<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period                 to
                                   ---------------    ------------

                         Commission file number: 0-23150

                           IBIS TECHNOLOGY CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                 MASSACHUSETTS                          04-2987600
         (STATE OR OTHER JURISDICTION       (I.R.S. EMPLOYER IDENTIFICATION NO.)
       OF INCORPORATION OR ORGANIZATION)

        32 CHERRY HILL DRIVE, DANVERS, MA                 01923
     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)           (ZIP CODE)

       Registrant's telephone number, including area code: (978) 777-4247

Securities registered pursuant to Section 12(b) of the Exchange Act:

       None.

Securities registered pursuant to Section 12(g) of the Exchange Act:

       Common Stock, $.008 Par Value Per Share
       (Title of class)

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant (without admitting that any person whose shares
are not included in such calculation is an affiliate) on March 9, 2001 was
$148,833,143 based on the last sale price as reported by the Nasdaq National
Market System.

         As of March 9, 2001, the registrant had 8,361,972 shares of common
stock outstanding.

         DOCUMENTS INCORPORATED BY REFERENCE

         The following documents (or parts thereof) are incorporated by
reference into the following parts of this Form 10-K: Certain information
required in Part III of this Annual Report on Form 10-K is incorporated from the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
on May 3, 2001.


<PAGE>


                                     PART I
ITEM 1.  BUSINESS

INTRODUCTION

         Ibis Technology Corporation ("Ibis") develops, manufactures and markets
SIMOX-SOI implantation equipment and wafers for the worldwide semiconductor
industry. SIMOX, which stands for Separation by IMplantation of Oxygen, is a
form of silicon-on-insulator, or SOI, technology that creates an insulating
barrier below the top surface of a silicon wafer. Our proprietary Ibis 1000
oxygen implanter produces SIMOX-SOI wafers by implanting oxygen atoms just below
the surface of a silicon wafer to create a very thin layer of silicon dioxide
between the thin operating region of the transistor at the surface and the
underlying silicon wafer itself. The buried layer of silicon dioxide acts as an
insulator for the devices fabricated on the surface of the silicon wafer and
reduces the electrical current leakage which otherwise slows integrated circuit
performance and increases the loss of power during circuit operation. Through
this process our customers can produce integrated circuits which we believe
offer significant advantages over circuits constructed on conventional silicon
wafers. These advantages include:

          o    substantially improved speed for microprocessors and other logic
               integrated circuits,

          o    reduced power consumption,

          o    reduced soft error rate, and

          o    higher temperature operation.

         Ibis believes these characteristics make SIMOX-SOI wafers, and the
finished integrated circuits, well-suited for many commercial applications,
including:

          o    servers and workstations,

          o    portable and desktop computers,

          o    wireless communications and battery powered devices such as
               laptop computers, personal digital assistants and mobile phones,

          o    integrated optical components, and

          o    harsh environment electronics.

         Ibis began operations in 1988, producing four, five and six inch
SIMOX-SOI wafers, mainly for military applications, on a NV-200 implanter
manufactured by Eaton Corporation ("Eaton"). Since 1989, we have spent in excess
of $20 million in developing our proprietary oxygen implanters (the Ibis 1000
and Ibis 2000, which is still in development) 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 (or 200 mm) wafers. The Ibis 1000 prototype, with
proprietary beam scanning technology, became operational in 1993, permitting
Ibis 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, Ibis
has constructed fourteen additional implanters for internal wafer production
requirements and for customers. Additional implanters are currently under
construction. In 1999, Ibis commenced a program to design and develop the Ibis
2000, an oxygen implanter which will be capable of producing eight and twelve
inch (or 200 and 300 mm) SIMOX-SOI wafers. Ibis believes that our demonstrated
ability to supply high quality, competitively priced wafers and our increased
wafer production capacity, together with substantial progress in our customers'
development programs, are accelerating the acceptance of Ibis-produced SIMOX-SOI
wafers for mainstream commercial applications. Over the last several years, Ibis
has focused on integrating SIMOX-SOI wafers into commercial applications, which
have substantially higher volume potential than military


2


<PAGE>


applications, our initial target market. In 2000, substantially all of our sales
of SIMOX-SOI wafers were for commercial applications and four of our customers
utilized our SIMOX-SOI wafers in their commercial products. Many more of our
customers are sampling SIMOX-SOI wafers or are developing prototype products.

         Ibis has sold SIMOX-SOI wafers to most of the world's leading
commercial semiconductor manufacturers, including Advanced Micro Devices,
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 or
pilot production in products, including microprocessors, gate arrays, ASICs
(application specific integrated circuits), memories (DRAMs, SRAMs, etc.), and
cellular and mobile radio components. The time to develop an integrated circuit
on SIMOX-SOI is lengthy, sometimes twelve to thirty-six months. The cycle
typically goes from initial sampling of SIMOX-SOI wafers to more intensive
sampling, the manufacture of prototype integrated circuits, circuit process
modifications, yield optimization, pilot production and finally to production.
This is a normal cycle in the semiconductor industry for any new advanced
material such as Ibis' SIMOX-SOI. In addition to semiconductor manufacturers,
Ibis also sells SIMOX-SOI wafers to several optical components manufacturers.
Bookham Technology, one of Ibis' largest customers, utilizes our SIMOX-SOI
wafers for their patented active silicon integrated optical circuits process to
manufacture integrated fiber-optic devices for broadband Internet and other
optical network applications. In addition, during 2000, Ibis started sampling
SIMOX-SOI wafers to several other optical components manufacturers, such as
Lightcross, Lucent, NTT and Oki Electric. According to the Semiconductor
Industry Association, the optoelectronics market is forecasted to grow from $9.8
billion in 2000 to $15 billion in 2003.

         Ibis believes that strategic alliances will play an important role in
developing a worldwide commercial market for our SIMOX-SOI wafers. In September
1995, Ibis and Motorola entered into an agreement whereby Motorola provided
funding to us to expand our SIMOX-SOI wafer production capacity to meet the
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. Ibis
also has a strategic alliance agreement with Mitsubishi Materials, under which
Mitsubishi markets and sells Ibis manufactured SIMOX-SOI wafers in Japan and the
Pacific Rim. Ibis and Mitsubishi have collaborated on joint research and
development focused on the commercial deployment of SIMOX-SOI technology for
many years. In 1998, Mitsubishi Materials Silicon Corporation, a subsidiary of
Mitsubishi Materials, purchased an Ibis 1000 oxygen implanter in order to
establish a Japanese-based manufacturing facility of Ibis' SIMOX-SOI wafers. In
July 1999, Ibis completed an agreement to license our standard and Advantox(R)
SIMOX-SOI wafer process technology to Mitsubishi Materials Silicon Corporation.
The agreement consists of an initial royalty fee and future royalties based on a
percentage of Mitsubishi's SIMOX-SOI wafer sales.

         In January 2000, Ibis, Mitsubishi and Samsung Electronics entered into
a joint development agreement to optimize SIMOX-SOI material for use in high
performance CMOS SOI devices. In December 2000, Ibis entered into a
royalty-bearing license agreement with IBM which gives Ibis the right to
manufacture SIMOX-SOI wafers using IBM's licensed process. Also in February
2001, Ibis and MEMC Electronic Materials, Inc. ("MEMC") announced an alliance
whereby beginning on April 1, 2001, MEMC will become a global sales
representative for Ibis' SIMOX-SOI wafers and the primary supplier to Ibis of
silicon substrate material. See "- Strategic Alliances and Patent and
Proprietary Rights."

         In 1996, Ibis began selling its Ibis 1000 implanters to semiconductor
manufacturers and in 1998 we experienced a significant increase in this area of
our business. During 2000, Ibis experienced a shift from demand of implanters to
demand of SIMOX-SOI wafers. This trend is expected to continue in the near-term
as our customers continue to sample SOI and the early adopters work to achieve
stable production processes and enter pilot production.

         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. Our telephone number is (978)
777-4247.


                                                                               3


<PAGE>


OUR STRATEGY

         Ibis is seeking to become the world leader in SOI technology with the
quality, cost and size required for mainstream commercial applications. Our
objective is to make our SIMOX-SOI wafers the preferred advanced materials
substrate for mainstream commercial applications. Key elements of our strategy
for achieving this objective include:

         CAPITALIZING ON A FUNDAMENTAL TREND IN SEMICONDUCTOR MANUFACTURING.
Semiconductor manufacturers face an increasing demand for faster integrated
circuit speed, reduced power consumption, immunity to soft errors and smaller
chip size. These manufacturers typically prefer to satisfy these demands with
minimal additions or modifications to their existing equipment base. Ibis
believes SIMOX-SOI technology is a leading alternative to address this need. We
plan to focus on our major key customers in the semiconductor industry who we
expect to lead the way in the adoption of SIMOX-SOI technology. We plan to
continue to focus a majority of our technical and marketing resources on these
key customers and continue with our joint development activities with all of our
customers.

         PURSUING STRATEGIC MARKETING, MANUFACTURING AND DISTRIBUTION ALLIANCES.
We intend to continue to pursue relationships through which third parties could
distribute some of our products or could assist us in research and development
activities. As evidence of this strategy, we have entered into business
development agreements or strategic alliances with MEMC, Mitsubishi Materials
Silicon, Samsung Electronics, Motorola and Okmetic of Finland, a key European
silicon supplier. In addition, we are pursuing the possibility of forming
strategic partnerships with semiconductor capital equipment manufacturers,
silicon wafer manufacturers and suppliers of components for our machines. We
also intend to pursue partnerships which could give us the right to
complementary technology and/or products.

         ENHANCING AND EXTENDING CURRENT PRODUCT OFFERINGS. We intend to use our
technical expertise to expand our core product functionality, add products to
our existing product line and further advance our process technology. We intend
to capitalize on the technology embodied in the Ibis 1000 for our next
generation oxygen implanter, the Ibis 2000, which will include 300 mm wafer size
capability and enhancements to increase throughput and reduce production costs.
We plan to introduce Advantox(R) MLD wafers which will be produced using IBM's
licensed process. In addition, we continue to improve existing, and develop
additional, SIMOX-Advantox(R)(R) products.

         INCREASING OUR SIMOX-SOI WAFER AND IMPLANTATION EQUIPMENT MANUFACTURING
CAPACITY. This past year Ibis expanded into a second building in Danvers that
effectively separated our two business segments: Implantation equipment design
and manufacture and SIMOX wafer production. This transition has streamlined both
our wafer and implanter manufacturing operations, while allowing us to expand
capacity in both areas. We now have a 40,000 square foot facility dedicated to
wafer operations and a 25,000 square foot facility dedicated to equipment
development and manufacturing. We intend to bring additional implanters on-line
at Ibis, as required by demand. In addition, we intend to further expand our
facility and have secured 20,000 square feet of adjacent space.


MARKETING, SALES AND CUSTOMERS

         Ibis has entered into an alliance with MEMC and beginning April 1,
2001, MEMC will become an Ibis global sales representative for Ibis' SIMOX-SOI
wafers. Ibis believes this alliance will allow us to capitalize on MEMC's
demonstrated global expertise in the silicon industry. MEMC has a worldwide
presence of well over 100 sales and applications personnel located in 14 sales
offices around the world. In addition, MEMC operates manufacturing facilities
directly, or through joint ventures, in Italy, Japan, Malaysia, South Korea,
Taiwan and the United States. We believe that MEMC's proven technology
leadership and 300 mm capability will build upon the foundation established by
Ibis to promote the acceptance of our SIMOX and Advantox(R) products and the
future adoption of 300 mm SIMOX. See "Business -- Strategic Alliances."


4


<PAGE>


         Our sales personnel will focus on our two largest customers, optical
components and MicroElectroMechanical Systems ("MEMS") manufacturers, as well
supporting our strategic partners. Our objective in these broad-based sales
efforts is to promote the adoption of SIMOX-SOI technology on an industry-wide
basis.

         Overseas, we rely on our strategic partners to market and sell our
products. We also have a strategic alliance with Mitsubishi Materials, under
which Mitsubishi markets and sells our SIMOX-SOI wafers in Japan and the Pacific
Rim. The purchase by Mitsubishi Materials Silicon of an Ibis 1000 oxygen
implanter will establish SIMOX-SOI manufacturing capability in Japan to service
this marketplace.

         The following table sets forth, in thousands of dollars, the amount of
revenue derived from our significant customers during the fiscal years ended
1998, 1999 and 2000, as well as the percent of our revenue represented by these
customers' purchases:

<TABLE>
<CAPTION>
    CUSTOMER                  1998                           1999                          2000
    --------                  ----                           ----                          ----
                     DOLLARS        PERCENT         DOLLARS        PERCENT        DOLLARS         PERCENT
                     -------        -------         -------        -------        -------         -------
<S>                     <C>           <C>              <C>           <C>               <C>          <C>
IBM                     $ 7,905       51%              $11,846       71%               $5,725       40%
Mitsubishi                4,419       29%                1,592       10%                1,045        7%
Bookham                     391        3%                1,234        7%                5,604       39%
</TABLE>

         The sales to IBM in 1998, 1999 and 2000 and to Mitsubishi in 1998
resulted primarily from the sale of a total of six units of Ibis 1000 oxygen
implanter equipment at a sale price of approximately $4,000,000 each. See Note
15 of Notes to Financial Statements for industry segment information.

         Set forth below is a list of some of our customers who have purchased
our Ibis 1000 oxygen implanter machines or our SIMOX-SOI wafers, either directly
from us or through a partner of ours:

<TABLE>
<CAPTION>
              IBIS 1000 CUSTOMERS
              <S>                                    <C>
              IBM
              Mitsubishi Materials Silicon

              WAFER CUSTOMERS OF OURS                WAFER CUSTOMERS OF OUR PARTNERS

              Advanced Micro Devices                 Fujitsu
              Allied Signal                          Matsushita
              Bookham Technology                     Mitsubishi Electric
              Cypress Semiconductor                  NEC
              Hewlett Packard                        Oki Electric
              Honeywell/Allied Signal                Sony
              Infineon                               Toshiba
              Intel
              IBM
              Lucent
              Maxim
              Micron
              Motorola
              Philips Semiconductor
              Samsung
              Sandia
              Sharp
              Texas Instruments
              TRAM
              TSMC
              UMC
</TABLE>


                                                                               5


<PAGE>

         The growth of MEMS and optical device marketplaces have created new
market opportunities for manufacturers of SIMOX-SOI wafers. Companies such as
Lightcross, Opticnet and NTT are developing devices in silicon such as optical
switches, multiplexers and attenuators. Ibis believes the tight silicon
uniformity that SIMOX provides makes it well suited for these types of
applications.

         Customers of Ibis that purchase wafers for military applications are
reliant in part on government funding, primarily from the Department of Defense.
During the fiscal years 1998, 1999 and 2000, approximately 15%, 4% and 4%,
respectively, of our product sales were generated by product sales to such
customers.

         Sales to overseas customers in 1998, 1999 and 2000 were 32%, 18% and
48% of total revenue, respectively. In 1999, sales to Japan were 10% of total
revenue, all of which was attributable to Mitsubishi. In 2000, sales to the
United Kingdom were 39% of total revenue, most of which was attributable to
Bookham Technology.

STRATEGIC ALLIANCES

         Ibis has entered into a number of strategic relationships which we
believe enable us to better address our target market, to advance our technology
more effectively, and to match our technical developments and production
expansion to the needs of our key customers.

