 518,688
Amortization of deferred compensation ................ 5,610 --
Loss from sale of asset .............................. 1,788 --
Changes in operating assets and liabilities .......... 2,498,995 9,765
----------- -----------
Net cash provided by operating activities ....... 2,598,897 91,090
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net ................ (611,225) (2,387,344)
Decrease (increase) in other assets ..................... (3,422) 79,327
----------- -----------
Net cash used in investing activities ........... (614,647) (2,308,017)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of bank notes payable .......................... (93,126) --
Payments of capital lease obligations ................... (195,643) (219,700)
Exercise of stock options ............................... 6,594 2,719
Increase in deferred offering costs ..................... (420,051) --
----------- -----------
Net cash used in financing activities ............... (702,226) (216,981)
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,282,024 (2,433,908)
Cash and cash equivalents, beginning of period ............ 2,279,852 9,201,016
----------- -----------
Cash and cash equivalents, end of period .................. $ 3,561,876 $ 6,767,108
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest ................ $ 97,716 $ 54,790
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
IBIS TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(1) INTERIM FINANCIAL STATEMENTS
The accompanying financial statements are unaudited, except for the
Balance Sheet as of December 31, 1996, and have been prepared by the Company in
accordance with generally accepted accounting principles.
The interim financial statements are unaudited, but in the opinion of
management include all adjustments which consist only of normal and recurring
adjustments, necessary for a fair presentation of its financial 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, 1996 which
are included in the Annual Report on Form 10-K.
(2) REVENUE RECOGNITION
Product sales are recognized upon shipment. Contract and equipment
revenue are recognized on the percentage-of-completion method. Provisions for
anticipated losses are made in the period in which such losses become
determinable. Unbilled revenue represents contract revenue earned but not yet
billable based on the terms of the contract which include shipment of the
product, achievement of milestones or completion of the contract.
(3) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ----------
<S> <C> <C>
Raw materials ................ $ 284,670 $ 421,261
Work in process .............. 105,401 13,584
Finished goods ............... 342,904 612,557
---------- ----------
$ 732,975 $1,047,402
========== ==========
</TABLE>
6
<PAGE> 7
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Ibis Technology Corporation ("Ibis" or the "Company") was formed in
October 1987 and commenced operations in January 1988. The Company's initial
activities consisted of producing and selling SIMOX-SOI wafers and conducting
funded and unfunded research and development activities. This research led to
the Company's development of a proprietary second generation implanter, the Ibis
1000, and to other proprietary process technology.
Until 1993, much of the Company's revenue was derived from research and
development contracts and sales of SIMOX-SOI wafers for military applications.
Over the past few years, there has been a shift in revenue to sales of SIMOX-SOI
wafers for commercial applications. For the quarter ended March 31, 1997 and for
the fiscal year ended December 31, 1996, commercial product sales (measured in
dollar volume) represented 82% and 90%, respectively, of total product sales
compared with 24% of total product sales for the fiscal year ended December 31,
1992. To date, most customers of the Company that have purchased wafers for what
the Company believes are commercial applications have done so solely for the
purpose of characterizing and evaluating the wafers. Thus, historical sales are
not necessarily indicative of future operations because such sales would not be
considered of a recurring nature.
During 1996 the Company recognized revenue from the sale of an Ibis
1000 implanter to a semiconductor manufacturer. This is the first implanter the
Company has sold and has no commitments for additional implanter equipment
sales. The sale of the implanter accounted for 40% of total revenue in 1996.
Quarterly wafer sales have remained relatively consistent in the range of $1.1
to $1.3 million per quarter during 1996 and through the first quarter of 1997.
