<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2000
Commission File Number 1-10515
JMAR TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 68-0131180
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
3956 Sorrento Valley Blvd.
San Diego, CA 92121
(858) 535-1706
-----------------------------------------------------------
(Address, including zip code and telephone number including
area code of registrant's principal executive office)
Indicate by check mark whether the registrant 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, and has been subject to the filing requirements for at
least the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (May 8, 2000).
Common Stock, $.01 par value: 22,133,409 shares
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<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE #
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1999 and
March 31, 2000 2
Consolidated Statements of Operations - Three months ended
March 31, 2000 and 1999
3
Consolidated Statements of Cash Flows - Three months ended
March 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II. OTHER INFORMATION
Item 1. N/A
Item 2. Changes in Securities 11
Item 3. N/A
Item 4. N/A
Item 5. N/A
Item 6. Reports on Form 8-K 11
</TABLE>
1
<PAGE> 3
PART I - FINANCIAL INFORMATION
JMAR TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents ..................................... $ 13,026,031 $ 2,323,127
Accounts receivable, net ...................................... 5,091,640 7,079,435
Notes and other receivable .................................... 35,218 32,551
Inventories ................................................... 6,616,981 6,253,336
Prepaid expenses and other .................................... 1,151,851 901,688
------------ ------------
Total current assets ...................................... 25,921,721 16,590,137
Property and equipment, net ....................................... 2,265,026 2,330,663
Other assets, net ................................................. 1,788,246 1,355,041
Goodwill, net ..................................................... 377,971 397,927
------------ ------------
TOTAL ASSETS .............................................. $ 30,352,964 $ 20,673,768
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .............................................. $ 1,158,715 $ 2,456,928
Accrued liabilities ........................................... 1,230,208 593,283
Accrued payroll and related costs ............................. 1,149,656 875,693
Line of credit ................................................ -- 4,990,000
Notes payable and capital lease obligations ................... 189,036 205,490
------------ ------------
Total current liabilities ................................. 3,727,615 9,121,394
------------ ------------
Notes payable, capital leases and other long-term
liabilities, net of current portion ....................... 691,504 642,913
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value;
5,000,000 shares authorized; none issued and outstanding
as of March 31, 2000 and December 31, 1999 .............. -- --
Common stock, $.01 par value; 40,000,000 shares authorized;
Issued and outstanding 21,971,297 as of March 31, 2000 and
18,074,836 shares as of December 31, 1999................ 219,713 180,748
Additional-paid in capital .................................... 52,065,253 36,499,238
Accumulated deficit ........................................... (26,351,121) (25,770,525)
------------ ------------
Total stockholders' equity ............................... 25,933,845 10,909,461
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................ $ 30,352,964 $ 20,673,768
============ ============
</TABLE>
2
<PAGE> 4
JMAR TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Sales .................................. $ 4,799,045 $ 6,695,465
Costs of sales ......................... 3,152,618 5,032,576
------------ ------------
Gross profit ....................... 1,646,427 1,662,889
------------ ------------
Operating expenses:
Selling, general and
administrative ..................... 1,628,824 1,823,276
Research, development and
engineering ........................ 538,928 407,961
------------ ------------
Total operating expenses ............. 2,167,752 2,231,237
------------ ------------
Loss from operations ................... (521,325) (568,348)
Interest and other income
(expense), net.......................... 25,169 15,594
Interest expense ....................... (84,440) (40,651)
------------ ------------
Net loss ............................... $ (580,596) $ (593,405)
============ ============
Basic and diluted net loss per share ... $ (.03) $ (.03)
============ ============
Basic and diluted shares used in
computation of net loss per share ..... 19,528,151 18,055,191
============ ============
</TABLE>
3
<PAGE> 5
JMAR TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ......................................................... $ (580,596) $ (593,405)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization .................................... 229,317 229,595
Services received in exchange for common stock ................... 1,200 --
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable, net ....................................... 1,987,795 2,860,743
