Arizona Daily Star November 11, 2005
Bomb detector proceeds secretly
By David Wichner
Tucson-based Ionatron Inc. says testing is on schedule with its device to detect and destroy improvised bombs for the U.S. military in Iraq.
But the publicly traded company says details about testing of its Joint Improvised Explosive Device Neutralizer, or JIN, remain top-secret. And that is prompting caution on Wall Street.
Ionatron shares fell about 8 percent Thursday, dropping 82 cents to close at $9.11 in trading on the Nasdaq.
In a conference call with analysts Thursday, Ionatron CEO Thomas Dearmin said troops were trained on its remote-controlled anti-bomb vehicles in September. The company says its JIN devices can detect so-called improvised explosive devices, or IEDs, and destroy them with an electrical pulse.
These explosives have been the top killer of U.S. soldiers in Iraq.
The technology has "exceeded expectations during numerous customer testing events," the company said.
"Our counter-IED units have been tested by the military, and they have determined the units have military utility," Dearmin told analysts as he reviewed third-quarter financial results.
He said the military has asked for pricing proposals for JIN production quantities of 50, 500, 1,000 and 2,000 units.
Dearmin said the company's Stennis, Miss., manufacturing plant is being readied for production, but it is unclear when any contract would be offered or signed.
"They've asked us to ramp up the Stennis facility for production, and we're doing that on our own," he said.
An official of the Defense Department's Joint IED Defeat Task Force would confirm only that the JIN units remain "under testing."
Meanwhile, Ionatron continues to bleed red ink. In its third-quarter report, the company reported a net loss of $361,000, compared with a net loss of $896,000 a year ago.
The company posted third-quarter revenue of $6.2 million, up from $2.6 million a year ago.
The company said it has a contracts backlog of $10.1 million, expected to be completed within the next 12 months.
Dearmin said the company also continues to work on its core technology, called "laser induced plasma channel," for military and civilian applications.
The technology, which uses powerful, laser-guided electrical pulses, is being developed for applications including weapons and a kind of security force field called a "portal denial" system.
But the company's secrecy has prompted Wall Street observers to question the company's stock value. A column in Barron's Online this week noted the company's losses and its competition with other bomb-disposal technologies in recommending against the stock.
An aerospace and defense analyst said military secrecy rules on classified procurement programs often trip up Wall Street but usually don't involve a big enough chunk of a company's business to matter much.
"They're usually buried in the bowels of a large company somewhere," said Paul Nisbet, a principal with JSA Research in Newport, R.I.
Nisbet was not familiar with Ionatron, but said the company's references to a finding of "military utility" and the military's interest in quantity pricing suggest the Defense Department is interested in ordering at least some JINs.
A military analyst said the Defense Department has cast a veil of secrecy over its anti-IED program - which also includes electronic jamming devices - and for good reason.
"The secrecy end of it is, they would just as soon not tell the enemy what is working and what is not working," said John Pike, director of GlobalSecurity.org.
"There just isn't an awful lot of information coming out about it."
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