The Company has four oxygen implanters on-line (two Ibis 1000
implanters, one of which is primarily dedicated to serve Motorola Corporation's
production requirements, and two NV-200s). Two additional Ibis 1000 implanters
are currently in construction, one anticipated to be placed in production in the
middle of 1997, the other near the end of 1997 or at such time as additional
capacity is needed to meet demand. The Company presently is phasing out
production of SIMOX-SOI wafers on the NV-200 implanters such that in the future
all SIMOX-SOI wafers will be produced on Ibis 1000 implantation equipment. As
the Company expands its production capacity in anticipation of increased demand,
it is expected that gross margins on product sales will initially be adversely
affected until the implanters are operating at or near full capacity. There can
be no assurances the Company will succeed in attracting a sufficient number of
customers and/or SIMOX-SOI wafer orders to offset such production costs or that
the Company will prevail over its competition.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 1997 COMPARED TO FIRST QUARTER ENDED MARCH 31,
1996
PRODUCT SALES. Product sales decreased to $1,113,948 for the first
quarter ended March 31, 1997, a decrease of $177,040 or 14% from $1,290,988 for
the first quarter ended March 31, 1996. The decrease in product sales is
attributable to the absence of wafer sales during the first quarter of 1997 to a
semiconductor manufacturer
7
<PAGE> 8
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
to which wafer sales accounted for 32% of total product sales during the first
quarter of 1996. This manufacturer has moved from the material evaluation stage
of the SIMOX-SOI wafers to the full circuit design and test phase. It is a
normal part of the SIMOX-SOI sales cycle to use fewer SIMOX-SOI wafers during
full circuit testing and the reduced wafer requirements for this customer are
being supplied by their Ibis 1000 implanter. There can be no assurance that this
manufacturer will purchase any wafers from the Company in the future.
CONTRACT AND OTHER REVENUE. Contract and other revenue increased for
the first quarter ended March 31, 1997 to $524,753 from $412,783 for the first
quarter ended March 31, 1996, an increase of $111,970 or 27%. The increase in
contract and other revenue is attributable to revenues derived from a contract
for consulting services related to the implementation of magnetic scanning
technology previously licensed to the customer, as well as a near four-fold
increase in government contract revenue. There were no license revenues
generated in the first quarter ended March 31, 1997 compared to $378,300 or 92%
of contract and other revenue during the quarter ended March 31, 1996. During
the first quarter of 1997 the Company began selling spare parts to the purchaser
of the Ibis 1000 implanter, a major semiconductor manufacturer. These sales
accounted for 15% of contract and other revenue for the period ending March 31,
1997.
EQUIPMENT REVENUE. There were no equipment sales during the quarter
ended March 31, 1997 and no commitments for additional equipment sales currently
exist. Equipment revenue of $240,000 for the first quarter ended March 31, 1996
represents revenue recognized using the percentage-of-completion method in
connection to the Ibis 1000 sale to a major semiconductor manufacturer. This
implanter was shipped to the customer in the fourth quarter of 1996.
TOTAL SALES AND REVENUE. Total sales and revenue for the first quarter
ended March 31, 1997 was $1,638,701, a decrease of $305,070, or 16%, from total
revenue of $1,943,771 for the first quarter ended March 31, 1996. This decrease
resulted from the decrease in product sales and the lack of equipment revenue
and was partially offset by increased contract and other revenue.
TOTAL COST OF REVENUE. Cost of product sales for the first quarter
ended March 31, 1997 was $980,454, as compared to $1,059,969 for the first
quarter ended March 31, 1996, a decrease of $79,515 or 8%. Cost of contract
revenue for the first quarter ended March 31, 1997 was $343,629, as compared to
$22,013 for the first quarter ended March 31, 1996, an increase of $321,616, or
a fourteen-fold increase. Cost of equipment revenue for the first quarter ended
March 31, 1996 was $180,000. The gross margin for all sales was 19% for the
first quarter ended March 31, 1997 as compared to 35% for the first quarter
ended March 31, 1996. This decrease in gross margin is primarily attributable to
the cost of sales for contract and other revenue increasing due to changes in
the make-up of contract and other revenue. Cost of sales for contract and other
revenue consists of labor and materials expended performing consulting tasks
during the first quarter of 1997 and cost of spare parts as compared to
negligible costs associated with license revenue generation during the quarter
ended March 31, 1996. Also contributing to the overall gross margin decrease is
the loss of gross profit on equipment revenue in 1996 and increase in cost of
product sales percentage resulting in a product sales gross margin of 12% during
the first quarter ended March 31, 1997 as compared to 18% during the quarter
ended March 31, 1996. This increase in cost of product sales is mainly due to
increased depreciation expense of capital additions used in the manufacturing
process.
