ALLIANCE AGREEMENT



            THIS ALLIANCE AGREEMENT (this "Alliance Agreement"), is entered into

this June 10, 2004, between JMAR Technologies, Inc., a Delaware corporation

("JMAR"), on the one hand, and Gregory M. Quist ("Quist") and David A. Drake

("Drake"), doing business as The LXT Group, on the other hand (Quist and Drake

are referred to herein collectively as "Sellers").



                                   WITNESSETH:



            WHEREAS, the parties entered into a letter agreement, dated April

16, 2004, which provides for the execution of an alliance agreement to fund the

development of the proof of concept model and beta models of the CORTS system

and, upon the satisfaction of certain conditions, the execution of a definitive

purchase agreement for the purchase and sale of the CORTS Business (the "Letter

Agreement"); and



            WHEREAS, the parties wish to set forth the terms of such an alliance

and certain terms of the purchase agreement;



            NOW, THEREFORE, in consideration of the representations, warranties,

covenants, agreements and undertakings hereinafter set forth in this Alliance

Agreement, the parties hereby agree as follows:



                                    ARTICLE I

                                   DEFINITIONS



      1.1 "CORTS" shall mean a continuous online real-time surveillance system

that uses light scattering for detection of microorganism contamination of

water.



      1.2 "CORTS Technology" shall mean the technology related to the CORTS

system, including the technology described in the Provisional Patent Application

prepared by Quist and Drake and filed with the U.S. Patent & Trademark Office on

January 8, 2004, and all designs, specifications, build list, software,

algorithms and related technology.



      1.2 "CORTS Business" shall mean all of the tangible and intangible assets

or other rights owned by Quist and/or Drake related to the CORTS system and the

CORTS Technology.



      1.3 "Seed Stage" shall mean the activities performed during the period

from April 19, 2004 until January 5, 2005.



<PAGE>



                                   ARTICLE II

                          ALLIANCE TERMS AND CONDITIONS



      2.1 Funding of Seed Stage. Subject to JMAR's maximum financial commitment

set forth in Section 2.3 below and the satisfaction of the Milestones (as

defined in Section 2.3 below), during the Seed Stage JMAR agrees to provide

funding and other resources to complete the activities set forth on Schedule

2.3(a) hereto. These activities include the design, construction and testing of

a proof of concept model of the CORTS system, two alpha models and five beta

models.



      2.2 Improvement of LXT Facility. The Sellers are a party to a short-term

lease of the premises (the "LXT Facility") located at 1334 Industrial Avenue,

Escondido, California ("Lease"). A copy of the Lease has been reviewed and

approved by JMAR. Attached hereto as Schedule 2.2 is a list of the proposed

improvements to be made to the CORTS Facility, together with a list of

furniture, equipment and other fixed assets to be purchased for the LXT

Facility. JMAR agrees to pay the cost for said improvements and equipment as a

part of its financial commitment under Section 2.3(a) below.



      2.3 Maximum Funding Commitment.



      (a) JMAR's total financial commitment during the Seed Stage shall not

exceed $1,000,000, including cash outlay, cost of labor (including applicable

overhead and general and administrative burden), consulting fees paid to Quist

and Drake and to other consultants (including those directly engaged by JMAR

with Sellers' consent), the cost of facility improvements, equipment and

materials and the value of assets contributed directly by JMAR. JMAR agrees to

continue to provide the monetary and non-monetary contributions described above

during the Seed Stage for so long as (i) the milestones listed on Schedule

2.3(a) hereto ("Milestones") are met in accordance with the schedule set forth

thereon, and (ii) the costs to complete the Seed Stage have not exceeded, and

are not expected by JMAR to exceed, the total budgeted costs set forth on

Schedule 2.3(b) hereto (the "Budgeted Costs"). In the event that the Milestones

are not met in accordance with Schedule 2.3(a) or the total costs of the Seed

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