         In September 1995, Ibis and Motorola entered into a strategic business
development agreement whereby Motorola advanced to Ibis the required funding to
build an Ibis 1000 implanter. Under this agreement, the SIMOX-SOI wafer
manufacturing capacity of this implanter is first dedicated to serving
Motorola's production requirements until at least December 31, 2000, with cash
price concessions to Motorola reflecting the amortization of the funding. Ibis
had granted to Motorola a security interest in the implanter to secure Ibis'
obligations to Motorola. Ibis and Motorola are currently evaluating the status
of this agreement.

         In July 1994, Ibis entered into a business development agreement with
Mitsubishi Materials under which Mitsubishi markets and sells Ibis manufactured
SIMOX-SOI wafers in Japan and the Pacific Rim. The two companies are also
collaborating on joint research and development focused on optimizing SIMOX-SOI
process technology for high-volume commercial applications. In 1998, Mitsubishi
Materials Silicon Corporation, a subsidiary of Mitsubishi Materials, purchased
an Ibis 1000 oxygen implanter in order to establish a Japanese-based
manufacturing facility of Ibis' SIMOX-SOI wafers. In July 1999, Ibis completed
an agreement to license our standard and Advantox(R) SIMOX-SOI wafer fabrication
process to Mitsubishi Materials Silicon Corporation. The agreement consisted of
an initial royalty fee and future royalties based on a percentage of
Mitsubishi's SIMOX-SOI wafer sales.

         In January 2000, Ibis, Samsung Electronics and Mitsubishi Materials
entered into a joint development agreement to optimize Ibis' Advantox(R)
SIMOX-SOI material for use in high performance CMOS SOI devices. Under the terms
of the agreement, Samsung fabricated CMOS devices using Advantox(R) material to
verify that enhancements made to the material resulted in improved reliability,
device performance and other manufacturing benefits. Mitsubishi certified the
Advantox(R)/SIMOX material parameters, supplied silicon substrates, and worked
closely with Samsung on material characterization. Ibis supplied the Advantox(R)
material. The initial phase of the program was extended due to the positive
results that Samsung received on its CMOS devices fabricated on our Advantox(R)
material.


         In December 2000, Ibis licensed from IBM the right to manufacture and
sell SIMOX-SOI wafers, using IBM's proprietary SIMOX process, to IBM and to all
other Ibis customers. Under the royalty-bearing license agreement, Ibis may use
IBM's process to produce SIMOX-SOI wafers which Ibis will market as Advantox(R)
MLD. Ibis has been working with IBM and other customers for many years to
improve the quality and manufacturing standards of SIMOX wafers. This
relationship gives Ibis an opportunity to combine our foremost SOI material with
the leading production-proven process of record in the industry and make it
available to all Ibis customers. A complementary product to Ibis' existing
Advantox(R) product line,


6
<PAGE>

Advantox(R) MLD wafers will be broadly marketed to integrated circuit
manufacturers looking to accelerate their SOI adoption process. See "- Patents
and Proprietary Rights."

         In February 2001, Ibis entered into an alliance with MEMC involving
Ibis' entire SIMOX-SOI wafer product line, including Advantox(R) MLD. Beginning
on April 1, 2001, MEMC will become a global sales representative for Ibis'
SIMOX-SOI wafers and the primary supplier to Ibis of silicon substrate material.
Ibis and MEMC have the option to expand the alliance to include joint research
and development work or other forms of technical collaboration. The alliance
also grants MEMC the right to license Ibis' SIMOX-SOI wafer technology and to
purchase oxygen implanters manufactured by Ibis. Such rights are designed to
provide MEMC with the option to produce and sell SIMOX-SOI wafers at some point
in the future.

RESEARCH AND DEVELOPMENT

         Ibis has active research and development programs in both equipment and
wafer process technology. Ibis' equipment engineers continually seek to refine
and enhance the capabilities of the Ibis 1000. Current development projects are
aimed at improving wafer quality with machine improvements, and increasing the
level of systems automation and throughput capacity of the machine, thereby
lowering the per wafer production cost. Our process engineers are attempting to
enhance the range of potential commercial applications for Ibis' SIMOX-SOI
wafers by (i) refining techniques to produce SIMOX-SOI wafers of higher quality,
(ii) developing new processes to produce SIMOX-SOI wafers with thinner buried
oxide layers at lower cost and (iii) responding to specific customer
requirements.

         During 1999, Ibis commenced a program to design and develop the
next-generation oxygen implanter, the Ibis 2000. The proprietary Ibis 2000 is
being designed to support the volume production of high quality SIMOX-SOI 200 mm
and 300 mm wafers for the global semiconductor industry. We believe that the
Ibis 2000 oxygen implanter will begin producing 300 mm wafers by the end of 2001
and will be ready for shipment in the first quarter of 2002. The Ibis 2000
duplicates the process environment of the Ibis 1000 to minimize process risks;
however, it also employs several changes to improve throughput and reduce costs.
Some of the improvements include increased beam current, improved wafer handling
speed and modular construction of the system, which will enable improved
serviceability and diagnostics, while simplifying the assembly and shipping of
the machine. The Ibis 2000 will be bulkhead mounted in the clean room and will
offer front-opening unified pod (FOUP) capability. In addition, Ibis believes
the improved automation and operator-friendly controls will raise the overall
productivity and afford ease-of-use. The Ibis 2000 will also offer extensive
low-dose and low-energy capabilities, facilitating the manufacture of the
Advantox(R) product portfolio introduced last year by Ibis.

         Early in 2000, Ibis undertook an ion source development program with
the U.S. Department of Energy's Lawrence Berkeley National Laboratory. Under the
terms of the agreement, Dr. Ka-Ngo Leung and his staff developed an ion source
suitable for the Ibis 2000 SIMOX-SOI implanter. The ion source uses the RF
inductive coupling technology developed in Dr. Leung's laboratory for high
current injection of H+ ions into tokamak reactors for fusion research. The
development is now complete and has resulted in an ion source with increased
beam current and a reduction of debris caused by a molecular ion, thus
increasing intervals between preventative maintenance on the beamline.

         During the fiscal years ended 1998, 1999 and 2000, Ibis' internally
funded research and development expenses were approximately $1,972,000,
$1,774,000 and $4,586,000, or 13%, 11% and 32% of the Company's revenues,
respectively.

         Government sponsored research and development activities also comprise
a part of our research and development effort. SIMOX-SOI technology is important
to various government agencies in large part due to its utility in constructing
high performance, radiation-tolerant and high temperature defense and
space-based systems. As a result of this government sponsored research and
development, radiation-tolerant integrated circuits on Ibis-produced SIMOX-SOI
wafers are now in production for commercial, military and space applications at
Honeywell. During the fiscal years ended 1998, 1999 and 2000 revenues from
government sponsored research and development contracts were approximately
$836,000, $374,000 and $372,000, or 5%,


                                                                               7
<PAGE>

2% and 3% of Ibis' revenues, respectively. Research and development expenses
attributable to research contracts are expensed as incurred and included in the
cost of contract revenue.

         Government-sponsored research and development has focused on improving
SIMOX-SOI manufacturing and characterization methods and developing new
processes to ensure the availability of high quality SIMOX-SOI wafers which meet
the requirements for commercial and military applications. The Small Business
Innovative Research ("SBIR") program, which is the largest source of direct
government support to Ibis, has funded development of advanced methods of
SIMOX-SOI processing, resulting in improved fabrication and characterization of
SIMOX-SOI materials, and has been supportive in developing a fundamental
understanding of new processes which has been useful in new product development.
Ibis has received SBIR contracts from ARPA, the Ballistic Missile Defense
Organization, the Defense Special Weapons Agency, U.S. Army, the U.S. Air Force,
the Department of Energy, National Science Foundation, National Aeronautical and
Space Administration and the Strategic Defense Initiative Organization.
Similarly, Ibis expects its cooperative research efforts with entities including
the Naval Research Laboratory, the Microelectronics Research Laboratory, the
National Institute of Standards, the Massachusetts Institute of Technology,
University of Florida, University of Arizona and Arizona State University to
yield benefits to our ongoing commercialization activities.

         Contracts with government agencies require compliance with applicable
government regulations and are generally subject to competitive bidding,
extensive regulation and cancellation at the government's sole discretion.
Pursuant to the terms of such government contracts, Ibis will be required to
grant to the U.S. government a royalty-free nonexclusive worldwide license to
any inventions claimed by Ibis which were funded by the U.S. government.
Additionally, these agreements are subject to negotiated overhead rates, and
work performed under government contracts is subject to audit and retroactive
adjustments of amounts paid to Ibis.

COMPETITION

         We believe we face three general sources of competition: (1) direct
SIMOX-SOI competition, (2) competing SOI technologies, and (3) competing non-SOI
technologies.

         Among direct SIMOX-SOI competitors, Ibis is presently the only U.S.
manufacturer of SIMOX-SOI wafers. The first generation oxygen implanter, the
NV-200, was produced by Eaton Corporation, which built a total of six. Of these
six implanters, Ibis owned two which were removed from production in 1997. All
Ibis SIMOX-SOI wafers are currently manufactured by Ibis on our proprietary
second generation oxygen implanter, the Ibis 1000. We believe that the remaining
four Eaton NV-200's are owned by Nippon Telephone and Telegraph ("NTT"), the
Fraunhofer Institute, Nippon Steel, and SOITEC, and that only Nippon Steel uses
this machine for commercial production, as opposed to research. Ibis believes
that Axcelis (formerly a division of Eaton) has no plans to manufacture
additional NV-200's. In 1995, Hitachi began marketing its oxygen implanter and,
Ibis believes, has sold two to date, to Komatsu and Nippon Steel. Both Komatsu
and Nippon Steel are marketing SIMOX-SOI material. We believe that, at this
stage of the market's development, the availability of alternate sources of
SIMOX-SOI wafers will help address customer concerns about the lack of available
alternate sources of supply.

         The second source of competition for Ibis is the development of
alternative SOI materials. The approach that competes with SIMOX is thin-film
bonded SOI wafers. SOITEC, a French-based company that spun off from LETI, a
French government research lab, uses a bonded method and has, to date, been the
primary source of wafer product competition for Ibis. The thin-film bonded
approach uses two silicon wafers, one or both having a thermally-grown oxide
layer, which are first bonded together to form the silicon/silicon
dioxide/silicon structure. A majority of one of the wafers is removed or
separated from the double-wafer structure, and the remaining portion serves as
the device layer of the SOI wafer. The most popular method is to transfer the
thin layer using wafer splitting techniques, allowing the rest of the wafer to
be reclaimed and reused. Regions of stress are first created using implantation
and/or epitaxial growth. The wafer is split along the stress interface by the
application of heat (SOITEC's Smartcut(R) process), a gas jet (Silicon Genesis'
process), or a water jet (Canon's ELTRAN(R) process). Evidence to date suggests
that both SIMOX and bonded wafers perform equally well. Ibis believes, however,
that the SIMOX process results in a lower


8
<PAGE>

manufacturing cost. Ibis believes that, at this stage in the market's
development, multiple SOI technologies will help supply wafers to the growing
SOI market.

         The third source of competition is derived from alternative non-SOI
technologies designed to obtain benefits similar to those of SOI, including
improvements to existing technologies. Significant resources are continually
expended to improve epitaxial and conventional silicon wafers. The semiconductor
industry has demonstrated its resourcefulness in improving these materials
through creative circuit design and manufacturing techniques, thereby extending
the useful life of conventional substrates, and we cannot be sure that it will
not continue to do so. The relatively lower cost of these substrates provides an
incentive to the semiconductor industry to continuously improve existing
material without moving to new, more advanced substrates. In addition, complex
variations of more conventional approaches, such as elaborate circuit structures
built on conventional silicon substrates, and compound materials
(silicon-germanium, gallium-arsenide, indium phosphide, etc.), are other
alternative substrate choices.

BACKLOG

         Ibis' backlog consists of written orders for SIMOX-SOI wafers to be
delivered during 2000, equipment revenue to be recognized during 2000 and other
contracts to be performed during 2000. As of February 28, 2001, the backlog was
$1,017,000 in wafer orders, $353,000 in equipment related orders and
approximately $384,000 in other contracts. This is compared with a backlog of
approximately $2,172,000 in wafer orders, $1,288,000 in equipment orders and
$774,000 in other contracts at February 28, 2000. Approximately 4% of the wafer
backlog is for four-inch wafers, 78% is for six-inch wafers, and 18% is for
eight-inch wafers. As customers of Ibis move from development and pilot
production into volume production, we expect much of the increased demand will
be for eight-inch wafers. Approximately 88% of the wafer backlog is comprised of
orders from three customers of Ibis. All customer orders are subject to
modification or cancellation by the customers.

         Backlog can fluctuate greatly based upon, among other matters, the
timing of receipt of orders. Therefore, variations in backlog may not represent
a fair indication of future business trends.

PATENTS AND PROPRIETARY RIGHTS

         Ibis has an exclusive worldwide sublicense to the proprietary beam
scanning system developed and patented by a consultant to Ibis during the
development of the Ibis 1000. The sublicense agreement obligated us to pay a
royalty of 1% of all revenue derived from the sale and servicing of products
incorporating or produced with the sublicensed technology, including oxygen
implantation machines and oxygen-implanted wafers, up to a maximum aggregate
payment of $160,000. This maximum was reached during 1999.

         Ibis' beam scanning system sublicense agreement also grants us certain
rights to further sublicense the beam scanning system for certain applications
other than oxygen implantation. Pursuant to these rights, we have entered into
four non-exclusive sublicense agreements that permit the respective sublicensees
to manufacture, use and sell implantation machines incorporating the beam
scanning system so long as such machines are not designed for the production of
oxygen implanted wafers. Each sublicensee has paid to Ibis a non-refundable
option fee upon signing an agreement and an initial license fee when it
exercised its option to use the licensed technology. In addition, each
sublicensee will pay a royalty fee with respect to each implantation machine
manufactured, used or sold after its option fee and initial license fee has been
applied. License fees received by Ibis from sublicenses are to be shared on a
substantially equal basis with the Company's sublicensor of the beam scanning
system. As of December 31, 2000, Ibis had received approximately $1,109,000 in
net license fees, after deducting amounts paid to the licensor.

         Ibis also obtained an exclusive license to technology that facilitates
the presentation of wafers to ion beams developed by Superion Limited, a United
Kingdom corporation. Through December 31, 2000, Ibis has paid $360,000 for
license fees at the rate of $30,000 per implantation machine that has been
manufactured by us. Under the terms of this agreement, Superion Limited has
retained the right to utilize the technology for uses not involving oxygen
implantation of silicon or other semiconductor materials.


                                                                               9
<PAGE>
         During 1998, we entered into an equipment licensing and development
agreement which gives the customer the right to a royalty-bearing, non-exclusive
license to supplement our equipment manufacturing capacity. Ibis has received no
royalties under this agreement.

         During 1999, Ibis completed an agreement to license its standard and
Advantox(R) SIMOX-SOI wafer fabrication process to Mitsubishi Materials Silicon
Corporation. The agreement consisted of an initial royalty fee and future
royalties shall be payable based on a percentage of Mitsubishi's SIMOX-SOI wafer
sales.