8
<PAGE> 9
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the first quarter ended March 31, 1997 were $337,583 (or 21% of
total revenue) as compared to $354,995 (or 18% of total revenue) for the first
quarter ended March 31, 1996, a decrease of $17,412, or 5%. The reduction is due
to decreases in various administrative expenses.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses have
decreased, totalling $110,049 (or 7% of total revenue) for the first quarter
ended March 31, 1997 as compared to $130,397 (or 7% of total revenue) for the
first quarter ended March 31, 1996, a decrease of $20,348. The decrease is due
primarily to a reduction in trade show expenditures and related travel expenses.
RESEARCH AND DEVELOPMENT. Internally funded research and development
expenses have decreased by $63,665, or 15%, to $347,694 (or 21% of total
revenue) for the first quarter ended March 31, 1997, as compared to $411,359 (or
21% of total revenue) for the first quarter ended March 31, 1996. The decrease
is due to the Company's ability to invoice the consulting customer for labor
hours worked which pertain to their contract, resulting in these charges being
classified as costs of revenue.
LOSS FROM OPERATIONS. The loss from operations for the first quarter
ended March 31, 1997 was $480,708 as compared to a loss of $214,962 for the
first quarter ended March 31, 1996, an increase in loss of $265,746. The
increase in the net loss from operations is primarily the result of the
reduction in product sales and lack of equipment revenue.
OTHER INCOME (EXPENSE). Total other income for the first quarter ended
March 31, 1997 was $44,601 as compared to total other expense of $67,992 for the
first quarter ended March 31, 1996, a difference of $112,593. This difference is
due to interest earned from the proceeds of the April 1996 public offering in
addition to reduced interest expense resulting from the payoff of bank term
debt.
LOSS BEFORE INCOME TAXES. The loss before income taxes was $436,107 for
the first quarter ended March 31, 1997, as compared to $282,954 for the first
quarter ended March 31, 1996. The increase of $153,153 in the net loss before
income taxes is the result primarily of the reduction in product sales due to
the full circuit design and test phase of a major customer as well as the lack
of equipment revenue.
LIQUIDITY AND CAPITAL RESOURCES
On April 9, 1996, the Company completed a public offering of 1,600,000
shares of common stock at $7.25 per share. The Company's net proceeds were
approximately $10,300,000, after deducting approximately $1,300,000 for
underwriting discounts, commissions and other associated expenses.
As of March 31, 1997, the Company had cash and cash equivalents of
$6,767,108. During the first quarter ended March 31, 1997, the Company provided
$91,090 in cash provided by operating activities as compared to cash provided
by operating activities in the amount of $2,598,897 for the same period in
1996. The decline of $2,507,807 in cash provided by operating activities
resulted primarily from cash outlays for the two Ibis 1000 implanters in
construction and expenditures for capital additions relating to the production
capacity expansion. Depreciation and amortization expense for the first
quarters ended March 31, 1997 and 1996 was $518,688 and $376,714, accounting
for 32% and 19% of total revenue, respectively. Due to the capital intensive
nature of the Company's business and the expansion of its production capacity,
management expects that depreciation and amortization will continue to be a
significant portion of its expenses. To date, the Company's working capital
requirements have been funded through debt and equity financing, equipment
lines of credit, a working capital line of credit, a term
9
<PAGE> 10
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
loan, sale leaseback arrangements, collaborative relationships and government
contracts. The principal use of cash during the quarter ended March 31, 1997 was
to fund the construction of the Ibis 1000 implanters and other additions to
property and equipment which totaled approximately $2.4 million. At March 31,
1997, the Company had commitments to purchase approximately $88,000 in material
or subassemblies to be used to manufacture the two additional Ibis 1000
implanters.