Inventories .................................................... (363,645) 337,656
Prepaid expenses and other ..................................... (92,680) (78,512)
Other assets ................................................... (51,938) (60,486)
Decrease in:
Accounts payable and accrued liabilities ....................... (387,326) (1,949,996)
------------ ------------
Net cash provided by operating activities .................... 742,127 745,595
------------ ------------
Cash flows from investing activities:
Capital expenditures ............................................. (62,423) (50,658)
Other assets ................................................. (610,264) --
Payments received on notes and other receivables ................. 4,152 4,001
Increase in notes receivable ..................................... -- (1,237)
Patent costs ..................................................... (9,635) (22,207)
------------ ------------
Net cash used in investing activities ........................ (678,170) (70,101)
------------ ------------
Cash flows from financing activities:
Net payments under short-term debt agreements .................... (4,990,000) (600,000)
Net borrowings (payments) of notes payable, capital leases
and other long-term liabilities ...................... 32,137 (116,923)
Repurchases of stock ............................................. -- (110,776)
Net proceeds from the exercise of options and warrants .......... 15,596,810 --
------------ ------------
Net cash provided by (used in) financing activities........... 10,638,947 (827,699)
------------ ------------
Net increase (decrease) in cash and cash equivalents ................. 10,702,904 (152,205)
Cash and cash equivalents, beginning of period ....................... 2,323,127 3,848,183
------------ ------------
Cash and cash equivalents, end of period ............................. $ 13,026,031 $ 3,695,978
============ ============
</TABLE>
4
<PAGE> 6
JMAR TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of JMAR Technologies, Inc. (the "Company") and its subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared by
the Company and are unaudited except for the balance sheet as of December 31,
1999. The financial statements have been prepared in accordance with generally
accepted accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
accompanying consolidated financial statements include all adjustments of a
normal recurring nature which are necessary for a fair presentation of the
results for the interim periods presented. Certain information and footnote
disclosures normally included in financial statements have been condensed or
omitted pursuant to such rules and regulations. The preparation of financial
statements in conformity with generally accepted accounting principles 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 revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Form 10-K for the
year ended December 31, 1999. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year.
(2) INVENTORIES
Inventories are carried at the lower of cost on the first-in, first-out
basis or market and are comprised of materials, direct labor and applicable
manufacturing overhead. At March 31, 2000 and December 31, 1999, inventories
consisted of the following:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Raw materials, components and sub-assemblies .......... $3,800,876 $4,096,529
Work-in-process ....................................... 2,277,541 1,711,753
Finished goods ........................................ 538,564 445,054
---------- ----------
$6,616,981 $6,253,336
========== ==========
</TABLE>
5
<PAGE> 7
JMAR TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
(3) PROPERTY AND EQUIPMENT
At March 31, 2000 and December 31, 1999, property and equipment
consisted of the following:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Equipment and machinery ................ $ 5,426,927 $ 5,310,573
Furniture and fixtures ................. 555,200 609,130
Leasehold improvements ................. 130,062 130,062
----------- -----------
6,112,189 6,049,765
Less-accumulated depreciation .......... (3,847,163) (3,719,102)
----------- -----------
$ 2,265,026 $ 2,330,663
=========== ===========
</TABLE>
(4) SEGMENT INFORMATION
In 1998, the Company adopted SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information", which required the Company to report
operating information by segment. The Company's two Segments offer varying
products and services that are affected by different economic conditions.
Further, the Segments reflect the manner in which the Company now views the
operating segments.
Microelectronics Equipment Segment: This segment includes the
manufacture, marketing and sale of the Company's measurement and inspection
systems, positioning and motion control systems and biotech processing systems.
This segment also includes the development of the Company's micro-technology
emerging products, including: next-generation X-ray lithography sources and
other non-lithography X-ray systems for inspecting and processing tomorrow's
high-performance microelectronics products; ultra-precision laser machining
systems; and other leading-edge products based on its patented laser technology.
