We have demonstrated high power monolithic surface emitting arrays, wherein we aggregate many high power (> 1 watt) surface-emitting lasers onto a single semiconductor chip. This development may significantly reduce the size of a high power laser and may permit the fabrication of large-scale, high power spectrally narrowed laser arrays at much lower cost and much longer lifetimes than conventional technology permits.
We have demonstrated the physical principles for, and are in the process of developing what we believe to be proprietary technology for on-chip wavelength "conversion" (shortening or lengthening wavelengths beyond conventional ranges for diode lasers) and control. Lasers generating these wavelengths can be used for detecting pollution, hazardous materials and chemical explosives; they also may be conducive to establishing effective countermeasures for heat-seeking missiles.
We also have eye-safe laser pumping technology that may be used in the creation of directed energy weapons for the U. S. military, as well as for the creation of eye-safe laser products for surgery, hair, tattoo and acne removal, and other commercial applications.
We were founded in 2000 by Dr. Jeffrey Ungar, a Caltech graduate and former head of Advanced Optoelectronic Device R & D at Ortel, and George Lintz, MBA, an entrepreneur with fifteen years of investment banking and finance industry experience. Under their administration, we have built a staff of more than 40 employees, including prominent scientists and engineers. Ten of our fourteen scientists have Ph.D.s. By 2002, we had created a state-of-the-art production facility that covers 18,000 square feet and allows us to conduct nearly all of our operations on site, including R&D, semiconductor wafer fabrication, processing and packaging. In its present configuration, our plant has the wafer capacity to produce three million devices per year and it is scalable to an estimated 20 million devices.
In 2002, we also produced the "first light" from our laser devices and procured our initial government contracts. In 2003, we phased in these government contracts and focused on product development for industrial, medical and defense purposes. In 2004, we initiated our first commercial shipments of our "Generation I" devices and in 2005, we introduced and began to market "Generation II" products, hired worldwide sales representatives and attracted several original equipment manufacturer ("OEM") orders. These contracts have all since terminated.
Since our inception, we have received over $6 million of development contracts from the United States Navy, United States Army, and United States Missile Defense Agency as well as from prime defense contractors in the United States and Israel. As of December 31, 2006, an agreement with the U.S. Army, two prime defense subcontract agreements with Fibertek, Inc. and Telaris, Inc. and the agreement with the Israeli prime defense contractor remain active. Please see "Management's Discussion and Analysis of Results of Financial Condition" for additional information on our material customers agreements. We have raised approximately $37 million in equity financing from investors. Total sales for the years ending December 31, 2006 and 2005 were $3,073,332 and $1,073,191, respectively. Our net loss for the years ending December 31, 2006 and 2005 were $18,692,607 and $18,600,886, respectively.
On May 12, 2006, we entered into a Share Exchange Agreement (the "Exchange Agreement") with Quintessence Photonics Corporation, a Delaware corporation ("Quintessence"), and the stockholders of all of the equity stock of Quintessence (the "Quintessence Stockholders"), and closed the transaction on the same date (the "Share Exchange"). Prior to the Share Exchange, we had 24 stockholders of record. Pursuant to the Exchange Agreement, QPC issued one share of its common stock to the Quintessence Stockholders in exchange for each share of their Quintessence common stock. The Quintessence Stockholders transferred substantially all of the shares of equity stock of Quintessence, thereby making Quintessence a subsidiary of QPC, and QPC issued an aggregate of 26,986,119 shares of its common stock to the Quintessence Stockholders. Furthermore, all options, warrants and convertible notes ("Derivative Securities") and preferred stock that may be exercised or converted into Quintessence common stock were exchanged for Derivative Securities that may be exercised or converted into shares of common stock of QPC. The number of shares of common stock of QPC underlying the new QPC Derivative Security was equal to the number of shares of common stock of QPC that would have been issued to the Quintessence Stockholders, had they exercised or converted the Quintessence Derivative Security into Quintessence common stock immediately prior to the closing of the Share Exchange. Pursuant to the Exchange Agreement, QPC issued options, warrants or convertible notes that may be exercised or converted, as the case may be, into 10,776,879 shares of common stock of QPC. After closing the Share Exchange, the Quintessence stockholders held at least 87% of the outstanding shares of common stock of QPC. We had 521 stockholders of record after the closing of the Share Exchange. This May 2006 transaction (1) involved no general solicitation or general advertising, and (2) involved no non-accredited purchasers. Thus, we believe that the offering was exempt from registration under Regulation D, Rule 505 of the Securities Act.
As of March 12, 2007, we do not have sufficient funds to continue operations for the next 12 months. We will need to raise at least $6 Million in the near future in order to maintain our operations at their current level. If we fail to raise sufficient funds, we may be required to significantly curtail our operations, which will make it highly unlikely that we can execute our business plan. We currently are in preliminary discussions with certain institutional investors and some of our stockholders regarding the possible sale of equity securities. No firm commitments have been received and we do not know at this time if a financing can be completed.