         During 2000, Ibis licensed from IBM the right to manufacture and sell
SIMOX-SOI wafers, using IBM's proprietary SIMOX process, to IBM and to all other
Ibis customers. Under the royalty-bearing license agreement, Ibis may use IBM's
process to produce SIMOX-SOI wafers which Ibis will market as Advantox(R) MLD. A
complementary product to Ibis' existing Advantox(R) product line, Advantox(R)
MLD wafers will be broadly marketed to integrated circuit manufacturers looking
to accelerate their SOI adoption process. Under the agreement Ibis grants IBM
rights to Ibis patents utilized in the modified low dose ("MLD") process.
Additionally, as part of the agreement Ibis granted IBM warrants to purchase
Ibis common stock. See "Part II -- Item 5 - Recent Sales of Unregistered
Securities."

         Although Ibis owns or has exclusive rights to several patents and
several pending applications, and we diligently monitor the research and
development process to identify inventions which warrant pursuing patent
protection, we rely largely upon trade secret protection to safeguard our
proprietary technology. All of our employees are currently required to execute
confidentiality agreements pursuant to which they agree to assign to Ibis all
patent rights and technical or other information developed by the employees
during their employment with us, and agree not to disclose any trade secret or
confidential information without the prior written consent of Ibis.
Notwithstanding these confidentiality agreements, we cannot be sure that other
companies will not acquire information which we consider to be proprietary.
Moreover, we cannot be sure that our patent rights will be enforceable or
provide us with meaningful protection from competitors or that patent
applications will be allowed. Even if a competitor's products were to infringe
patents owned by Ibis, it would be very costly for us to enforce our rights in
an enforcement action, which would also divert funds and resources which
otherwise could be used in our operations. We cannot be sure that Ibis would be
successful in enforcing such rights, that our products or processes do not
infringe the patent or intellectual property rights of a third party, or that if
we are not successful in a suit involving patents or other intellectual property
rights of a third party, that a license for such technology would be available,
if at all, on commercially reasonable terms.

         Pursuant to the terms of our government contracts, Ibis will be
required to grant to the U.S. government a royalty-free non-exclusive worldwide
license to any inventions claimed by us which were funded by the U.S.
government.

GOVERNMENT REGULATION

         Ibis has entered into certain research and development contracts with
agencies of the United States government which require compliance with
applicable government regulations. These contracts are generally subject to
competitive bidding and extensive regulation and are generally subject to
cancellation at the U.S. government's sole discretion. See "Business -- Research
and Development."

         Ibis 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 we believe that we have all permits necessary to conduct our
business, the failure to comply with present or future regulations could result
in fines being imposed on us, suspension of production or a cessation of
operations. Ibis' future activities may result in our being subject to
additional regulation. Such regulations could require us to acquire significant
equipment or to incur other substantial expenses to comply with regulations. Any
failure by us to control the use of, or to restrict adequately the discharge of,
hazardous substances or to properly control other occupational hazards could
subject it to substantial financial liabilities.

         Certain technologies associated with Ibis' implanters are subject to
export regulations administered by the U.S. Department of Commerce. Accordingly,
Ibis may be required to secure U.S. export licenses with

10
<PAGE>
respect to sales of implanters or transfers of technologies to end users in
certain foreign countries. There can be no assurance that if necessary, Ibis
will be able to secure such licenses in a timely manner, or at all.

MANUFACTURING AND SUPPLIES

         Ibis manufactures its Ibis 1000 oxygen implanters from standard
components and from components manufactured in-house or by other vendors
according to our design specifications. Most raw materials and components not
produced by Ibis are available from more than one supplier. However, certain raw
materials, components and subassemblies are obtained from a limited group of
suppliers. Although we seek to reduce our dependence on these limited source
suppliers and we have not experienced significant production delays due to
unavailability or delay in procurement of component parts or raw materials to
date, disruption or termination of certain of these sources could occur and such
disruptions could have a material adverse effect on our business and results of
operations.

         We manufacture our SIMOX-SOI wafers using conventional silicon wafers
and a variety of chemicals and gases, all of which are available from multiple
sources. We order the wafers, chemicals and gases pursuant to blanket purchase
orders which generally may be modified or cancelled by us upon 60 days' prior
notice to the vendor. In February 2001, Ibis and MEMC, a leading global producer
of silicon wafers, entered into an alliance whereby beginning on April 1, 2001,
MEMC will become the primary supplier of silicon substrate material to Ibis.
Ibis is currently able to purchase its required supply of silicon wafers from
its normal sources. In the periods of increasing demand in the semiconductor
industry for silicon wafers, we cannot be sure that we will be able to purchase
an adequate supply of such silicon wafers for manufacture of our 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 our business and results of operations.

EMPLOYEES

         As of February 28, 2001, Ibis employed 113 persons on a full-time
basis, two people on a permanent part-time basis and four people on a contract
or temporary basis. None of our employees are represented by a labor union and
we believe our relations with our employees are good.

BUSINESS OUTLOOK

         This Form 10-K contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995 including statements regarding Ibis' belief in the accelerated
acceptance of Ibis-produced SIMOX-SOI wafers for mainstream commercial
applications, the expected continued trend in the shift from demand of
implanters to demand of SIMOX-SOI wafers, our intent to pursue further strategic
relationships, partnerships and alliances with third parties, our intention to
add products and advance our process technology including the introduction of
Advantox(R) MLD wafers, the potential benefits of the agreement with MEMC, the
anticipated production and shipping schedule for the Ibis 2000, the anticipated
benefits of the Ibis 2000, and the sufficiency of our capital resources. Such
statements are based on our current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. Such factors and
uncertainties include, but are not limited to, the uncertainty that the
performance advantages of SIMOX-SOI wafers will continue to be realized
commercially or that a commercial market for SIMOX-SOI wafers will continue to
develop; the dependence by Ibis on key customers (during 1998, 1999 and 2000,
revenues from two customers averaged in the aggregate between 78% and 81% of our
revenues, so that the loss of one or more of these major customers and the
failure of the Ibis to obtain other sources of revenue could have a material
adverse impact on us); the loss of the services of one or more of our key
individuals, which could have a material adverse impact on Ibis; the dependence
by Ibis on key suppliers, so that the loss of services of one or more suppliers
could have a material adverse impact on us; the development of competing or
superior technologies and products from manufacturers, many of which have
substantially greater financial, technical and other resources than us; Ibis'
lack of experience in producing commercial quantities of our products at
acceptable costs; our ability to successfully complete the manufacture of our
implanters and that these implanters will be accepted by our customers; Ibis'
ability to develop and maintain strategic alliances for the manufacturing,
marketing and distribution of our products and sale of equipment; the cyclical
nature of the semiconductor industry, which has negatively affected our 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
                                                                              11
<PAGE>


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 our business and results of operations; the
availability of additional capital to fund expansion on acceptable terms, if at
all; and general economic conditions.

ITEM 2. DESCRIPTION OF PROPERTY

         Ibis' corporate office and manufacturing facilities are located at
leased facilities in Danvers, Massachusetts. In 2000, we opened our second
building in Danvers, which effectively separated our two business segments:
Implantation equipment design and manufacture and SIMOX wafer production. This
transition has been very beneficial to Ibis in that it has streamlined both our
wafer and implanter manufacturing operations, while allowing us to expand
capacity in both areas. We now have a 40,000 square foot facility dedicated to
wafer operations which includes modernized cleanrooms that contain a total of 9
implanters, upgraded metrology equipment and state-of-the-art cleaning
equipment. Currently the cleanrooms are capable of accommodating five more
implanters. The other 25,000 square foot facility, is dedicated to implantation
equipment design and manufacturing. The leases expire on May 31, 2005 and
contain options to renew for five years. Ibis has also secured an additional
20,000 square feet of adjacent space for future expansion.

ITEM 3. LEGAL PROCEEDINGS

         Ibis is not a party to any material pending legal proceedings, and
management is not aware of any contemplated proceeding by any governmental
authority against us of a material nature.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to stockholders during the fourth quarter of
the year ended December 31, 2000.


                                     PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
        RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Ibis' Common Stock began trading on May 20, 1994 on the Nasdaq SmallCap
Market and on the Boston Stock Exchange. Prior to May 20, 1994, there was no
public market for the Common Stock or any other securities of Ibis. On April 4,
1996, Ibis commenced trading on the Nasdaq National Market System. Our Common
Stock is traded under the symbol "IBIS." The following tables set forth, for
1999 and 2000, the high and low closing prices for the Common Stock as reported
by the Nasdaq National Market System.

<TABLE>
<CAPTION>
                                                                   COMMON STOCK
                                                                 HIGH          LOW
          <S>                                                   <C>           <C>
          1999:
               First Quarter..........................          $ 19.63       $ 9.88
               Second Quarter.........................          $ 33.50       $17.25
               Third Quarter..........................          $ 37.13       $25.13
               Fourth Quarter.........................          $ 55.63       $35.38
          2000:
               First Quarter..........................          $125.00       $44.00
               Second Quarter.........................          $ 82.00       $29.50
               Third Quarter..........................          $ 61.88       $32.25
               Fourth Quarter.........................          $ 41.00       $11.44
</TABLE>


12


<PAGE>



STOCKHOLDERS

         As of March 9, 2001, there were approximately 125 stockholders of
record of the 8,361,972 outstanding shares of Common Stock and approximately
11,000 beneficial owners of the Common Stock.

DIVIDENDS

         Ibis has never declared or paid any dividends and does not anticipate
paying such dividends on its Common Stock in the foreseeable future. Ibis
currently intends to retain any future earnings for use in its business. The
payment of any future dividends will be determined by the Board of Directors in
light of conditions then existing, including our financial condition and
requirements, future prospects, restrictions in financing agreements, business
conditions and other factors deemed relevant by the Board of Directors.

RECENT SALES OF UNREGISTERED SECURITIES

         In December 2000, Ibis issued to IBM warrants to purchase 200,000
shares of Ibis' Common Stock in connection with a license agreement, patent
license agreement and other related agreements between Ibis and IBM. The
warrants were immediately exercisable for a term of five (5) years at an
exercise price of $22.30 per share. No person acted as an underwriter with
respect to this transaction. The Company relied on Section 4(2) of the
Securities Act of 1933, as amended, as no public offering was involved.




                                                                              13


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA


         The selected financial data presented below under the captions
"Statement of Operations Data" and "Balance Sheet Data" for, and as of the end
of each of the years in the five-year period ended December 31, 2000, are
derived from the financial statements of Ibis, which financial statements have
been audited by KPMG LLP, independent certified public accountants. The audited
balance sheets at December 31, 2000 and 1999 and the related statements of
operations, stockholders equity and cash flows for each of the years in the
three-year period ended December 31, 2000 and the report thereon, are included
elsewhere in this Annual Report on Form 10-K. The data set forth below should be
read in conjunction with Ibis' financial statements, the related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K.


<TABLE>
<CAPTION>
                                                                    YEARS ENDED DECEMBER 31,
                                                1996         1997             1998         1999         2000
                                                ----         ----             ----         ----         ----
                                                      (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                       <C>            <C>             <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
Product sales.......................      $    4,766     $     3,389     $   3,149    $   5,282    $  8,173
Contract and other revenue..........             887           2,831         1,087        1,257         533
Equipment revenue...................           3,800             454        11,230       10,064       5,769
                                          ----------     -----------     ---------    ---------    ---------
  Total revenue.....................           9,453           6,674        15,466       16,603      14,475
                                          ----------     -----------     ---------    ---------    ---------
Cost of product sales...............           4,042           4,827         4,581        4,644       5,824
Cost of contract and other revenue..             320           2,143           976          443         388
Cost of equipment revenue...........           2,625             311         7,347        7,242       3,482
                                          ----------     -----------     ---------    ---------    ---------
  Total cost of revenue.............           6,987           7,281        12,904       12,329       9,694
                                          ----------     -----------     ---------    ---------    ---------
  Gross profit (loss)...............           2,466            (607)        2,562        4,274       4,781
                                          ----------     -----------     ---------    ---------    ---------
Operating expenses:
  General and administrative........           1,423           1,724         1,823        1,787       1,998
  Marketing and selling.............             515             466           470        1,016       1,640
  Research and development..........           1,477           1,435         1,972        1,774       4,587
                                          ----------     -----------     ---------    ---------    ---------
  Total operating expenses..........           3,415           3,625         4,265        4,577       8,225
                                          ----------     -----------     ---------    ---------    ---------
  Loss from operations..............            (949)         (4,232)       (1,703)        (303)     (3,444)
                                          ----------     -----------     ---------    ---------    ---------
Total other income..................             110             296           538        1,140       1,943
Income (loss) before income taxes...            (839)         (3,936)       (1,165)         837      (1,501)
Income tax expense..................              (1)             (1)           (1)         (10)         (1)
                                          ----------     -----------     ---------    ---------    ---------
Net income (loss)...................      $     (840)    $    (3,937)    $  (1,166)   $     827    $ (1,502)
                                          ==========     ===========     =========    ==========   =========
Net income (loss) per common
  share(1)..........................      $     (.18)    $      (.69)    $    (.17)   $     .11    $   (.18)
                                          ==========     ===========     =========    ==========   =========
Weighted average common shares
  outstanding....................              4,722           5,710         6,760        7,404       8,286
</TABLE>


<TABLE>
<CAPTION>
                                                                      AS OF DECEMBER 31,
                                          -------------------------------------------------------------------
                                              1996           1997            1998         1999         2000
                                              ----           ----            ----         ----         ----
                                                                      (IN THOUSANDS)
<S>                                       <C>            <C>             <C>          <C>          <C>
BALANCE SHEET DATA:
Working capital ....................      $    8,068     $    17,249     $  16,831    $  43,309    $ 35,285
Total assets........................          19,542          24,918        24,307       53,728      56,299
Long-term debt, less current portion             973             499            40           30          18
Total liabilities...................           5,178           4,161         3,698        5,347       6,780
Stockholders' equity................          14,364          20,757        20,609       48,381      49,519
</TABLE>

------------------
(1) Computed on the basis described for net earnings (loss) per common share in
Note 2(g) of Notes to Financial Statements.


14


<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS OF IBIS (INCLUDING NOTES THERETO) AND SELECTED FINANCIAL
DATA INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

OVERVIEW

         Ibis Technology Corporation ("Ibis") was formed in October 1987 and
commenced operations in January 1988. Ibis' initial activities consisted of
producing and selling SIMOX-SOI wafers and conducting research and development
activities. This research led to the development of a proprietary second
generation implanter, the Ibis 1000, which we began selling in 1996, and to
other proprietary process technology.

         Initially, much of our revenue was derived from research and
development contracts and sales of wafers for military applications. Over the
years, there was a shift in revenue to sales of SIMOX-SOI wafers for commercial
applications and sales of Ibis 1000 implanters. In 2000, substantially all of
our wafer sales were for commercial applications and four of our customers
utilized our SIMOX-SOI wafers in their products. Many more of our customers are
sampling SIMOX-SOI wafers or are developing prototype products.

         To date, most of our customers have purchased wafers for the purpose of
characterizing and evaluating the wafers, developing prototype products or for
pilot production. Thus, historical sales are not necessarily indicative of
future operations because such sales would not be considered of a recurring
nature.

         In 1996, Ibis began selling its Ibis 1000 implanters to semiconductor
manufacturers and in 1998 we experienced a significant increase in this area of
our business. However, during 2000, Ibis experienced a shift from demand for
implanters to demand for SIMOX-SOI wafers. This trend is expected to continue in
the near-term as our customers continue to sample SOI and the early adopters
work to achieve stable production processes and enter pilot production. For the
fiscal years ending December 31, 1999 and December 31, 2000, Ibis recognized
revenue on the sale of implanters using the percentage-of-completion method and
upon delivery, respectively.