The Company anticipates that it may be required to raise substantial
additional capital in the future in order to finance expansion of its
manufacturing capacity and its research and development programs. The Company's
existing cash resources together with funds generated from operations, are
believed to be sufficient to support the Company's operations on their
anticipated scale for fifteen months. This anticipated scale of operations
includes the two additional Ibis 1000 oxygen implanters (in addition to its
four oxygen implanters currently on-line: two Ibis 1000's and two NV-200s), the
purchase of support equipment and expansion of the Company's facilities. Of the
two new implanters in construction, one is expected to be transferred to
production in the middle of 1997, the other near the end of 1997 or at such
time as additional capacity is needed to meet demand. The Company is phasing
out production of SIMOX-SOI wafers from its NV-200 implanters such that in the
future all SIMOX-SOI wafers will be produced on the Ibis 1000 implantation
equipment.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS 128 establishes a different method of computing net income per
share that is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS No. 128, the Company will be required to
present both basic net income per share and diluted net income per share. Basic
net income per share is expected to be higher than the currently presented net
income per share as the effect of dilutive stock options will not be considered
in computing basic net income per share. The impact on diluted net income per
share is not expected to be material.
The Company plans to adopt SFAS No. 128 in its fiscal quarter ending
December 31, 1997 and at that time all historical net income per share data
presented will be restated to conform to the provisions of SFAS No. 128.
EFFECTS OF INFLATION
The Company believes that over the past two years inflation has not had
a significant impact on the Company's sales or operating results.
BUSINESS OUTLOOK
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. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties which could cause actual
results to differ materially from those described in the forward-looking
statements. Such factors and uncertainties include, but are
10
<PAGE> 11
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
not limited to, the uncertainty that the performance advantages of SIMOX-SOI
wafers will be realized commercially or that a commercial market for SIMOX-SOI
wafers will continue to develop; the dependence by the Company on key customers
(during 1994, 1995 and 1996, revenues from four customers averaged in the
aggregate between 39% and 68% of the Company's revenues, so that the loss of one
or more of these major customers and the failure of the Company to obtain other
sources of revenue could have a material adverse impact on the Company); the
loss of the services of one or more of the Company's key individuals, the
development of competing or superior technologies and products from
manufacturers, many of which have substantially greater financial, technical and
other resources than the Company; the Company's lack of experience in producing
commercial quantities of its products at acceptable costs; the Company's ability
to develop and maintain strategic alliances for the manufacturing, marketing and
distribution of its products; the cyclical nature of the semiconductor industry,
which has negatively affected the Company's sales of SIMOX-SOI wafers during
industry downturns and which could continue to do so in the future; the limited
availability of critical materials and components for wafer products and
implanters, as a shortage of such materials and components or a significant
increase in the price thereof could have a material adverse effect on the
Company's business and results of operations; the availability of additional
capital to fund expansion on acceptable terms, if at all; and general economic
conditions.
11
<PAGE> 12
IBIS TECHNOLOGY CORPORATION
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Change 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:
11 - Statement regarding computation of per share loss
10.4 - Fifth Amendment to Lease dated February 4, 1997, amending
Lease Agreement dated December 22, 1987 between Company
and Thomas J. Flatley d/b/a The Flatley Company
27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
12
<PAGE> 13
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: May 13, 1997 By: /s/ Nancy J. Neill
-----------------------------------------
Nancy J. Neill
Controller and Assistant Treasurer
Date: May 13, 1997 By: /s/ Timothy J. Burns
-----------------------------------------
