UNITED STATES SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-K/A


Amendment
No. 2


x
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
the fiscal year ended December 31, 2007


or


o
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 [NO FEE REQUIRED]


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 incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)





10905
      Technology Place, San Diego, CA
            
            92127(Address
      of principal executive offices)
            
            (Zip
      code)




Registrant’s
telephone number, including area code: (858) 946-6800




(Former
name, former address and former fiscal year, if changed since last
report)




Securities
      registered pursuant to Section 12(b) of the Act:Title
      of each class
            
            Name
      of each exchange on which registered


Securities
registered pursuant to Section 12(g) of the Act:


Common
Stock, $.01 par value




Title of
Class


Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.
Yes o No x


Indicate
by check mark whether the registrant (1) 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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No o


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
Act.


Large
accelerated filer o     Accelerated
filer o     Non-accelerated
filer o Smaller
reporting company x


Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x


The
aggregate market value of common stock held by non-affiliates of the Registrant
as of June 30, 2007 was approximately $6.5 million. The aggregate market
value was based on the closing price on June 30, 2007 for the common stock
as quoted on the over-the-counter bulletin board, multiplied by the number of
shares outstanding on June 30, 2007, excluding the common stock held by
executive officers, directors and stockholders whose ownership exceeded 5% of
the common stock outstanding at June 30, 2007. Exclusion of such shares
should not be construed to indicate that any such person possesses the power,
direct or indirect, to direct or cause the direction of the management or
policies of the Registrant or that such person is controlled by or under common
control with the Registrant.


Number
of shares outstanding of common stock: Common Stock, $.01 Par Value – 53,839,559
shares as of March 31, 2008.









EXPLANATORY
NOTE




This
Amendment No. 2 on Form 10-K/A, or the Amendment, amends JMAR Technologies,
Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007, originally filed on April 2, 2008, as amended by Amendment No. 1 filed on
April 9, 2008 (the “Original Filing”). The purpose of this Amendment is to
include certain information required by Part III the Annual Report on Form 10-K
that was omitted from Part III of the Original Filing because it was to be
incorporated by reference to the Company’s definitive Proxy Statement for the
2008 Annual Meeting of Stockholders. Because the Company’s definitive Proxy
Statement will not be filed within 120 days after the end of the fiscal year
ended December 31, 2007, the information required by Part III of the Annual
Report on Form 10-K cannot be incorporated by reference and therefore must be
included in the Annual Report. This Amendment contains the information that was
previously omitted from Part III of the Annual Report. In addition, in
connection with the filing of this Amendment and pursuant to the rules of the
Securities and Exchange Commission, the Chief Executive Officer and the Chief
Financial Officer of the Company have reissued their certifications.
Accordingly, Item 15 of Part IV has also been amended to reflect the filing
of such certifications.




Except as
described above, no other changes have been made to the Original Filing. The
Original Filing continues to speak as of the dates described in the Original
Filing, and we have not updated the disclosures contained therein to reflect any
events that occurred subsequent to such dates. Accordingly, this Amendment
should be read in conjunction with the Company’s filings made with the
Securities and Exchange Commission subsequent to the filing of the Original
Filing, as information in such filings may update or supersede certain
information contained in this Amendment. In this Amendment, unless the context
indicates otherwise, the terms “Company,” “we,” “us,” and “our” refer to JMAR
Technologies, Inc. and our subsidiaries.










TABLE OF
CONTENTS


PART
      IIIItem 10.
      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTItem 11.
      EXECUTIVE COMPENSATIONItem 12.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERSItem 13.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSItem 14.
      PRINCIPAL AUDITOR FEES AND SERVICESPART
      IVItem 15.
      EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESIndex
      to ExhibitsEXHIBIT
      31.1EXHIBIT
      31.2EXHIBIT
      32.1














PART III




Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


Directors


The names
of each of the Company’s directors, and certain information about them, are set
forth below:


Name
      of Nominee
            
            Age
            
            Principal
      Occupation
            
            Director
      SinceC.
      Neil Beer, Ph.D.
            
            73
            
            President
      and Chief Executive Officer of the Company
            
            
            1988Charles
      A. Dickinson
            
            85
            
            Chairman
      of the Board
            
            
            2001J.
      Paul Gilman, Ph.D.
            
            55
            
            Director,
      Oak Ridge Center for Advanced Studies
            
            
            2005Richard
      J. Naughton
            
            61
            
            President,  International
      Data Security
            
            
            2007James
      B. McCarthy
            
            56
            
            Chairman
      and CEO of Gemini Consulting Group
            
            
            2008




C. NEIL BEER, Ph.D.was
elected President and Chief Executive Officer of JMAR Technologies, Inc. in
April, 2006. He has served on the JMAR Board of Directors since July 1988
and was an employee of the Company from May 1991 until November 1992.
Prior to assuming the CEO position at JMAR, Dr. Beer was the Executive Vice
President of Computer Technology Associates, Inc. From April 1996 until
April 2002, Dr. Beer was the President of SECON, a software systems
engineering company supporting the national intelligence community. He was
founder and chairman of the Teller Foundation from September 1989 to
June 1996, focused on the applications of science and technology consistent
with the ideas and ideals of Dr. Edward Teller. From September 1986 to
October 1989, he was President and Chief Executive Officer of Thermo
Technologies Corporation which develops advanced lasers, optics, signal
processing and energy conversion hardware. Previously, he was Deputy for
Strategic Defense, Military Applications, at Livermore National Laboratory.
During his career with the U.S. Air Force, Dr. Beer achieved the rank of
Major General and was deputy Chief of Staff, plans and programs, for the Air
Force Space Command. Earlier, while assigned to the office of the Secretary of
Defense, he worked with the White House staff on policy and support
requirements. Dr. Beer was associate professor of mathematics at the Air
Force Academy and a combat pilot in Southeast Asia . Dr. Beer graduated
magna cum laude with a B.S. degree in engineering from the University of
Oklahoma where he also received his doctorate in Operations Research/Mathematics
in 1972. Dr. Beer is recipient of the NDIA Medal for Outstanding
Achievement in Space.




CHARLES A. DICKINSONwas
elected Chairman of the Board in April, 2006 and has been a director of the
Company since August 2001. Mr. Dickinson twice served as Chairman of
the Board of Directors of Solectron Corporation, a worldwide leader in
electronics manufacturing, assembly, and test services for electronic companies
around the world. He was a director of Solectron from 1984 to 2004 and served as
Chairman from 1986 to 1990 and from 1994 to September 1996. While an
outside director, he accepted the assignment of establishing Solectron’s
European business in 1991 and served as President of Solectron Europe from 1993
to February 1996. From January 2000 to August 2001 he was
Chairman of the Board of Directors of SAL, Inc. (which was acquired by the
Company in 2001). Before joining Solectron, Mr. Dickinson was Chairman,
President and CEO of Vermont Micro Systems, Inc. He was also CEO of Dataproducts
Corporation and he served seven years in various general management roles at
Control Data Corporation. Prior to that, he was the Corporate Vice President of
Manufacturing for Memorex and spent 20 years at RCA. He has served on the
Boards of many other public and private companies over the years and currently
is the Chairman of LeCroy Corporation, Inc., a public company, and
privately-held Aavid Thermal Technologies, Inc. and Nypro, Inc..
Mr. Dickinson holds a Bachelors of Electrical Engineering and an MBA from
the University of Minnesota.




J. PAUL GILMAN, Ph.D.was
elected as a director of the Company in April, 2005. Dr. Gilman joined Covanta
Energy, Inc. in 2008 as Senior Vice President, Chief Sustainability
Officer.  He is responsible for implementing Covanta’s environmental
compliance, safety programs, and sustainability initiatives for further reducing
the company’s environmental impact while increasing the use of its
technologies.  Before joining Covanta he was the Director of the Oak
Ridge Center for Advanced Studies.  He served as the Assistant
Administrator for Research and Development and Science Advisor at the U.S.
Environmental Protection Agency from 2002 until 2004.  Prior to EPA,
he was Director for Policy Planning at Celera Genomics.  Dr. Gilman
was the Executive Director of the life sciences and agriculture divisions of the
National Research Council of the National Academies of Sciences and Engineering
from 1993 until 1998.  Other government service included the Executive
Office of the President as the Associate Director of the Office of Management
and Budget (OMB) for Natural Resources, Energy, and Science and also as
Executive Assistant to the Secretary of Energy for technical
matters.  He has 13 years of experience working on the staff of the
United States Senate in several capacities, including as a Congressional Science
Fellow sponsored by the American Association for the Advancement of Science and
as the Staff Director of the Subcommittee on Energy Research and
Development.




1




RICHARD J. NAUGHTON was
elected as a director of the Company and appointed Chairman of the Board's Audit
Committee in November 2007. Admiral Naughton’s experience is in operational,
financial and technical management which includes innovative policy development,
long-term strategic business planning, identification of growth and acquisition
opportunities and government relations. Admiral Naughton retired from active
military duty in January, 2004 with more than 15 years of top-level executive
management experience. His last assignment was as Superintendent of the United
States Naval Academy. From 2000 to 2002, he served as Commander, Naval Strike
& Air Warfare Center. Prior to that, Admiral Naughton served as Commander,
Carrier Group FOUR/Carrier Striking Force where he trained deploying battle
groups consisting of more than 100,000 sailors and marines. From 1996 to 1998,
he was Director for Plans and Policy (J-5) United States Transportation Command
where he developed an innovative strategy for worldwide transportation needs. He
also served as the Commanding Officer of the Nuclear Powered Aircraft Carrier,
USS Enterprise. Since retiring from the Navy, the Admiral has provided
consulting services to major defense and transportation companies including
Lockheed Martin and Northrop Grumman, and was CEO for Xenonics Holdings, Inc., a
world leader in high intensity illumination and low light vision systems for
defense and security applications. He is president of International Data
Security, which provides data center and managed services to marine vessels in
metropolitan areas. Admiral Naughton holds a BS in Engineering from the U.S.
Naval Academy, an MS in Aeronautical Engineering and a Professional Aeronautical
Engineer degree from the U.S. Naval Postgraduate School (both with distinction),
and is a graduate from the Industrial College of the Armed Forces.





