<PAGE> 1
Filed pursuant to Rule 424(b)(3)
File No. 33-78440
PROSPECTUS
IBIS TECHNOLOGY CORPORATION
125,280 SHARES OF COMMON STOCK
------------------------------
The 125,280 shares of Common Stock (subject to adjustment upon the
occurrence of certain anti-dilutive events), $.008 par value per share ("Common
Stock"), of Ibis Technology Corporation, a Massachusetts corporation (the
"Company" or "Ibis"), offered hereby (the "Shares") are being sold by the
Company upon exercise of warrants originally issued by the Company to Josephthal
Lyon & Ross Incorporated ("Josephthal"), the underwriter of the Company's
initial public offering completed in May 1994 (the "IPO Underwriter's Warrants")
and are being resold by the selling stockholders identified herein (the "Selling
Stockholders"). Such offers and sales by the Selling Stockholders may be made on
one or more exchanges, in the over-the-counter market, or otherwise, at prices
and on terms then prevailing, or at prices related to the then-current market
price, or in negotiated transactions, or by underwriters pursuant to an
underwriting agreement in customary form, or in a combination of any such
methods of sale. The Selling Stockholders may also sell such shares in
accordance with Rule 144 under the Securities Act of 1933, as amended (the "1933
Act"). The Selling Stockholders are identified and certain information with
respect to them is provided under the caption "Selling Stockholders" herein, to
which reference is made. The expenses of the registration of the securities
offered hereby, including fees of counsel for the Company, will be paid by the
Company. The following expenses will be borne by the Selling Stockholders:
underwriting discounts and selling commissions, if any, and the fee of legal
counsel, if any, for the Selling Stockholders. The filing by the Company of this
Prospectus in accordance with the requirements of Form S-3 is not an admission
that any person whose shares are included herein is an "affiliate" of the
Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing selling orders on behalf of any
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the 1933 Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the 1933 Act. The Company will not
receive any of the proceeds from the sale of the securities offered hereby. The
Common Stock is listed on The Nasdaq National Market ("Nasdaq") under the symbol
IBIS. On February 5, 1998, the closing sale price of the Common Stock, as
reported by Nasdaq, was $10.00 per share.
The executive offices of the Company are located at 32 Cherry Hill Drive,
Danvers, Massachusetts 01923. Its telephone number is (978) 777-4247.
---------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The Company is offering for sale, upon exercise of the IPO Underwriter's
Warrants at an exercise price of $8.05 per share, 125,280 shares of Common
Stock, subject to adjustment upon the occurrence of certain anti-dilutive
events. If all of the IPO Underwriter's Warrants were exercised, the proceeds to
the Company would be approximately $1,008,000, less any expenses. There can be
no assurance, however, that any of the IPO Underwriter's Warrants will be
exercised or that the Company will receive any proceeds from the sale of IPO
Underwriter's Warrants. See "Risk Factors - No Assurance that Warrants Will be
Exercised.".
---------------------
No person is authorized in connection with any offering made hereby to
give any information or to make any representations other than as contained in
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus is
not an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
---------------------
The date of this Prospectus is March 9, 1998.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 of the Commission's office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its regional
offices located at 7 World Trade Center, Suite 1300, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such reports, proxy statements and other information can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, DC 20549 at prescribed rates. The Commission maintains a Web
Site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically.
Additional updating information with respect to the securities covered herein
may be provided in the future to purchasers by means of appendices to this
Prospectus.
The Company has filed with the Commission in Washington, DC a registration
statement (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the 1933 Act with respect to the securities
offered or to be offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement, certain items of which are
omitted in accordance with the rules and regulations of the Commission. For
further information about the Company and the securities offered hereby,
reference is made to the Registration Statement and the exhibits thereto.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any document incorporated herein by reference, excluding exhibits. Requests
should be made to Ibis Technology Corporation, 32 Cherry Hill Drive, Danvers, MA
01923, telephone (978) 777-4247 and directed to the attention of Debra L.
Nelson, Chief Financial Officer.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RISK FACTORS......................................................................................................4
USE OF PROCEEDS..................................................................................................10
DILUTION.........................................................................................................11
THE COMPANY......................................................................................................12
SELLING STOCKHOLDERS.............................................................................................13
PLAN OF DISTRIBUTION.............................................................................................15
DESCRIPTION OF IPO UNDERWRITER'S WARRANTS........................................................................15
LEGALITY OF COMMON STOCK.........................................................................................16
EXPERTS..........................................................................................................16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE................................................................17
</TABLE>
3
<PAGE> 4
RISK FACTORS
An investment in the securities being offered by this Prospectus involves
a high degree of risk. In addition to the other information contained in this
Prospectus or incorporated herein by reference, prospective investors should
carefully consider the following risk factors before purchasing the shares of
Common Stock and Warrants offered hereby.
This Prospectus contains and incorporates by reference forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
description of the Company's plans and objectives for future operations,
assumptions underlying such plans and objectives and other forward-looking
statements included or incorporated in this Prospectus. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. Factors which could
cause such results to differ materially from those described in the
forward-looking statements include those set forth in the risk factors below.
History of Net Losses, Accumulated Deficit and Future Net Losses. The
Company incurred net losses of $1,474,299, $3,992,795 and $840,116 for the years
ended December 31, 1994, 1995 and 1996, respectively, and $1,763,490 for the
nine-month period ended September 30, 1997, and at September 30, 1997 had an
accumulated deficit of $12,716,063. The net loss incurred by the Company for the
year ended December 31, 1994 and the accumulated deficit as of September 30,
1997 each would have been $2,000,000 greater if the Company had not received
$2,000,000 in key-man life insurance proceeds in June 1994 as a result of the
death of Dr. Michael Guerra, a founder of the Company and a former Chief
Executive Officer and Chairman of the Board. The Company expects net losses to
continue for the foreseeable future and there can be no assurance that the
Company will be profitable. The Company anticipates that it may be required to
raise substantial additional capital in the future in order to finance expansion
of its manufacturing capacity and its research and development programs. There
can be no assurance, however, that such capital will be available on acceptable
terms, if at all. See "Selected Financial Data" in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 (the "1996 Form 10-K"),
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 1996 Form 10-K and the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 (the "September 30, 1997 Form
10-Q"), and "Risk Factors Availability of Capital."