Semiconductor Products and Processes Segment: Using advanced design and
engineering tools and established foundry relationships with semiconductor
producers, this segment is a "fabless" supplier of semiconductors which focuses
on the development and delivery of high-performance custom microcircuits for a
wide range of commercial, medical and military electronics uses. This segment
also provides high value services related to the upgrade and enhancement of a
CMOS integrated circuit fabrication facility and related wafer processing
technology for the low-volume and prototype manufacture of electronic circuits
used in operational military systems.
6
<PAGE> 8
JMAR TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
Segment information for the three months ended March 31, 2000 and 1999
was as follows:
<TABLE>
<CAPTION>
SEMICONDUCTOR
MICROELECTRONICS PRODUCTS AND
EQUIPMENT PROCESSES CORPORATE TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
2000:
Revenues $ 3,674,703 $ 1,124,342 $ -- $ 4,799,045
Operating loss (491,177) (30,148) -- (521,325)
Total assets 14,756,901 3,708,043 11,888,020 30,352,964
1999:
Revenues $ 3,676,730 $ 3,018,735 $ -- $ 6,695,465
Operating income (loss) (710,727) 142,379 -- (568,348)
Total assets 11,996,597 4,143,510 3,363,626 19,503,733
</TABLE>
In the table above, Corporate assets are principally cash, including the
proceeds from the exercise of the Company's publicly traded warrants, deferred
income taxes and other assets.
(5) WARRANT AND OPTION EXERCISES
During the quarter ended March 31, 2000, the Company received net
proceeds of approximately $15.6 million from the exercise of approximately 3.9
million outstanding options and warrants, including its publicly traded
warrants. Of these funds, $4,990,000 were used to pay down the Company's
working capital line of credit.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company operates in two segments as follows: Microelectronics
Equipment and Semiconductor Products and Processes.
RESULTS OF CONSOLIDATED OPERATIONS
Revenues for the March 31, 2000 quarter were $4,799,045 compared with
$6,695,465 for the three months ended March 31, 1999. Notwithstanding this
decline in revenues, the Company's net loss declined slightly from a net loss of
$593,405 for the three months ended March 31, 1999 to a net loss of $580,596 for
the three months ended March 31, 2000.
The decline in revenues for the first quarter of 2000 was chiefly
attributable to large one-time subcontracts let by the Semiconductor Products
and Processes Segment in the 1999 quarter to outside vendors for technology
licenses and facility construction related to a semiconductor fabrication
facility that the Company developed and installed for the Defense
Microelectronics Activity as well as the reassignment of a substantial portion
of the Company's semiconductor engineering staff from government contract chip
development work to commercial product activities consistent with the Company's
plans to accelerate its entry into the commercial telecomm semiconductor product
market. Revenues for the first quarter of 2000 were also impacted by a delay in
funding related to the Company's X-ray lithography contract with the U.S.
Government in the Microelectronics Equipment Segment.
Gross margins for the three months ended March 31, 2000 and 1999 were
34.3% and 24.8%, respectively. The higher gross margins for 2000 are primarily
due to an increase in sales of the Company's higher margin precision instrument
products in the Microelectronics Equipment Segment as well as higher margins in
the Semiconductor Products and Processes Segment. The Company continues to
experience competitive pressures on certain products, which may impact gross
margins in the future. The Company's Semiconductor Products and Processes
Segment conducted by JSI is in the process of evolving from a lower profit
margin contract development business to a commercial business focused on the
telecommunications products markets. JMAR believes that, as this evolution
progresses, a greater proportion of JMAR's sales will be generated by higher
profit margin commercial semiconductor products. Therefore, to the extent that
the Company's commercial semiconductor products begin to generate a higher
percentage of the Company's revenues, the Company's gross margins should
improve. The Company also expects that as its patented, laser-driven advanced
light products enter the marketplace and gain acceptance, they will also
substantially improve gross profit margins.
The Company's operating results in 2000 were also impacted by JMAR's
continuing investments to accelerate the time-to-market for several new
high-performance products for the microelectronics marketplace. These
investments include increased payroll costs with the addition of several senior
technical specialists and managers to direct and help speed the Company's new
precision instrument, laser and X-ray product development programs. As discussed
below, the Company-funded product development expenditures that were expensed
totaled $538,928 for the three months ended March 31, 2000 compared to $407,961
for the three months ended March 31, 1999.