JAMES B. MCCARTHYwas elected
as a director of the Company in January, 2008. Mr. McCarthy is currently
Chairman and CEO of Gemini Consulting Group, an international management
consulting and development company focusing on the health care industry. Prior
to forming Gemini, Mr. McCarthy was the Executive Vice President of a
Chicago-based health care consulting company from 1984 to 1991. He also held
positions as Vice President and General Manager of a medical device
manufacturing company in Chicago from 1981 to 1984, and prior to that he spent
five years in increasingly responsible planning positions with the Medical
Products Division of 3M Company. Mr. McCarthy received his B.A. from the
University of Notre Dame, his J.D. from the Loyola University School of Law, and
his M.B.A. from the Keller Graduate School of Management. He is a member of
various state and national organizations, including the American Health Lawyers
Association. He also serves on the National Advisory Council of the Keller
Graduate School of Management, Chicago, Illinois. Mr. McCarthy is Chairman of
the Board of Directors of Sirigen, Inc., Santa Barbara, California; and is a
member of the Board of Directors of Hinsdale Bank & Trust Company, Hinsdale,
Illinois; and Protein Polymer Technologies, Inc. (PPTI), San Diego,
California.




Executive
Officers


The
executive officers of the Company are as follows:


Name
            
            AGE
            
            PositionC.
      Neil Beer, Ph.D.
            
            
            73
            
            
            President,
      Chief Executive OfficerEdward
      C. Hall
            
            
            67
            
            
            Vice
      President, Chief Financial Officer and SecretaryDavid
      G. Wessing
            
            
            49
            
            
            Chief
      Operating Officer and Vice President of Sales and
  Marketing


Officers
of the Company are elected annually by the Board of Directors and hold office
until their successors are duly elected and qualified.




C. NEIL BEER, Ph.D. –The
background and experience of Dr. Beer, President and Chief Executive
Officer, is set forth above in “Directors”.




EDWARD C. HALLjoined JMAR
August 2007 and was elected Chief Financial Officer in October 2007. Prior
to this CFO assignment Mr. Hall was Chief Financial officer of
Grubb&Ellis|BRE, a major commercial real estate brokerage firm in San Diego
from 2005 to 2007.He has over 30 years experience as a chief financial officer
of public and private companies including several companies in the life science
industry in San Diego in the previous ten years. Previous positions include CFO
for Aethlon Medical, Inc.,VP, Finance and CFO for Chromagen, Inc., a
privately-held biotechnology company; VP, Finance and CFO for Cytel Corporation,
a software and services company providing clinical trial design, simulation and
monitoring for pharmaceutical research; and CFO for Medical Device Technologies,
Inc., a developer of emerging medical technologies. Hall holds a BS in
Aeronautical Engineering from Princeton University and an MBA from Harvard
Business School. He is a partner with Tatum,LLC, a national executive services
firm.




DAVID G. WESSINGjoined the
Company as Chief Operating Officer and Vice President of Sales and Marketing on
March 1, 2008. Mr. Wessing has approximately twenty years of management
experience in product development, strategic business development and production
/ supply chain management. Prior to joining the Company, Mr. Wessing served as
Vice President and General Manager, Embedded Systems at GE Fanuc, a General
Electric Company.  He joined GE Fanuc through an acquisition in 2006
of SBS Technologies, Inc, a leading provider of embedded computing technology
for defense and aerospace applications, where Mr. Wessing spent four years as
Vice President and General Manager, responsible for doubling sales revenues
during that period as well as adding a robust business development organization
supporting sales efforts. Mr. Wessing has also held senior management positions
at General Dynamics Information Systems, as Director, Advanced Programs and
Business Development (1998-2001); Program Manager, Avionics Research and
Development Programs for Computing Devices International (1996-1998); and
Manager, Business Development for McDonnell Douglas Aerospace (1989-1996). Prior
to entering the corporate world, Mr. Wessing served in the U.S. Marine Corps as
a pilot, with primary duties including leadership positions in operations,
maintenance, training and safety. He holds an MBA from Maryville University, St.
Louis, MO, and a BS in Engineering from the United States Naval Academy in
Annapolis, MD.




2




Corporate
Governance Matters




The Board
is elected by the shareholders to oversee their interests in the long-term
health and the overall success of the Company and its financial strength. The
Board serves as the ultimate decision-making body of the Company, except for
those matters reserved to or shared with the shareholders. The Board selects and
oversees the members of senior management, who are charged by the Board with
conducting the business of the Company.




Independence
Determination




Although
the Company is not listed on Nasdaq, it follows the Nasdaq definition of
director independence. Under the Nasdaq listing standards, a director is deemed
to be independent if he or she is not an officer or employee of the Company and
has no relationship which, in the opinion of the Board of Directors, would
interfere with the director’s exercise of independent judgment in carrying out
the responsibilities of a director. Specific relationships that would result in
a director not being independent include employment by the Company within the
past three years, receiving payments from the Company in excess of $60,000
during any of the past three years (other than Board or Committee fees) and
being related to an executive officer of the Company.




The Board
has determined that four of its five directors are independent under the Nasdaq
listing standards, with Dr. Beer (President and CEO) not meeting the Nasdaq
definition of independence. The Board intends to review the independence of its
directors on at least an annual basis. Since August 2002, the position of
Chairman of the Board has also been held by an independent
director.




The Board and Board
Committees




The
following table lists the current members of each of the Board’s standing
Committees.




Nominatingand
      CorporateBoard
      Member
            
            Audit
            
            Compensation
            
            GovernanceJ.
      Paul Gilman
            
            X
            
            
            
            XCharles
      A. Dickinson
            
            
            
            Chair
            
            ChairRichard
      J. Naughton
            
            Chair
            
            
            
            XJames
      B. McCarthy
            
            
            
            X
            
            X




The Audit
Committee




The Audit
Committee of the Company’s Board of Directors acts in accordance with a written
charter first adopted and approved by the Board. A copy of the revised Audit
Committee Charter is available on the Company’s website at www.jmar.com. Under
the terms of its Charter, the Audit Committee represents and assists the Board
in fulfilling its oversight responsibility relating to the integrity of the
Company’s financial statements and the financial reporting process, the systems
of internal accounting and financial controls, the annual independent audit of
the Company’s financial statements, the Company’s compliance with legal and
regulatory requirements and its ethics program, the independent auditors’
qualifications and independence and the performance of its independent auditors.
In fulfilling its duties, the Audit Committee, among other things,
shall:




·
              have the sole authority and responsibility to hire, evaluate and,
      where appropriate, replace the independent
  auditors;
 
 ·
              review
      with management and the independent auditors, the interim financial
      statements and the Company’s disclosures under Management’s Discussion and
      Analysis of Financial Condition and Results of Operations prior to the
      filing of the Company’s Quarterly Reports on Form
  10-Q;
 
 ·
              review
      with management and the independent auditors the financial statements to
      be included in the Company’s Annual Report on Form 10-K (or the annual
      report) including (a) their judgment about the quality, not just
      acceptability, of the Company’s accounting principles, including
      significant financial reporting issues and judgments made in connection
      with the preparation of the financial statements; (b) the clarity of
      the disclosures in the financial statements; and (c) the Company’s
      disclosures under Management’s Discussion and Analysis of Financial
      Condition and Results of Operations, including critical accounting
      policies;
 
 ·
              review
      and discuss with management and the independent auditors the Company’s
      policies with respect to risk assessment and risk
    management;
 
 ·
              review
      and discuss with management and the independent auditors the Company’s
      internal controls, and the Company’s disclosure controls and procedures
      and quarterly assessment of such controls and
  procedures;
 
 ·
              establish
      procedures for handling complaints regarding accounting, internal
      accounting controls, and auditing matters, including procedures for
      confidential, anonymous submission of concerns by employees regarding
      accounting and auditing matters;
and
 
 ·
              review
      and discuss with management and the independent auditors the adequacy and
      effectiveness of the Company’s legal, regulatory and ethical compliance
      programs.
  3
 Audit Committee Member
Qualifications:


In
addition to meeting the Nasdaq definition of independence, members of the Audit
Committee must also satisfy the following requirements: 1) each member meets
additional criteria for independence under the Sarbanes-Oxley Act of 2002 (which
prohibits the receipt of any compensatory
payments from the Company, other than Board or Committee fees), 2) no member has
participated in the preparation of the Company’s financial statements during the
past three years, 3) each member must also be able to read and understand
fundamental financial statements, and 4) at least one member must meet certain
additional financial sophistication requirements. Finally, the Company is also
required to disclose whether the Audit Committee has a member who is an “audit
committee financial expert” as defined in SEC Rules.




The Compensation
Committee




Under the
terms of its Charter, the Compensation Committee has overall responsibility for
evaluating and approving all director and officer compensation plans, policies
and programs of the Company. A copy of the Compensation Committee Charter is
available on the Company’s website at www.jmar.com.


In
fulfilling its duties, the Compensation Committee, among other things,
shall:




·
            review
      and approve all corporate goals and objectives relevant to the
      compensation of the Chief Executive
Officer;





·
            evaluate
      the performance of the Chief Executive Officer in light of approved
      corporate goals, performance goals and objectives and determine his
      compensation level;





·
            review
      and approve the compensation of the Company’s executive
      officers;





·
            review
      and approve all employment agreements, severance agreements or
      arrangements, change in control agreements/provisions, and any special or
      supplemental benefits for each executive
  officer;





·
            approve,
      disapprove, modify or amend all non-equity plans designed and intended to
      provide compensation primarily for
officers;





·
            make
      recommendations to the Board regarding adoption of compensation
      plans;





·
            administer,
      modify or amend the stock option and other equity incentive plans;
      and





·
            review
      and make recommendations to the Board on matters concerning the directors’
      annual retainer, as well as any other compensation programs for the
      directors, committee chairpersons and committee members, consistent with
      any applicable requirements of the Nasdaq listing
    standards.


The Nominating and Corporate
Governance Committee




Under the
terms of its Charter, the Nominating and Corporate Governance Committee is
responsible for considering and making recommendations concerning the function
and needs of the Board, and reviewing and developing corporate governance
guidelines. A copy of the Committee’s Charter is available on the Company’s
website at www.jmar.com.


In
fulfilling its duties, the Nominating and Corporate Governance Committee, among
other things, shall:




·
            identify
      individuals qualified to be Board members consistent with criteria
      established by the Board;





·
            recommend
      to the Board nominees for the next annual meeting of
      shareholders;





·
            evaluate
      individuals suggested by
shareholders;





·
            review
      the performance of the Board on an annual
basis;





·
            develop
      and recommend to the full Board a set of corporate governance guidelines,
      including policies furthering open communication among members of the
      Board, senior management and outside advisors, requiring regular meetings
      of the independent directors in executive session and requiring continuing
      education of directors in compliance with applicable Nasdaq Rules. The
      Committee shall review such guidelines annually and recommend any
      modifications thereto; and





·
            periodically
      review all standing or any ad hoc committees and recommend to the full
      Board, as appropriate, changes in number, function or composition of
      committees. In evaluating candidates for nomination to committees of the
      Board, the Committee shall take into account the applicable requirements
      for members of committees of boards of directors under the Securities
      Exchange Act of 1934 and the Nasdaq listing
  standards.





