JMAR Technologies Reports Year 2000 Results
SAN DIEGO--(BUSINESS WIRE)--March 30, 2001--JMAR Technologies Inc.
(Nasdaq:JMAR - news):
Company Achieves Net Profit for Fourth Quarter, Cuts Annual Net Loss in Half With Revenue Decline
New Product Outlays Were 45% of Sales
Technology Breakthroughs in X-ray Lithography, Progress in Chip Development Portend Growth for Future
Warrant Calls, Other Transactions, Add $18 Million to Balance Sheet
JMAR Technologies Inc. (Nasdaq:JMAR - news), a provider of precision micro- and nanotechnology products, today
announced its results for the fourth quarter and year ended December 31, 2000.
Revenues for the year 2000 were $19,626,600, compared with $24,767,740 for 1999. The year-to-year decline in revenues
was attributable to a substantial decrease in contract sales in the company's semiconductor Technology Services product line at
JMAR Semiconductor Inc. (JSI). That decrease resulted primarily from the reassignment of certain semiconductor engineering
resources from low-margin, external contract revenue microchip development projects to internally-funded chip development
and marketing activities. JMAR believes the move significantly accelerated the commercialization of JMAR's new,
high-performance semiconductor products for the rapidly growing voice, video and data transfer segments of the high-speed
communications markets.
Financial Report
Ongoing company efforts to strengthen its financial position narrowed by 45% its net loss over 1999. For the year 2000, the
company reported a net loss of $(1,224,765), or $(0.06) per share, compared to a net loss of $(2,248,994), or $(0.12) per
share, for 1999. For the fourth quarter of 2000, JMAR achieved revenues of $5,890,485 compared with $6,625,794 for the
prior year quarter and generated a net profit of $581,654, or $0.03 per share, compared with a loss of $(952,739), or
$(0.05), per share in 1999.
Commenting on the company's overall performance in 2000, JMAR Chairman and CEO John S. Martinez, Ph.D., said, ``We
worked hard throughout the year to improve shareholder value, concluding the year with one of the best fourth quarters in
JMAR's history, when we factor in the impressive progress in our labs as well. We also made tremendous progress in
solidifying our financial infrastructure during 2000, with several important financial transactions bringing a great deal of additional
strength to our balance sheet. The largest of those, the successful Call in the first quarter of the Company's Redeemable
Common Stock Purchase Warrants at an exercise price of $5.50 per share, netted $12.7 million. Those Warrants had traded
on the Nasdaq National Market System under the symbol 'JMARW' since 1993. Additionally, we received $2.9 million from
the exercise of privately-held warrants and options, bringing the total net proceeds from equity exercises to $15.6 million in that
period. The average exercise price paid by all of those warrant and option holders was $4.35 per share.
``In May, we executed a series of technology, financing and investment agreements with Bede Scientific Instruments, Ltd.,
(''Bede``) of Durham, England, a leading provider of X-ray-based instruments to the semiconductor industry,'' Dr. Martinez
said. ``In addition, we made an interest-bearing loan of $700,000 to Bede, which was privately-held at that time. In return,
JMAR acquired certain rights to Bede's proprietary X-ray source and optics technology and received an option to purchase a
10% equity interest in Bede for approximately $85,000.
``Five months later, Bede announced the completion of its initial public offering on the London Stock Exchange and repaid
JMAR's loan. At that time we exercised our option and received 1,935,500 Bede shares having a market value of $5.4 million.
Clearly, by any measure, JMAR's investment in Bede was a resounding success. In December 2000, we sold 890,000 of our
Bede shares for net proceeds and a gain to JMAR of about $2.2 million and continue to hold the remaining 1,045,500 shares.''
Dennis Valentine, JMAR's Chief Financial Officer, commented, ``The total net cash proceeds received by JMAR during 2000
from equity exercises and the sale of Bede shares was approximately $18.4 million. In addition, the Company's assets grew
65% to $34.2 million at December 31, 2000 compared with $20.7 million at December 31, 1999. Cash improved 324% to
almost $10.0 million, working capital almost tripled to $21.5 million, and our current ratio increased 174% to 4.98, from 1.82.