         Ibis has experienced quarterly and annual fluctuations in revenue and
results of operations due to the timing of receipt of equipment orders and
dependence on a limited number of customers. We may continue to experience
fluctuations in revenue due to equipment sales and shifts in customer demands
during various stages of the SIMOX-SOI sales cycle.

         During the fourth quarter of 2000, approximately four of our Ibis 1000
oxygen implanters were used to generate SIMOX-SOI wafer sales and three
implanters were used for non-revenue generating activities, such as research and
development. Ibis currently has ten Ibis 1000 oxygen implanters, including those
customer owned.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED DECEMBER 31, 2000 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1999

         PRODUCT SALES. Wafer product sales increased to $8,173,095 for the
fiscal year ended December 31, 2000, an increase of $2,890,930 or 55% from
$5,282,165 for the fiscal year ended December 31, 1999. The increase in product
sales is attributable to increased wafer sales by Ibis in Europe, primarily from
one customer who is using Ibis' SIMOX-SOI wafers in its commercial products.
Sales by Ibis in the United States and Japan decreased overall during this
twelve-month period. Ibis shipped approximately 30,000 wafers in 2000 compared
to 17,000 shipped in 1999.

         CONTRACT AND OTHER REVENUE. Contract and other revenue includes revenue
derived from government contracts, license agreements, characterization services
and other services. Contract and other revenue decreased for the fiscal year
ended December 31, 2000 to $532,395 from $1,257,235 for the fiscal year ended
December 31, 1999, a decrease of $724,840 or 58%. This decrease is primarily due
to the fact that in 1999,


                                                                              15


<PAGE>


Ibis recognized license revenue in the form of a one time initial royalty fee in
connection with an agreement to license its standard and Advantox(R) SIMOX-SOI
wafer fabrication process.

         EQUIPMENT REVENUE. Equipment revenue represents revenue recognized from
the sale of Ibis 1000 implanters, sales of spare parts and field service
revenue. Equipment revenue decreased to $5,769,393 for the fiscal year ended
December 31, 2000 from $10,063,622 for the fiscal year ended December 31, 1999,
a decrease of $4,294,229 or 43%. This decrease is attributable to decreases in
implanter and spare parts sales which were partially offset by an increase in
field service revenue. During 2000, Ibis experienced a shift from demand for
implanters to demand for SIMOX-SOI wafers. This trend is expected to continue in
the near-term as our customers continue to sample SOI and the early adopters
work to achieve stable production processes and enter pilot production. Field
service revenue accounted for $474,670 or 8% of equipment revenue for the fiscal
year ended December 31, 2000 as compared to 2% of equipment revenue for the
fiscal year ended December 31, 1999. Sales of spare parts accounted for $572,723
or 10% of equipment revenue for the fiscal year ended December 31, 2000 as
compared to $1,057,514 or 11% of equipment revenue for the fiscal year ended
December 31, 1999.

         TOTAL REVENUE. Total revenue for the fiscal year ended December 31,
2000 was $14,474,883, a decrease of $2,128,139 or 13% from $16,603,022 for the
fiscal year ended December 31, 1999. The decrease is due to decreases in
equipment revenue and contract and other revenue which were partially offset by
an increase in product sales.

         COST OF PRODUCT SALES. Cost of product sales for the fiscal year ended
December 31, 2000 was $5,824,160, as compared to $4,643,421 for the fiscal year
ended December 31, 1999, an increase of $1,180,739 or 25%. The gross margin from
product sales for the fiscal year ended December 31, 2000 was 29%, as compared
to a gross margin of 12% for the fiscal year ended December 31, 1999. The gross
margin on wafer product sales improved significantly due to the increased volume
of wafers sold.

         COST OF CONTRACT AND OTHER REVENUE. Cost of contract and other revenue
consists of labor and materials expended in performing contract services. There
were no costs associated with the license revenue recognized. The cost of
contract and other revenue for the fiscal year ended December 31, 2000 was
$388,320, as compared to $443,078 for the fiscal year ended December 31, 1999, a
decrease of $54,758 or 12%. The decrease is a result of lower costs associated
with contract and other revenue.

         COST OF EQUIPMENT REVENUE. The cost of equipment revenue represents all
costs related to the implanters sold, the cost of spare parts and the cost to
provide field service. The cost of equipment revenue for the fiscal year ended
December 31, 2000 was $3,481,516, as compared to $7,242,126 for the fiscal year
ended December 31, 1999, a decrease of $3,760,610 or 52%. The lower cost of
equipment revenue is a result of decreased equipment revenue.

         TOTAL COST OF REVENUE. Total cost of revenue for the fiscal year ended
December 31, 2000 was $9,693,996, as compared to $12,328,625 for the fiscal year
ended December 31, 1999, a decrease of $2,634,629 or 21%. This decrease is due
to decreases in the cost of equipment revenue and contract revenue, which were
partially offset by an increase in cost of product sales.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the fiscal year ended December 31, 2000 were $1,998,302 (14% of
total revenue) as compared to $1,787,821 (11% of total revenue) for the fiscal
year ended December 31, 1999, an increase of $210,481 or 12%. This is primarily
a result of an increase in personnel and professional service fees.

         MARKETING AND SELLING EXPENSES. Marketing and selling expenses for the
fiscal year ended December 31, 2000 were $1,639,845 (11% of total revenue) as
compared to $1,015,843 (6% of total revenue) for the fiscal year ended December
31, 1999, an increase of $624,002 or 61%. The increase in marketing and sales
expenses is primarily a result of an increase in the number of customer support
personnel, and public relations and product sample expenses.


16


<PAGE>


         RESEARCH AND DEVELOPMENT EXPENSES. Internally funded research and
development expenses increased by $2,812,364 or 159% to $4,586,375 (32% of total
revenue) for the fiscal year ended December 31, 2000 from $1,774,011 (11% of
total revenue) for the fiscal year ended December 31, 1999. This increase is
primarily due to an increase in personnel and consultants hired for the design
and development effort on our next generation oxygen implanter, the Ibis 2000,
and increased material expenses on Ibis' SIMOX-SOI wafer development program.

         LOSS FROM OPERATIONS. The loss from operations for the fiscal year
ended December 31, 2000 was $3,443,635, as compared to a loss from operations of
$303,278 for the fiscal year ended December 31, 1999. The increase in the loss
from operations of $3,140,357 or 1,036% is a result of decreases in equipment
revenue and contract and other revenue and an increase in operating expenses,
which were partially offset by increased wafer product sales.

         OTHER INCOME. Total other income for the fiscal year ended December 31,
2000 was $1,943,024 as compared to $1,140,663 for the fiscal year ended December
31, 1999. The increase in total other income of $802,361 or 70% is attributable
to increased interest income earned on the cash balance and reduced interest
expense on capitalized leases.

         INCOME (LOSS) BEFORE INCOME TAXES. The loss before income taxes was
$1,500,611 for the fiscal year ended December 31, 2000, as compared to income of
$837,385 for the fiscal year ended December 31, 1999. The loss before income
taxes is a result of decreases in equipment revenue and contract and other
revenue and an increase in operating expenses. These were partially offset by
increased wafer product sales and interest income.

         As of December 31, 2000, the Company had federal net operating loss and
general business credit carryforwards of approximately $27,235,000 and $598,000,
respectively, for tax purposes expiring through 2020. As a result of the public
stock offering that closed in April 1996 of 1,600,000 shares at $7.25 per share,
a change of ownership within the meaning of Sec. 382(g) of the Internal Revenue
Code occurred. As a result of this ownership change, the net operating loss
carryforward utilization is limited to approximately $1,500,000 per year, which
limitation, if not utilized, can be carried forward to future years.

FISCAL YEAR ENDED DECEMBER 31, 1999 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1998

         PRODUCT SALES. Wafer product sales increased to $5,282,165 for the
fiscal year ended December 31, 1999, an increase of $2,133,382 or 68% from
$3,148,783 for the fiscal year ended December 31, 1998. The increase in product
sales is attributable to increased wafer sales by Ibis in the United States and
Europe. Sales by Ibis in Japan decreased overall during this twelve-month
period.

         CONTRACT AND OTHER REVENUE. Contract and other revenue increased for
the fiscal year ended December 31, 1999 to $1,257,235 from $1,087,434 for the
fiscal year ended December 31, 1998, an increase of $169,801 or 16%. This
increase is attributable to license revenue recognized in 1999 in connection
with an agreement to license its standard and Advantox(R) SIMOX-SOI wafer
fabrication process. This was offset by a decrease in governmenT contract
revenue.

         EQUIPMENT REVENUE. Equipment revenue decreased to $10,063,622 for the
fiscal year ended December 31, 1999 from $11,229,852 for the fiscal year ended
December 31, 1998, a decrease of $1,166,230 or 10%. This decrease is
attributable to a decrease in revenue recognized on equipment which was
partially offset by an increase in field service revenue and the sale of spare
parts. Field service revenue accounted for $171,108 or 2% of equipment revenue
for the fiscal year ended December 31, 1999 as compared to no revenue for the
fiscal year ended December 31, 1998. Sales of spare parts accounted for
$1,057,514 or 11% of equipment revenue for the fiscal year ended December 31,
1999 as compared to $196,396 or 2% of equipment revenue for the fiscal year
ended December 31, 1998.

         TOTAL REVENUE. Total revenue for the fiscal year ended December 31,
1999 was $16,603,022, an increase of $1,136,953 or 7% from $15,466,069 for the
fiscal year ended December 31, 1998. The increase is


                                                                              17


<PAGE>


due to increases in wafer product sales and license revenue which were partially
offset by a decrease in equipment revenue.

         COST OF PRODUCT SALES. Cost of product sales for the fiscal year ended
December 31, 1999 was $4,643,421, as compared to $4,581,140 for the fiscal year
ended December 31, 1998, an increase of $62,281 or 1%. The increase in cost of
product sales primarily resulted from an increase in the volume of wafers sold
which was offset by a decrease in depreciation. The gross margin from product
sales for the fiscal year ended December 31, 1999 was 12%, as compared with a
negative gross margin of 45% for the fiscal year ended December 31, 1998.

         COST OF CONTRACT AND OTHER REVENUE. The cost of contract and other
revenue for the fiscal year ended December 31, 1999 was $443,078, as compared to
$976,082 for the fiscal year ended December 31, 1998, a decrease of $533,004 or
55%. The decrease is a result of a decrease in government contract work. Cost of
contract and other revenue consists of labor and materials expended in
performing contract services. There are no costs associated with the license
revenue recognized.

         COST OF EQUIPMENT REVENUE. The cost of equipment revenue for the fiscal
year ended December 31, 1999 was $7,242,126, as compared to $7,346,592 for the
fiscal year ended December 31, 1998, a decrease of $104,466 or 1%. Cost of
equipment revenue decreased due to lower equipment revenue.

         TOTAL COST OF REVENUE. Total cost of revenue for the fiscal year ended
December 31, 1999 was $12,328,625, as compared to $12,903,814 for the fiscal
year ended December 31, 1998, a decrease of $575,189 or 5%. This decrease is due
to decreases in the cost of equipment revenue and contract revenue, which were
partially offset by an increase in cost of product sales.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the fiscal year ended December 31, 1999 were $1,787,821 (11% of
total revenue) as compared to $1,823,001 (12% of total revenue) for the fiscal
year ended December 31, 1998, a decrease of $35,180 or 2%. This is primarily a
result of a decrease in professional service fees.

         MARKETING AND SELLING EXPENSES. Marketing and selling expenses for the
fiscal year ended December 31, 1999 were $1,015,843 (6% of total revenue) as
compared to $470,288 (3% of total revenue) for the fiscal year ended December
31, 1998, an increase of $545,555 or 116%. The increase in marketing and sales
expenses is primarily a result of an increase in the number of customer support
personnel.

         RESEARCH AND DEVELOPMENT EXPENSES. Internally funded research and
development expenses decreased by $197,723 or 10% to $1,774,011 (11% of total
revenue) for the fiscal year ended December 31, 1999 from $1,971,734 (13% of
total revenue) for the fiscal year ended December 31, 1998. This decrease is
primarily due to decreases in material expenses. In 1998, the Company introduced
a new wafer product line, Advantox(R) which resulted iN increased material
expenses for the year.

         LOSS FROM OPERATIONS. The loss from operations for the fiscal year
ended December 31, 1999 was $303,278, as compared to a loss from operations of
$1,702,768 for the fiscal year ended December 31, 1998. The decrease in the loss
from operations of $1,399,490 or 82% is a result of increases in wafer product
sales and license revenue which were partially offset by a decrease in equipment
revenue and an increase in operating expenses.

         OTHER INCOME (EXPENSE). Total other income for the fiscal year ended
December 31, 1999 was $1,140,663 as compared to $538,064 for the fiscal year
ended December 31, 1998. The increase in total other income of $602,599 or 112%
is primarily attributable to increased interest income earned on the proceeds
from the August 1999 public stock offering and reduced interest expense on
capitalized leases.

         INCOME (LOSS) BEFORE INCOME TAXES. The income before income taxes was
$837,385 for the fiscal year ended December 31, 1999, as compared to a loss of
$1,164,704 for the fiscal year ended December 31, 1998. The decrease in the loss
before income taxes of $2,002,089 or 172% is a result of increases in product


18


<PAGE>



sales license revenue and other income which were partially offset by a decrease
in equipment revenue and an increase in operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2000, Ibis had cash and cash equivalents of
$26,366,299, reflecting in large part our receipt of approximately $25 million
in net proceeds from the August 1999 public sale of 1,000,000 shares of Common
Stock. During the fiscal year ended December 31, 2000, Ibis generated $884,186
in cash from operating activities as compared to cash used in operations in the
amount of $1,700,668 in 1999. Depreciation and amortization expense for the
fiscal years ended December 31, 2000 and 1999 was $1,662,538 and $1,310,896,
respectively. This accounted for 11% and 8% of total revenue, respectively. Due
to the capital intensive nature of Ibis' business and the anticipated expansion
of its facilities and production capacity, management expects that depreciation
and amortization will continue to be a significant portion of its expenses. To
date, Ibis' working capital requirements have been funded primarily through debt
and equity financings. The principal use of cash during the fiscal year ended
December 31, 2000 was to fund additions to property and equipment which totaled
approximately $11 million. As of December 31, 2000, we had invested $27,356,722
in property and equipment. At December 31, 2000, Ibis had commitments to
purchase approximately $4,242,652 in material or subassemblies to be used for
manufacturing Ibis 1000 implanters and approximately $921,000 in capital
equipment purchases.

         On August 6, 1999, Ibis completed the public offering of 1,000,000
shares of common stock in an offering underwritten by SoundView Technology
Group. The shares were included in a shelf registration statement filed with the
Securities and Exchange Commission on July 8, 1999 and declared effective on
July 26, 1999. Net proceeds from the offering were approximately $25 million and
Ibis intends to use the proceeds to fund research and development, capital
expenditures, working capital and for other general corporate purposes.

         We anticipate that we may be required to raise substantial additional
capital in the future in order to finance further expansion of our manufacturing
capacity and our research and development programs. Our existing cash resources
together with funds generated from operations are believed to be sufficient to
support Ibis' operations on our anticipated scale for at least the next eighteen
months. Management of Ibis currently believes that this anticipated scale of
operations will include the addition of Ibis 1000 oxygen implanters, the
purchase of support equipment, the expansion of Ibis' facilities and the design
and development of the next generation oxygen implanter, the Ibis 2000.
Additional implanters are expected to be transferred to production at various
times as additional capacity is needed to meet demand.