4


Code of Conduct




The
Company has adopted a Code of Business Conduct and Ethics in compliance with the
applicable rules of the Securities and Exchange Commission that applies to all
employees, including all officers, and our non-employee directors, and a Code of
Ethics for our Chief Executive Officer, Division General Managers and all senior
financial officers, including the Chief Financial Officer. The Company has filed
a copy of these policies as exhibits to the Form 10-K for the year ended
December 31, 2003. In the event we amend or waive any of the provisions of
the Code of Ethics, we intend to disclose the same on the Company’s website at
http://www.jmar.com under the caption “Corporate Governance – Code of
Ethics.”




Compensation of
Board of Directors




During
2007, directors who were not salaried employees of the Company (“Non-Employee
Directors”) were paid a quarterly retainer of $3000, with one-half of the fee
paid in shares of Common Stock.  In April, 2007, the Board approved a
modification of the director compensation arrangements to provide that all
meeting fees shall be paid in shares of common stock. Meeting fees paid in the
common stock equivalent are: $2,000 for each regular Board of Director’s
meeting, $500 for each telephonic Board Meeting and $500 for each formal
Committee meeting. All shares issued to directors were issued from the 2006
Equity Incentive Plan which was approved by the shareholders in June 2006
and increased by the directors in February 2008. The number of shares issued has
been calculated using the closing price equal to 100% of the average of the
closing prices of the stock for the five days prior to the date of grant. Shares
granted in the future will be calculated using the closing price for the
Company’s common stock for the date such amount is owed.





Mr. Dickinson
elected to be paid in stock in lieu of the cash portion of his quarterly
retainers and monthly Chairman fee. Mr. Dickinson is paid a fee of $2,000
per month for his services as Chairman of the Board. In recognition of the
responsibilities of the Audit Committee Chairman, in November, 2007 the Board
approved a monthly fee of $1,000 per month to be paid in cash to
Mr. Naughton as Chairman of the Audit Committee. All directors are eligible
to receive option and share grants under the Company’s shareholder-approved
Stock Option Plans and the 2006 Equity Incentive Plan on the same basis as key
employees of the Company. Grants of options and shares to directors from these
plans will be made by the Board’s Compensation Committee on a case-by-case basis
on such terms as the Committee in its discretion may decide. The Compensation
Committee’s policy has been to make an annual grant of options to the directors
at the time of the Annual Shareholders Meeting. No such grant was made in 2007,
as no shareholder meeting was held in 2007. The Compensation Committee’s policy
is to grant options with an exercise price equal to the fair market value of the
stock.





Directors
are also reimbursed for their travel, lodging and food expense incurred when
attending Board and Committee meetings.





Director
Compensation Table




The
following table sets forth compensation information with respect to all
non-employee directors of the Company for amounts earned during 2007.
Compensation information for the Company’s Chief Executive Officer, Dr. C.
Neil Beer is reported in the Summary Compensation Table below.




Name
              
              Year
              
              Fees
      Earned or Paid in Cash (1)
              
              
              Options
      Awards (2)
              
              
              All
      Other Compensation (3)
              
              
              TotalCharles
      A. Dickinson
              
              2007
              
              $
              -
              
              
              $
              8,057
              
              
              $
              79,688
              
              
              $
              87,745J.
      Paul Gilman
              
              2007
              
              $
              6,000
              
              
              $
              4,823
              
              
              $
              45,500
              
              
              $
              56,323Richard
      J. Naughton
              
              2007
              
              $
              2,000
              
              
              $
              -
              
              
              $
              7,000
              
              
              $
              9,000Barry
      Ressler (4)
              
              2007
              
              $
              6,000
              
              
              $
              8,057
              
              
              $
              14,500
              
              
              $
              28,557Edward
      P. O'Sullivan II (5)
              
              2007
              
              $
              2,500
              
              
              $
              -
              
              
              $
              3,000
              
              
              $
              5,500




(1)
            
            Amounts
      shown represent fees earned or paid in cash for services as director in
      2007.(2)
            
            Amounts
      shown for option awards reflect the dollar value recognized for financial
      statement purposes for the fiscal year ended December 31, 2007 in
      accordance with Financial Accounting Standards Board Statement of
      Financial Accounting Standards No. 123(R), Share-Based Payment(“FAS 123(R)”). The costs for awards disregard adjustments for
      forfeiture assumptions. The full grant date fair value of stock options
      granted to Messrs. Dickinson, Gilman, Ressler and O’Sullivan during
      the fiscal year ended December 31, 2007 was $6,902 as computed in
      accordance with FAS 123(R). A discussion of the relevant assumptions used
      in the valuation is contained in Note 12 to the Company’s audited
      consolidated financial statements for the fiscal year ended
      December 31, 2007 included in Part II, Item 8 of the
      Company’s Annual Report on Form 10-K filed with the SEC on April 2,
      2008. As of December 31, 2007, the total number of stock options
      outstanding for each director was as follows: Mr. Dickinson (62,750),
      Dr. Gilman (20,000), Mr. Naughton (0), Mr. O’Sullivan II
      (28,417) and Mr. Ressler (82,750).(3)
            
            Amounts
      shown for All Other Compensation consist of the dollar value of shares of
      common stock issued to directors in payment of meeting fees, quarterly
      retainers, monthly Chairman fees and travel-related expenses. The amounts
      shownreflect
      the dollar value recognized for financial statement purposes for the
      fiscal year ended December 31, 2007.(4)
            
            Mr. Ressler
      resigned as a director effective on December 1, 2007.(5)
            
            Mr. O’Sullivan
      resigned as a director effective on April 2,
  2007.






5




Section 16(a)
Beneficial Ownership Reporting Compliance




Executive
officers, directors and certain persons who own more than ten percent of the
Common Stock are required by Section 16(a) of the Securities Exchange Act of
1934 to promptly file a Form 4 with the SEC reporting any changes in ownership
of Common Stock and to furnish us with copies of such reports. Copies of these
reports are available on the SEC’s website at www.sec.gov and on
the Company’s website at www.jmar.com. Any
transactions not reported currently on a Form 4 must be reported on a
Form 5 filed on an annual basis. We have received written representations
from each reporting person who did not file a Form 5 annual report that no
Form 5 was due. Based on our review of the filed reports and these
representations, we believe that all required Section 16(a) reports were timely
filed in 2007.




Item 11. EXECUTIVE
COMPENSATION




Compensation Discussion and
Analysis




The
Compensation Committee of the Board of Directors (the “Committee”) is
responsible for approving the compensation structure for our executive officers
and for annually reviewing it for competitiveness.




Compensation
Philosophy and Objectives




Hiring
and retaining quality employees are key factors to our success. Our compensation
programs for executive officers are designed to (1) attract talented
individuals who are capable of growing the Company, (2) retain key
individuals, (3) motivate executive officers to increase the Company’s
performance for the benefit of stockholders, and (4) reward executive
officers for exceptional individual contributions to the achievement of our
business objectives. Our compensation programs are also designed to provide a
direct, meaningful link between the Company’s annual business plan and
individual performance and compensation earned.




Our
compensation policy applicable to all employees strives to establish and
maintain a system of compensation that, with reasonable availability of
resources, is consistent with total compensation in comparable labor markets for
similar jobs being performed. Our compensation system is driven by a number of
factors including, but not limited to, our ability to pay based on current
economic and business factors, the current market value of a position based on
the skills, knowledge, experience and competencies required of a fully competent
incumbent; internal equity of a job as compared to other similar jobs within the
organization; and the strategic value of a position.




We
believe that the compensation of our executives should largely reflect their
success as a management team, rather than as individuals, in attaining key
operating objectives, such as growth of revenues, and ultimately, in realizing
increased stockholder value. We believe that the performance of the executives
in managing our company, considered in light of general economic and specific
company, industry and competitive conditions, should be the basis for
determining their overall compensation. We also believe that our executives’
compensation should not be based on the short-term performance of our stock,
whether favorable or unfavorable. Rather, we believe that the price of our stock
will, in the long-term, reflect our operating performance, and ultimately, the
successful management of the Company by our executives. We seek to provide
long-term incentives through awards of options and other forms of equity from
our stockholder-approved equity incentive plans.




Components of
2007 Executive Compensation




Our 2007
executive compensation package consisted of base salary and long-term incentive
equity awards (consisting of stock options). We also provide a package of
employee benefits (health, disability and life insurance) intended to be
competitive for companies of our size. In earlier years, we also provided for a
management cash bonus plan which provided for payment of bonuses based upon the
achievement of certain individual performance goals and our financial
performance objectives. No bonus plan was approved for 2007 or
2008.




Base Salary




The base
salaries for executive officers are established considering a number of factors,
including the Company’s financial condition; the executive’s individual
performance and measurable contribution to the Company’s success; and pay levels
of similar positions with comparable companies in the industry. The Compensation
Committee supports the Company’s compensation philosophy of moderation for
elements such as base salary and benefits. Base salary decisions are made as
part of the Company’s annual review process. Generally, base salaries are
maintained to be comparable to salaries paid by similar size, high technology
public companies. In determining the level of base salaries and other
compensation, the Compensation Committee had access to the results of several
salary surveys procured by the Company.




Dr. Beer
was appointed Chief Executive Officer of the Company in April 2006. The
base salary payable to Dr. Beer for 2006 was initially set at $225,000 per
annum, increasing to $250,000 per annum on July 1, 2006. This was determined as
a result of arms’ length negotiations between Dr. Beer and the other
members of the Board of Directors. The members of the Compensation Committee
believe that Dr. Beer’s base salary for 2006 was set at a level that was
competitive with the base salary levels in effect for chief executive officers
at similarly situated companies. In February, 2007, in order to enable the
Company to conserve cash, Dr. Beer agreed to reduce his base salary to
$125,000.




6




Although
the Committee considers the Company’s general financial performance and
financial condition in its determination of the appropriate levels of base
salaries for executive officers, it does not tie the base salaries to a specific
measure of Company financial performance.




In
February, 2007, in order to conserve cash, in lieu of salary increases for 2007,
the Compensation Committee approved the creation of a stock bonus pool of a
maximum of 230,000 shares of common stock to be awarded to certain executive
officers and key employees upon the achievement of specific short-term business
goals, plus an additional maximum of 126,667 shares to be issued to the CEO
based upon the amount of shares earned by the other executive officers. The plan
called for achievement of the goals by March 31, 2007. In April, 2007, the
Compensation Committee approved the issuance of 20,000 and 25,000 shares,
respectively, to two (now former) executive officers, 40,000 shares to a key
employee who was not an executive officer, and 78,333 shares to Dr. Beer.
In March, 2007, the two executive officers agreed to reduce their base salaries
by 50%.




