Tucson tech: Applied Energetics points laser work in new direction
Arizona Daily Star
Tuesday, October 25, 2011
Direct Link: http://azstarnet.com/business/local/tucson-tech-applied-energetics-points-laser-work-in-new-direction/article_160db694-29f6-54f2-8e4b-07a3eb1d795f.html#ixzz1bsH2cGZx
Joe Hayden knows his company can't escape its controversial past, but he's firmly fixed on the future.
Hayden is president and a co-founder of Applied Energetics Inc., a Tucson-based company that specializes in directed-energy systems.
With a flagship technology that uses a laser to guide electrical pulses, the company has - up to now - focused on products for military and security applications.
But if you've heard of the company, formerly know as Ionatron, there's a good chance you came away with a bad impression.
Applied Energetics has been pilloried by critics who have cited its missteps, including a shareholder lawsuit and the recent cancellation of a Marine Corps program to use the company's technology to defeat improvised explosive devices, or IEDs.
Critics include Brookings Institution fellow and Wired magazine blogger Noah Shachtman, who has suggested the Tucson company provided unproven technology to a Pentagon desperate for solutions.
Hayden insists the company's anti-IED technology works, acknowledging some problems in early versions rushed into field testing.
But largely because of its failure to win a major military production contract - and perhaps partly because of the bad publicity - the price of the company's Nasdaq shares have fallen from more than $13 in mid-2006 to 18 cents as of Monday.
Applied Energetics, founded in 2002, is surviving despite recent setbacks and is moving into the market for advanced lasers for industrial uses.
Whether the company can stay afloat until it breaks into the industrial market remains to be seen.
One thing's for sure, Hayden said, the company and its roughly 40 employees are going to try.
The company is moving fast to get into the industrial market for so-called ultrashort pulse (USP) lasers for precision micromachining, Hayden said.
Applied Energetics developed its USP laser under a Navy contract, shrinking the size of the critical equipment from half a room to a box about two feet long.
In the past month, the company has announced a partnership with Missouri-based Laser Light Technologies to develop and market a USP laser micromachining system. It also has opened a "laser applications center" at its south side headquarters, where it is testing its laser cutter on different materials.
Meanwhile, the company is focusing on commercial uses for another technology, electron beams for industrial processing. Hayden said the company is working with a major chemical company - which he declined to name - to develop a system to process chemicals with a stream of electrons.
Those initiatives began after the company saw pressure on federal budgets mounting in 2009.
"We said, we need to get serious about this and look to diversify - if for no other reason than to do some things that we can talk about, and people can understand that this is a real company, doing real things," said Hayden, who worked as an engineer at Raytheon Missile Systems before co-founding Ionatron.
While lasers have been used for industrial cutting for years, USP lasers offer the ability to make very fast, precise cuts in a variety of materials, including very hard metals and minerals, without heating or otherwise changing the properties of the surrounding materials.
Applications range from drilling tiny holes in fuel injectors to manufacturing medical devices such as arterial stents.
"We saw micromachining as a growing area, and there are very few U.S. companies in this area," he said.
The market for such lasers is, indeed, growing, said Tom Hausken, director of the research firm Strategies Unlimited in Mountain View, Calif.
The overall market for fast industrial lasers has grown about 9 percent a year since 2008, to an estimated $334 million this year, Hausken said. And the submarket for such lasers for materials processing has grown even faster, at about 31 percent annually since 2008, to $47 million, he said.
"That's an area that hasn't really been affected by the downturn," he said.
Hausken said more than 30 companies are making USP lasers, including U.S. market leaders Newport Corp. and Coherent Inc. and European firms like Rofin-Sinar.
But many are entrenched in certain market niches, and there may be opportunities for smaller, more nimble players, he said.
Whether Applied Energetics is around to bring its new products to market remains an open question.
Since it will take months or years to develop a marketable laser and sell it, the company needs new government contracts to see it through, Hayden said.
The Navy, Air Force and a joint-services IED agency bankrolled the company's anti-IED device - to the tune of about $38 million.
The Marine Corps took over the program but recently canceled its last, $3 million contract to develop the system. The Marines had the company install its high-voltage IED zapper on a mine-roller system pushed ahead of a truck. Ten of the units, called the Banshee, were delivered to troops in Afghanistan before the Marine Corps pulled the plug.
Applied Energetics has a small backlog of about $1.5 million for work on a laser-guided energy project for the Army. The company had about $6.5 million in cash at the end of March, with no debt.
"In general, in a very challenging federal fiscal environment. We still need that government work in the near term in order to remain a going concern," Hayden said.
Meanwhile, the company continues to work with the Marine Corps Warfighting Laboratory to potentially further develop the Banshee, Hayden said.
Hayden said he can't talk about the Banshee's performance, and a Marine Corps spokesman did not respond to queries.
However, an article in a quasi-official Marine Corps magazine indicated the system worked.
"The Banshee supported more than 200 combat logistics patrols while in theater. In more than 15,000 miles, no vehicle that remained in a path cleared by the banshee was struck by an IED," the article said, citing information from the Warfighting Lab.
Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.
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