Quarterly Fluctuations in Operating Results. The Company has experienced
and expects to continue to experience significant fluctuations in its quarterly
operating results. The Company believes that fluctuations in quarterly results
may cause the market price of its Common Stock to fluctuate, perhaps
substantially. Factors which have had an influence on and may continue to
influence the Company's operating results in a particular quarter include the
timing of receipt of orders from major customers, product mix, product
obsolescence and changes in pricing policies by the Company, its competitors or
its suppliers, the relative proportions of sales for commercial and military
applications, the Company's ability to manufacture and ship products on a
cost-effective and timely basis, the development and introduction of new
production Ibis 1000 implanters by the Company, market acceptance of new and
enhanced versions of the Company's products or implanters, the cyclical nature
of the semiconductor industry, the evolving and unpredictable nature of the
markets for the products incorporating the Company's SIMOX-SOI wafers, the
amount of research and development expenses associated with new or enhanced
products or implanters and the availability of government funding.
The Company places blanket orders to purchase its materials from
independent vendors several months in advance, often prior to receiving orders
from its customers. If customers cancel or reschedule shipments or if production
difficulties delay shipments, expense and inventory levels could be
disproportionately high. A significant portion of the Company's expenses is
fixed and the timing of increases in variable expenses is based in large part on
the Company's forecast of future revenues. As a result, if revenues do not meet
the Company's expectations, it may be unable to quickly adjust expenses to
levels appropriate given actual revenues, which could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 1996 Form 10-K and the September 30, 1997 Form 10-Q.
4
<PAGE> 5
Development Stage of Commercial Market for SIMOX-SOI Wafers. The sources
of the Company's revenue have shifted from primarily research and development
contracts and sales of SIMOX-SOI wafers for military applications to primarily
sales of SIMOX-SOI wafers for commercial applications and sale and support of
ion implantation equipment. To date, most customers who have purchased SIMOX-SOI
wafers from the Company in the commercial field have done so only for the
purpose of characterizing and evaluating the wafers. The Company is aware of
only one semiconductor manufacturer that has used SIMOX-SOI wafers in mainstream
commercial applications for more than a year. In the second quarter of 1997, the
Company announced that two of its customers had indicated their intention to
adopt SIMOX-SOI technology in their commercial products. During the second half
of 1997 these customers have slowly increased their volume of wafers purchased
from the Company. There can be no assurance 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.
Competition and Technological Advances. The semiconductor industry is
highly competitive and has been characterized by rapid and significant
technological advances. A number of established semiconductor and materials
manufacturers, including certain of the Company's customers, have expended
significant resources in developing improved wafer substrates. There can be no
assurance that the Company's competitors or others, many of which have
substantially greater financial, technical and other resources than the Company,
will not succeed in developing technologies and products that are equal to or
more effective than any which are being developed by the Company or which would
render the Company's technology obsolete or noncompetitive. In addition to
competition from other manufacturers of SIMOX-SOI wafers, the Company faces
competition from manufacturers using bulk silicon and epitaxial wafer
technology, compound materials technology such as silicon-germanium,
gallium-arsenide and indium phosphide and SOI technology other than SIMOX
technology. Although the Company believes that SIMOX-SOI wafers offer integrated
circuit performance advantages, there is no assurance that semiconductor
manufacturers will not develop improvements to existing bulk silicon or
epitaxial wafer technology, or that competing compound materials or SOI
technologies will not be more successfully developed, that would eliminate or
diminish the performance advantages of SIMOX-SOI wafers. The Company's ability
to compete with other manufacturers of SIMOX wafers and manufacturers of
competing SOI wafers, as well as with bulk silicon, epitaxial and compound
materials wafer manufacturers, will depend on numerous factors within and
outside the Company's control, including the success and timing of product
introductions by the Company and its competitors, product distribution, customer
support, sufficiency of funding available to the Company and the price, quality
and performance of competing products and technologies.
No Assurances of Successful Large-Scale Manufacturing. The Company has
only manufactured limited quantities of SIMOX-SOI wafers on the Ibis 1000 oxygen
implanters for evaluation in commercial applications. To be successful, the
Company's products must be manufactured in commercial quantities, at acceptable
costs. Although to date the Company has produced its products successfully, with
the exception of a component failure and subsequent upgrade on the first Ibis
1000 implanter which resulted in a ten week production loss in the second
quarter of 1997, future production in commercial quantities may create technical
and financial challenges for the Company. The Company has limited manufacturing
experience. No assurance can be given that the Company will be able to make the
transition to volume commercial production successfully.
The Company has two Ibis 1000 implanters on-line, one of which is
primarily dedicated to serve Motorola Corporation's production requirements. Two
additional Ibis 1000 implanters are currently under construction, one
anticipated to be placed in production in the first quarter of 1998, the other
in the second quarter of 1998 or at such time as additional capacity is needed
to meet demand. Any difficulty or delay in constructing additional Ibis 1000's
could have a material adverse effect on the Company's business and results of
operation.
Dependence on Manufacturing, Marketing and Distribution Partners. One
element of the Company's marketing strategy is to form alliances with strategic
partners for the manufacturing, marketing and distribution of its products, in
part to address possible customer concerns regarding Ibis being a sole source
supplier. In July, 1994, the Company entered into a business development
agreement with Mitsubishi Materials, under which Mitsubishi markets and sells in
Japan SIMOX-SOI wafers manufactured by Ibis, and in September, 1995 the Company
entered into a strategic business development agreement with Motorola
Corporation to fund capacity expansion. However, there can be no assurance that
the Company will be successful in maintaining such alliances or forming and
maintaining other alliances, including satisfying its contractual obligations
with its strategic partners, or that the Company's partners will
5
<PAGE> 6
devote adequate resources to manufacture, market and distribute these products
successfully or will not attempt to compete with the Company. The limited number
of reliable second sources of supply may adversely affect or delay the
integration of SIMOX-SOI wafers in mainstream commercial applications.