Timothy J. Burns
Chief Financial Officer, Operations
Manager, Treasurer and Clerk
(principal financial and accounting officer)
13
<PAGE> 14
IBIS TECHNOLOGY CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
11 Statement regarding computation of per share loss 15
10.4 Fifth Amendment to Lease dated February 4, 1997, amending 16
Lease Agreement dated December 22, 1987 between Company
and Thomas J. Flatley d/b/a The Flatley Company
27 Financial Data Schedule 23
</TABLE>
14
<PAGE> 1
FIFTH AMENDMENT TO LEASE
------------------------
This Agreement made this 4th day of February, 1997, by and between Thomas
J. Flatley d/b/a The Flatley Company (hereinafter referred to as LANDLORD), and
Ibis Technology Corporation (hereinafter referred to as TENANT),
WITNESSETH:
-----------
WHEREAS, by a certain Lease Agreement dated December 22, 1987, as amended
by a First Amendment to Lease dated July 19, 1990, a Second Amendment to Lease
dated August 2, 1991, a Third Amendment to Lease dated March 17, 1992, and a
Fourth Amendment to Lease dated March 7, 1994 (hereinafter collectively referred
to as the "Lease"), LANDLORD leased to TENANT, a certain premises described as
Cherry Hill Commerce Center, 32A and 32B Cherry Hill Drive, Danvers, MA 01923,
consisting of approximately 22,320 square feet of space, more particularly
described therein as ("Premises" "Expansion Premises 1", "Expansion Premises 2"
and "Expansion Premises 4", respectively), and,
TENANT wishes to lease from LANDLORD, and LANDLORD wishes to lease to
TENANT, an additional 4,800 square feet of space, commencing upon the Fifth
Amendment to Lease Commencement Date which shall be January 1, 1997 (as
hereinafter defined) which includes a 0% common area factor, located at Cherry
Hill Commerce Center, 26-42 Cherry Hill Drive, Danvers, MA 01923, as outlined on
Exhibit "A-6" attached hereto and made a part hereof (hereinafter referred to as
"Expansion Premises 5").
LANDLORD and TENANT desire to amend the Lease to reflect this and certain
additional changes which have been agreed to by the parties, and all changes as
set forth below shall become effective on the Fifth Amendment to Lease
Commencement Date (as hereinafter defined).
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged each to the other, the above named parties do hereby agree to amend
said Lease as follows:
1. The description of TENANT'S Premises as set forth in Section 1 of the
Lease, Incorporation of Basic Data, namely Premises, is hereby amended
in part, as follows:
...27,120 square feet of space, being the approximate size of the
Premises and the basis on which Annual Rent and Additional Rent shall
be paid by Tenant to Landlord, in the building located at Cherry Hill
Commerce Center, 32A and 32B Cherry Hill Drive, Danvers, MA 01923...
2. The Third Extended Term of the Lease, which expires December 31, 1996,
is hereby extended for a period of seven (7) years, commencing January
1, 1997 and expiring December 31, 2003 (hereinafter referred to as the
"Fourth Extended Term").
3. The term of this Fifth Amendment to Lease shall commence on January 1,
1997 (hereinafter referred to as the "Fifth Amendment to Lease
Commencement Date") and shall terminate December 31, 2003.
<PAGE> 2
Notwithstanding the foregoing, if Tenant's personnel shall occupy all
or any part of the Expansion Premises 5 for the conduct of its
business prior to the Fifth Amendment to Lease Commencement Date as
determined pursuant to the preceding paragraph, such date of occupancy
shall, for all intents and purposes of this Fifth Amendment to Lease,
be the Fifth Amendment to Lease Commencement Date.
Landlord and Tenant agree to execute a Supplemental Agreement setting
forth the actual Occupancy and Term Dates, once the same have been
established.
4. Effective January 1, 1997, Section 1 of the Lease, Incorporation of
Basic Data, namely Annual Rent, shall be deleted in its entirety and
replaced with the following:
The TENANT agrees to pay to LANDLORD, without deduction or offset,
rent at the rate of, payable in advance on the first day of each
month, in equal monthly installments of FIFTEEN THOUSAND TWO HUNDRED
FIFTY-FIVE AND 00/100 ($15,255.00) Dollars, for the period commencing
January 1, 1997 and continuing through and including December 31, 1999
and at that rate for any fraction of a month; and
The annual rent for the period commencing January 1, 2000 and
continuing through and including December 31, 2001, shall be ONE
HUNDRED EIGHTY-THREE THOUSAND SIXTY AND 00/100 ($183,060.00) Dollars
annually, which shall be adjusted to reflect the percentage increase,
if any, of The Consumer Price Index for Urban Wage Earners and
Clerical Workers, all cities average, (1982-84=100) issued by the U.S.