The
Committee’s view is that, subject to significant changes in the Company’s
financial condition, future adjustments to base salaries will be modest and that
increases in compensation for the executive officers will be through
performance-based bonus plans and stock option grants. In consideration of the
reduction of his salary and successful arrangement of the $7.5 million Term Note
financing with Laurus, the Board of Directors awarded Dr. Beer a $100,000 bonus
in October 2007.




Long-Term Equity Incentive
Awards




The
Company’s stockholder-approved 1999 Stock Option Plan authorizes the
Compensation Committee to grant awards of stock options and its 2006 Equity
Incentive Plan authorizes the Compensation Committee to grant awards of stock
options, restricted stock, stock bonuses, stock appreciation rights and other
equity-based awards to its executive officers and other key employees. The goals
of the Company’s equity awards are to: (1) align the interests of each
executive officer with those of our stockholders by providing each individual
with a significant incentive to manage the Company from the perspective of a
stockholder with an equity stake in the business, and (2) encourage
long-term retention of key employees by virtue of vesting conditions imposed on
typical equity awards. Employees must remain employed by the Company for a fixed
period of time in order for the equity awards to vest fully. Typically, options
awards vest over a three-year period at the rate of one-third per year and have
a term of ten years. Vesting ceases upon termination of employment and unvested
options terminate upon termination of employment. The right to exercise vested
options ceases 60 days after termination of employment, except that in the
case of death the exercise period extends until one year after such termination
of employment. Prior to the exercise of an option, the holder has no rights as a
stockholder with respect to the shares subject to such option, including voting
rights and the right to receive dividends or dividend equivalents. Between June,
2003 and June, 2004, options were granted to directors in payment of director
meeting fees with an exercise price of $1.00 below market value in order to
provide an equivalent value in lieu of the prior grant of shares of common stock
(with the appropriate compensation expense recorded in the Company’s financial
statements). Except for these options, all options granted to date have an
exercise price equal to 100% of the average of the closing prices of the stock
for the five days prior to the date of grant. Options granted in the future are
planned to be granted using the closing price for the Company’s common stock for
the date such amount is owed.




Perquisites, Personal Benefits and
Other Compensation




The
Company does not generally provide significant perquisites or personal benefits
to executive officers, although pursuant to an employment agreement the Company
agreed to pay or reimburse Dr. Beer for all reasonable and allowable expenses
incurred by Dr. Beer in relocating him and his family from Colorado
Springs, Colorado to San Diego, California. These expenses include the cost of
commissions, fees, escrow and closing costs involved with the purchase of a
residence in the San Diego area, and transport of automobiles, household goods,
and travel. In addition, in the event that Dr. Beer’s Colorado residence
does not sell in a timely manner, in order to expedite Dr. Beer’s purchase of a
residence in San Diego and to further facilitate the performance of
Dr. Beer’s duties, the Compensation Committee authorized the payment of
$65,000 in additional compensation to Dr. Beer to defray the additional
living costs and associated expenses of maintaining two houses. The amounts paid
to Dr. Beer are described more fully in the footnotes to the Summary
Compensation Table below. Also included in the Summary Compensation Table for
each of the executive officers under the heading “Other Compensation” is the
value of the Company’s matching contributions to the executive officers’ 401(k)
accounts and the value of life insurance premiums and certain housing and
transportation costs. The Company match portion of the 401(k) plan is available
to all employees of the Company.




Severance
Arrangements




The
Company has no contractual obligations to pay severance or other enhanced
benefits to its executive officers upon termination of their employment, except
as follows: 1) the Company,  in the event their employment is
terminated without cause, has agreed to provide Dr. Beer with minimum
severance benefits equal to six months of his base salary and Mr. Hall with an
escalating severance starting at two month’s of his base salary after 90 days of
employment with an additional month’s termination pay after each additional six
months of employment up to a limit of 12 months pay and 2) the Company
agreed to provide a former executive with severance benefits equal to 13 weeks
of base salary in the event his employment was terminated without cause, which
were paid upon closure of the Company’s Vermont Operations in October
2007.




7




Stock Option Grant Timing and
Price




All stock
option grants to employees, including the executive officers, are made either
from the Company’s 1999 Stock Option Plan or from the Company’s 2006 Equity
Incentive Plan and are required to be approved by the Compensation Committee.
The exercise price of options were set equal to the average of the closing
prices of the Company’s common stock as reported on the OTCBB for the five
trading days immediately preceding the date of the grant. Except as noted above
regarding certain options granted to the directors in 2003 and 2004 in lieu of
payment of meeting fees in shares, the Company has never granted options with an
exercise price that is less than the fair market value of the Company’s Common
Stock on the grant date, nor has it granted options which are priced on a date
other than the grant date. Options granted in the future are planned to be
granted using the closing price for the Company’s common stock for the date such
amount is owed.




Pension Plans




The
Company has no pension plans or other defined benefit retirement plans that
benefit the executive officers or directors.




Tax Deductibility
of Executive Compensation




Section 162(m)
of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of the Company’s executive officers,
to the extent that compensation exceeds $1.0 million per covered officer in
any year. The limitation applies only to compensation which is not considered to
be performance-based. The non-performance based compensation paid in cash to the
Company’s executive officers for 2007 did not exceed the $1.0 million limit per
officer, and the Committee does not anticipate that the non-performance based
compensations to be paid in cash to the Company’s executive officers for 2008
will exceed that limit. The Company’s 1999 Stock Option Plan and its 2006 Equity
Incentive Plan have been structured so that any compensation deemed paid in
connection with the exercise of stock option grants made under that plan with an
exercise price equal to fair market value of the option shares on the grant date
will qualify as performance-based compensation which will not be subject to the
$1.0 million limitation. Other types of equity-based awards which may be
granted under that plan may also be structured so as to qualify as performance
based compensation.




REPORT OF THE COMPENSATION
COMMITTEE




The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis set forth above. Based on such review and
discussions, the Compensation Committee has recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this
Annual Report on Form 10-K for the year ended December 31, 2007, filed by
us with the Securities and Exchange Commission.




COMPENSATION
      COMMITTEE/s/
            
            Charles
      A. Dickinson






8




Summary
Compensation Table




The
following table sets forth summary information on the compensation earned during
2007 for services rendered in all capacities by the Company’s Chief Executive
Officer, Chief Financial Officer(s) and each of the Company’s three other most
highly compensated executive officers whose total compensation for 2007 exceeded
$100,000. These four individuals are referred to in the Proxy Statement as the
“Named Officers.”




Non-EquityOption
            
            Incentive
      Plan
            
            All
      OtherName
      and Position
            
            Year
            
            Salary(1)
            
            Bonus
            
            Awards(2)
            
            Compensation
            
            Compensation(3)
            
            TotalC.
      Neil Beer (4)
              President
      and Chief
              Executive
      Officer
            
            
            2007
            
            
            $
            211,539
            
            
            $
            100,000
            
            
            $
            89,790
            
            
            $
            —
            
            
            $
            73,339
            
            
            $
            474,668Edward
      C. Hall  (5)
              Vice
      President,
              Chief
      Financial Officer
              and
      Secretary
            
            
            2007
            
            
            $
            37,500
            
            
            $
            —
            
            
            
            10,000
            
            
            $
            —
            
            
            $
            367
            
            
            $
            47,867I.
      Michael Sweatman (6)
              Former
      Chief Financial
              Officer
            
            
            2007
            
            
            $
            66,925
            
            
            $
            —
            
            
            
            15,444
            
            
            $
            —
            
            
            $
            —
            
            
            $
            82,369Dennis
      E. Valentine (7)
              Former
      Chief Financial
              Officer
            
            
            2007
            
            
            $
            45,245
            
            
            $
            —
            
            
            
            9,421
            
            
            $
            —
            
            
            $
            508
            
            
            $
            55,174John
      P. Ricardi (8)
              Former
      Vice President,
              Sensor
      Products Group
            
            
            2007
            
            
            $
            94,811
            
            
            $
            —
            
            
            $
            9,658
            
            
            $
            —
            
            
            $
            193
            
            
            $
            104,662Douglas
      Cheng (9)
              Former
      Vice President of Operations, Vermont Operations
            
            
            2007
            
            
            $
            105,371
            
            
            $
            —
            
            
            $
            33,025
            
            
            $
            —
            
            
            $
            928
            
            
            $
            139,324Robert
      A. Selzer (10)
              Former
      Sr. V.P. of Technology, Vermont Operations
            
            
            2007
            
            
            $
            127,012
            
            
            $
            —
            
            
            $
            28,163
            
            
            $
            —
            
            
            $
            928
            
            
            $
            156,103




9




(1)
            
            Amounts
      shown represent salary earned in 2007.(2)
            
            Amounts
      shown for option awards reflect the dollar value recognized for financial
      statement purposes for the fiscal year ended December 31, 2007 in
      accordance with FAS 123(R), including amounts related to stock options
      granted in prior years that were unvested at January 1, 2007. The
      costs for awards disregards adjustments for forfeiture assumptions, and
      the costs for awards made prior to 2007 are determined in accordance with
      the modified prospective transition method under FAS 123(R). A discussion
      of the relevant assumptions used in the valuation is contained in footnote
      13 to the Company’s audited financial statements for the fiscal year ended
      December 31, 2007 included in Part II, Item 8 of the
      Company’s Annual Report on Form 10-K filed with the SEC on April 2,
      2008. Additional information regarding grants awarded in 2007 is presented
      in the “Grants of Plan Based Awards” table below. Of the dollar amounts
      included in this column, the following amounts are attributable to options
      granted prior to 2007 which were unvested on January 1, 2007:
      Dr. Beer ($238,833), Mr. Hall (0), Mr. Sweatman (0), Mr. Valentine
      (98,377), Mr. Ricardi ($47,000), Mr. Cheng ($23,167) and Mr.
      Selzer ($46,666). Also includes $84,133 for a restricted stock awards to
      Dr. Beer ($29,733), Mr. Hall ($10,000), Mr. Sweatman ($15,000), Mr.
      Valentine ($0) Mr. Cheng ($15,650) and Mr. Selzer ($13,750) granted
      in 2007.(3)
            
            Amounts
      in this column consist of (i) matching contributions made by the
      Company under its 401(k) Plan to Messrs. Beer, Hall, Sweatman,
      Valentine, Ricardi, Cheng and Selzer; (ii) life insurance premiums
      paid by the Company on behalf of Messrs. Beer, Hall, Sweatman,
      Valentine, Ricardi, Cheng and Selzer; and (iii) perquisites and other
      personal benefits or property the aggregate amount of which exceeds
      $10,000 as to any named executive officer. Although the amounts of
      perquisites and other personal benefits cannot be determined precisely,
      the Company has concluded that the aggregate amount thereof does not
      exceed $10,000 for each of Messrs. Hall, Sweatman, Valentine, Ricardi,
      Cheng and Selzer. Dr. Beer received the following types of personal
      benefits: reimbursement of relocation costs and an auto
      allowance.(4)
            
            Dr. Beer
      was appointed President and Chief Executive Officer in
      April 2006.(5)
            
            Mr.
      Hall was appointed Vice President , Chief Financial Officer and Secretary
      in October 2007(6)
            
            Mr.
      Sweatman ceased being an employee in September
  2007(7)
            
            Mr.
      Valentine ceased being an employee in March 2007(8)
            
            Mr. Ricardi
      ceased being an employee in July 2007.(9)
            
            Mr. Cheng
      ceased being an employee in October 2007.(10)
            
            Mr.
      Selzer ceased being an employee in
  October 2007.