Selling, general and administrative ("SG&A") expenses for the three
months ended March 31, 2000 and 1999 were $1,628,824 and $1,823,276,
respectively. The decrease in SG&A expenses in 2000 is primarily due to staff
and cost reductions in the Microelectronics Equipment Segment.
The Company's research, development and engineering program (RD&E)
consists of two types: Customer-Funded RD&E (U.S. government and other
companies) and Company-Funded RD&E. Both types of RD&E are expensed when
incurred. Customer-Funded RD&E costs incurred, included in "Costs of Sales",
totaled $624,653 and $1,437,986 for the three months ended March 31, 2000 and
1999, respectively. The decrease in Customer-Funded RD&E expenditures for 2000
is related to a
8
<PAGE> 10
decrease of $602,837 due to a delay in the X-ray lithography program funding
provided by the Defense Advanced Research Projects Agency, most of which is
directed toward development of JMAR's X-ray lithography source technology for
the commercial semiconductor market and a decrease of $210,496 related to the
Company's contract for the development of a unique microcircuit architecture and
devices for the replacement of obsolete integrated circuits. The Company
believes this latter technology has applicability in both the government and
commercial marketplaces. Company-Funded RD&E costs are shown in "Operating
Expenses" and totaled $538,928 and $407,961 for the three months ended March 31,
2000 and 1999, respectively. Hence, total RD&E expenditures for the three month
periods were $1,163,581 and $1,845,947 for 2000 and 1999, respectively. In
addition to these RD&E expenditures, capitalized product costs related to the
semiconductor chips for commercial telecommunications applications and
capitalized software were $454,354 and $30,753 for the three months ended March
31, 2000 and 1999, respectively. Including capitalized product and software
costs, RD&E expenditures as a percentage of sales were 33.7% and 28.0% for the
three months ended March 31, 2000 and 1999, respectively. RD&E expenditures is
primarily related to the continued development of PXS point X-ray sources for
lithography for the semiconductor industry and other metrology applications, the
development of a unique microcircuit architecture and devices for the
replacement of obsolete integrated circuits and for a new family of
telecommunications semiconductor products, the development of new software for
the Company's test and measurement systems and the engineering development of
higher performance test and measurement inspection systems for the
semiconductor, biomedical and disk drive industries.
Interest expense is higher for the first quarter of 2000 versus the
first quarter of 1999 due to increased average borrowings under the Company's
working capital line (the "Line") with Comerica Bank. However, in late March
2000, the Company paid down the Line in its entirety. Therefore, the Company
expects its interest expense to be reduced, accordingly. The full availability
of the Line continues in effect and can be drawn down if needed in the future.
RESULTS OF SEGMENT OPERATIONS
Microelectronics Equipment Segment
Revenue for the three months ended March 31, 2000 as compared to the
three months ended March 31, 1999 for the Microelectronics Equipment Segment
decreased slightly from $3,676,730 to $3,674,703. However, due to improved
margins, the operating loss of the Microelectronics Equipment Segment for the
three months ended March 31, 2000 as compared to the three months ended March
31, 1999 decreased from a loss of $710,727 to a loss of $491,177.
Semiconductor Products and Processes Segment
Revenue for the three months ended March 31, 2000 as compared to the
three months ended March 31, 1999 for the Semiconductor Products and Processes
Segment decreased $1,894,393 from $3,018,735 to $1,124,342, or 62.8%. This
decrease is related to both the large one-time subcontracts let in the 1999
quarter to outside vendors for technology licenses and facility construction
related to a semiconductor fabrication facility that the Company developed and
installed for the Defense Microelectronics Activity as well as the reassignment
of a substantial portion of the Company's semiconductor engineering staff from
government contract chip development work to commercial product activities
consistent with the Company's plans to accelerate its entry into the commercial
telecomm semiconductor product market. Because of the decrease in revenues, as
well as the build-up of the sales and marketing infrastructure related to the
planned introduction of the Company's new commercial semiconductor chips,
operating income for the three months ended March 31, 2000 as compared to the
three months ended March 31, 1999 decreased $172,527 from income of $142,379 to
a loss of $(30,148).