During 2000, shareholders' equity soared from $10.9 million to $28.4 million and we cut long-term debt almost in half to
$340,000, or to about 1.2% of shareholders' equity.''
Business/Technology Report
JMAR used a significant portion of the cash it acquired in 2000 to accelerate the development of its standard semiconductor
products at JSI and expanded its X-ray source development and marketing activities at JMAR Research -- including the
creation of the new JMAR NanoLight Division which is focused on transitioning JRI's X-ray and related advanced light
technologies to the marketplace.
The growing intensity of the company's commercial semiconductor chip and X-ray lithography product and market
development programs further increased the percentage of JMAR's sales dedicated to R&D. Including semiconductor software
development programs that the company capitalized, total R&D expenditures grew from 30% of overall sales in 1999 to 45%
in 2000.
Dr. Martinez further commented, ``As the increase in our R&D investment clearly indicates, the intensity of JMAR's efforts to
achieve commercialization with the proprietary X-ray lithography technology being developed by JRI, and the communications
semiconductor standard products being created at JSI, grew substantially during 2000. Those investments produced impressive
results, particularly at JRI. For example, the X-ray power output, at one nanometer wavelength, from our patented Picosecond
X-ray Source, or PXS, lithography sources grew from about 3 watts to an independently-certified range of 20-25 watts during
the year -- a truly significant advance in this breakthrough technology. These power increases should translate directly into
faster semiconductor wafer processing rates.
``JMAR's PXS is being developed to provide a faster, more efficient alternative to the direct-write electron beam sources
currently used in the manufacture of high-performance gallium arsenide (GaAs) semiconductors, as well as for an alternative to
the high-cost optical lithography sources currently used to manufacture high-performance, silicon-based integrated circuits,'' Dr.
Martinez explained.
``We believe that our recently demonstrated X-ray power levels further position JMAR's PXS sources as a near-term enabling
technology for the higher-volume, cost-effective production of the valuable GaAs chips required to meet the future needs of the
rapidly growing, highest bandwidth segment of the wireless and optical communications markets,'' he noted. ``Market research
sources indicate that sales of GaAs chips, presently running about $2 billion per year, are forecasted to grow at about a 30%
per year rate to an estimated $6 billion in 2004. That rapid growth is expected to generate strong demand for higher
performance manufacturing equipment that could, and we believe should, include JMAR's PXS sources.''
The major elements of an X-ray lithography (XRL) system include an X-ray source and a wafer stepper. In early 2001, JMAR
announced that it had placed an order with a leading XRL stepper manufacturer to commence construction of an X-ray
lithography system to be powered by a JMAR PXS-125 laser plasma X-ray source for installation at a semiconductor
manufacturing demonstration site in 2002. JMAR issued this contract under a Defense Advanced Research Projects Agency
(DARPA)-funded program administered by the Army Research Laboratory to demonstrate the practicality of ``point-source''
laser plasma X-ray technology for advanced commercial lithography applications.
John H. Carosella, President of JMAR's NanoLight division, commented, ``The total value of the X-ray lithography contracts
awarded to JMAR during the past seven or eight months is about $13 million.'' He added, ``When completed in 2002, our
XRL system will be ideally positioned to address a range of important market applications, such as the critical high-speed
gallium arsenide semiconductors used in advanced communications. Production of those circuits, with minimum feature sizes
ranging from 130 nanometers (or 0.13 micron) to as small as 70 nanometers, could represent a substantial available near-term
market for JMAR's X-ray lithography systems.