Grants of
Plan-Based Awards




There
were no option awards in 2007.





Outstanding
Equity Awards at Fiscal Year-End (1)




The
following table sets forth information regarding outstanding options held by
each of the Named Officers at December 31, 2007.




Number
      of Securities UnderlyingUnexercised
      Options (2)
            
            
            
            
            
            OptionOption
      Exercise
            
            ExpirationName
            
            Exercisable
            
            Unexercisable
            
            Price($)
            
            Date(3)C.
      Neil Beer
            
            
            5,000
            
            
            
            —
            
            
            
            3.531
            
            
            
            7/8/20085,000
            
            
            
            —
            
            
            
            2.4375
            
            
            
            8/7/200910,000
            
            
            
            —
            
            
            
            1.75
            
            
            
            8/13/201010,000
            
            
            
            —
            
            
            
            6.50
            
            
            
            8/11/201110,000
            
            
            
            —
            
            
            
            3.73
            
            
            
            8/10/201210,000
            
            
            
            —
            
            
            
            1.28
            
            
            
            12/6/201310,000
            
            
            
            —
            
            
            
            1.36
            
            
            
            6/6/20141,000
            
            
            
            —
            
            
            
            1.34
            
            
            
            10/10/2014500
            
            
            
            —
            
            
            
            0.87
            
            
            
            12/12/2014500
            
            
            
            —
            
            
            
            2.01
            
            
            
            2/20/2015750
            
            
            
            —
            
            
            
            2.26
            
            
            
            4/9/201510,000
            
            
            
            —
            
            
            
            1.94
            
            
            
            6/25/20156,667
            
            
            
            3,333
            
            
            
            1.21
            
            
            
            6/24/2016100,000
            
            
            
            200,000
            
            
            
            0.73
            
            
            
            4/12/20163,333
            
            
            
            6,667
            
            
            
            0.53
            
            
            
            7/19/2017




(1)
            
            No
      executive officer had any unearned equity awards outstanding at
      December 31, 2007. The majority of these options were granted under
      the Company’s 1999 Stock Option Plan (“Options”). The exercise price of
      the options reported above was equal to the fair market value of the
      Company’s Common Stock at the date of grant. The terms of each such option
      are determined by the Compensation Committee of the Board of Directors.
      The exercise price and tax withholding obligations related to exercise may
      be paid by delivery of already owned shares, subject to certain
      conditions. The majority of these options contain a Reload Option feature
      whereby if the optionee exercises the option in whole or in part using
      shares of Common Stock owned by the optionee for at least six months, the
      Company shall grant to the optionee a new option to purchase that number
      of shares equal to the shares transferred to the Company in payment of the
      exercise price of the option. In addition, if the optionee exercises the
      option in whole or in part with cash, the Company shall grant to the
      optionee a new option to purchase that number of shares equal to the
      amount of cash paid divided by the market value of the Common Stock on the
      date of exercise. In both cases, these Reload Options will have an
      exercise price equal to the fair market value on the date of grant of the
      Reload Option and are not exercisable until one year following the date of
      grant.




10




(2)
            
            The
      majority of these options are incentive stock options and are exercisable
      in increments of one-third each for the first three years after the date
      of grant.(3)
            
            The
      expiration date of each option normally occurs 10 years after the
      date of grant of each option. Options which are unvested at the time of
      termination of optionee’s employment expire at that time. Vested options
      also expire if not exercised within 60 days after termination of
      optionee’s employment or one year following death of optionee if not
      exercised by optionee’s personal representative. Vested options issued to
      directors expire one year following resignation as a
    director.




Option Exercises
During 2007







No
options were exercised by any of the Named Officers in 2007.




Potential
Payments upon Termination or Change-in-Control




The
Company has no contractual obligations to pay severance or other enhanced
benefits to the Named Officers upon termination of their employment, except as
follows: 1) the Company,  in the event their employment is terminated
without cause, has agreed to provide Dr. Beer with minimum severance
benefits equal to six months of his base salary and Mr. Hall with an escalating
severance starting at two month’s of his base salary after 90 days of employment
with an additional month’s termination pay after each additional six months of
employment up to a limit of 12 months pay.




Defined Benefit
or Deferred Compensation Plans




The
Company has no defined benefit pension or non-qualified deferred compensation
plans under which its executive officers participate.




Employment
Agreements





On
September 14, 2007, the Company entered into an Employment Agreement with
Mr. Hall which provides for the following: 1) Base salary of $160,000 per
annum, $10,000 of the first year’s compensation to be paid in stock; 2)
Reimbursement, consistent with JMAR’s employee coverage, for all medical
expenses, on a pretax basis, incurred by Mr. Hall, to continue his
current  medical coverage; 3) In the event that Mr. Hall’s employment
is terminated by the Company without cause or by Mr. Hall with cause (as
defined), he will be paid two month’s of his salary after 90 days of employment
with an additional month’s termination pay after each additional six months of
employment up to a limit of 12 months pay.  In the event that
such termination had occurred on December 31, 2007, the Company would have
become obligated to pay Dr. Beer and Mr. Hall $26,666.67. Actual amounts payable
can only be determined at the time of termination. Associated with Mr. Hall’s
Employment Agreement, the Company executed a Resource Agreement with Tatum, LLC
(“Tatum”) under which Tatum receives a monthly fee of $2,500 for the first year
of Mr. Hall’s employment, $2,667 per month in the second and third year of
employment and $1,000 per month thereafter. In addition, Tatum receives 15% of
any cash bonus and 15% of the cash proceeds of any stock award associated with
Mr. Hall’s services to the Company. Tatum would receive a share of Mr. Hall’s
termination compensation, if any, calculated on the same basis as their monthly
fee. Mr. Hall is a partner in Tatum, a national executive services
firm.


Compensation
Committee Interlocks and Insider Participation




During
2007, executive compensation matters were addressed by the Compensation
Committee of the Board of Directors. None of the members of the Compensation
Committee were either officers or employees of the Company. None of the members
of the Compensation Committee serves as an executive officer of any other entity
whose Board of Directors or compensation committee includes an executive officer
of the Company.




Item 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS




Ownership of 5% or More of JMAR
Common Stock




The
following lists all persons known by the Company to be the beneficial owner of
5 percent or more of the Company’s Common Stock as of April 30, 2008.
A person is deemed to be the beneficial owner of JMAR Common Stock, whether or
not such person has any economic interest therein, if such person directly or
indirectly has (or shares with others) voting or investment power with respect
to the JMAR shares or has the right to acquire beneficial ownership within sixty
days.




Number
      of Shares of
            
            Percentage
      ofName
      and address of
            
            Common
      Stock
            
            Outstanding
      Common StockBeneficial
      Owner
            
            Beneficially
      Owned
            
            Beneficially
      OwnedLaurus
      Master Fund, Ltd.,
            
            5,378,572
            
            
            9.99%c/o
      Laurus Capital Management, LLC,825
      Third Avenue, 14th
      Floor,New
      York, NY 10022




11




Included
in the shares listed above, as of April 28, 2008, are a portion of the
shares of Common Stock issuable on exercise of warrants owned by Laurus. The
Preferred Stock and Warrants owned by Laurus may not be converted or exercised
into Common Stock if it results in Laurus having beneficial ownership of more
than 9.99% of the outstanding shares of JMAR common stock at any time (the
“Ownership Limitation”). Laurus may terminate this Ownership Limitation with
respect to all of the Preferred Stock and with respect to substantially all of
the Warrants upon a minimum of 75 days notice or upon a default by the
Company of its redemption obligations under the Preferred Stock. Absent the
Ownership Limitation, Laurus would have beneficial ownership of a total of 150,975,300shares,
consisting of: (i) 3,860,872shares
owned at April 28, 2008, (ii) 20,065,472 shares issuable upon
conversion of Convertible Preferred Stock, and (iii) 127,048,956 shares issuable
upon exercise of Warrants. If all derivative securities held by Laurus were
freely exercisable and convertible within 60 days, this total of 150,975,300sharesof Common Stock would represent beneficial ownership of 72.8%
of the Company’s Common Stock.




Ownership of JMAR Common Stock by
Management




The
following table sets forth the beneficial ownership of Common Stock of the
Company as of April 28, 2008 by each director, the “Named Officers” (as defined
in “Summary Compensation Table” above) and by all directors and executive
officers as a group. Except as otherwise noted, the following stockholders have
sole voting and investment power with respect to the shares. Information with
respect to beneficial ownership is based on information furnished to the Company
by each stockholder included in the table.




Number
      of Shares of
            
            Percentage
      ofCommon
      Stock
            
            Outstanding
      Common StockBeneficial
      Owner
            
            Beneficially
      Owned
            
            Beneficially
      OwnedCharles
      A. Dickinson (1)
            
            
            2,708,178
            
            
            
            5.03%C.
      Neil Beer (2)
            
            
            459,983
            
            
            
            (9
            )J.
      Paul Gilman (3)
            
            
            200,425
            
            
            
            (9
            )Richard
      J. Naughton
            
            
            100,000
            
            
            
            (9
            )Edward
      C. Hall
            
            
            92,593
            
            
            
            (9
            )I.
      Michael Sweatman
            
            
            100,000
            
            
            
            (9
            )Dennis
      E. Valentine
            
            
            27,568
            
            
            
            (9
            )James
      B. McCarthy
            
            
            100,000
            
            
            
            (9
            )John
      P. Ricardi
            
            
            -
            
            
            
            (9
            )Douglas
      Cheng
            
            
            96,500
            
            
            
            (9
            )Robert
      A. Selzer
            
            
            81,500
            
            
            
            (9
            )All
      Executive officers and directors as a group (9 persons)  (4)
            
            
            3,888,747
            
            
            
            7.18%




(1)
            
            Includes
      61,217 shares held by Mr. Dickinson’s wife. Includes 52,750 shares
      issuable upon exercise of currently exercisable stock
    options.(2)
            
            Includes
      282,750 shares issuable upon exercise of currently exercisable stock
      options.(3)
            
            Includes
      10,000 shares issuable upon exercise of currently exercisable stock
      options.(4)
            
            Includes
      345,500 shares issuable upon exercise of currently exercisable stock
      options.(9)
            
            Less
      than one percent.