Department of Labor, or such other costs as may be hereafter
substituted by the United States Department of Labor for The Consumer
Price Index. If there is an upward change thereof from the
Commencement Date of this Lease, to December 31, 1999, then the annual
rent during this period shall be increased in accordance with such
adjusted value of the dollar, but in no event shall such rent be less
than the last annual rent paid by TENANT to LANDLORD; and
The annual rent for the period commencing January 1, 2002 and
continuing through and including December 31, 2003, shall be ONE
HUNDRED EIGHTY-THREE THOUSAND SIXTY AND 00/100 ($183,060.00) Dollars
annually, which shall be adjusted to reflect the percentage increase,
if any, of The Consumer Price Index for Urban Wage Earners and
Clerical Workers, all cities average, (1982-84=100) issued by the U.S.
Department of Labor, or such other costs as may be hereafter
substituted by the United States Department of Labor for The Consumer
Price Index. If there is an upward change thereof from January 1, 2000
to December 31, 2001 of this Lease, then the annual rent during this
period shall be increased in accordance with such adjusted value of
the dollar, but in no event shall such rent be less than the last
annual rent paid by TENANT to LANDLORD.
5. Effective on January 1, 1997, the Lease is hereby amended in part, by
inserting the following section:
SECTION 40 - LATE PAYMENT
-------------------------
If TENANT fails to pay any installment of Annual Rent and/or
Additional Rent within five (5) days of the first (lst) day of the
calendar month when such
<PAGE> 3
installment becomes due and payable, TENANT shall pay to LANDLORD a
late charge of five percent (5%) of the amount of such installment,
and, in addition, such unpaid installment shall bear interest at the
rate per annum which is four percent (4%) greater than the "base
lending rate" then in effect at The Wall Street Journal, or the
highest rate permitted by law, whichever may be less; with it being
the express intent of the parties that nothing herein contained shall
be construed or implemented in such manner as to allow LANDLORD to
charge or receive interest in excess of the maximum legal rate. then
allowed by law. Such late charge and interest shall constitute
Additional Rent hereunder due and payable with the next monthly
installment of Annual Rent due.
6. Effective January 1, 1997, the Lease is hereby amended in part, by
inserting the following section:
SECTION 41 - TENANT'S OPTION TO EXPAND
--------------------------------------
In the event TENANT has not been in default of any of the terms,
conditions and covenants of this Lease Agreement and any Amendments
made hereto during the term hereof, after the expiration of any
applicable notice and grace period, TENANT shall have the option, to
lease additional space from the LANDLORD within Cherry Hill Commerce
Center, Danvers, MA 01923, (as delineated on Exhibit "A-7", attached
hereto and made a part hereof), subject, but not limited to, the
following terms and conditions:
1. TENANT'S additional space requirement must be a minimum of 9,600
square feet (hereinafter referred to as the "Expansion Space").
2. LANDLORD shall notify TENANT approximately six (6) months prior to
Expansion Space availability and TENANT must notify LANDLORD in
writing of its desire to lease said Expansion Space or not to lease
said Expansion Space within thirty (30) days from LANDLORD's said
notice. If TENANT does not respond within thirty (30) days as stated
herein, said Option to Expand shall be deemed null and void.
3. TENANT must occupy said Expansion Space and the Premises demised
hereunder for a term of no less than five (5) years which shall be
coterminous with this Fifth Amendment to Lease.
4. Rent for said Expansion Space shall be at then rental rate being
paid by TENANT.
5. TENANT shall pay to LANDLORD in three (3) monthly installments, the
amount of FIVE THOUSAND FOUR HUNDRED AND 00/100 ($5,400.00) Dollars,
beginning on the date as set forth herein, in addition to TENANT'S
annual rent, in order to maintain this Option to Expand (herein
referred to "Option Payments"). Said Option Payments shall be due as
follows:
February 1, 1997: $5,400.00
May 1, 1997: $5,400.00
September 1, 1997: $5,400.00
Only in the event TENANT exercises said Option to Expand, then the
above-referenced Option Payments shall
<PAGE> 4
be applied to TENANT'S account and therefore the Rent for said
Expansion Space shall commence at such time as the Option Payments
have been fully recaptured. In the event TENANT shall not exercise
this Option to Expand as stated herein, then LANDLORD shall retain the
above-referenced Option Payments and said Option Payments shall not be
applied to TENANT'S account or refunded to TENANT.