Cyclical Nature of the Semiconductor Industry. The semiconductor industry
into which the Company sells its products is highly cyclical and has
historically experienced periodic downturns, which often have had a severe
effect on the semiconductor industry's demand for semiconductor materials. Prior
semiconductor industry downturns have resulted in negative effects on the
Company's net sales, gross margin and net income. The Company's operations as a
whole will continue to be dependent on the expenditures of semiconductor
manufacturers, which in turn will be largely dependent on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. Any future weakness in demand in the semiconductor industry
may have a material adverse effect on the Company's business and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the 1996 Form 10-K and the September 30, 1997 Form
10-Q.
Limited Availability of Materials and Components. Due to the increasing
demand in the semiconductor industry for silicon wafers, there is no assurance
that the Company will be able to purchase an adequate supply of such silicon
wafers for manufacture of its products at or near current prices, if at all. Any
shortages in the availability of silicon wafers or a significant increase in the
price of silicon wafers could have a material adverse effect on the Company's
business and results of operations.
The Company manufactures its Ibis 1000 oxygen implanters from standard
components and from components manufactured in-house or by other vendors
according to the Company's design specifications. Although the Company has not
experienced significant production delays due to unavailability or delay in
procurement of component parts or raw materials to date, there can be no
assurance that a disruption or termination of certain of these vendors will not
occur and any such disruption or termination could have a material adverse
effect on the Company's business and results of operations.
Dependence on New and Key Personnel. On December 1, 1997, upon the
resignation of Geoffrey Ryding, Ph.D., Martin J. Reid assumed the positions of
President and Chief Executive Officer of the Company. Dr. Ryding, who remains a
Director of the Company, had been President since May 1992 and Chief Executive
Officer since December 1993. The Company is dependent upon a number of key
scientific and management personnel. The loss of the services of one or more key
individuals will have a material adverse impact on the Company. The Company's
success may also depend on its ability to attract and retain other qualified
scientific, marketing, manufacturing and other key management personnel. The
Company faces competition for such personnel and there can be no assurance that
the Company will be able to attract or retain such personnel. Furthermore,
although the Company's employees are subject to certain confidentiality and
non-competition obligations, there can be no assurance that the Company's key
personnel will remain with the Company or will not become employed by a
competitor.
Dependence on Research and Development Funding and Equipment Consulting
Contracts. To date, a significant portion of the Company's revenue has been
derived from research and development agreements with agencies of the U.S.
government. During the nine-month period ended September 30, 1997, and the
fiscal years ended 1994, 1995 and 1996, revenues from government sponsored
research and development contracts were approximately $631,000, $890,000,
$764,000 and $877,000, or 12%, 27%, 16% and 9% of the Company's revenues,
respectively. The research and development agreements are subject to termination
at the election of the relevant agency. Additionally, these agreements are
subject to negotiated overhead rates, and work performed under these agreements
may be subject to audit and retroactive adjustments of amounts paid to the
Company. The loss of revenue from research and development agreements and/or the
payment of any such retroactive adjustments could have a material adverse impact
on the Company. During the nine-month period ended September 30, 1997, an
equipment consulting contract for installation of previously licensed technology
amounted to $1,429,000 or 27% of the Company's revenue. There can be no
assurance that the Company can secure such contracts in the future.
Dependence on Key Customers. During the nine-month period ended September
30, 1997 and the fiscal years ended 1994, 1995 and 1996, revenues from
Honeywell, IBM, Motorola, and Texas Instruments accounted in the aggregate for
approximately $1,001,000, $1,266,000, $2,554,000, $6,420,000, or approximately
19%, 39%, 55% and
6
<PAGE> 7
68% of the Company's revenues, respectively. The loss of one or more of these
major customers and the failure of the Company to obtain other sources of
revenue could have a material adverse impact on the Company.
Centralization of Manufacturing Facilities. The Company manufactures all
of its products at its facility in Danvers, Massachusetts. Due to the
centralization of all of its manufacturing equipment in one location, the
Company is susceptible to business interruptions resulting from power outages,
natural disasters, equipment failures, and other localized conditions. Although
the Company maintains business interruption insurance, prolonged business
interruption could have a material adverse effect on the Company's business and
its results of operations.
Availability of Capital. The Company has invested, and intends to continue
to invest, in facilities and state-of-the-art equipment in order to increase its
research, development and manufacturing capabilities. In 1996, these capital
expenditures totaled approximately $4,982,000. The Company expects to use much
of the net proceeds it received from its August 1997 Warrant Redemption to
construct additional Ibis 1000 oxygen implanters, expand its facilities and
purchase additional equipment. Changes in technology or sales growth beyond
currently established capabilities would require further investment. As a
result, the Company expects that it may be required to raise substantial
additional capital in the future in order to finance expansion of its
manufacturing capacity and its research and development programs. The Company
has previously financed its working capital requirements through debt and equity
financings, equipment lines of credit, a working line of credit, a term loan,
sale-leaseback arrangements and government contracts. There can be no assurance
that additional capital will be available on acceptable terms, if at all. If
additional funds are raised by issuing equity securities, further dilution to
the Company's then existing stockholders may result. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
1996 Form 10-K and the September 30, 1997 Form 10-Q, "Use of Proceeds" and "Risk
Factors--Dilution."