Equity
Compensation Plan Information




The
following Table sets forth information regarding all equity compensation plans
(including individual contracts) (i) previously approved by the Company’s
shareholders, and (ii) not previously approved by the Company’s
shareholders, as of December 31, 2007.




Plan
      Category
            
            Number
      of Shares to be Issued Upon Exercise of Outstanding Options and
      Warrants
            
            
            Weighted-Average
      Exercise price of Outstanding Options and Warrants
            
            
            Number
      os Shares Remaining Available for Future Issuance Under Equity
      Compensation Plans (Excluding Shares Reflected in Column
    (a))(a)
            
            
            (b)
            
            
            (c)Plans
      Approved by Shareholders
            
            
            2,597,677
            
            
            $
            2.25
            
            
            
            1,000,364Plans
      Not Approved by Shareholders
            
            
            1,330,492
            
            
            $
            1.34
            
            
            
            —Total
            
            
            3,928,169
            
            
            $
            1.74
            
            
            
            1,000,364






12




Summary Description of the Company’s
Equity Compensation Plans




The
Company has two shareholder-approved stock option plans from which additional
options may be granted (the 1999 Stock Option Plan and the 2006 Equity Incentive
Plan) and four terminated option or warrant plans under which previously granted
options and warrants remain outstanding. Prior to Nasdaq rule changes in 2003
requiring shareholder approval of compensatory equity grants, the Company
established several plans and entered into a number of equity compensation
agreements with individuals that were not required to be approved by the
shareholders. All of these plans and individual arrangements are described
below.




Shareholder Approved
Plans:




The 2006 Equity Incentive
Plan




The
Company’s shareholders approved the 2006 Equity Incentive Plan (“2006 Plan”) in
June, 2006. The 2006 Plan provides for the grant of options, restricted stock,
stock bonuses, stock appreciation rights and other equity-based awards to the
Company’s employees, directors and consultants for up to 2,000,000 shares of
Common Stock etc., As of December 31, 2007, 1,564,384 shares of common
stock were issued and outstanding and no options to purchase shares of common
have been issued. 435,616 shares were available for future equity
awards.(See also
Non-Shareholder Approved Plans below)




The 1999 Stock Option
Plan




The
Company’s shareholders approved the 1999 Stock Option Plan (“1999 Plan”) in
August, 1999 and approved an amendment to the 1999 Plan in December, 2002. This
plan authorizes the grant of options to purchase up to 1,900,000 shares of the
Company’s Common Stock. As of December 31, 2007, options to purchase
808,333 shares were outstanding and 564,748 shares were available for
future option grants.




The 1991 Stock Option
Plan




The
Company’s shareholders approved the 1991 Stock Option Plan (“1991 Plan”) in
July, 1991 and approved amendments to the 1991 Plan in June, 1992, September,
1995 and September, 1996. The 1991 Plan, as amended, provided for the grant of
options to the Company’s employees, directors and consultants for up to
1,480,000 shares. The term of the 1991 Plan has expired and no further options
may be granted under this plan. As of December 31, 2007, options to
purchase a total of 224,960 shares were outstanding.




Non-Shareholder Approved Plans and
Individual Arrangements:




Management Anti-Dilution
Plan




In
February, 1993, the Company’s Board of Directors approved the issuance of
Warrants to the then officers and directors of the Company in consideration for
agreements made by them in connection with an underwritten offering of the
Company’s Common Stock. This plan has terminated and no additional securities
may be issued from this plan. As of December 31, 2007, Warrants to purchase
306,920 Warrants are outstanding. These Warrants have an exercise price of $3.00
per share.




Research Division Warrant
Plan




In April,
2001, Warrants were issued to employees of the Research Division in connection
with an incentive plan for performance of certain milestones in 2000. This plan
has terminated and no additional Warrants may be issued under this plan. As of
December 31, 2007, Warrants to purchase a total of 10,500 shares were
outstanding. These Warrants have an exercise price of $3.25 per share and expire
on the earlier of 60 days after termination of employment or January,
2011.




2002 Research Division
Plan




In May,
2002, the Company’s Board of Directors approved a plan for the issuance of
non-plan options to purchase Common Stock to Research Division employees. This
plan has terminated and no additional options may be issued from this plan. As
of December 31, 2007, options to purchase 32,000 shares were
outstanding. These options have an exercise price of $1.71 per share and expire
on the earlier of 60 days after termination of employment or 10 years
after date of grant.




The 2006 Equity Incentive
Plan




The
Company’s shareholders approved the 2006 Equity Incentive Plan (“2006 Plan”) in
June, 2006. The 2006 Plan provides for the grant of options, restricted stock,
stock bonuses, stock appreciation rights and other equity-based awards to the
Company’s employees, directors and consultants for up to 2,000,000 shares of
Common Stock etc., As of December 31, 2007, 1,564,384 shares of common
stock were issued and outstanding and no options to purchase shares of common
have been issued. 435,616 shares were available for future equity
awards.




On
June 25, 2007 the Board of Directors resolved and unanimously approved an
increase in the authorized shares of the 2006 Plan to 20,000,000 shares, subject
to a shareholder-approved increase in authorized shares of the Company. On
February 20, 2008  shareholders approved an increase in the Company’s
authorized shares to 380,000,000 shares As of April 28, 2008,
12,595,612 shares of common stock were awarded, of which 2,845,612 was
issued and outstanding and 9,750,000 was subject to vesting.
7,404,388 shares were available for future equity
awards.




13




Individual Compensation
Arrangements:




In
December, 1998, an option to purchase 50,000 shares, with an exercise price of
$3.00 per share, was issued to Fred Schiele in connection with his hiring as
President and Chief Operating Officer of the Company. In September, 2001, in
connection with the termination of his employment this option was modified to
waive the provision which otherwise would have caused its termination 60 days
after the termination of his employment. This option expires on
November 30, 2008.




In March
2002, a Warrant to purchase 20,000 shares, with an exercise price of $2.40
per share, was issued to a placement agent. This Warrant expired on
March 28, 2007.


Pursuant
to an investor relations services agreement (“IRG Agreement”) entered into in
July, 2003 between the Company and The Investor Relations Group (“IRG”), the
Company agreed to issue a total of 200,000 Warrants to Dian Griesel, President
of IRG, with 50,000 Warrants being issued at the beginning of each year of the
effectiveness of the IRG Agreement, as follows: (i) in July, 2003, a
Warrant to purchase 50,000 shares, with an exercise price of $1.16 per share and
expiring on June 30, 2008; (ii) in July, 2004, a Warrant to purchase 50,000
shares, with an exercise price of $2.05 per share and expiring on June 30,
2009; (iii) in July 2005, a Warrant to purchase 50,000 shares, with an
exercise price of $1.23 per share and expiring on June 30, 2010, and (iv)
in July, 2006, a Warrant to purchase 50,000 shares, with an exercise price of
$0.67 per share and expiring on June 30, 2011.




In
February, 2005, a Warrant to purchase 108,871 shares, with an exercise price of
$1.80 per share, was issued to Source Capital in connection with a financing in
February, 2005. This Warrant expires on February 1, 2010.




In
December, 2005, a Warrant to purchase 171,844 shares, with an exercise price of
$1.44 per share, was issued to Midtown Partners in connection with a financing
in December, 2005. This Warrant expires on June 28, 2011. In February, 2007
a Warrant to purchase 97,024 shares, with an exercise price of $0.25 per share,
was issued to Midtown Partners in connection with a financing in February, 2007.
This Warrant expires on February 8, 2012. In March, 2007 a Warrant
to purchase 83,333 shares, with an exercise price of $0.20 per share, was issued
to Midtown Partners in connection with a financing in March, 2007. This Warrant
expires on March 6, 2012. In July, 2007 a Warrant to purchase 320,000 shares,
with an exercise price of $0.1022 per share, was issued to Midtown Partners in
connection with a financing in July, 2007. This Warrant expires on July 5,
2012.




Item 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS




Certain
Relationships And Related Transactions




Laurus
Master Fund, Ltd. (“Laurus”) is the beneficial owner of more than 5% of the
Company’s Common Stock. The disclosures in “Security Ownership Of Certain
Beneficial Owners And Management And Related Stockholder Matters” in
Item 12 above regarding Laurus’ ownership of Preferred Stock and Warrants
are incorporated herein by reference. The terms of the Preferred Stock and
substantially all of the Warrants provide that such instruments are not
convertible or exercisable into Common Stock for so long as Laurus has
beneficial ownership of more than 9.99% of the Company’s Common
Stock.




In March,
2006, the Company and Laurus replaced the Company’s Working Capital Line that
terminated on March 21, 2006 with a new working capital line (2006 Working
Capital Line). The 2006 Working Capital Line allowed the Company to borrow from
time-to-time up to 90% of eligible accounts receivable and up to 50% of eligible
inventory up to $500,000, up to an aggregate maximum of $3 million. The 2006
Working Capital Line is non-convertible and has no financial ratio covenants.
The interest rate on the 2006 Working Capital Line is equal to the prime rate
plus 2 percent. In connection with the 2006 Working Capital Line, the
Company issued two warrants to Laurus to purchase a total of 458,181 shares of
common stock at an exercise price of $0.01 per share and paid fees of $108,000.
Of the 458,181 warrants, 240,000 vested in March 2007 based on the average
borrowings under the 2006 Working Capital Line with an exercise price based on
the three day average stock price prior to March 28, 2007, but no less than
$1.00. Both warrants expire in March 2016. The 2006 Working Capital Line is
non-convertible and has no financial ratio covenants. The interest rate
(7.25 percent at April 28, 2008) on the 2006 Working Capital Line is equal
to the prime rate plus 2 percent. The amount outstanding under the 2006
Working Capital Line was fixed on September 12, 2007 and terminates on August
31, 2009.  As of December 31, 2007 there was $649,911 outstanding
under the 2006 Working Capital Line, including a $500,000
Overadvance.