EFFECTS OF INFLATION

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

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") that
establishes accounting and reporting requirements for derivative instruments and
for hedging activities. SFAS 133 requires companies to recognize all derivatives
as either assets or liabilities in the statement of financial position at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge of the exposures to changes in fair value of recognized
assets or liabilities or unrecognized firm commitments, a hedge of the exposure
to variable cash flows of a forecasted transaction, or a hedge of the foreign
currency exposure of a net investment in a foreign operation, unrecognized firm
commitments, an available-for-sale security or a foreign-currency denominated
forecasted transaction. The accounting for changes in fair value under SFAS 133
depends on the intended use of the derivative and the resulting designation. In
June 1999, the FASB decided that the effective date for adopting the
requirements of SFAS 133 should be delayed to fiscal years beginning after June
15, 2000. This delay, published as SFAS 137, applies to quarterly and annual
financial statements. In June 2000, the FASB issued SFAS 138, which addresses a
limited number of issues causing implementation difficulties


                                                                              19


<PAGE>


for numerous entities that apply SFAS 133. Ibis does not expect this to have a
material impact on its financial condition or results of operations.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements". This bulletin, as amended, established guidelines for revenue
recognition and was originally effective for periods beginning after March 15,
2000. In June 2000, the SEC announced that the effective date of SAB 101 was
being delayed until no later than the quarter ending December 31, 2000. Ibis
does not expect this to have a material impact on its financial condition or
results of operations as Ibis has complied with SAB 101.

         In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation", an interpretation of APB
Opinion No. 25, "Accounting for Stock Issued to Employees". This interpretation
clarified the application of Opinion 25, among other issues: (a) the definition
of an employee for purposes of applying Opinion 25, (b) the criteria for
determining whether a stock ownership plan qualifies as noncompensatory, (c) the
accounting implications of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for the exchange of stock
compensation awards in a business combination. The Interpretation is effective
July 1, 2000 and the effects of applying the Interpretation are recognized on a
prospective basis. The adoption of this Interpretation did not have a material
impact on its financial condition or results of operations.

       ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The exposure of market risk associated with risk-sensitive instruments
is not material to Ibis, as we do not transact our sales denominated in other
than United States dollars, invest primarily in short-term commercial paper,
hold our investments until maturity and have not entered into hedging
transactions.




20


<PAGE>


               ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                           IBIS TECHNOLOGY CORPORATION

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Financial Statements:
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                         NUMBER
<S>                                                                        <C>
Independent Auditors' Report......................................         22
Balance Sheets as of December 31, 1999 and 2000...................         23
Statements of Operations for the Years Ended
       December 31, 1998, 1999 and 2000...........................         24
Statements of Stockholders' Equity for the Years Ended
       December 31, 1998, 1999 and 2000...........................         25
Statements of Cash Flows for the Years Ended December 31,
       1998, 1999 and 2000........................................         26
Notes to Financial Statements.....................................         27


Schedule:


Schedule II - Valuation and Qualifying Accounts...................        S-1
</TABLE>



                                                                              21


<PAGE>



                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Ibis Technology Corporation:

         We have audited the accompanying balance sheets of Ibis Technology
Corporation as of December 31, 1999 and 2000, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ibis Technology
Corporation at December 31, 1999 and 2000, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States of America.


                                                              KPMG LLP

Boston, Massachusetts
February 2, 2001




22


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                                 BALANCE SHEETS

                           DECEMBER 31, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                         1999               2000
                                                                         ----               ----
<S>                                                               <C>                <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents....................................   $   36,361,621     $   26,366,299
  Accounts receivable, trade, net (notes 3 and 14).............        3,585,824          1,209,916
  Unbilled revenue.............................................        1,469,215            510,500
  Inventories (note 4).........................................        6,876,002         10,932,859
  Prepaid expenses and other current assets....................          333,742            326,103
                                                                  --------------     --------------
          Total current assets.................................       48,626,404         39,345,677
                                                                  --------------     --------------
Property and equipment (notes 5 and 7).........................       14,346,200         25,416,692
  Less: Accumulated depreciation and amortization..............       (9,370,156)       (10,875,048)
                                                                  --------------     --------------
          Net property and equipment...........................        4,976,044         14,541,644
Patents and other assets, net (notes 6 and 7)..................          125,056          2,411,203
                                                                  --------------     --------------
          Total assets.........................................   $   53,727,504     $   56,298,524
                                                                  ==============     ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Capital lease obligation, current (note 7)...................   $        9,557     $       11,593
  Accounts payable.............................................        1,624,451          1,046,960
  Accrued liabilities (note 8).................................        2,148,755          2,718,240
  Deferred revenue (note 9)....................................        1,534,369          2,984,094
                                                                  --------------     --------------
          Total current liabilities............................        5,317,132          6,760,887
Capital lease obligation, noncurrent (note 7)..................           30,073             18,479
                                                                  --------------     --------------
          Total liabilities....................................        5,347,205          6,779,366
                                                                  --------------     --------------
COMMITMENTS AND CONTINGENCIES (NOTES 5, 7, 9 AND 14)

STOCKHOLDERS' EQUITY (NOTES 12 AND 13):
  Undesignated preferred stock, $.01 par value.
    Authorized 2,000,000 shares; none issued...................               --                 --
  Common stock, $.008 par value.
    Authorized 50,000,000 shares; issued 8,172,800 shares and
    8,342,709 shares in 1999 and 2000, respectively............           65,382             66,742
  Additional paid-in capital...................................       63,543,777         66,183,143
  Accumulated deficit..........................................      (15,228,860)       (16,730,727)
                                                                  --------------     --------------
          Total stockholders' equity...........................       48,380,299         49,519,158
                                                                  --------------     --------------
          Total liabilities and stockholders' equity...........   $   53,727,504     $   56,298,524
                                                                  ===============    ==============
</TABLE>



                 See accompanying notes to financial statements.


                                                                              23


<PAGE>



                           IBIS TECHNOLOGY CORPORATION

                            STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


<TABLE>
<CAPTION>
                                                                      1998              1999                2000
                                                                      ----              ----                ----
<S>                                                             <C>                 <C>                <C>
Product sales.............................................      $   3,148,783       $  5,282,165       $  8,173,095
Contract and other revenue (note 10)......................          1,087,434          1,257,235            532,395
Equipment revenue.........................................         11,229,852         10,063,622          5,769,393
                                                                -------------       ------------      -------------

          Total sales and revenue (note 14)...............         15,466,069         16,603,022         14,474,883
                                                                -------------       ------------      -------------


Cost of product sales.....................................          4,581,140          4,643,421          5,824,160
Cost of contract and other revenue........................            976,082            443,078            388,320
Cost of equipment revenue.................................          7,346,592          7,242,126          3,481,516
                                                                -------------       ------------      -------------
          Total cost of sales and revenue.................         12,903,814         12,328,625          9,693,996
                                                                -------------       ------------      -------------
          Gross profit....................................          2,562,255          4,274,397          4,780,887
                                                                -------------       ------------      -------------
Operating expenses:
  General and administrative..............................          1,823,001          1,787,821          1,998,302
  Marketing and selling...................................            470,288          1,015,843          1,639,845
  Research and development................................          1,971,734          1,774,011          4,586,375
                                                                -------------       ------------      -------------
          Total operating expenses........................          4,265,023          4,577,675          8,224,522
                                                                -------------       ------------      -------------
          Loss from operations............................         (1,702,768)          (303,278)        (3,443,635)
                                                                -------------       ------------      -------------
Other income (expense):
  Interest income.........................................            652,305          1,154,598          1,956,664
  Interest expense........................................           (114,241)           (43,280)           (10,031)
  Other...................................................                 --             29,345             (3,609)
                                                                -------------       ------------      -------------
          Total other income..............................            538,064          1,140,663          1,943,024
                                                                -------------       ------------      -------------

          Income (loss) before income taxes...............         (1,164,704)           837,385         (1,500,611)

Income tax expense (note 11)..............................              1,256             10,256              1,256
                                                                -------------       ------------      -------------

          Net income (loss)...............................      $  (1,165,960)      $    827,129      $  (1,501,867)
                                                                =============       ============      =============

Net income (loss) per common share:
Basic.....................................................      $       (0.17)      $       0.11      $       (0.18)
                                                                =============       ============      =============
Diluted...................................................      $       (0.17)      $       0.11      $       (0.18)
                                                                =============       ============      =============

Weighted average number of common shares outstanding:
Basic.....................................................          6,759,870          7,403,803          8,285,893
                                                                =============       ============      =============
Diluted...................................................          6,759,870          7,818,151          8,285,893
                                                                =============       ============      =============
</TABLE>


                 See accompanying notes to financial statements.


24


<PAGE>



                           IBIS TECHNOLOGY CORPORATION

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


<TABLE>
<CAPTION>
                                                       ADDITIONAL                         TOTAL
                                          COMMON        PAID-IN         ACCUMULATED    STOCKHOLDERS'
                                           STOCK        CAPITAL           DEFICIT        EQUITY


<S>                                      <C>         <C>                <C>             <C>
BALANCES AT DECEMBER 31, 1997..........  $  53,030   $  35,593,999      $ (14,890,029)  $ 20,757,000

Exercise of stock options..............      1,334       1,002,691                 --      1,004,025
Exercise of warrants...................        504          13,374                 --         13,878
Net loss...............................         --              --         (1,165,960)    (1,165,960)
                                        ----------   -------------      -------------   ------------

BALANCES AT DECEMBER 31, 1998..........     54,868      36,610,064        (16,055,989)    20,608,943

Exercise of stock options..............      2,386       1,401,877                 --      1,404,263
Exercise of warrants...................        128           1,837                 --          1,965
Common stock issued, net of issuance
costs..................................      8,000      25,529,999                 --     25,537,999
Net income.............................         --              --            827,129        827,129
                                        ----------   -------------      -------------   ------------

BALANCES AT DECEMBER 31, 1999..........     65,382      63,543,777        (15,228,860)    48,380,299

Exercise of stock options..............        960         670,865                 --        671,825
Employee Stock Purchase Plan...........        113         165,393                 --        165,506
Exercise of warrants...................        287          23,108                 --         23,395
Issuance of warrants...................         --       1,780,000                 --      1,780,000
Net loss...............................         --              --         (1,501,867)    (1,501,867)
                                        ----------   -------------      -------------   ------------

BALANCES AT DECEMBER 31, 2000.......... $   66,742   $  66,183,143       $(16,730,727)  $ 49,519,158
                                        ==========   =============       ============   ============
</TABLE>



                 See accompanying notes to financial statements.


                                                                              25


<PAGE>



                           IBIS TECHNOLOGY CORPORATION

                            STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


<TABLE>
<CAPTION>
                                                                1998              1999             2000
                                                                ----              ----             ----
<S>                                                      <C>                  <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)..................................... $  (1,165,960)       $  827,129    $  (1,501,867)
  Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
     Depreciation and amortization......................     1,671,413         1,310,896        1,662,538
     Gain (loss) on sale of equipment...................            --             2,550           (3,609)
     Changes in operating assets and liabilities:
       Accounts receivable, trade.......................       374,548        (3,182,013)       2,375,908
       Unbilled revenue.................................    (2,217,837)          979,112          958,715
       Inventories......................................     1,758,003        (3,754,918)      (4,056,857)
       Prepaid expenses and other current assets........       116,729           (39,512)           7,639
       Accounts payable.................................      (280,260)        1,213,386         (577,491)
       Accrued liabilities and deferred revenue.........       243,731           942,702        2,019,210
                                                         -------------     -------------    -------------
          Net cash provided by (used in) operating
                activities..............................       500,367        (1,700,668)         884,186
                                                         -------------     -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment, net..............    (1,645,607)       (1,171,192)     (11,211,689)
  Other assets..........................................        63,216           (22,854)        (518,987)
                                                         -------------     -------------    -------------
          Net cash used in investing activities.........    (1,582,391)       (1,194,046)     (11,730,676)
                                                         -------------     -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments of capital lease obligations.................      (426,336)         (507,258)          (9,558)
  Proceeds from sales of common stock, net of
      issuance costs....................................            --        25,537,999               --
  Exercise of stock options, warrants
      and Employee Stock Purchase Plan..................     1,017,903         1,406,228          860,726
                                                         -------------     -------------    -------------
          Net cash provided by financing activities.....       591,567        26,436,969          851,168
                                                         -------------     -------------    -------------
          Net increase (decrease) in cash and cash
                 equivalents............................      (490,457)       23,542,255       (9,995,322)
Cash and cash equivalents, beginning of year............    13,309,823        12,819,366       36,361,621
                                                         -------------     -------------    -------------
Cash and cash equivalents, end of year.................. $  12,819,366     $  36,361,621    $  26,366,299
                                                         =============     =============    =============

Supplemental disclosures of cash flow information:
  Cash paid during the year for interest................ $     364,241     $      43,280    $      10,031
                                                         =============     =============    =============
Supplemental disclosures of noncash investing and
  financing activities:
   Capital lease obligations incurred................... $      66,447     $          --    $          --
                                                         =============     =============    =============
   Issuance of warrants for license..................... $          --     $          --    $   1,780,000
                                                         =============     =============    =============
</TABLE>



                 See accompanying notes to financial statements.


26


<PAGE>



                           IBIS TECHNOLOGY CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 2000


(1) NATURE OF BUSINESS AND ORGANIZATION

         Ibis Technology Corporation (the "Company") was incorporated in October
1987 for the purpose of supplying silicon-on-insulator (SOI) wafers formed by
SIMOX (Separation by Implantation of Oxygen) technology. SIMOX-SOI wafers are
manufactured by the Company using a specialized oxygen ion implanter, which was
developed and manufactured by the Company and is integrated with other
specialized processes and characterization equipment. The Company is the leading
manufacturer of high current oxygen implanters and began selling these oxygen
implanters in 1996.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a) CASH AND CASH EQUIVALENTS

         Cash equivalents represent highly liquid investments with original
maturities of three months or less.

         (b) INVENTORIES

         Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) cost method.

         (c) PROPERTY AND EQUIPMENT AND IMPAIRMENT OF LONG-LIVED ASSETS

         Property and equipment is stated at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of the respective
assets, ranging from three to eight years. Amortization is provided using the
straight-line method over the life of the lease, ranging from three and one-half
to five years.

         The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

         (d) PATENTS AND OTHER ASSETS

         Other assets consist principally of deposits, prepaid royalties and
licenses. Patents and prepaid royalties are amortized over five years using the
straight-line method. Licenses are amortized over seven years using the
straight-line method.

         (e) REVENUE RECOGNITION

         Product sales and the sales of spare parts are recognized upon
shipment. For equipment sales, the Company previously used the
percentage-of-completion method for recognizing revenue because there were
significant engineering effort and milestone payments involved. The Company is
now building its equipment to stock and recognizes revenue upon shipment.
Revenue derived from services is recognized upon performance. Contract revenue
is recognized on the percentage-of-completion method. Provisions for anticipated
losses are made in the period in which such losses become determinable. Unbilled
revenue under customer contracts represents revenue earned under the
percentage-of-completion method but not yet billable


27


<PAGE>

                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


under the terms of the contract. These amounts are billable based on the terms
of the contract, which can include shipment of the product, achievement of
milestones or completion of the contract.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements". This bulletin, as amended, established guidelines for revenue
recognition and was originally effective for periods beginning after March 15,
2000. In June 2000 the SEC announced that the effective date of SAB 101 was
delayed until the quarter ended December 31, 2000. The Company does not expect
this to have a material impact on its financial condition or results of
operations as the Company has complied with SAB 101.