Rights to Implanters. Pursuant to a sale-lease back arrangement, the Ibis
1000 implanter currently in production is owned by Finova Technology Corporation
("Finova") and is leased to the Company, with the Company having an option to
purchase the Ibis 1000 at the expiration of the lease. In addition, Motorola has
a security interest in the Ibis 1000 that has been constructed and primarily
dedicated to Motorola's production requirements. If the Company fails to meet
certain contractual obligations under its agreements with either Finova or
Motorola, the Company could lose its ability to use the implanter and Finova or
Motorola, as the case may be, could sell the implanter to a competitor of the
Company, which would have an adverse effect on the Company's operations. The
Company has constructed and sold an additional Ibis 1000 implanter to a major
semiconductor manufacturer. Although the use of the implanter by this
manufacturer and its ability to sell SIMOX-SOI wafers is subject to certain
restrictions, there can be no assurance that such manufacturer, which has
substantially greater financial, technical and other resources than the Company,
will not attempt to compete with the Company's business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in the 1996 Form 10-K and the September 30,
1997 Form 10-Q.
Patents and Protection of Proprietary Technology. The Company's ability to
compete effectively with other companies will depend, in part, on the ability of
the Company to maintain the proprietary nature of its technology. Although the
Company has been awarded or has filed applications for a number of patents in
the United States and foreign countries, there can be no assurance as to the
degree of protection offered by these patents, or as to the likelihood that
pending patents will be issued. There can be no assurance that competitors in
both the United States and foreign countries, many of which have substantially
greater resources and have made substantial investments in competing
technologies, do not have or will not obtain patents that will prevent, limit or
interfere with the Company's ability to make and sell its products or
intentionally infringe the Company's patents. The defense and prosecution of
patent suits is both costly and time-consuming, even if the outcome is favorable
to the Company. In addition, there is an inherent unpredictability regarding
obtaining and enforcing patents. An adverse outcome in the defense of a patent
suit could subject the Company to significant liabilities to third parties,
require disputed rights to be licensed from third parties, or require the
Company to cease selling its products. The Company also relies in large part on
unpatented proprietary technology and there can be no assurance that others,
including strategic partners, may not independently develop the same or similar
technology or otherwise obtain access to the Company's proprietary technology.
To protect its rights in these areas, the Company currently requires all of its
employees to enter into confidentiality agreements. There can be no assurance,
however, that these agreements will provide meaningful protection for the
Company's trade
7
<PAGE> 8
secrets, know-how or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure of such trade secrets, know-how
or other proprietary information.
Public Market for Securities; Volatility of Price. There can be no
assurance that an active trading market for any of the Company's securities will
develop or be sustained. Additionally, there can be no assurance as to the
liquidity of any such markets. The market prices of the Company's securities
have been and may continue to be highly volatile and there can be no assurance
as to the market price of the Common Stock at any given time. Factors such as
quarter-to-quarter variations in the Company's revenues and earnings and
announcements or introductions of technological innovations, new products or new
prices by the Company or its competitors, customers or suppliers could cause the
market price of the Company's securities to fluctuate significantly. Sales of a
substantial number of shares of Common Stock by existing stockholders may also
have an adverse effect on the market price of the Common Stock. In addition, in
recent years the stock market in general, and the market prices for high
technology companies in particular, have experienced significant volatility,
which often may have been unrelated to the operating performance of the affected
companies.
Effect of Shares Eligible for Future Sale on Market Price. Sales of
substantial amounts of the Company's Common Stock in the public markets could
have an adverse effect on the price of the Common Stock. As of December 31,
1997, the Company had 6,628,728 shares of Common Stock outstanding. Of such
shares, 6,499,175 shares are freely tradable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"). Of the remaining 129,553 shares of Common Stock, approximately
55,978 shares were previously sold by certain stockholders of the Company
under Rules 144, 144(k) or 701 of the Securities Act or pursuant to the
Company's S-8 Registration Statement (the "S-8") and are now freely tradable,
and approximately 73,575 shares are or will become eligible for sale under
Rules 144 and 144(k) or pursuant to the S-8. The holders of up to approximately
225,474 shares of Common Stock, excluding the 125,280 shares offered hereby,
are entitled to certain registration rights with respect to such shares. If such
holders, by exercising their registration rights, cause a large number of shares
to be registered and sold in the public market, such sales may have an adverse
effect on the price for the Common Stock.
Government Regulation. The Company is subject to a variety of federal,
state and local environmental regulations related to the storage, treatment,
discharge or disposal of chemicals used in its operations and exposure of its
personnel to occupational hazards. Although the Company believes that it has all
permits necessary to conduct its business, the failure to comply with present or
future regulations could result in fines being imposed on the Company,
suspension of production or a cessation of operations. The Company's future
activities may result in it being subject to additional regulation. Such
regulations could require the Company to acquire significant equipment or to
incur other substantial expenses to comply with regulations. Any failure by the
Company to control the use of, or to restrict adequately the discharge of,
hazardous substances or properly control other occupational hazards could
subject it to substantial financial liabilities.
Impact of Warrants. Initially, each IPO Underwriter's Warrant was
exercisable for one share of Common Stock at a price equal to $8.40. The
exercise prices of the IPO Underwriter's Warrants and the number of shares
issuable upon exercise thereof are subject to adjustment in certain
circumstances, including upon the issuance of certain securities by the Company
having an issue price or exercise price lower than the exercise price of the IPO
Underwriter's Warrants. As a result of certain issuances and sales of Common
Stock (and securities exercisable for shares of Common Stock) by the Company
below the exercise price of the IPO Underwriter's Warrants, the exercise price
of each IPO Underwriter's Warrant is $8.05 per share of Common Stock, and the
IPO Underwriter's Warrants are exercisable for an aggregate of 125,280 shares of
Common Stock. Exercise of the Warrants may have an adverse effect upon the
trading price of and market for the Common Stock and will result in dilution of
the outstanding shares. It is also possible that, as long as the Warrants remain
outstanding, their existence may place downward pressure on the price of Common
Stock above certain levels.
Dilution. The exercise price of the IPO Underwriter's Warrants is
substantially higher than the net tangible book value per share of Common Stock
as of September 30, 1997. If the holder of the IPO Underwriter's Warrants were
to have exercised such warrants as of September 30, 1997 they would have
incurred immediate and substantial dilution in net tangible value per share. At
an exercise price of $8.05 and based upon certain other assumptions set
8
<PAGE> 9
forth under the caption "Dilution" below, including an assumption that all of
the Warrants are exercised, the net tangible book value dilution per share would
have been $4.56 as of September 30, 1997. There can be no assurance that such
dilution per share will not increase at the times the IPO Underwriter's Warrants
are exercised. Additional dilution is likely to occur upon exercise of the IPO
Underwriter's Warrants and exercise of outstanding stock options and other
warrants, and may occur in connection with future financings to meet the
Company's capital requirements. Further, based upon the closing sale price of
the Common Stock as reported on the Nasdaq National Market on January 29, 1998,
the offering price of the Common Stock is substantially higher than the net book
value per share of Common Stock. Purchasers of shares of the Common Stock
offered hereby will therefore incur immediate and substantial dilution. See
"Risk Factors--Availability of Capital-Effect of Shares Eligible for Future Sale
on Market Price," "Risk Factors--Impact of Warrants" and "Dilution."