In the event that, LANDLORD is unable to make the Expansion Space
available to TENANT on or before August 1, 1998, LANDLORD shall pay to
TENANT on such date the sum of $16,200.00, which equals the total
amount of Option Payments made hereunder, with interest thereon from
the time paid by TENANT as required by this Section 41, at the
passbook savings rate then in effect at Fleet Bank.
Such repayment by LANDLORD shall be the only remedy, either at law or
in equity, available to TENANT in the event of LANDLORD'S failure to
make the Expansion Space available at the time specified above, except
for LANDLORD'S willful failure to do so.
It is hereby agreed between the parties that immediately following
LANDLORD'S receipt of TENANT'S notice indicating its desire to lease
Expansion Space, LANDLORD and TENANT shall enter a mutually acceptable
Amendment to this Lease setting forth the terms and provisions set
forth hereinabove.
7. Effective on January 1, 1997, the Lease is hereby amended in part, by
inserting the following section:
SECTION 43 - FINANCIAL INFORMATION
----------------------------------
It is hereby understood and agreed that TENANT will supply to the
LANDLORD, on an annual basis, a copy of TENANT'S audited financial
statement within ninety (90) days following TENANT'S fiscal year end.
Any information obtained by LANDLORD pursuant to the provisions of
this Paragraph shall be treated as confidential, except that LANDLORD
may disclose such information to its lenders.
8. Effective on January 1, 1997, the Lease shall be amended in part by
inserting the following section:
SECTION 44 - OPTION TO EXTEND
-----------------------------
In the event TENANT has not been in default of any of the terms,
conditions and covenants of this Lease Agreement and any Amendments
made hereto during the Term hereof, after the expiration of any
applicable notice and grace period, LESSEE shall have the right to
extend the Term of this Lease for an additional period of five (5)
years, subject to the following terms and conditions:
1. Annual Rent for the Premises shall be at the then current market
rent rate and terms, but in no event shall such rental be less
than the last annual rent paid by TENANT.
2. TENANT must exercise this option no earlier than nine (9)
calendar months but no later than six (6)
<PAGE> 5
calendar months prior to the termination date of this Lease by
sending written notice to LANDLORD by registered or certified
mail.
Thereupon, this Lease shall be deemed extended for an additional
period of five (5) years, upon all of the same terms and conditions of
this Lease and any Amendments made hereto with the exception of the
annual rent stipulated hereinabove.
In the event the credit worthiness of Tenant is not sufficient in
LANDLORD'S reasonable discretion to assure the future performance of
TENANT'S obligations under the lease during the Renewal Term, LANDLORD
may nullify TENANT'S exercise of this renewal option.
9. TENANT acknowledges that it has examined and inspected the Premises
and is familiar with the physical condition thereof. TENANT further
acknowledges (1) that LANDLORD has not made and does not hereby make
any representations regarding the physical condition of the Premises
and (2) that there are no warranties, either expressed or implied,
regarding the condition of the Premises. Any such warranties which may
exist, are hereby expressly released and waived. Accordingly, TENANT
hereby agrees to accept the Premises in their "as is" condition.
10. TENANT shall not make any structural improvements or alterations to
the Expansion Premises 5, without first obtaining LANDLORD'S prior
written approval. TENANT shall not make any non-structural
improvements or alterations to the Expansion Premises 5, in excess of
$20,000.00, without first obtaining LANDLORD'S prior written approval.