         Government contracts are performed under negotiated overhead rates and
are subject to audit and retroactive adjustments of amounts paid to the Company.

         (f) RESEARCH AND DEVELOPMENT

         Research and development costs are charged to expense as incurred.
Research and development costs funded by contracts are included as a component
of contract revenue.

         (g) NET INCOME (LOSS) PER COMMON SHARE

         Net income (loss) per share of common stock is computed based upon the
weighted average number of shares outstanding during each period and including
the dilutive effect, if any, of stock options and warrants. SFAS 128 requires
the presentation of basic and diluted earnings (loss) per share for all periods
presented. As the Company was in a net loss position for 1998 and 2000, common
stock equivalents of 246,537 and 471,969 for the years ended December 31, 1998,
and 2000, respectively, were excluded from the diluted loss per share
calculation as they would be antidilutive. As a result, diluted loss per share
is the same as basic loss per share for 1998 and 2000.

         The reconciliation of the denominators of the basic and diluted net
income (loss) per common share for the Company's net income (loss) is as
follows:

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                              1998              1999                 2000
                                                              ----              ----                 ----

<S>                                                       <C>               <C>                 <C>
Basic net income (loss).................................. $ (1,165,960)     $    827,129        $  (1,501,867)
                                                          ============      ============        =============
Weighted average common shares outstanding-
  basic..................................................    6,759,870         7,403,803            8,285,893
Net additional common shares upon assumed
  exercise of stock options and warrants.................           --           414,348                   --
                                                          ------------      ------------        -------------
Weighted average common shares outstanding
  diluted................................................    6,759,870         7,818,151            8,285,893
                                                          ============      ============        =============
Net income (loss) per common share
  Basic.................................................. $      (0.17)     $       0.11        $       (0.18)
                                                          ============      ============        =============
  Diluted................................................ $      (0.17)     $       0.11        $       (0.18)
                                                          ============      ============        =============
</TABLE>

         (h) ISSUANCE COSTS

         Issuance costs of common stock are netted against additional paid-in
capital.


28
<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)



         (i) USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results may differ from these
estimates.

         (j) FAIR VALUE OF FINANCIAL INSTRUMENTS

         Financial instruments of the Company consist of cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities and
capital lease obligations. The carrying amount of these financial instruments
approximates fair value.

         (k) NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") that
establishes accounting and reporting requirements for derivative instruments and
for hedging activities. SFAS 133 requires companies to recognize all derivatives
as either assets or liabilities in the statement of financial position at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge of the exposures to changes in fair value of recognized
assets or liabilities or unrecognized firm commitments, a hedge of the exposure
to variable cash flows of a forecasted transaction, or a hedge of the foreign
currency exposure of a net investment in a foreign operation, unrecognized firm
commitments, an available-for-sale security or a foreign-currency denominated
forecasted transaction. The accounting for changes in fair value under SFAS 133
depends on the intended use of the derivative and the resulting designation. In
June 1999, the FASB decided that the effective date for adopting the
requirements of SFAS 133 should be delayed to fiscal years beginning after June
15, 2000. This delay, published as SFAS 137, applies to quarterly and annual
financial statements. In June 2000, the FASB issued SFAS 138, which addresses a
limited number of issues causing implementation difficulties for numerous
entities that apply SFAS 133. Ibis does not expect these statements to have a
material impact on its financial condition or results of operations.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements". This bulletin, as amended, established guidelines for revenue
recognition and was originally effective for periods beginning after March 15,
2000. In June 2000, the SEC announced that the effective date of SAB 101 was
being delayed until no later than the quarter ending December 31, 2000. The
Company does not expect this to have a material impact on its financial
condition or results of operations as the Company has complied with SAB 101.

         In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation", an interpretation of APB
Opinion No. 25, "Accounting for Stock Issued to Employees". This interpretation
clarified the application of Opinion 25, among other issues: (a) the definition
of an employee for purposes of applying Opinion 25, (b) the criteria for
determining whether a stock ownership plan qualifies as noncompensatory, (c) the
accounting implications of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for the exchange of stock
compensation awards in a business combination. The Interpretation is effective
July 1, 2000 and the effects of applying the Interpretation are recognized on a
prospective basis. The adoption of this Interpretation did not have a material
impact on its financial condition or results of operations.


                                                                              29


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

(3) ACCOUNTS RECEIVABLE

         Accounts receivable consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                      1999              2000
                                                                      ----              ----
         <S>                                                     <C>                <C>
         Accounts receivable, trade........................      $  3,650,824       $  1,274,916
         Less: Allowance for doubtful accounts.............           (65,000)           (65,000)
                                                                 ------------       ------------
                                                                 $  3,585,824       $  1,209,916
                                                                 ============       ============
</TABLE>

(4) INVENTORIES

         Inventories consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                      1999              2000
                                                                      ----              ----
         <S>                                                     <C>                <C>
         Raw materials.....................................      $    129,786       $    392,708
         Work in process...................................            46,639            332,844
         Finished goods....................................            28,685            218,210
                                                                 ------------       ------------
              Subtotal wafer inventory.....................           205,110            943,762
         Equipment inventory...............................         6,670,892          9,989,097
                                                                 ------------       ------------
              Total inventories............................      $  6,876,002       $ 10,932,859
                                                                 ============       ============
</TABLE>

(5) PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                      1999              2000
                                                                      ----              ----
         <S>                                                     <C>                <C>
         Machinery and equipment...........................      $ 12,373,162       $ 20,047,351
         Furniture and fixtures............................           357,416            395,017
         Leasehold improvements............................         1,534,637          2,765,393
         Construction in progress..........................            80,985          2,208,931
                                                                 ------------       ------------
                                                                 $ 14,346,200       $ 25,416,692
                                                                 ============       ============
</TABLE>

         Fixed assets subject to capital leases at December 31, 1999 and 2000
were $2,106,447. Accumulated depreciation for fixed assets subject to capital
leases was $2,066,818 and $2,076,374 in 1999 and 2000, respectively.

         Construction in progress at December 31, 2000 and December 31, 1999,
includes the cost for different Class 10 clean room expansion projects.


         At December 31, 2000, the Company had commitments to purchase
approximately $4,243,000 in material or subassemblies to be used in normal
operations and approximately $921,000 in capital equipment purchase commitments.

(6) OTHER ASSETS

         In December 2000, the Company entered into a royalty-bearing license
agreement which gives the Company the right to manufacture SIMOX-SOI wafers
using the licensed process. Warrants were issued in connection with this
agreement. The cost of the license agreement, including cash paid and the fair
value of the warrants issued, is $2,280,000 and is included in other assets at
December 31, 2000 (see note 13 (c)).


30


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


(7) LEASE COMMITMENTS

         In November 1995, the Company entered into a sale-leaseback transaction
for an Ibis 1000 implanter. Warrants to purchase 35,478 shares of common stock
at $5.75 per share were issued in connection with this capital lease. The
warrants, which were valued at $106,434 at the time of issuance, have been
recorded in other assets as deferred financing costs and were amortized over 48
months, the initial term of the lease. This capital lease terminated in 1999 and
the Company exercised the lease buyout option and purchased the implanter for
approximately $241,000.


         In January 1997, the Company entered into a non-cancelable operating
lease for its office and manufacturing facility expiring in 2003 with a
five-year renewal option. In April 2000, the Company entered into a
non-cancelable operating lease for an additional manufacturing facility expiring
in 2005 with a five-year renewal option. The Company also leases certain
equipment under non-cancelable operating leases expiring through 2004, as well
as equipment used in operations under non-cancelable capital leases expiring
through 2003. Future minimum lease payments under non-cancelable leases at
December 31, 2000, are as follows:

<TABLE>
<CAPTION>
                                                                   CAPITAL         OPERATING
                                                                    LEASES           LEASES
        Year ending:
        <S>                                                    <C>               <C>
        2001..................................................  $   13,284        $  587,506
        2002..................................................      13,284           562,672
        2003..................................................       7,749           548,282
        2004..................................................          --           198,250
        2005..................................................          --            82,300
                                                                ----------        ----------
              Total minimum lease payments....................      34,317        $1,979,010
                                                                                  ==========
        Less amount representing interest.....................      (4,245)
        Less current maturities...............................     (11,593)
                                                                ----------
        Capital lease obligations, less current maturities....  $   18,479
                                                                ==========
</TABLE>


         Interest was calculated using an imputed interest rate of 14%.

         Rent expense was approximately $302,000, $332,000 and $454,000 for the
years ended December 31, 1998, 1999 and 2000, respectively.

(8) ACCRUED LIABILITIES

         Current accrued liabilities were as follows at December 31:

<TABLE>
<CAPTION>
                                                                        1999             2000
                                                                        ----             ----
         <S>                                                       <C>             <C>
         Billings in excess of costs on contracts...............   $   347,919     $   886,559
         Accrued vacation.......................................       197,819         283,664
         Accrued warranty.......................................       751,260         398,580
         Accrued payroll........................................       487,228         404,552
         Accrued expenses.......................................       364,529         744,885
                                                                   -----------     -----------
                Total...........................................   $ 2,148,755     $ 2,718,240
                                                                   ===========     ===========
</TABLE>

(9) DEFERRED REVENUE

         During September 1995, the Company entered into a strategic business
development agreement with a customer whereby the customer advanced to the
Company the required funding to build an Ibis 1000 implanter, whose SIMOX-SOI
wafer manufacturing capacity would be dedicated to serving this customer's
production requirements over a multi-year period, with wafer prices being
reduced to repay this funding. Revenue is recognized as wafers are shipped and
discounts are earned by the customer.


                                                                              31


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


         In April 2000, the Company received funding from a customer for a
capacity reservation. This capacity reservation will allow this customer to
utilize a purchase credit toward an additional implanter, wafers or spare parts.

         The funding amounts for which revenue has not been earned are included
in deferred revenue.

(10) LICENSE AGREEMENTS

         The Company obtained an exclusive sublicense in the field of oxygen
implantation to the proprietary beam scanning system developed by a consultant
to the Company during the development of the first Ibis 1000 implanter.

 The beam scanning system sublicense agreement also grants the Company certain
rights to further sublicense the technology for certain applications. The
Company received $72,000, $181,522 and $141,044 in 1998, 1999 and 2000,
respectively, for non-refundable option fees or royalty fees in accordance with
non-exclusive sublicense agreements.

         During 1999, Ibis completed an agreement to license its standard and
Advantox(R) SIMOX-SOI wafer fabrication process. The agreement consists of an
initial royalty fee and future royalties based on a percentage of SIMOX-SOI
wafer sales. In 2000, the Company recognized no royalty fee income from this
agreement. In 1999, the Company recognized royalty fee income of $630,000.

(11) INCOME TAXES

         Income tax expense consists of state income taxes for each year and
federal alternative minimum taxes for 1999. No federal tax benefit was recorded
in 1998, 1999 or 2000 due to the existence of unused net operating loss
carryforwards.

         The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are presented below at December
31:

<TABLE>
<CAPTION>
                                                                            1999             2000
                                                                            ----             ----
         <S>                                                            <C>              <C>
         Deferred tax assets:
           Net operating loss carryforwards........................     $ 7,418,000      $ 10,110,000
           Accruals not currently deductible for tax purposes......         100,000           152,000
           General business tax credit carryforwards...............         507,000         1,022,000
           Other...................................................         496,000           374,000
           Less: Valuation allowance...............................      (8,440,000)      (11,336,000)
                                                                        -----------      ------------
                   Net deferred tax assets.........................          81,000           322,000
         Deferred tax liabilities:
           Property and equipment, principally due to differences in
               depreciation........................................         (81,000)         (322,000)
                                                                        ------------     ------------
                                                                        $        --      $         --
                                                                        ============     ============
</TABLE>


         As a result of the losses incurred to date by the Company, a 100%
valuation allowance has been applied against the Company's deferred tax assets.
The amount recorded as net deferred tax assets as of December 31, 1999 and 2000
represents the tax benefits of existing deductible temporary differences or
carryforwards that are more likely than not to be realized through the
generation of sufficient future taxable income within the carryforward period.
The net change in the total valuation allowance was an increase of $659,000 and
$2,896,000 for the years ended December 31, 1999 and 2000, respectively.

         The Company had federal net operating loss and general business credit
carryovers of approximately $27,235,000 and $598,000, respectively, at December
31, 2000, that may be used to offset future taxable income, if any, through
2020. Deferred tax assets and related valuation allowance of $3,011,000 related
to the net operating loss carryforward results from the exercise of employee
stock options, the tax benefit of which,


32


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


when recognized, will be accounted for as a credit to additional paid-in capital
rather than a reduction of income tax expense. Net operating loss carryforwards
and other tax attributes may be limited in the event of certain changes in
ownership interests.

(12) CAPITALIZATION

         The Company has 50,000,000 shares of common stock and 2,000,000 shares
of preferred stock ("Undesignated Preferred Stock") authorized. At December 31,
2000, 2,500, 168,063, 648,388, and 201,392 common shares were reserved for
issuance upon exercise of options outstanding or available for grant under the
Company's 1988 Stock Option Plan, the 1993 Employee, Director and Consultant
Stock Option Plan, 1997 Employee, Director and Consultant Stock Option Plan, and
for exercises of warrants, respectively.

         On August 6, 1999, the Company completed a public offering of 1,000,000
shares of common stock in an offering underwritten by SoundView Technology
Group. The shares were included in a shelf registration statement filed with the
Securities and Exchange Commission on July 8, 1999 and declared effective on
July 26, 1999. Net proceeds from the offering were approximately $25,538,000
after deducting approximately $1,462,000 for underwriting discounts, commissions
and other associated expenses.


(13) STOCK PLANS AND WARRANTS

         (a) STOCK OPTION PLANS

         In December 1993, the Board of Directors and stockholders approved the
adoption of the Company's 1993 Employee, Director and Consultant Stock Option
Plan which provided for the issuance of options to purchase up to 250,000 shares
of common stock of the Company to employees, consultants and non-employee
directors. In May 1996, the stockholders increased to 750,000 shares the
aggregate number of shares that may be granted under this plan.

         In October 1997, the Board of Directors approved the adoption of the
Company's 1997 Employee, Director and Consultant Stock Option Plan (the "1997
Plan") which provides for the issuance of options to purchase up to 750,000
shares of common stock of the Company to employees, consultants and non-employee
directors. The stockholders approved the Plan at the May 1998 Annual
Stockholders Meeting. In February 2001, the Board of Directors approved an
amendment to the 1997 Plan to increase the aggregate number of shares reserved
for issuance to 1,350,000. This amendment will be submitted to the stockholders
of the Company for their approval at the May 2001 Annual Stockholders Meeting.