Certain Charter and By-Law Provisions; Possible Issuance of Preferred
Stock. The Company's Restated Articles of Organization and Restated By-Laws
contain certain provisions that may make it more difficult for a third party to
acquire, or discourage acquisition bids for, the Company. This could limit the
price that certain investors might be willing to pay in the future for shares of
the Company's Common Stock. In addition, shares of the Company's Preferred Stock
may be issued in the future without future stockholder approval and upon such
terms and conditions, and having such rights, privileges and preferences, as the
Board of Directors may determine. The rights of the holders of Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of
any Preferred Stock that may be issued in the future. The issuance of Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or discouraging a third party from
acquiring, a majority of the outstanding voting stock of the Company. The
Company has no present plans to issue any shares of Preferred Stock.
No Assurance that Warrants Will Be Exercised. If all of the IPO
Underwriter's Warrants are exercised to purchase the shares of Common Stock
offered hereby, the Company would receive net proceeds of approximately
$1,008,000. However, there can be no assurance that any or all of the IPO
Underwriter's Warrants will be exercised by the holders thereof prior to their
expiration on May 20, 1999. Accordingly, there can be no assurance that the
Company will receive any proceeds from the sale of the shares of Common Stock
offered in this Prospectus. Moreover, even if the IPO Underwriter's Warrants are
exercised, the timing of such exercise cannot be predicted and may not coincide
with the Company's needs for additional capital.
Current Prospectus and State "Blue Sky" Registration Required to Exercise
the Warrants. The Company will be able to issue shares of its Common Stock upon
exercise of the IPO Underwriter's Warrants only if there is a current prospectus
relating to the Common Stock issuable upon the exercise of said Warrants under
an effective registration statement filed with the Commission, and only if such
Common Stock is qualified for sale or exempt from qualification under applicable
state securities laws of the jurisdictions in which the various holders of the
IPO Underwriter's Warrants reside. Although the Company has agreed to use its
best efforts to meet such regulatory requirements, there can be no assurance
that the Company will be able to do so. Although the IPO Underwriter's Warrants
were not knowingly sold to purchasers in jurisdictions in which the IPO
Underwriter's Warrants were not registered or otherwise qualified for sale,
holders may move to jurisdictions in which the shares of Common Stock issuable
upon exercise of the IPO Underwriter's Warrants are not so registered or
qualified. In this event, the Company would be unable to issue shares of Common
Stock to those persons upon exercise of the IPO Underwriter's Warrants unless
and until the shares of Common Stock issuable upon exercise of the IPO
Underwriter's Warrants are qualified for sale or exempt from qualification in
jurisdictions in which such persons reside. There is no assurance that the
Company will be able to effect any required registration or qualification. The
IPO Underwriter's Warrants may be deprived of any value if a then current
prospectus covering the Common Stock issuable upon exercise of the IPO
Underwriter's Warrants is not effective pursuant to an effective registration
statement or if such Common Stock is not qualified or exempt from qualification
in the jurisdictions in which the holders of the IPO Underwriter's Warrants
reside.
No Dividends. The Company has not paid dividends since its inception and
does not anticipate paying any dividends in the foreseeable future. The Company
plans to retain any earnings to finance the development and expansion of its
business.
9
<PAGE> 10
USE OF PROCEEDS
The net proceeds to the Company from the exercise of the IPO Underwriter's
Warrants underlying the securities offered hereby are estimated to be
approximately $1,008,000 if all of the Warrants are exercised. However, there
can be no assurances that any or all of the Warrants will be exercised or as to
the timing of such exercises. These net proceeds will be used for general
corporate purposes, including hiring additional personnel, particularly for
marketing and equipment manufacturing, supporting internally funded research and
development activities.
The Company expects that it may be required to raise substantial
additional capital in the future in order to finance expansion of its
manufacturing capacity and its research and development programs. Such capital
may be raised through additional equity offerings, as well as collaborative
relationships, borrowings and other available sources. There can be no assurance
that such funding will be available on acceptable terms, if at all. See "Risk
Factors - Availability of Capital."
10
<PAGE> 11
DILUTION
The net tangible book value of the Company's Common Stock as of September
30, 1997 was $22,505,000 or $3.41 per share. Net tangible book value per share
represents the amount of the Company's stockholders' equity, less intangible
assets, divided by 6,606,519 shares of Common Stock outstanding on September 30,
1997.
For purposes hereof, net tangible book value dilution per share represents
the difference between (i) $8.05 (which is the exercise price of each IPO
Underwriter's Warrant, subject to additional adjustment in certain
circumstances), and (ii) the net tangible book value per share of Common Stock
as of September 30, 1997. After giving effect to the net proceeds to be received
by the Company upon exercise of the Warrants (taking into account the expenses
of the Company), the net tangible book value of the Company as of September 30,
1997 would have been, if all of the IPO Underwriter's Warrants to purchase
125,280 shares of Common Stock are exercised, $23,513,504 or $3.49 per share.