``I am also pleased to report that during 2000 we made substantial progress in adapting our Britelight laser, originally
developed for PXS, to the efficient generation of the extreme ultraviolet (EUV) wavelengths currently being pursued by
research organizations worldwide, as a candidate for Next Generation Lithography (NGL) for future high-performance silicon
semiconductors. In recent testing at JMAR using one of the Company's current Britelight lasers coupled to a proprietary
wavelength converter, we produced very promising laser-to-EUV conversion efficiencies. JMAR continues to pursue this highly
proprietary EUV technology for possible silicon applications while at the same time moving forward aggressively with its
leading-edge PXS technology for the near-term GaAs market.''
During this past year, JMAR achieved a number of other important marketing and business development milestones that the
company expects will have a significant impact on its future sales and product developments. Those achievements, several of
which have already been the subject of more extensive announcements, are summarized in the accompanying Appendix.
Summary & Outlook
``In the final analysis, 2000 was a rather positive year for JMAR,'' Dr. Martinez concluded. ``We spent 45% of our sales
revenue to more rapidly advance our standard semiconductor chip products to what we believe is the verge of market
acceptance, and to achieve major technological breakthroughs in our X-ray source development programs that position JMAR
for near-term entry into the potentially huge XRL market. Despite the fact that we recorded a net loss for the year, which
resulted primarily from the large investment we made to expedite commercialization of our developmental products, we also
increased shareholder equity by 160% -- and did it with equity transactions at well above JMAR's current share price.
``Looking forward, there is little doubt that considerable uncertainties remain for those in the microelectronics industry,
especially for manufacturers of telecommunications semiconductors,'' Dr. Martinez observed. ``From my experience, however,
when the Technology Industry slumps, it's generally because there's been a reluctance to invest in an adequate and timely
manner in the semiconductor innovations that drive the Industry. However, these are precisely the times when the Technology
Industry should expand R&D budgets to accelerate the development of the revolutionary, higher-performance products that
will create new demand by rendering existing products obsolete. This is precisely what we're doing at JMAR. We expect that
the overall Technology Industry will be doing the same.''
JMAR Technologies Inc., a semiconductor industry-focused company, is a leading developer of proprietary advanced laser
and X-ray light sources for high-value microelectronics manufacturing and metrology. It is also a fabless provider of high
performance integrated circuits for the rapidly growing broadband communications market and other microelectronics
applications. In addition, JMAR manufactures precision measurement, positioning and light-based manufacturing systems for
inspection and repair of semiconductors and continues to play an important role in adapting its precision semiconductor
manufacturing technology to the fabrication of advanced biomedical and optical communications products.
The statements regarding JMAR's expectations for the successful development and introduction of new products and future
sales and potential business opportunities are forward-looking statements based on current expectations that are subject to
risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements.
These risks include the failure of future orders to materialize as expected, delays in shipment or production, parts and labor
shortages, dependence on semiconductor foundry capacity and timing, cancellation or re-scheduling of orders, delay in funding
of third-party contracts, failure of acceptance of new products or technologies, failure of advanced technology and new
intellectual property to perform as predicted, the failure of pending patents to be issued, and the other risks detailed in the
company's 2000 Form 10-K and other reports filed with the SEC.
Financial Data
Consolidated Statements of Operations
Year Ending Quarter Ending
December 31 December 31
Item 2000 1999 2000 1999
Net Sales $19,626,600 $24,767,740 $5,890,485 $6,625,794
Gross Profit 5,923,223 7,051,994 1,456,766 1,810,461
(Loss) from
Operations (3,546,554) (2,145,104) (1,597,711) (789,755)
Net Income (Loss) (1,224,765) (2,248,994) 581,654 (952,739)
Net Income (Loss)
per Share:
Basic $(0.06) $(0.12) $0.03 $(0.05)
Diluted $(0.06) $(0.12) $0.03 $(0.05)
Selected Balance Sheet Data
Year Ended December 31
Item 2000 1999
Assets ($) 34,191,574 20,673,768
Cash ($) 9,856,768 2,323,127
Working Capital ($) 21,543,381 7,468,743
Current Ratio 4.98 1.82
Long Term Debt ($) 339,908 642,913
Shareholder Equity ($) 28,444,669 10,909,461
Net Tangible Equity ($) 28,144,168 10,511,534
For further details please see the full text of JMAR's Form 10-K for the year ended December 31, 2000 available from JMAR
or at www.sec.gov.