         A summary of stock option activity under the plans is as follows:

<TABLE>
<CAPTION>
                                                                        NUMBER         WEIGHTED AVERAGE
                                                                          OF            EXERCISE PRICE
                                                                         SHARES           OF SHARES
                                                                       ---------          ---------
         <S>                                                          <C>                 <C>
         Options outstanding at December 31, 1997                       782,529           $   6.84
           Granted                                                      306,950               8.72
           Exercised                                                   (190,247)              6.42
           Cancelled                                                   (115,109)              6.46
                                                                       ---------          --------
         Options outstanding at December 31, 1998                       784,123               7.73
           Granted                                                      225,750              17.50
           Exercised                                                   (323,602)              6.71
           Cancelled                                                    (32,404)              7.13
                                                                       ---------          --------
         Options outstanding at December 31, 1999                       653,867              11.64
           Granted                                                      264,000              41.21
           Exercised                                                   (127,668)              8.39
           Cancelled                                                    (11,711)             20.62
                                                                       ---------          --------

         Options outstanding at December 31, 2000                       778,488           $  22.06
                                                                       ========           ========
         Options exercisable at December 31, 2000                       279,507           $  10.74
                                                                       ========           ========
</TABLE>


                                                                              33


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)



         The following table summarizes information concerning outstanding and
exercisable options as of December 31, 2000:

<TABLE>
<CAPTION>
                                    OPTIONS OUTSTANDING                                 OPTIONS EXERCISABLE
                  -----------------------------------------------------        ------------------------------------
                                           WEIGHTED
                                            AVERAGE             WEIGHTED                              WEIGHTED
                                           REMAINING            AVERAGE                                 AVERAGE
    RANGE OF            NUMBER            CONTRACTUAL         OUTSTANDING          NUMBER              EXERCISE
EXERCISE PRICES       OUTSTANDING         LIFE (YEARS)        OPTION PRICE      EXERCISABLE             PRICE
---------------       -----------         -----------         ------------     ------------          ------------
<S>                       <C>                  <C>              <C>               <C>                    <C>
$   .08  - 6.00             16,834             5.5              $   4.88               16,834            $  4.88
$  6.01  - 9.00            117,119             6.6              $   7.78               66,777            $  7.68
$  9.01  -13.50            320,450             7.6              $  10.68              172,949            $ 10.04
$ 13.51 - 20.25             46,775             9.6              $  16.80                2,187            $ 18.27
$ 20.26 - 30.37             11,760             7.7              $  23.87               10,260            $ 23.38
$ 30.38 - 45.55             89,250             9.3              $  36.31                9,500            $ 36.30
$ 45.56 - 68.32            170,300             9.0              $  46.59                1,000            $ 46.00
$ 68.33 - 98.71              6,000             9.2              $  86.60                   --            $  --
                          --------                                                 ----------
                           778,488                                                    279,507
                          ========                                                 ==========
</TABLE>


         The Company accounts for its stock option plan in accordance with APB
No. 25 and related interpretations. Had compensation costs for the stock option
plans been determined based on the fair value at the grant dates for awards in
1998, 1999 and 2000 consistent with the provisions of SFAS No. 123, the
Company's net income (loss) and net income (loss) per common share would have
been increased or decreased to the following pro forma amounts at December 31:

<TABLE>
<CAPTION>
                                                            1998              1999                 2000
                                                            ----              ----                 ----
       <S>                              <C>            <C>                 <C>                <C>
       Net income (loss)                As reported    $ (1,165,960)       $  827,129         $  (1,501,867)
                                        Pro forma      $ (2,601,113)       $ (665,621)        $  (5,522,211)

       Net income (loss) per share      As reported    $      (0.17)       $     0.11         $       (0.18)
                                        Pro forma      $      (0.38)       $    (0.09)        $       (0.67)
</TABLE>


         The per share weighted-average fair value of each option granted during
1998, 1999 and 2000, was $5.78, $9.95 and $26.18, respectively, on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions: 1998 - expected volatility of 98.55%, risk-free interest
rate of 5.50%, and an expected life of 3 years; 1999 - expected volatility of
79.47%, risk-free interest rate of 5.50%, and an expected life of 3 years; 2000-
expected volatility of 96.96%, risk-free interest rate of 5.06%, and an expected
life of 3 years. The expected dividend yield rate for 1998, 1999 and 2000 is
zero.

         Pro forma net loss reflects only options granted in 1995 through 2000.
Therefore, the full impact of calculating compensation costs for stock options
under SFAS No. 123 is not reflected because compensation costs for options
granted prior to January 1, 1995 are not considered.

         (b) EMPLOYEE STOCK PURCHASE PLANS

         On February 24, 2000, the Board of Directors adopted the Ibis
Technology Corporation 2000 Employee Stock Purchase Plan (the "Purchase Plan")
pursuant to which a total of 300,000 shares of the Company's Common Stock may be
sold to eligible employees of the Company at a 15% discount from the market
value of the shares. Under the terms of the Purchase Plan, employees may elect
to have up to 15% of their base earnings withheld to purchase these shares
during each offering period, which is a six month period. The purchase price
under the Purchase Plan is 85% of the lesser of the market price on the
beginning or the ending of the offering period. Approximately 55% of eligible
employees participated in the Purchase Plan in the initial offering period.
During 2000, the Company sold 14,161 shares to employees under the Purchase
Plan. The stockholders approved this plan at the May 2000 Annual Stockholders
Meeting.


34


<PAGE>

                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


         (c) WARRANTS

         During 2000, 38,263 Warrants were exercised. Since some of these
Warrants were exercised on a cashless basis, 35,840 shares of Common Stock were
issued. At December 31, 2000, there were additional warrants outstanding to
purchase 1,392 shares of common stock at $8.40 per share.

         In December 2000, the Company issued warrants to purchase 200,000
shares of common stock at $22.30 per share in connection with a license
agreement. The value of the warrants is included in other assets (see note 6)
and was calculated using the Black-Scholes option-pricing model with the
following assumptions: expected volatility of 93.69%, risk-free interest rate of
5.50%, and an expected life of 5 years.

(14) SIGNIFICANT CUSTOMERS AND CONCENTRATION OF BUSINESS RISK

         The Company sells its products to a limited number of semiconductor and
optical components manufacturers primarily in the United States and the United
Kingdom.

         Government sales and other significant customers are shown in dollar
amounts and as a percentage of total revenue as follows:

<TABLE>
<CAPTION>
                                 GOVERNMENT                               OTHER                     TOTAL
                             -----------------                     --------------------     --------------------
                                                    SIGNIFICANT
          YEAR ENDED         AMOUNT        %         CUSTOMERS     AMOUNT           %          AMOUNT        %
          ----------         ------     ------       ----------    -------         ----     -----------     ----
     <S>                   <C>               <C>         <C>       <C>             <C>      <C>             <C>
     December 31, 1998     $ 1,268,000       8%          2         $12,324,000     80%      $13,592,000     88%
     December 31, 1999     $   608,000       4%          2         $13,438,000     81%      $14,046,000     85%
     December 31, 2000     $   678,000       5%          2         $11,329,000     79%      $12,007,000     84%
</TABLE>

         Accounts receivable from government sales amounted to approximately
$2,000 and $45,000 at December 31, 1999 and 2000, respectively. Accounts
receivable from significant customers amounted to $3,473,000, and $932,000 at
December 31, 1999 and 2000, respectively.

         Export sales to unaffiliated customers in 1998, 1999 and 2000 were 32%,
17% and 47% of total revenues, respectively.

         During 1998, 1999 and 2000, the Company purchased substantially all of
its conventional bulk silicon wafers and certain raw materials, components and
subassemblies for its implanters from a limited group of suppliers. Disruption
or termination of certain of these sources could occur and such disruptions
could have a material adverse effect on the Company's business and results of
operations.

(15) INDUSTRY SEGMENTS

         The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" during 1998. SFAS No. 131 established the
standards for reporting information about operating segments in annual financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders.

         The Company's reportable segments are SIMOX Wafer Products, SIMOX
Equipment and Other Products or Services. For purposes of segment reporting,
equipment spares and field service revenue are combined and reported as SIMOX
equipment. Government contracts, other services and license revenue are combined
and reported as other products or services. In previous financial statements
spares and field service revenue were included in the Other Products or Services
segment. This reclassification was made in the third quarter of 1999 and all
prior periods presented reflect this reclassification.


                                                                              35
<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)


         The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies. The Company
generally evaluates operating performance based on income or loss before
interest and taxes.

         The table below provides information for the years ended December 31,
1998, 1999 and 2000 pertaining to the Company's three industry segments.

<TABLE>
<CAPTION>
                                             SIMOX
                                              WAFER              SIMOX           OTHER PRODUCTS
                                             PRODUCTS          EQUIPMENT           OR SERVICES                TOTAL
<S>                                       <C>                  <C>                <C>                     <C>
NET REVENUES
Year Ended December 31, 1998              $  3,148,783         $11,229,852        $  1,087,434            $ 15,466,069
Year Ended December 31, 1999                 5,282,165          10,063,622           1,257,235              16,603,022
Year Ended December 31, 2000                 8,173,095           5,769,393             532,395              14,474,883

OPERATING INCOME (LOSS)
Year Ended December 31, 1998               (2,023,241)           1,939,025             204,449                 120,233
Year Ended December 31, 1999                  252,874              417,512             814,157               1,484,543
Year Ended December 31, 2000                  774,010           (2,363,418)            144,076              (1,445,332)

ASSETS
December 31, 1998                           5,411,282            5,296,619             319,200              11,027,101
December 31, 1999                           5,145,320           10,912,431             645,291              16,703,042
December 31, 2000                          17,587,720           11,478,915              56,686              29,123,321

CAPITAL EXPENDITURES

Year Ended December 31, 1998                1,251,522              293,280                  --               1,544,802
Year Ended December 31, 1999                  834,385               38,375                  --                 872,760
Year Ended December 31, 2000               10,110,169              812,850                  --              10,923,019


DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
Year Ended December 31, 1998                1,451,810              106,460              21,036               1,579,306
Year Ended December 31, 1999                1,104,052               62,145               5,503               1,171,700
Year Ended December 31, 2000                1,393,259              159,233               3,656               1,556,148
</TABLE>


36


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

         The table below provides the reconciliation of reportable segment
  operating income (loss), assets, capital expenditures, and depreciation and
  amortization to the Company's totals.

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,

SEGMENT RECONCILIATION                                           1998                1999                2000
----------------------                                           ----                ----                ----
<S>                                                             <C>                 <C>               <C>
Income (Loss) Before Income Taxes:
    Total operating income (loss) for
       reportable segments                                      $    120,233        $ 1,484,543       $  (1,445,332)
    Corporate general & administrative expenses                   (1,823,001)        (1,787,821)         (1,998,303)
    Net other income                                                 538,064          1,140,663           1,943,024
                                                                ------------        -----------      --------------
    Income (loss) before income taxes                             (1,164,704)           837,385          (1,500,611)
                                                                ============        ===========      ==============

Assets:
    Total assets for reportable segments                          11,027,101         16,703,042          29,123,321
    Cash & cash equivalents not allocated
       to segments                                                12,819,366         36,361,621          26,366,299
    Other unallocated assets                                         460,851            662,841             808,904
                                                                ------------        -----------      --------------
    Total assets                                                  24,307,318         53,727,504          56,298,524
                                                                ============        ===========      ==============

Capital Expenditures:
    Total capital expenditures for
       reportable segments                                         1,544,802            872,760          10,923,019
    Corporate capital expenditures                                   100,805            298,432             288,670
                                                                ------------        -----------      --------------
    Total capital expenditures                                     1,645,607          1,171,192          11,211,689
                                                                ============        ===========      ==============

Depreciation and Amortization:
    Total depreciation & amortization for
       reportable segments                                         1,579,306          1,171,700           1,556,148
    Corporate depreciation & amortization                             92,107            139,196             106,390
                                                                ------------        -----------      --------------
    Total depreciation & amortization                              1,671,413          1,310,896           1,662,538
                                                                ============        ===========      ==============
</TABLE>


                                                                              37


<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

         The Response to this item is incorporated by reference from the
discussion responsive thereto under the captions "Management" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement for
the 2001 Annual Meeting of Stockholders.


ITEM 11. EXECUTIVE COMPENSATION

         The response to this item is incorporated by reference from the
discussion responsive thereto under the caption "Executive Compensation" in the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The response to this item is incorporated by reference from the
discussion responsive thereto under the caption ""Share Ownership" in the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The response to this item is incorporated by reference from the
discussion responsive thereto under the captions "Certain Transactions" and
"Executive Compensation--Employment Contracts and Change of Control
Arrangements" in the Company's Proxy Statement for the 2001 Annual Meeting of
Stockholders.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM   8-K

ITEM 14(a).       The following documents are filed as part of this annual
                  report on Form 10-K.

ITEM 14(a)(1).    See "Index to Financial Statements and Financial Statement
 AND (2)          Schedule" at Item 8 to this Annual Report on Form 10-K.
                  Other financial statement schedules have not been included
                  because they are not applicable or the information is included
                  in the financial statements or notes thereto.


38


<PAGE>


ITEM 14(a)(3)     EXHIBITS

                  The following is a list of exhibits filed as part of this
                  Annual Report on Form 10-K.

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                        DESCRIPTION
           <S>         <C>
              3.1   -  Restated Articles of Organization of Registrant (Filed as
                       Exhibit 3.1 to the Company's Quarterly Report on
                       Form 10-Q for the Quarter Ended September 30, 2000 and
                       incorporated herein by reference)
            3.1.1   -  Articles of Amendment to the Restated Articles of
                       Organization of the Registrant (Filed as Exhibit 3.1.1 to
                       the Company's Quarterly Report on Form 10-Q for the
                       Quarter Ended September 30, 2000 and incorporated herein
                       by reference)
            3.1.2   -  Articles of Amendment to the Restated Articles of
                       Organization of the Registrant (Filed as Exhibit 3.1.2 to
                       the Company's Quarterly Report on Form 10-Q for the
                       Quarter Ended September 30, 2000 and incorporated herein
                       by reference)
            * 3.2   -  Restated By-Laws of the Registrant, as amended (Filed as
                       Exhibit 3.2)
            * 4.1   -  Article 4 of Restated Articles of Organization (Filed as
                       Exhibit 4.1)
            * 4.2   -  Form of Common Stock Certificate (Filed as Exhibit 4.2)
            * 4.3   -  Form of Redeemable Warrant Certificate (Filed as Exhibit
                       4.3)
            * 4.4   -  Amended and Restated Shareholders Agreement dated as of
                       August 17, 1989, as amended, among the Registrant and
                       certain holders of Common Stock (Filed as Exhibit 4.4)
            *10.1   -  Master Agreement, dated as of August 7, 1992, among the
                       Registrant, Dr. Hilton Glavish, and Zimec, Inc. (Filed as
                       Exhibit 10.1)
            *10.2   -  Sublicense Agreement, dated December 21, 1993, among the
                       Registrant, Dr. Hilton Glavish, and Zimec, Inc. (Filed as
                       Exhibit 10.2)
           *+10.3   -   Business Development Agreement, dated as of July 15,
                       1994, between the Registrant and Mitsubishi Materials
                       Corporation (Filed as Exhibit 10.3)
            *10.4   -  Lease Agreement, dated December 22, 1987, as amended,
                       between the Registrant and Thomas J. Flatley d/b/a The
                       Flatley Company  ("Flatley") (Filed as Exhibit 10.4)
            10.4A   -  Fifth Amendment to Lease Agreement, dated February 4,
                       1997 between the Registrant and Flatley (Filed as Exhibit
                       10.4 to the Registrant's Quarterly Report on Form 10-Q
                       for the Quarter ended March 31, 1997 and Incorporated
                       herein by reference).
            *10.5   -  Master Lease Agreement, dated September 14, 1993, between
                       the Registrant and Comdisco, Inc. ("Comdisco") (Filed as
                       Exhibit 10.5)
            *10.6   -  Warrant Agreement, dated as of October 26, 1993, as
                       amended, between the Registrant and Comdisco (Filed as
                       Exhibit 10.6)
            *10.7   -  Warrant, dated November 15, 1990, as amended, issued by
                       the Registrant to Phoenix Venture Incorporated (Filed as
                       Exhibit 10.7)
            *10.8   -  Master Equipment Lease Agreement, dated as of September
                       22, 1993, as amended, between the Registrant and
                       Financing for Science International, Inc. ("FSI"), as
                       assigned to General Electric Capital Corporation as of
                       April 29, 1994 (Filed as Exhibit 10.8)
            *10.9   -  Warrant, dated October 1, 1993, issued by the Registrant
                       to FSI (Filed as Exhibit 10.9)
           *10.10   -  Warrant, dated January 2, 1991, as amended, issued by
                       the Registrant to Venlease Associates (Filed as Exhibit
                       10.10)
           *10.11   -  Form of Noncompetition, Nondisclosure and Assignment of
                       Inventions Agreement between the Registrant and each
                       current employee of the Registrant (Filed as Exhibit
                       10.11)
          +*10.12   -  Employment Agreement, dated December 20, 1993, as
                       amended, between the Registrant and Geoffrey Ryding
                       (Filed as Exhibit 10.12)
          +*10.13   -  Ibis Technology Corporation 1988 Stock Option Plan
                       (Filed as Exhibit 10.13)
          +*10.14   -  Form of Stock Option Agreement under 1988 Stock Option
                       Plan (Filed as Exhibit 10.14)
           +10.15   -  Ibis Technology Corporation 1993 Employee, Director and
                       Consultant Stock
</TABLE>