This would have represented as of September 30, 1997 an immediate increase in
net tangible book value of $.08 per share, to existing stockholders and an
immediate dilution in net tangible book value of $4.56 per share to the holders
of the IPO Underwriter's Warrants upon exercise thereof. The following table
illustrates this per share dilution:
<TABLE>
<CAPTION>
<S> <C> <C>
Exercise price of the Warrants .................................. $8.05
Net tangible book value per share ............................ $3.41
Increase per share attributable to exercise of Warrants ....... .08
-----
Net tangible book value per share after exercise of Warrants .... 3.49
-----
Net tangible book value dilution per share to holders of Warrants $4.56
=====
</TABLE>
The following table summarizes, as of September 30, 1997, the difference
between the existing stockholders and the holders of Warrants that will receive
shares of Common Stock assuming all of the Warrants are exercised, with respect
to the number of shares purchased from the Company, the total consideration paid
and the average price per share paid (assuming an exercise price of $8.05 per
Warrant):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
---------------- ------------------- -------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing holders of Common Stock. 6,606,519 98% $35,612,265 97% $5.39
Shares of Common Stock issued upon
exercise of Warrants........... 125,280 2% 1,008,000 3% $8.05
------- --- --------- ---
Total 6,731,799 100% $36,620,265 100%
========= === =========== ===
</TABLE>
The foregoing computations exclude an aggregate of 675,748 shares of
Common Stock reserved for issuance upon exercise of outstanding stock options
and warrants as of September 30, 1997, which have a weighted average exercise
price of $6.37 per share. See "Risk Factors -- Dilution."
11
<PAGE> 12
THE COMPANY
Ibis Technology Corporation ("Ibis" or the "Company") is an advanced
materials company and the leading supplier of SIMOX (Separation by Implantation
of OXygen) wafers to the semiconductor industry. SIMOX wafers are
state-of-the-art silicon-on-insulator ("SOI") wafers which enable the production
of integrated circuits with significant advantages over circuits constructed on
conventional bulk silicon or epitaxial wafers. These advantages include
substantially reduced power consumption, more efficient low-voltage operation,
significantly improved speed, and reduced integrated circuit manufacturing
costs. These characteristics make SIMOX-SOI wafers well-suited for many
commercial applications, including cellular phones, wireless communications
devices, portable and desktop computers, automotive electronics, and microwave
systems. SIMOX-SOI wafers are created by implanting oxygen atoms below the
surface of a silicon wafer in sufficient quantity to transform a layer of the
silicon to silicon dioxide, while maintaining a thin layer of circuit quality
single crystal silicon at the surface.
The Company began its operations in 1988, producing four, five and six
inch SIMOX-SOI wafers, mainly for military applications, on an NV-200 implanter
manufactured by Eaton Corporation ("Eaton"). Since 1989, the Company has spent
in excess of $10 million for the development of its proprietary oxygen implanter
(the Ibis 1000) and advanced proprietary processing technologies which enable
the production of SIMOX-SOI wafers capable of meeting the requirements of high
volume commercial applications, including the production of eight inch wafers.
The Ibis 1000 prototype, with proprietary beam scanning technology, became
operational in 1993, permitting the Company to begin producing wafers of this
size. The first fully-automated production version of the Ibis 1000 implanter
was completed in May 1995, enabling volume production of high-quality SIMOX-SOI
wafers. Since then the Company has constructed two additional implanters, one of
which was sold to one of the Company's largest customers. The Company believes
that its demonstrated ability to supply high quality, competitively priced
wafers and its increased wafer production capacity, together with substantial
progress in customers' development programs, are accelerating the acceptance of
Ibis-produced SIMOX-SOI wafers for mainstream commercial applications.
In recent years, the Company has focused on integrating SIMOX-SOI wafers
into commercial applications, which have substantially higher volume potential
than military applications, the Company's initial target market. Unit sales of
SIMOX-SOI wafers for commercial applications have expanded from approximately
36% of the Company's total wafers sold in 1992 to approximately 88% of its
wafers sold in 1996.
Ibis has sold SIMOX-SOI wafers to most of the world's leading commercial
semiconductor manufacturers, including Advanced Micro Devices, Digital Equipment
Corporation, Fujitsu, Honeywell, IBM, Intel, Mitsubishi Electric, Motorola,
National Semiconductor, NEC, Philips, Samsung, Sharp, Texas Instruments, and
Toshiba. These commercial shipments have been used principally for evaluation
purposes in products, including ASICs (application specific integrated
circuits), memories (DRAMs, SRAMs, etc.), and cellular and mobile radio
components. For any potential customer who is ultimately committed to designing
and building integrated circuits on SIMOX-SOI wafers, the time required for a
customer to make a definitive buying decision and for Ibis to "make the sale" -
from initial contract to full-scale chip fabrication - will be lengthy and
proceed along definable, targeted stages. The sales cycle typically goes from
intensive evaluation of Ibis' SIMOX-SOI material in the customer's process
laboratory to full circuit evaluations in the chip-design lab which, we hope,
will lead to full scale chip production in the fab. This is a normal sales cycle
in the semiconductor industry for any technologically advanced material such as
Ibis' SIMOX-SOI. In addition, the Company supplies SIMOX-SOI wafers to
military-oriented semiconductor manufacturers such as Allied-Signal Aerospace
and Honeywell for use in production applications.
The Company believes that strategic alliances will play an important role
in developing a worldwide commercial market for SIMOX-SOI wafers. In September
1995, the Company and Motorola entered into an agreement for Motorola to provide
funding to the Company to substantially expand the Company's current SIMOX-SOI
wafer production capacity to meet requirements of Motorola for its commercial
programs. The implanter that was constructed with this funding became
operational in September, 1996 and shipments to Motorola under the terms of this
Agreement commenced shortly thereafter. The two companies continue to work
closely to advance the processing and testing of SIMOX-SOI material in
conjunction with Motorola's rigorous quality standards. The Company also has a
strategic alliance agreement with Mitsubishi Materials, under which Mitsubishi
markets and sells in Japan SIMOX-SOI
12
<PAGE> 13
wafers manufactured by Ibis. The Company and Mitsubishi are collaborating on
joint research and development focused on commercial deployment of SIMOX-SOI
technology with the ultimate objective of establishing SIMOX-SOI manufacturing
capability in Japan to service this marketplace.
In May 1996, the Company entered into an agreement with one of the world's
leading semiconductor manufacturers for the sale of an Ibis 1000 implanter,
which was delivered to the purchaser in November 1996. Under the terms of this
agreement, there are certain limitations on the purchaser's ability to sell
SIMOX-SOI wafers produced on this implanter. The agreement also sets forth terms
and conditions in the event that the purchaser desires to buy additional
implanters. The revenue, together with related costs, was recognized on a
percentage of completion basis determined by the achievement of various
milestones.
