For a company that specializes in focused beams of light, a certain murkiness engulfs Ionatron ( IOTN).

The tiny, money-losing company is trying to build laser-powered weapons reminiscent of "Star Trek," but won't say much about its contract with the Pentagon. Meanwhile, a controversial chairman who was twice sanctioned by securities regulators is at the helm.

Not that it matters to investors, who sense lightning in a bottle with the three-year-old company's "laser-induced plasma channel weapons" that can "disable people or vehicles." Shares of the Tucson, Ariz.-based company are up 1,100%, to $10.60, since completing a so-called reverse merger in April with lawn-care company U.S. Home and Gardens.

The company's stock recently moved from the OTC Bulletin Board to the more respectable Nasdaq Small-Cap Market.

Over the past several months, Ionatron has fueled investor expectations by announcing a big expansion plan and comparing its weapons to those produced by stun-gun manufacturer Taser International ( TASR), one of Wall Street's hottest stocks over the past two years.

Ionatron's Web site describes its technology as a nonlethal alternative to guns, although "lethal configurations are also available." Similarly, phasers could be set on stun and kill.

Last spring's reverse merger has done more than give a jolt to shares of Ionatron. It resurrected the scandal-tainted career of Robert Howard, Ionatron's octogenarian chairman, who owns roughly one-third of the company's 66 million shares and claims to have invented the "impact dot matrix printer."

Wall Street hadn't heard much from Howard since late 1997, when the Securities and Exchange Commission fined him $2.7 million for allegedly issuing "misleading information" about the sales and business prospects of Presstek ( PRST), a small printing-press technology company he helped found. Shares of Presstek surged from $45 to as much as $200 during the one-year period in which the SEC contends the company issued false and misleading statements about its earnings projections.

In the mid-1990s, Presstek was one of the market's more volatile stocks, with a loyal following of both bullish and bearish investors. About 14% of Ionatron's float is sold short.

Three years before the Presstek affair, the SEC fined Howard $42,000 for improperly tipping off a friend about an impending announcement about a new product to be sold by Howtek, another company he helped start.

Howard is still chairman of Howtek, now called iCAD ( ICAD), which develops health care equipment. When the company was Howtek, it also was involved in printing technology. He stepped down as chairman of Presstek in September 1998 and became chairman emeritus. In 2000, he left its board. His son Lawrence remains a Presstek director.

Other Presstek alumni also are employed by Ionatron. Thomas Dearmin, the company's chief executive, president and chief financial officer, is the former president and CEO of Lasertel, a Presstek subsidiary. Bernard Walik, Ionatron's vice president of operations, was Lasertel's chief operating officer.

Lasertel is a manufacturer of high-powered lasers and a supplier of optical components.

In a recent interview, Howard dismissed his past scrapes with regulators as ancient history. His past regulatory problems have nothing to do with Ionatron.

"That was like eight years ago. It's not relevant," says Howard. "But an investor has to make his own decision about what's relevant."

Howard not only is Ionatron's biggest shareholder, he's also one of its biggest financiers, extending a $3 million line of credit to the company. The loan carries an interest rate that's 2 percentage points above the current prime lending rate. In 2003, Ionatron paid $164,000 in interest to Howard and made interest payments totaling $134,000 during the first nine months of this year.

Aside from Howard's colorful regulatory past, Ionatron isn't giving investors much to consider in deciding whether the company is really on to something with its products. Much of the company's hopes rest with a $9 million defense contract that Ionatron says it secured last April to build a prototype of its laser-powered weapon.

Ionatron won't say whether it's the Army, Navy or Air Force that awarded the contract, citing government secrecy rules.

"Our contracts are confidential," says Howard.

A company spokesman says Ionatron would like to say more about the deal, but the customer won't let it.

In the nine months to Sept. 30, the company lost $3.1 million on revenue of $4.7 million, much of it from government contracts.

In all, Ionatron says it has four government contracts, of which the $9 million pact is the largest. According to the company's third quarter 10-Q, at least one contract is with the Navy. The company says the funding for that contract could expand to $12.6 million in the coming year.

Ionatron made those statements before the Bush administration announced this week it was planning to reduce some Pentagon spending in order to reduce the federal government's spiraling budget deficit.

It's not clear if all of the $12.6 million is earmarked for Ionatron, or other contractors working on similar weapons. In a corporate filing, the company says it is still negotiating the terms of a "continuing contract" with the Navy. A company spokesman says it's not aware of any other contractor seeking the money.

To the Pentagon, a $9 million contract or even a $12.6 million pact to develop and test a new weapon system is a drop in the bucket. Last year, the Defense Department spent $64 billion on research and development, out of a total budget of $434 billion.

Still, the cloak-and-dagger nature of Ionatron's operations adds a bit of mystery and intrigue to this stock. All the secrecy clearly has caught the fancy of investors, who are banking on the possibility that the company will hit the bull's-eye with its mysterious laser gun.

But given the checkered past of the company's chairman, investors may find themselves taking a walk in the dark at the end of the day.

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