CONSOLIDATED LIQUIDITY AND FINANCIAL CONDITION
Cash and cash equivalents at March 31, 2000 and December 31, 1999 were
$13,026,031 and $2,323,127, respectively. The increase in cash and cash
equivalents for the three months ended March 31, 2000 was $10,702,904. That
increase resulted primarily from the exercise of warrants and options, including
the Company's publicly traded warrants, of $15,596,810 and cash provided by
operations of $742,127 offset in part by the payoff of the Company's working
capital bank line of $4,990,000 and an increase in other assets of $610,264.
9
<PAGE> 11
JMAR's operations will continue to require the use of working capital.
The working capital of the Company has generally been funded through its
$5,000,000 working capital line (the "Line") with Comerica Bank (the "Bank") and
through third-party contracts. In December 1999, the Line was amended to consist
of a $5 million primarily formula-based line of credit. Of that amount, $750,000
is unrestricted with advances on the balance based on a formula of 80 percent of
eligible accounts receivable, 35 percent of eligible inventories (up to $2.5
million), 50 percent of unbilled revenue on a long-term contract and up to
$500,000 for certain foreign receivables. The Line contains several covenants
relating to, among other matters, the maintenance of certain minimum income
levels and financial ratios, which, if not met by the Company, could impact the
availability of advances pursuant to the Line.
Subsequent to December 31, 1999, the Company received net proceeds of
approximately $16 million from the exercise of outstanding options and warrants,
including its publicly traded warrants. Of these funds, $4,990,000 were used to
pay down the Line in its entirety (however, the availability of the Line is
still in effect). In addition, these funds will be used to accelerate the
Company's development of high-value semiconductors for the rapidly growing
Internet and Telecom markets and to accelerate the development and
commercialization of its other high value proprietary products, as needed.
Management believes that the Company has adequate resources to fund operations
and working capital requirements for the next twelve months based on the current
level of operations and business conditions.
At December 31, 1999, the Company had in excess of $27 million of
Federal net operating loss carryforwards, subject to certain annual limitations,
which expire from 2004 through 2014. To the extent the Company has taxable
income in the future, these carryforwards may be used by the Company to reduce
its cash outlay for taxes.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Certain statements contained in this Form 10-Q which are not related to
historical results, including statements regarding JMAR's future sales or profit
growth, competitive position or products, projects or processes currently under
development and the ability of the Company to successfully introduce those
products into the commercial marketplace or to apply those products, projects or
processes to alternative applications are forward-looking statements that
necessarily are based on certain assumptions and are subject to certain risks
and uncertainties that could cause actual future performance and results to
differ materially from those stated or implied in the forward-looking
statements. These risks and uncertainties include concentration of sales to
certain markets and customers, delays in shipments or cancellations of orders,
failure of expected orders to materialize, fluctuations in margins, timing of
future orders, customer reorganizations, failure of advanced technology to
perform as predicted, uncertainties associated with the timing of the funding of
government contracts, fluctuations in demand, delays in development,
introduction and acceptance of new products, changing business and economic
conditions in various geographic regions, technical obsolescence of existing
products, technical problems in the development or modification of current
products or manufacturing processes, the impact of competitive products and
pricing, shifts in demand for the Company's products, the degree of success of
technology transfer (e.g., advanced lithography sources, etc.) to commercial
products, availability of working capital to support growth, continued
government funding of advanced lithography, successful integration of
acquisitions, other competitive factors and temporary cessation of operations at
one or more of its division facilities due to natural events such as floods,
earthquakes and fires, and other risks detailed in the Company's Form 10-K for
the year ended December 31, 1999, in the Company's Form 8-K filed on February
15, 2000 and in the Company's other filings with the Securities and Exchange
Commission.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
At March 31, 2000, Company has no material investments in marketable
securities or other debt instruments which subject it to material market risk.