Appendix
Other Important Marketing and Business Development Milestones
The execution, in September, of a non-exclusive stocking distribution agreement with All American Semiconductor Inc.,
a leading distributor of semiconductor and electronic components with 35 offices throughout North America. The
agreement is expected to greatly improve JMAR's ability to penetrate the North American chip market.
The successful establishment and implementation of substantial semiconductor foundry manufacturing relationships with
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and MacroTech Research, also in Taiwan, to manufacture
multiple models of the Company's proprietary VeloSync(TM) First-In, First-Out (FIFO) memory chips (introduced
during 2000) for marketing to the communications sector, including Internet applications.
Initial versions of the company's VeloSync FIFO chips started flowing from TSMC into JSI's inventory during the latter
part of Q4, but the company's full line of VeloSync products did not reach All American's shelves until mid-February
2001. Although All American placed significant orders and paid JSI for delivery of initial shipments in 2000, the
company elected not to recognize any revenue until confirmation of the resale of those products to end users.
Accordingly, significant sales efforts did not commence until the latter part of February 2001 when JSI began to report
significant levels of customer inquiries and interest in our products.
Shortly after the end of 2000, JSI broadened the range of semiconductor manufacturing processes available for use in
producing its chips by executing an important three-year supply and manufacturing agreement with 1st Silicon Sdn, Bhd,
a recently established foundry located in Sarawak, Malaysia. This new foundry relationship will eventually enable JSI to
expand the scope of its chip offerings. Under the agreement, 1st Silicon will manufacture to JSI's design specifications up
to four hundred, 8-inch semiconductor wafers per month using its 0.25 micron and 0.18 micron CMOS logic and mixed
signal processes. Depending upon the product, each wafer could contain up to several thousand individual
semiconductor chips with selling prices to the end users ranging from less than $10 to several hundred dollars each.
Between January 2000 and January 2001, the company's Precision Systems (JPSI) division received orders totaling
about $4.0 million for its precision micro-positioning and lithography alignment systems and services from two leading
manufacturers of DNA biochips for the biotechnology and pharmaceutical industries. Those systems enable the
fabrication of biomedical products targeted at improving the diagnosis, monitoring and treatment of many diseases. DNA
biochips are an array of miniature testing sites that allow vast numbers of simultaneous experiments to be conducted in a
very small area. The microarrays, now being used in drug discovery, pharmacology and clinical research, are viewed as
one of the most important bioresearch tools of the post-genome area. Some of the purchased items were delivered
before the end of 2000 with the remainder scheduled for delivery in 2001.
JPSI also introduced its new Atomic Vision (AV) line of ultra-high resolution measurement and inspection systems based
on the integration of atomic force microscopes into certain of its enhanced vibration-isolation metrology products. By
doing so, the company created new precision metrology systems with sub-nanometer imaging resolution for a variety of
micro- and nanometrology applications in the electronics and biomedical fields. These systems are undergoing evaluation
at customer sites.
Throughout the year JMAR continued to strengthen and broaden its already extensive intellectual property portfolio. The
company currently holds 11 issued patents containing 295 separate allowed claims covering its various types of laser
plasma X-ray sources (PXS), high-brightness solid state lasers (Britelight(TM)), and point-source lithography system
technology. JMAR also has many other multi-claim patents pending, including those covering advanced X-ray collimator
technology, improved wavelength conversion devices such as ``X-ray chambers,'' internal semiconductor imaging
devices (nanotomography), and ultraviolet and extreme ultraviolet (EUV) microlithography systems. In addition, the
proprietary semiconductor device design activities at JSI have created a substantial body of valuable proprietary
technology.
Contact:
JMAR Technologies Inc., San Diego
Dennis E. Valentine, 760/602-3292
Chief Financial Officer
jmar.com |