On
February 8, 2007, the Company sold 1,212,800 shares of Common Stock to
Laurus for $230,432 and on March 6, 2007, the Company sold
1,041,667 shares of Common Stock to Laurus for $156,250.




On
April 13, 2007, the Company and Laurus entered into a Securities Purchase
Agreement which provided for the loan of $750,000 to the Company evidenced by a
Secured Promissory Note (“the “750,000 Note”), together with a Warrant to
purchase 7,597,750 shares of Common Stock (See Note 9 — Derivative Liability –
Warrants Attached to Debt). The terms of this transaction provided for the
following: 1) the $750,000 Note accrues interest at the rate of prime rate plus
2%, which is 7.25 percent at April 28, 2008, with interest payable monthly
in arrears which commenced on May 1, 2007, 2) the principal and all unpaid
interest is due on August 31, 2009, 3) $250,000 of the loan proceeds are held in
a restricted account until the satisfaction of certain stated minimum “burn
rate” conditions and the achievement of certain business milestones, 4) the
obligations under the Securities Purchase Agreement and the $750,000 Note are
secured by the grant of a security interest in all of the Company’s assets,
together with the benefit of security interests previously granted to secure
other financing transactions with Laurus, 5) the Warrant has a term of ten years
and an exercise price of $0.01 per share and contains a cashless exercise
provision which is exercisable in the event that a registration statement
covering the Warrant is not effective; provided, however, Laurus is
restricted from selling the shares issuable under the Warrant for a one year
period following issuance of the Warrant, 6) the Company entered into a
registration rights agreement providing for the filing of a registration
statement covering the resale of the Warrant shares within six months after the
closing of this transaction, and 7) the Company paid a fee of $26,250 to Laurus.
As of December 31, 2007, $750,000 was outstanding pursuant to the $750,000
Note.




14




On
April 23, 2007, the Company and Laurus entered into a Securities Exchange
Agreement that provided for the issuance by the Company to Laurus of a total of
1,500,000 shares of Common Stock (the “Shares”) in exchange for and in
cancellation of i) $194,754 of stated value of Series G Preferred Stock
held by Laurus, and ii) $18,996 of stated value of Series I Preferred
Stock. Following this exchange, Laurus owned a total of $1,261,266 of stated
value of Series G Preferred Stock and $6,374,984 of stated value of
Series I Preferred Stock. As a result of the payment of the Shares, a total
of $213,750 was applied to pay monthly redemption payments owing under the
Preferred Stock in chronological order as follows: (i) the entire monthly
redemption amounts ($27,822 per month) owing under the Series G Preferred
Stock for the months of February through August, 2007 (for a total of $194,754),
and (ii) $18,996 of the redemption amount owing under the Series I
Preferred Stock for the month of August 2007.




In June,
2007, the Company committed to a transaction with Laurus by executing a term
sheet providing for the sale from time to time of up to $3.5 million of a
new Series J preferred stock. Such sales are intended to be done following
the conversion or exchange by Laurus of an equivalent amount of its existing
preferred stock. On June 28, 2007, the Company entered into a Securities
Exchange Agreement with Laurus which provided for the issuance to Laurus of two
million (2,000,000) shares of Common Stock in exchange for and cancellation of
$204,400 stated value of Series G and Series I Preferred Stock held by
Laurus. On July 5, 2007, the Company entered into a second Securities
Exchange Agreement with Laurus which provided for the issuance to Laurus of
another two million (2,000,000) shares of Common Stock in exchange for and
cancellation of another $204,400 stated value of Series G and I Preferred
Stock. As a result of these two transactions, a total of $408,800 of
Series G and Series I Preferred Stock have been redeemed and this dollar
amount will be applied to pay the monthly redemption payments due under the
outstanding Series G and I Preferred Stock such that the remaining monthly
redemption payment owing in August, the entire September and October monthly
redemption payments and a portion of the November monthly redemption payment are
canceled.




In June,
2007, the Company committed to a transaction with Laurus by executing a term
sheet providing for the sale from time to time of up to $3.5 million of a
new Series J preferred stock. The definitive terms of this agreement are
contained in a Securities Purchase Agreement, dated July 5, 2007, between the
Company and Laurus (the “Series J SPA”).  Such sales are intended to
be done following the conversion or exchange by Laurus of an equivalent amount
of its existing preferred stock. On June 28, 2007, the Company entered into
a Securities Exchange Agreement with Laurus which provided for the issuance to
Laurus of two million (2,000,000) shares of Common Stock in exchange for and
cancellation of $204,400 stated value of Series G and Series I
Preferred Stock held by Laurus. On July 5, 2007, the Company entered into a
second Securities Exchange Agreement with Laurus which provided for the issuance
to Laurus of another two million (2,000,000) shares of Common Stock in exchange
for and cancellation of another $204,400 stated value of Series G and I
Preferred Stock. As a result of these two transactions, a total of $408,800 of
Series G and Series I Preferred Stock were redeemed and this dollar amount
was applied to pay the monthly redemption payments due under the outstanding
Series G and I Preferred Stock such that the remaining monthly redemption
payment owing in August, the entire September and October monthly redemption
payments and a portion of the November monthly redemption payment were
canceled.




On
July 5, 2007, the Company and Laurus entered into a Securities Purchase
Agreement (the “Series J SPA”) The Series J SPA provides for the issuance from
time to time of up to $3.5 million shares of Series J Cumulative
Convertible Preferred Stock (“Series J Preferred Stock”). Pursuant to the
Series J SPA, the Company’s Board of Directors created a new Series J
Cumulative Convertible Preferred Stock, with a stated value of $1,000 per share,
and authorized sale and issuance from time to time of up to 3,500 of such
shares. Pursuant to the Series J SPA, purchases by Laurus of shares of
Series J Preferred Stock will be made from time to time in such amounts and
at such times as Laurus may determine in its sole discretion. The Series J
Preferred Stock accrues dividends at the rate of 9.5% per annum and is
convertible into shares of the Company’s Common Stock at a conversion price
equal to lesser of (i) $0.15 or (ii) the equivalent price at which Laurus
has most recently exchanged shares of Common Stock for shares of Series G
and I. In the event that any shares of Series J Preferred Stock remain
outstanding on the second anniversary of the issuance of such shares, such
shares must be redeemed in cash by the Company. The Series J Preferred
Stock also provides that the Company can force the conversion of the
Series J Preferred Stock at $0.50 per share if the bid price of the
Company’s Common Stock for ten consecutive trading days equals or exceeds $0.50
per share and the trading volume during such ten day period exceeds 100,000
shares per day. The provisions of the Series J Preferred Stock restrict
Laurus from converting into shares of Common Stock if Laurus would have
beneficial ownership of more than 9.99% of the Company.




The
Series J SPA also provided that a portion of the outstanding shares of
Series G and Series I Preferred Stock will be amended with each sale
and issuance of Series J Preferred Stock, as follows: A stated amount of
Series G and I Preferred Stock equal to 200% of the stated amount of the
Series J Preferred Stock that is issued will be amended to reduce its
conversion price to a price equal to the average of the volume weighted average
price for the five trading days prior to the issuance of the new Series J
shares.




The
Company agreed that it would file a Form S-1 Registration Statement with the SEC
to register the resale of the shares of Common Stock issuable on conversion of
the Series J Preferred Stock within 60 days after an aggregate of
$1 million of Series J Preferred Stock has been sold. The Company
agreed to use its best efforts to obtain effectiveness of the registration
statement within 120 days after filing with the SEC and to pay a penalty
equal to one percent (1%) per month for a maximum of eight months if the
registration statement is not filed or declared effective within the required
deadlines.   As of December 31, 2007, an aggregate of $1 million
or more of Series J Preferred Stock has not been sold and the Company is not yet
obligated to file such a registration statement.




On
July 5, 2007, Laurus purchased 408.8 shares of Series J Preferred
Stock (with a stated value per share of $1,000) for gross proceeds of $408,800.
The shares of Series J Preferred Stock issued in this transaction have a
conversion price of $0.1022 per share (the price at which Laurus had most
recently received shares of Common Stock in exchange for its Series G and
Series I Preferred Stock). In connection with the sale of the Series J
Preferred Stock, the Company paid Midtown Partners & Co., LLC (“Midtown
Partners”) a fee equal to eight percent (8%) of the gross proceeds from the sale
of the Series J Preferred Stock and a warrant to purchase 320,000 shares of
Common Stock, with a term of 5-1/2 years, an exercise price of $0.1022 per
share and a provision enabling the holder to effect a cashless exercise of the
Warrant. As a result of this issuance of Series J Preferred Stock, pursuant
to the SPA the conversion price for a total of $817,600 of stated value of
Series I Preferred Stock was reduced to $0.15 per share.




15




On
July 20, 2007 the Company and Laurus entered into an Agreement which
provides that certain of the convertible securities owned by Laurus may not be
converted into common stock unless and until the Company’s shareholders have
approved an amendment to the Company’s Certificate of Incorporation to increase
the authorized capital stock from 80,000,000 shares of Common Stock to
300,000,000 shares of Common Stock. The shares which will not be convertible
consist of 1) those shares of Series I Preferred Stock with a stated value
of $817,600 that were amended on July 5, 2007 to reduce their conversion
price as noted above, 2) the shares of Series J Preferred Stock with a
stated value of $408,800 with a conversion price of $0.1022 that were issued on
July 5, 2007, and 3) up to another $817,600 of Series J Preferred
Stock and up to another $1,635,200 of Series G and Series I Preferred
Stock to be adjusted in connection with the sale of such Series J Preferred
Stock. As of December 31, 2007, only $300,000 of the $817,600 of additional
shares of Series J Preferred Stock has been sold and the conversion price of
$600,000 of Series G and I Preferred Stock has been reduced as provided.
Pursuant to this Agreement, the Company agreed to file a proxy statement and
solicit approval by its shareholders of the increase in authorized
shares. On February 20, 2008, the Company’s shareholders approved an
amendment to the Company’s Certificate of Incorporation to increase the
authorized shares of Common Stock to 380,000,000 shares.




On
August 8, 2007, Laurus purchased 2,100,000 shares of Common Stock in
exchange for and cancellation of $252,000 stated value of Series G and
Series I Preferred Stock held by Laurus. As a result of this transaction,
$252,000 of Series G and Series I Preferred Stock has been redeemed
and this dollar amount has been applied to pay the monthly redemption payments
due under the outstanding Series G and I Preferred Stock such that the
remaining monthly redemption payment owing under the Series G for November,
2007 has been satisfied, the entire monthly redemption payment under the
Series I for November has been satisfied and $107,618 of the $122,178
December redemption payment under the Series I has been
satisfied.