The Company's objective is to make its SIMOX-SOI wafers the preferred
advanced materials substrate for mainstream commercial applications. The
Company's strategy for attaining this objective is to capitalize on the
technology embodied in the Ibis 1000 by building additional high current oxygen
implanters to increase available capacity, further advancing its process
technology, increasing throughput and reducing production costs, and to form
strategic marketing, manufacturing and distribution alliances. The Company
believes that this strategy will enable it to become the predominant supplier of
SIMOX-SOI technology and SIMOX-SOI wafers with the quality, cost, and size
required for mainstream commercial applications.
Ibis was incorporated in Massachusetts on October 7, 1987 and commenced
operations in January 1988. Ibis' executive offices are located at 32 Cherry
Hill Drive, Danvers, Massachusetts 01923. Its telephone number is (978)
777-4247.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of December 31, 1997, and as adjusted
to reflect the sale of the Common Stock offered hereby by each Selling
Stockholder (who are either current or former employees of Josephthal Lyon &
Ross Incorporated, the underwriter of the Company's May 1994 initial public
offering).
<TABLE>
<CAPTION>
Shares Shares
Beneficially Number of Beneficially
Owned Prior to Shares Being Owned After
Selling Stockholders Offering (1)(2)(3) Offered Offering (2)(4)
- -------------------- ------------------ ------------- ---------------
Number Percent Number Percent Number Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Matthew Balk 4,155 * 4,155 * 0 *
Franklin Berger 55 * 55 * 0 *
Larry Borgman 4,176 * 4,176 * 0 *
Dennis Burke 55 * 55 * 0 *
Bill Dioguardi 159 * 159 * 0 *
Menik Diwela 1,044 * 1,044 * 0 *
Hank Fichtner 1,566 * 1,566 * 0 *
Paul Fitzgerald 388 * 388 * 0 *
Faith Griffin 6,264 * 6,264 * 0 *
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
Shares Shares
Beneficially Number of Beneficially
Owned Prior to Shares Being Owned After
Selling Stockholders Offering (1)(2)(3) Offered Offering (2)(4)
- -------------------- ------------------ ------------- ---------------
Number Percent Number Percent Number Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Tony Guzzi 48 * 48 * 0 *
Steve Kowitski 55 * 55 * 0 *
Woody Larkin 309 * 309 * 0 *
Michael Loew 2,305 * 2,305 * 0 *
Ray Mando 24 * 24 * 0 *
Emerson Martin 55 * 55 * 0 *
Mike Petruzillo 4,698 * 4,698 * 0 *
Dan Purjes 67,987 1.0% 67,987 1.0% 0 *
Lawrence Rice 5,345 * 5,345 * 0 *
Charles Roden 4,025 * 4,025 * 0 *
Estate of Peter Sheib 13,124 * 13,124 * 0 *
Averell Satloff 1,087 * 1,087 * 0 *
Mary Vitullo 48 * 48 * 0 *
Scott Weisman 8,306 * 8,306 * 0 *
</TABLE>
- ------------------
* Represents beneficial ownership of less than 1% of the outstanding
Common Stock.
(1) Assumes the exercise of all of the IPO Underwriter's Warrants.
(2) The Company believes that the persons named in this table have sole voting
and investment control with respect to all shares of Common Stock shown as
beneficially owned by them, subject to the information contained in the
footnotes to this table.
(3) Percentage of ownership is based on 6,628,728 shares of Common Stock
outstanding on December 31, 1997.
(4) Assumes the sale of all shares offered hereby to unaffiliated third
parties.
14
<PAGE> 15
PLAN OF DISTRIBUTION
The 125,280 shares of Common Stock offered hereby (the "Shares") may be
offered and sold from time to time by the Company upon exercise of the IPO
Underwriter's Warrants by the holders thereof. The IPO Underwriter's Warrants
may be exercised from time to time by the holders thereof by tendering the
exercise price, together with the warrant certificate and exercise form, to the
Company before May 20, 1999, the expiration date of the Warrants.
The shares offered hereby may be offered and resold from time to time by
the Selling Stockholders or by pledgees, donees, transferees or other successors
in interest. Such offers and sales by the Selling Stockholders may be made from
time to time on one or more exchanges or in the over-the-counter market, or
otherwise, at prices and on terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The Shares may be sold
by one or more of the following: (a) a block trade in which the broker or dealer
so engaged will attempt to sell the Shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account; (c) an exchange distribution in accordance with the rules of such
exchange; (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; (e) privately negotiated transactions; and (f) a
combination of any such methods of sale. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale. The Selling Stockholders may also sell such
shares in accordance with Rule 144 under the 1933 Act.
The Selling Stockholders and any brokers participating in such sales may
be deemed to be underwriters within the meaning of the 1933 Act. There can be no
assurance that the Selling Stockholders will sell any or all of the shares of
Common Stock offered hereunder.
All proceeds from any such sales will be the property of the Selling
Stockholders who will bear the expense of underwriting discounts and selling
commissions, if any, and their own legal fees.