10
<PAGE> 12
PART II - OTHER INFORMATION
Item 2. Changes in Securities
(c)(i) Pursuant to the Board Member Compensation Program adopted by the
Company in August, 1997, the Company issued a total of 212 shares of
Common Stock to its outside directors as compensation for services as
directors in February 2000. These transactions were exempt under
Section 4(2) of the Securities Act of 1933.
(ii) In May 2000, the Company issued 5,062 shares of Common Stock to
Steven Sarfati as required in the acquisition agreement as additional
purchase price for Continuum Engineering, Inc., in a transaction exempt
under Section 4(2) of the Securities Act of 1933.
(iii) In February 2000, the Company issued to 16 employees warrants
exercisable into 120,000 shares of Common Stock at exercise prices
ranging from $3.00 to $17.63 per share. The warrants were issued
pursuant to the Management Incentive Plan dated August 15, 1996 for JMAR
Precision Systems, Inc. (the "Incentive Warrants"). The Incentive
Warrants were issued in a transaction exempt under Section 4(2) of the
Securities Act of 1933. The Incentive Warrants expire March 25, 2005.
(iv) In connection with the hiring of John Crawford as the Vice
President of Operations of JMAR Precision Systems, Inc. on February 14,
2000, the Company issued 530 shares of Common Stock of the Company. The
shares were issued in a transaction exempt under Section 4(2) of the
Securities Act of 1933.
(v) Pursuant to its Warrant Solicitation Agreement, dated February 9,
2000, with Auerbach, Pollak & Richardson, Inc. ("Auerbach"), on March
31, 2000 the Company issued a Warrant Certificate to Auerbach to
purchase 189,347 shares of the Company's Common Stock. The Warrants have
an exercise price of $5.50 per share and are not exercisable until the
occurrence of one of the following events after September 15, 2000: (x)
the closing price (regular session) of the Company's Common Stock as
reported on NASDAQ has exceeded $9.50 for any ten trading days in any
twenty trading day period or (y) the average of the closing price
(regular session) of the Company's Common Stock as reported on NASDAQ
for any ten consecutive trading day period exceeds $9.50. The Warrants
have a term of three years and a provision allowing for a cashless
exercise. The Company has agreed to file a registration statement to
include the shares issuable under the Solicitor's Warrant no later than
September 15, 2000. The Warrants were issuable in a transaction exempt
under Section 4(2) of the Securities Act of 1933.
Item 6. Reports on Form 8-K
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K on February 15, 2000, containing
the press release which announced that it has exercised its right to call for
redemption of its outstanding Redeemable Common Stock Purchase Warrants.
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMAR TECHNOLOGIES, INC.
May 10, 2000 By: /s/ John S. Martinez
------------------------------------
John S. Martinez,
Chief Executive Officer
and Authorized Officer
By: /s/ Dennis E. Valentine
------------------------------------
Dennis E. Valentine, Chief
Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000857953
<NAME> JMAR TECHNOLOGIES, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 13,026,031
<SECURITIES> 0
<RECEIVABLES> 5,163,268
<ALLOWANCES> 71,628
<INVENTORY> 6,616,981
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<DEPRECIATION> 3,847,163
<TOTAL-ASSETS> 30,352,964
<CURRENT-LIABILITIES> 3,727,615
<BONDS> 691,504
0
0
<COMMON> 219,713
<OTHER-SE> 25,714,132
<TOTAL-LIABILITY-AND-EQUITY> 30,352,964
<SALES> 4,799,045
<TOTAL-REVENUES> 4,799,045
<CGS> 3,152,618
<TOTAL-COSTS> 3,152,618
<OTHER-EXPENSES> 2,167,752
<LOSS-PROVISION> 435
<INTEREST-EXPENSE> 84,440
<INCOME-PRETAX> (580,596)
<INCOME-TAX> 0
<INCOME-CONTINUING> (580,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (580,596)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