On
August 9, 2007, Laurus purchased $300,000 of shares of Series J
Cumulative Convertible Preferred Stock (“Series J Preferred Stock”) with a
stated value of $1,000 per share. These shares of Series J Preferred Stock
have a conversion price of $0.12 per share. The Series J Preferred Stock
accrues dividends at the rate of 9.5% per annum.




If not
previously converted, the Series G, I and J Preferred Stock, as amended,
must be redeemed by the Company as follows:











Gross
      AmountOutstanding
      at
            
            
            Scheduled
      RedemptionsDescription
            
            December
      31, 2007
            
            
            2008
            
            
            2009
            
            
            TotalSeries G
      Preferred
            
            $
            1,177,800
            
            
            $
            —
            
            
            $
            1,177,800
            
            
            $
            1,177,800Series I
      Preferred
            
            
            5,797,651
            
            
            
            —
            
            
            
            5,797,651
            
            
            
            5,797,651Series
      J Preferred
            
            
            708,800
            
            
            
            —
            
            
            
            708,800
            
            
            
            708,800Total
            
            $
            7,684,251
            
            
            
            —
            
            
            $
            7,684,251
            
            
            $
            7,684,251




In
connection with all of the above financing transactions with Laurus, the Company
issued warrants to Laurus to purchase a total of 127,048,956 shares of common
stock at prices ranging from $.01 to 5.00. In addition, in connection with the
2006 Working Capital Line on April 30, 2006, Laurus was granted two warrants
exercisable into up to 458,181 shares of common stock at an exercise price of
$0.01 per share. As of December 31, 2007 all of the preferred stock and
warrants held by Laurus are convertible or exercisable into approximately
147.1 million shares.




All of
the preferred stock and warrants (Securities) held by Laurus contain provisions
that restrict the right of Laurus to convert or exercise its JMAR securities in
order to limit its percentage beneficial ownership. If Laurus were to waive
these beneficial ownership limitations the Securities would be convertible for
or exercisable into more than 9.99% of the outstanding shares of the Company’s
common stock commencing 75 days after notice of such waiver. However,
Laurus has not requested such a waiver. Laurus has also agreed that none of the
Securities shall be converted or exercised to the extent that conversion or
exercise of the Securities would result in Laurus beneficially owning more than
9.9% of the shares of the Company’s common stock (as of various issuance dates
of the securities) unless and until the Company obtains stockholder approval of
such excess. Excluded from such calculation are all shares issued to Laurus upon
conversion of convertible preferred stock or exercise of warrants but no longer
owned by Laurus.




On
September 12, 2007, the Company entered into a Securities Purchase Agreement
(the “September 2007 SPA"), dated for identification purposes as of August 31,
2007, with Laurus and related agreements. Pursuant to the “September 2007
SPA,  Laurus completed a loan to the Company of $7,500,000 evidenced
by a Secured Term Note ("the $7.5 million Term Note ") and was issued two
warrants (the “September 2007 Warrants") for the purchase of a total of
119,000,000 shares of the Company’s Common Stock. The maturity date of the $7.5
million Term Note is August 31, 2009. Interest on the Note is payable monthly,
with interest accruing at the rate of two percent above the prime rate, as
determined from time to time, but at a rate of no less than 10.25% per annum.
The $7.5 million Term Note was disbursed principally as follows: 1) $620,000 was
disbursed directly to the Company, 2) $6,420,600.61 of the proceeds of the $7.5
million Term Note were funded and placed in a restricted account, with the
disbursement of such funds subject to the conditions described below, 3)
$194,899.39 of the proceeds of the $7.5 million Term Note were paid to Laurus at
closing in satisfaction of outstanding interest, dividends and other obligations
owing to Laurus under other loans and securities previously issued to Laurus,
and 4) Laurus was paid a closing fee of $262,500. The incremental release of the
funds deposited into the restricted account will only occur pursuant to written
operating budgets of the Company to be submitted to Laurus no less than monthly
(the "Monthly Operating Budgets"), which budgets shall be, in form and substance
acceptable to Laurus in its sole discretion. If the Monthly Operating Budgets
fail to be acceptable to Laurus in form or substance, no funds from the
restricted account shall be released to the Company.




16




The
September 2007 Warrants have an exercise price of $0.01 per share and a term of
ten years. In no event may the September 2007 Warrants be exercised in excess of
the number of shares which would cause the total number of issued and
outstanding shares of the Company’s Common Stock plus the number of shares of
Common Stock reserved for issuance under all outstanding options, warrants
(including the September 2007 Warrants) and preferred stock to exceed the number
of the Company’s authorized shares of Common Stock. Pursuant to the September
2007 SPA, the Company agreed that on or before March 5, 2008 it would seek and
have obtained shareholder approval and would have amended its certificate of
incorporation to increase its authorized Common Stock to no less than
300,000,000 shares. A failure to increase the Company’s authorized shares to at
least 300,000,000 shares on or before such date would have constituted an event
of default under the $7.5 million Term Note.




On
February 20, 2008, the Company’s shareholders approved an amendment to the
Company’s Certificate of Incorporation to increase the authorized shares of
Common Stock to 380,000,000 shares.





The
Company and Laurus are parties to several registration rights agreements which
require the Company to include the shares issued and issuable to Laurus in
registration statements filed with the SEC. All of the shares of Common Stock
issuable on conversion of the Preferred Stock are included in effective
registration statements and also benefit from the Rule 144 holding period
attributable to the Preferred Stock. The shares issuable on exercise of Warrants
that were issued to Laurus prior to 2006 are included in effective registration
statements and Warrants issued since then are required to be included in future
registration statements.




Except
with regard to the transactions with Laurus, there were no transactions since
January 1, 2007, and there are no currently proposed transactions, in which
the Company is a participant where the amount involved exceeds $120,000 and in
which any director, executive or their respective immediate family members, or a
owner of more than 5% of the Company’s common stock have a direct or indirect
material interest.




Policy and Procedures with Respect to
Related Party Transactions




The
Company has adopted a written policy for approval of transactions and
arrangements between the Company and the Company’s directors, director nominees,
executive officers, greater than five percent stockholders, and their immediate
family members (each, a “related party”) where the amount involved is considered
material.




The
policy provides that the Board’s Compensation Committee reviews the material
facts of certain transactions subject to the policy and determines whether or
not to approve or ratify those transactions. In determining whether
to approve or ratify an interested transaction, the Committee will take into
account, among other factors it deems appropriate, whether the interested
transaction is on terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar circumstances and the extent
of the related party’s interest in the transaction.




The
Compensation Committee has considered and adopted standing pre-approvals under
the policy for certain limited transactions with related parties that meet
specific criteria. Pre-approved transactions are limited to:




·
              Employment compensation of executive officers of the Company, if
      the compensation is required to be reported in the Company’s proxy
      statement or would have been required to be reported in the Company’s
      proxy statement if the executive officer was a “named executive officer”,
      and the Company’s Compensation Committee approved (or recommended that the
      Board approve) such
compensation;
 
 ·
              Any
      director compensation if the compensation is required to be reported in
      the Company’s proxy statement; and
 
 ·
              Any
      transaction where the related person’s interest arises solely from the
      ownership of the Company’s common stock and all holders of the Company’s
      common stock received the same benefit on a pro ratabasis (e.g.
      dividends).
 
 Item 14. PRINCIPAL AUDITOR FEES
AND SERVICES


Audit and
Non-Audit Fees




The
following is a description of the fees billed by Singer Lewak Greenbaum &
Goldstein LLP (“SLGG”) for the fiscal year ended December 31,
2007.




Audit Fees




SLGG
billed the Company an aggregate of $ 307,764 in fees for professional services
rendered in connection with the audit of the Company’s financial statements for
the year ended December 31, 2007 and for the reviews of the financial
statements included in the Company’s quarterly reports on Form 10-Q for the
quarters ended March 31, 2007, June 30, 2007 and September 30,
2007. In addition, the Company was billed $3,284 by SLGG in 2007 for the
issuance of a consent with the Form 10-K for the year ended December 31,
2007 and for the Form S-8 filed April 8, 2008.




17




Audit-Related
Fees




There
were $15,431 in fees for audit-related services billed by SLGG in
2007.




Tax Fees




There
were no fees for tax services billed by SLGG, including tax compliance and tax
consultation, in 2007.




All Other Fees




There
were no billings from SLGG for 2007 for other products or services.




Audit Committee Pre-Approval Policies
and Procedures




The Audit
Committee is required to pre-approve all audit and permissible non-audit
services provided by the independent auditors in order to assure that the
provision of such services does not impair the auditor’s independence. The Audit
Committee has adopted a policy for the pre-approval of services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services and other non-audit services not otherwise prohibited.
Under this policy, unless a type of service to be provided by the auditor has
received general pre-approval, it will require specific pre-approval by the
Audit Committee. Any pre-approved services exceeding pre-approved cost levels
also will require specific pre-approval by the Audit Committee. The term of any
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different period.




Under
this policy, general pre-approval may be given for work associated with
registration statements under the Securities Act of 1933 (for example,
consents); due-diligence work for potential acquisitions or disposals; attest
services not required by statute or regulation; adoption of new accounting
pronouncements or auditing and disclosure requirements and accounting or
regulatory consultations; internal control reviews and assistance with internal
control reporting requirements; review of information systems security and
controls; tax compliance, tax planning and related tax services (excluding any
tax service prohibited by regulatory or other oversight authorities; expatriate
and other individual tax services); and assistance and consultation on questions
raised by regulatory agencies. For each proposed service, the independent
auditor is required to provide detailed back-up documentation at the time of
approval to permit the Audit Committee to make a determination whether the
provision of such services would impair the independent auditor’s
independence.







PART IV




Item 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES




(a)(3)
Exhibits.




The
Exhibits listed in the accompanying Exhibit Index are filed as part of this
Form 10-K.




SIGNATURES




Pursuant
to the requirement of Section 13 or 15 (d) 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.Date:
      April 30, 2008
            
            By:
            
            /s/
      C. Neil Beer
              Chief
      Executive OfficerBy:
            
            /s/
      Edward C. Hall
              Chief
      Financial Officer








18













Index
to Exhibits





Exhibit
              No.
            
            Description31.1
            
            Certification
      of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
            
            Certification
      of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of
  2002.




(+)
      These contracts are management compensation contracts required to be
      separately identified pursuant to Item 15 (a) of Form
      10-K.