                                                                              39


<PAGE>


<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                        DESCRIPTION
           <S>             <C>
                           Option Plan as amended (Filed as Exhibit 10.15 to the
                           Company's Quarterly Report on Form 10-Q for the
                           Quarter Ended June 30, 1996 and Incorporated herein
                           by reference)
              +*10.16   -  Form of Stock Option Agreement under 1993 Employee,
                           Director and Consultant Stock Option Plan (Filed as
                           Exhibit 10.16)

              +*10.17   -  1995/1996 Incentive Compensation Plan of the
                           Registrant (Filed as Exhibit 10.17)
              @*10.18   -  Capacity Option Agreement, dated September 21, 1995,
                           between Registrant and Motorola Corporation (Filed as
                           Exhibit 10.18)
               *10.19   -  Letter Agreement, dated March 4, 1994, as amended,
                           between the Registrant and Fleet Bank of
                           Massachusetts, N.A.  ("Fleet") (Filed as Exhibit
                           10.19)
              *10.19A   -  Amendment to Letter Agreement, dated February 2,
                           1996, between the Registrant and Fleet (Filed as
                           Exhibit 10.19A)
               *10.20   -  Master Equipment Lease Agreement, dated November 1,
                           1995, between Registrant and FSI (Filed as Exhibit
                           10.20)
               *10.21   -  Bill of Sale dated November 22, 1995 between the
                           Registrant and FSI (Filed as Exhibit 10.21)
               *10.22   -  Sale and Leaseback Agreement dated as of November 1,
                           1995 between the Registrant and FSI (Filed as Exhibit
                           10.22)
               *10.23   -  Reserve Pledge and Security Agreement dated as of
                           November 1, 1995 between FSI and Registrant (Filed as
                           Exhibit 10.23)
               *10.24   -  Warrant issued by Registrant in favor of FSI dated
                           November 22, 1995 for the Purchase of shares of
                           Common Stock of the Registrant (Filed as Exhibit
                           10.24)
               *10.25   -  Sales Representative Agreement, dated February 17,
                           1995, between the Registrant and Young Woo High Tech
                           (Filed as Exhibit 10.25)
               *10.26   -  Exclusive Patent License Agreement, dated November
                           1, 1994, between the Registrant and Superion Limited
                           (Filed as Exhibit 10.26)
               *10.27   -  License Agreement, dated as of September 1, 1994,
                           between the Registrant and Nissin Electric Co., Ltd.
                           (Filed as Exhibit 10.27)
               *10.28   -  Underwriter's Warrant Agreement, dated May 27, 1994,
                           between the Registrant and Josephthal Lyon & Ross
                           Incorporated ("Josephthal") (Filed as Exhibit 10.28)
               *10.29   -  Underwriting Agreement, dated May 20, 1994,
                           between, the Registrant and Josephthal (Filed as
                           Exhibit 10.29)
               *10.30   -  Warrant Agreement, dated as of May 20, 1994,
                           between the Registrant and Continental Stock Transfer
                           & Trust Company (Filed as Exhibit 10.30)
                10.31   -  Contract, as amended, dated May 25, 1994, between
                           the Registrant and the Defense Nuclear Agency (Filed
                           as Exhibit 10.31 to the Company's Quarterly Report on
                           Form 10-Q for the Quarter Ended June 30, 1996 and
                           incorporated herein by reference).
                10.32   -  Equipment Purchase Master Agreement, dated as of
                           May 22, 1996, between Registrant, and IBM (Filed as
                           Exhibit 10.1 to the Company's Current Report on Form
                           8-K/A (File No.0-13078) filed on September 12, 1996
                           and incorporated herein by reference).
                10.33   -  Description of Fees Paid to Ted R. Dintersmith,
                           Ph.D. (Filed as Exhibit 10.33 to the Company's Annual
                           Report on Form 10-K for the year ended December 31,
                           1996).
               +10.34   -  Employment Agreement, dated October 23, 1997 between
                           the Registrant and Martin J. Reid.  (Filed as Exhibit
                           10.34 to the Company's Annual Report on Form 10-K for
                           the year ended December 31, 1997).
               +10.35   -  Ibis Technology Corporation 1997 Employee, Director
                           and Consultant Stock Option Plan (Filed as Exhibit
                           99.1 to the Company's Form S-8 (File No. 333-45247)
                           filed on January 30, 1998 and incorporated herein by
                           reference).
                10.36   -  License Agreement, dated June 27, 1996, between the
                           Registrant and Orion Equipment, Inc. ("Orion") (Filed
                           as Exhibit 10.36 to the Company's Annual Report on
                           Form 10-K for the year ended December 31, 1997)
</TABLE>


40


<PAGE>

<TABLE>
<CAPTION>
            EXHIBIT
            NUMBER                               DESCRIPTION
            <S>            <C>
                10.37   -  Modification to License Agreement, dated August 28,
                           1997, between the  Registrant and Orion (Filed as
                           Exhibit 10.37 to the Company's Annual Report on Form
                           10-K for the year ended December 31, 1997)
                10.38   -  Consulting Services Agreement, dated as of April
                           22, 1997, between the Registrant and Orion (Filed as
                           Exhibit 10.38 to the Company's Annual Report on Form
                           10-K for the year ended December 31, 1997)
               @10.39   -  Purchase Order, dated April 14, 1998, from
                           Mitsubishi Silicon Corporation (Filed as Exhibit
                           10.39 to the Company's Quarterly Report on Form 10-Q
                           for the Quarter Ended June 30, 1998 and incorporated
                           herein by reference).
               @10.40   -  Task Order dated April 10, 1998, between the
                           Registrant and International Business Machines
                           Corporation ("IBM") (Filed as Exhibit 10.40 to the
                           Company's Quarterly Report on Form 10-Q for the
                           Quarter Ended June 30, 1998 and incorporated herein
                           by reference).
               @10.41   -  Licensing and Development Agreement, dated June 9,
                           1998, between the Registrant and IBM (Filed as
                           Exhibit 10.41 to the Company's Quarterly Report on
                           Form 10-Q for the Quarter Ended June 30, 1998 and
                           incorporated herein by reference)
                10.42   -  Sixth Amendment to Lease dated July 16, 1998,
                           amending Lease Agreement dated December 22, 1987
                           between the Company and Thomas J. Flatley d/b/a the
                           Flatley Company (Filed as Exhibit 10.42 to the
                           Company's Quarterly Report on Form 10-Q for the
                           Quarter Ended September 30, 1998 and incorporated
                           herein by reference)
               +10.43   -  Change of Control Agreement, dated September 20,
                           1999, between the Registrant and Martin J. Reid
                           (Filed as Exhibit 10.43 to the Company's Annual
                           Report on Form 10-K for the Year Ended December 31,
                           1999 and incorporated herein by reference)
               +10.44   -  Change of Control Agreement, dated September 20,
                           1999, between the Registrant and Debra L. Nelson
                           (Filed as Exhibit 10.44 to the Company's Annual
                           Report on Form 10-K for the Year Ended December 31,
                           1999 and incorporated herein by reference)
               @10.45   -  License Agreement dated July 1, 1999, between the
                           Registrant and Mitsubishi Materials Silicon
                           Corporation (Filed as Exhibit 10.45 to the Company's
                           Annual Report on Form 10-K for the Year Ended
                           December 31, 1999 and incorporated herein by reference)
                10.46   -  Lease Agreement, dated April 14, 2000, between the
                           Registrant and Flatley (Filed as Exhibit 10.46 to the
                           Company's Quarterly Report on Form 10-Q for the
                           Quarter Ended June 30, 2000 and incorporated herein
                           by reference)
                10.47   -  Ibis Technology Corporation 2000 Employee Stock
                           Purchase Plan (Filed as Exhibit 99.1 to the Company's
                           Form S-8 (File No. 333-36706) filed on May 10, 2000
                           and incorporated herein by reference)
               #10.48   -  Advantox 150 License Agreement dated November 1,
                           2000, between the Registrant and Mitsubishi Materials
                           Silicon Corporation
               +10.49   -  Employment Agreement, dated December 27, 2000 between
                           the Registrant and Martin J. Reid.
               #10.50   -  License Agreement dated December 15, 2000, between
                           the Registrant and International Business Machines
                           Corporation ("IBM")
                10.51   -  Patent License Agreement dated December 15, 2000,
                           between the Registrant and IBM
                10.52   -  Stock Purchase Warrant Agreement dated December 15,
                           2000, between the Registrant and IBM
                   11   -  Statement regarding computation of per share income (loss)
                   23   -  Consent and Report on Financial Statement Schedule of KPMG LLP
</TABLE>

                                                                              41
<PAGE>


---------
*    Previously filed with the Commission as Exhibits to, and incorporated
     herein by reference from, the Company's Registration Statement filed on
     Form S-1, File No. 333-1174, effective April 2, 1996.

@    Confidential treatment previously obtained from the Securities and Exchange
     Commission. The portions of the document for which confidential treatment
     has been granted are marked "Confidential" and such confidential portions
     have been filed separately with the Securities and Exchange Commission.

#    Confidential treatment requested from the Securities and Exchange
     Commission. The portions of the document for which confidential treatment
     has been requested are marked "Confidential" and such confidential portions
     have been filed separately with the Securities and Exchange Commission.

+    Management contract or compensatory plan, contract or arrangement.

Where a document is incorporated by reference from a previous filing, the
Exhibit number of the document in that previous filing is indicated in
parentheses after the description of such document.

(B) FINANCIAL STATEMENT SCHEDULES

Schedule II -- Valuation and Qualifying Accounts

ITEM 14(b)        REPORTS ON FORM 8-K

The Company filed with the Commission on October 25, 2000, a Current Report on
Form 8-K for the October 25, 2000, event reporting the public dissemination of a
press release announcing its financial results for the third quarter and nine
months ended September 30, 2000.

The Company filed with the Commission on November 29, 2000, a Current Report on
Form 8-K for the November 28, 2000, event reporting the public dissemination of
a press release reiterating the estimates it made during its third quarter
conference call held on October 26, 2000.

The Company filed with the Commission on December 28, 2000, a Current Report on
Form 8-K for the December 28, 2000, event reporting the public dissemination of
a press release announcing a license agreement with International Business
Machines.




42


<PAGE>


                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) 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, in Danvers,
Massachusetts on March 21, 2001.

                           IBIS TECHNOLOGY CORPORATION

                           By:   /s/ MARTIN J. REID
                                 ----------------------------------
                                 Martin J. Reid
                                 President



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated and on the dates indicated.

<TABLE>
<CAPTION>
    SIGNATURES                                                TITLE                              DATE
<S>                                         <C>                                         <C>
By: /s/ Martin J. Reid                      President, Chief Executive Officer                   March 21, 2001
   -----------------------------------      and Chairman (principal executive officer)
   Martin J. Reid                           and Director


By: /s/ Debra L. Nelson                     Chief Financial Officer,                             March 21, 2001
   ---------------------------------        Treasurer, Clerk, (principal financial
    Debra L. Nelson                         and accounting officer)


By: /s/ Dimitri A. Antoniadis, Ph.D.        Director                                             March 21, 2001
   ---------------------------------
   Dimitri A. Antoniadis, Ph.D.

By: /s/ Robert L. Gable                     Director                                             March 21, 2001
   ---------------------------------
   Robert L. Gable

By: /s/ Leslie B. Lewis                     Director                                             March 21, 2001
   ---------------------------------
   Leslie B. Lewis

By: /s/ Donald McGuinness                   Director                                             March 21, 2001
   ---------------------------------
   Donald McGuinness

By: /s/ Lamberto Raffaelli                  Director                                             March 21, 2001
   -----------------------------------
   Lamberto Raffaelli

By: /s/ Peter  H. Rose, Ph.D.               Director                                             March 21, 2001
   ------------------------------------
   Peter H. Rose, Ph.D.

By: /s/ Geoffrey Ryding, Ph.D.              Director                                             March 21, 2001
   ---------------------------------
   Geoffrey Ryding, Ph.D.
</TABLE>


                                                                              43


<PAGE>


                                                                     SCHEDULE II

                           IBIS TECHNOLOGY CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                           BALANCE AT                                        BALANCE AT
                                          BEGINNING OF     CHARGED          AMOUNTS            END OF
      DESCRIPTION                            PERIOD      TO EXPENSE        WRITTEN OFF         PERIOD
<S>                                         <C>           <C>                <C>                <C>
Allowance for Doubtful Accounts
December 31, 1998.......................      40,550        24,450                 --            65,000
December 31, 1999.......................      65,000            --                 --            65,000
December 31, 2000.......................      65,000            --                 --            65,000

Reserve for Inventory Obsolescence
December 31, 1998.......................      78,000        82,000                 --           160,000
December 31, 1999.......................     160,000       517,000            189,000           488,000
December 31, 2000.......................     488,000       440,000            357,000           571,000
</TABLE>




                                       S-1


<PAGE>


                           IBIS TECHNOLOGY CORPORATION

                                  EXHIBIT INDEX



EXHIBIT NO.                                 DESCRIPTION

#10.48            Advantox 150 License Agreement, dated November 1, 2000,
                  between the Registrant and Mitsubishi Materials Silicon
                  Corporation

 10.49            Employment Agreement, dated December 27, 2000 between the
                  Registrant and Martin J. Reid

#10.50            License Agreement dated December 15, 2000, between the
                  Registrant and IBM

 10.51            Patent License Agreement dated December 15, 2000, between the
                  Registrant and IBM

 10.52            Stock Purchase Warrant Agreement dated December 15, 2000,
                  between the Registrant and IBM

 11               Statement regarding computation of per share income (loss)

 23               Consent and Report on Financial Statement Schedule of KPMG LLP
-------------

#    Confidential treatment requested from the Securities and Exchange
     Commission. The portions of the document for which confidential treatment
     has been requested are marked "Confidential" and such confidential portions
     have been filed separately with the Securities and Exchange Commission.