It is further understood and agreed that LANDLORD'S prior written
approval is contingent upon TENANT submitting to LANDLORD, TENANT'S
construction plans for any structural or non-structural improvements
in excess of the stated amount as set forth herein, to the Expansion
Premises 5. All such allowed improvements shall be at TENANT'S sole
cost and expense. Any improvements made by the TENANT shall become the
property of the LANDLORD at the termination of occupancy as provided
herein.
11. Except where this Fifth Amendment to Lease specifically changes same,
all other terms, conditions and covenants of the original Lease
Agreement shall remain the same, where applicable, and are hereby
reaffirmed.
12. The submission of this document is for examination and negotiation and
does not constitute an offer, and this document shall become effective
and binding only upon the execution thereof by both LANDLORD and
TENANT, regardless of any written or verbal representation of any
agent, manager or other employee of LANDLORD to the contrary. All
negotiations, consideration, representations and understandings
between LANDLORD and TENANT are incorporated herein and the Lease and
this Amendment expressly supersede any proposals or other written
documents relating hereto. The Lease and this Amendment may be
modified or altered only by written agreement between LANDLORD and
TENANT, and no act or omission of any employee or agent of LANDLORD
shall alter, change or modify any of the provisions thereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
instrument on the day and year first above written.
LANDLORD Thomas J. Flatley d/b/a
The Flatley Company
/s/ Sarah V. Capaccioli /s/ Thomas J. Flatley
- ------------------------------------ ----------------------------------
WITNESS By Thomas J. Flatley
Its President
TENANT Ibis Technology Corporation
/s/ Nancy A. Bailey /s/ Timothy J. Burns
- ------------------------------------ ----------------------------------
WITNESS By Timothy J. Burns
Its CFO
<PAGE> 7
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF NORFOLK )
February 21, 1997
Then personally appeared Thomas J. Flatley to me known to be the individual
who acknowledged himself to be the President of The Flatley Company, LANDLORD,
and that he, as such, being authorized to do so, executed the foregoing
instrument and acknowledged the execution thereof to be his free act and deed
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal at Norfolk
County, Braintree, Massachusetts, this 21st day of February, 1997.
/s/ Francesca Austin
-------------------------------
Notary Public
My commission expires: 9/4/03
STATE OF MASSACHUSETTS )
) SS.
COUNTY OF ESSEX )
February 4, 1997
Then personally appeared Timothy J. Burns to me known to be the individual
who acknowledged himself to be the C.F.O. of Ibis Technology Corporation,
TENANT, and that he, as such, being authorized to do so, executed the foregoing
instrument and acknowledged the execution thereof to be his free act and deed
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal at Essex
County, Danvers, Massachusetts, this 4th day of February, 1997.
/s/ Nancy J. McKenna
-------------------------------
Notary Public
My commission expires: 8/31/01
<PAGE> 1
IBIS TECHNOLOGY CORPORATION
STATEMENT RE: COMPUTATION OF PER SHARE LOSS
EXHIBIT 11
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1996 1997
----------- -----------
<S> <C> <C>
Net loss ................................... $ (284,210) $ (437,363)
=========== ===========
Primary and fully diluted loss per share:
Weighted average common shares outstanding 3,518,746 5,190,839
=========== ===========
Net loss per common share .................. $ (0.08) $ (0.08)
=========== ===========
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,767,108
<SECURITIES> 0
<RECEIVABLES> 1,256,796
<ALLOWANCES> 7,550
<INVENTORY> 1,047,402
<CURRENT-ASSETS> 9,273,990
<PP&E> 16,780,008
<DEPRECIATION> 6,745,035
<TOTAL-ASSETS> 19,628,002
<CURRENT-LIABILITIES> 3,289,146
<BONDS> 0
0
0
<COMMON> 41,578
<OTHER-SE> 13,887,729
<TOTAL-LIABILITY-AND-EQUITY> 19,628,002
<SALES> 1,113,948
<TOTAL-REVENUES> 1,638,701
<CGS> 980,454
<TOTAL-COSTS> 1,324,083
<OTHER-EXPENSES> 750,725
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,703
<INCOME-PRETAX> (436,107)
<INCOME-TAX> 1,256
<INCOME-CONTINUING> (437,363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (437,363)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