DESCRIPTION OF IPO UNDERWRITER'S WARRANTS
The following discussion of certain terms and provisions of the IPO
Underwriter's Warrants is qualified in its entirety by reference to the detailed
provisions of the Warrant Agreement, dated as of May 27, 1994 (the "Warrant
Agreement"), the form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Company sold to Josephthal for nominal consideration warrants to
initially purchase from the Company up to 120,000 shares of Common Stock and/or
up to 120,000 IPO Underwriter's Redeemable Warrants pursuant to the Warrant
Agreement (the "Original IPO Underwriter's Warrants"). Each Original IPO
Underwriter's Warrant initially entitled the holder to purchase one share of
Common Stock at a purchase price of $8.40 and/or one IPO Underwriter's
Redeemable Warrant at a purchase price of $.24 per warrant until May 20, 1999
(the "Expiration Date"). The IPO Underwriter's Redeemable Warrants were
redeemable by the Company at a redemption price of $.20 at any time after May
20, 1995 on not less than 30 days' prior written notice, provided that the
closing sale price of the Common Stock on the primary exchange on which the
Common Stock is traded (if then traded on a national securities exchange) or the
average closing bid price for such shares in the over-the-counter market as
reported by the Nasdaq Stock Market (if then traded in the over-the-counter
market), for a period of 20 consecutive trading days ending within 10 days prior
to the date of the notice of redemption delivered by the Company was at least
$10.50 per share. In July of 1996, the holders of all of the Original IPO
Underwriter's Warrants exercised that portion of the Original IPO Underwriter's
Warrants exercisable for one IPO Underwriter's Redeemable Warrant. Consequently,
in exchange for each Original IPO Underwriter's Warrant the Company issued one
IPO Underwriter's Warrant exercisable for one share of the Company's Common
Stock and one IPO Underwriter's Redeemable Warrant exercisable for one share of
the Company's Common Stock. In August of 1997, the Company redeemed all of the
IPO Underwriter's Redeemable Warrants at a redemption price of $.20 per warrant.
15
<PAGE> 16
The IPO Underwriter's Warrants are entitled to the benefit of adjustments
in the purchase price and in the number of shares of Common Stock deliverable
upon the exercise thereof in the event of certain stock dividends, stock splits,
reclassification, reorganizations, consolidations or mergers and upon certain
issuances of shares of Common Stock, or securities convertible into or
exercisable for shares of Common Stock, at a price per share below the purchase
price of the IPO Underwriter's Warrants. As a result of certain issuances and
sales of Common Stock (and securities exercisable for shares of Common Stock) by
the Company below the purchase price of the IPO Underwriter's Warrants, each IPO
Underwriter's Warrant will be exercisable for approximately 1.044 shares of
Common Stock (125,280 shares in the aggregate) at a Purchase Price of $8.05 per
share.
On or after the Expiration Date, the IPO Underwriter's Warrants become
wholly void and of no value. The Company may at any time extend the Expiration
Date of all outstanding IPO Underwriter's Warrants for such increased period of
time as it may determine. The IPO Underwriter's Redeemable Warrants may be
exercised at the office of the Company's transfer agent, Continental Stock
Transfer and Trust Company.
No holder, as such, of IPO Underwriter's Warrants shall be entitled to
vote or receive dividends or be deemed the holder of shares of Common Stock for
any purpose whatsoever until such IPO Underwriter's Warrants have been duly
exercised and the Purchase Price has been paid in full.
Holders of the IPO Underwriter's Warrants will have the right to exercise
the IPO Underwriter's Warrants to purchase shares of Common Stock only if a
current prospectus relating to such shares is then in effect and only if the
shares are qualified for sale under the securities laws of the state or states
in which the various holders of the IPO Underwriter's Warrants reside. The
Company has undertaken to use its best efforts to maintain the effectiveness of
the Registration Statement of which this Prospectus is a part so as to permit
the purchase and sale of the Common Stock underlying the IPO Underwriter's
Warrants, but there can be no assurance that the Company will be able to do so.
Although the IPO Underwriter's Warrants were not knowingly sold by the Company
to purchasers in jurisdictions in which the IPO Underwriter's Warrants are not
registered or otherwise qualified for sale, purchasers may buy IPO Underwriter's
Warrants in the aftermarket or may move to jurisdictions in which the shares of
Common Stock issuable upon exercise of the IPO Underwriter's Warrant are not so
registered or qualified. In this event, the Company would be unable to issue the
shares of Common Stock to those persons desiring to exercise their IPO
Underwriter's Warrants unless and until the shares of Common Stock could be
qualified for sale in jurisdictions in which such purchasers reside, or an
exemption from such qualification exists in such jurisdiction. No assurances can
be given that the Company will be able to effect any required registration or
qualification. The IPO Underwriter's Warrants may be deprived of any value if a
current prospectus covering the shares issuable upon the exercise thereof is not
kept effective or if such Common Stock is not qualified or exempt from
qualification in the jurisdiction in which the holders of the IPO Underwriter's
Warrants reside.
LEGALITY OF COMMON STOCK
The validity of the issuance of the shares of Common Stock offered hereby
is being passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., Boston, Massachusetts.
EXPERTS
The balance sheets of the Company as of December 31, 1996 and 1995 and the
statements of operations, stockholders' equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1996, and related schedule,
have been incorporated by reference in this Prospectus and Registration
Statement, in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of that firm as experts in accounting and auditing.
16
<PAGE> 17
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
Number 0-23150).
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended September 30, 1997, June 30, 1997 and March 31, 1997 filed pursuant to
Section 13 or 15(d) of the 1934 Act (File No. 0-23150).
(c) The Company's Current Report on Form 8-K for the May 21, 1997 event.
(d) The Company's Current Report on Form 8-K for the May 28, 1997 event.
(e) The Company's Current Report on Form 8-K for the June 6, 1997 event.
(f) The Company's Current Report on Form 8-K for the June 24, 1997 event.
(g) The Company's Current Report on Form 8-K for the July 24, 1997 event.
(h) The Company's Current Report on Form 8-K for the July 30, 1997 event.
(i) The Company's Current Report on Form 8-K for the August 15, 1997
event.
(j) The Company's Current Report on Form 8-K for the September 2, 1997
event.
(k) The Company's Current Report on Form 8-K for the October 24, 1997
event.
(l) The Company's Current Report on Form 8-K for the November 4, 1997
event.
(m) The Company's Current Report on Form 8-K for the February 3, 1998
event.
(n) The Company's Current Report on Form 8-K for the March 5, 1998 event.
(o) The description of the Company's capital stock contained in the
Company's Registration Statement on Form 8-A (File No. 1-13078) filed with the
Commission on May 6, 1994, including amendments or reports filed for the purpose
of updating such description.
All reports and other documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act,
prior to the filing of a post-effective amendment which indicates that all
securities covered by this Prospectus have been sold or which deregisters all
such securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
17
