Anyone following IMX?
May be spreading themselves too thin, but involved with making prostate seeds, orthopedic coatings, and more recently explosive detection equipment. Knock on them is their detectors are more expensive then others, and recent financing may be responsible for drop today.
Implant Sciences Awarded Army Contract to Develop Landmine Detection Device
Thursday December 19, 10:49 am ET
WAKEFIELD, Mass.--(BUSINESS WIRE)--Dec. 19, 2002--Implant Sciences Corporation (AMEX: "IMX", "IMX.WS") has been awarded a U.S. Army contract to develop a portable landmine detection device based on the Company's Laser Ion Mobility Spectrometer ("IMS") technology. The award is pursuant to a Small Business Innovation Research Contract providing funding in the amount of $69,995 for the first phase of the project. Upon successful completion of the Phase I project, which is to be completed within a six month time frame, Implant Sciences has the potential to receive an additional award up to $750,000.
This from the 10K:
The Department of Transportation has stated that the U.S. could spend between $1.9 billion and $2.5 billion on equipment for the detection of bulk amounts and trace amounts of explosives. However, we do not know how much will be allocated to each of trace and bulk equipment or how much allocated to equipment for the detection of trace amounts of explosives will be allocated to devices like ours.
In June 2000, we developed our first generation device, which demonstrated sensitivity to the explosive TNT. In June 2001, we developed a second generation prototype with increased sensitivity and selectivity. This device can detect and specify an increasing number of compounds within various explosive materials. The explosives that have been tested to date are TNT, RDX, PETN, EGDN, and DNT. RDX is the primary component of C3 and C4 explosives, such as Datasheet and Semtex, as well as certain types of black powder explosives. We believe these explosives represent the majority of the explosives presently used in terrorist activities. After the attack on the World Trade Center occurred on September 11, 2001, management made the decision to continue the internal funding of the project rather than await funding through government grants. In December 2001, we successfully demonstrated our working prototype of the electronic detection system to several third parties. Our electronic detection system has been
subjected to controlled testing by third parties and successfully detected a sample of C4. As a result of the successful demonstration, we believed it was appropriate to further pursue the commercial development of our electronic detection system device. We are developing a pre-production electronic detection system that we believe will be completed prior to the end of calendar year 2002. This pre-production electronic detection system will form the basis of a commercial unit and we will submit it to the Transportation Security Administration for evaluation.
The electronic detection system detects microscopic quantities of explosive molecules in the air. The device does not use X-rays and does not produce a danger to personnel operating the device or scanned by the device. The device is a sensor that receives signals that are already in the environment. Two companies market trace electronic detection systems (Ion Track Instruments, a subsidiary of General Electric, and Smiths Plc, a U.K. publicly held company). Both of these competitors use Ion Mobility Spectrometry in their respective devices for the detection and classification of explosive molecules. Additionally, both of these competitors use Nickel-63, a radioactive source, to ionize the explosive vapors. Our electronic detection system also uses Ion Mobility Spectrometry technology to detect and classify explosives molecules, however, our electronic detection system uses a laser beam to ionize the explosive molecules. The laser yields greater sensitivity than Nickel-63 and has the potential to detect explosives without physically rubbing or swiping the outside of a container or luggage. Currently, the trace electronic detection systems require the operator to physically rub or swipe the articles to be tested. The swab or cloth is then placed into electronic detection system, heated to evaporate some of the explosive particles, and then directs these vapors into the Ion Mobility Spectrometry device. Our electronic detection system uses a sensor that does not require physical contact to screen the article to detect trace residues and detects the explosives from the vapor alone. Since our device does not use any radioactive source, management believes it is safer than trace explosives residue detection systems currently in use.
We believe its explosives detection system is roughly 833 to 4,500 times more sensitive than an explosives-sniffing dog. This belief is based on the assumption that an explosives-sniffing dog is as sensitive to explosives as it is to narcotics.
We have tested for false positives and false negatives by using numerous non-explosive organic vapors. The electronic detection system properly did not register the existence of non-explosives. The accepted testing methodology for false positives requires testing on a commercially available electronic detection system and is usually performed in the context of a specific application, such as baggage screening, personnel screening, locating bombs in buildings, and cargo or auto screening. The official false positive and false negative testing must be done by an independent third party agency, however, such independent testing has not yet been performed.
Management believes the material competitive disadvantage of our electronic detection system is the cost. We believe that our device will be 30% to 40% more expensive than Ion Mobility Spectrometry based electronic detection systems, which are approximately $40,000 to $50,000 per unit. However, we believe that the efficiency of our electronic detection system and the resultant improvement in throughput of the quantity of carry-on articles and personnel that can be screened will provide a cost justification.
Consistent with our policy to protect our proprietary technologies, we have submitted three preliminary patent applications to the United States Patent and Trademark Office. These patent applications will cover specific design configurations that are responsible for our improved vapor detection sensitivity.
We are developing several versions of the systems to serve these markets. We are developing a table-top unit, which can be used to screen passengers and carry-on baggage in airports. We are also developing a portable system, which can be used to replace bomb-sniffing dogs to clear buildings, aircrafts, or ships where hidden bombs are believed to exist. We plan to first market these systems to U.S. government agencies for use in airports and government buildings. We have signed a Cooperative Research and Development Agreement with an agency of the Department of Transportation which will permit the Company and the government to exchange critical test data and for the Company to deliver a certain number of units to the Department of Transportation for independent evaluation and field testing.
The electronic detection system does not change our current operational and spending focus. Our operations and spending continue to focus on the sales of our semiconductor, medical coatings and prostate seed products. Additionally, we continue to fund research and development through government grants in accordance with the provisions of the respective grant awards. We may require additional funding in order to advance the commercial development of the electronic detection system. If such additional funding is required, we will attempt to obtain such financing by: (i) a government grant, (ii) the exercise of the redeemable common stock purchase warrants, or (iii) private financing. However, there can be no assurance that we will be successful in our attempts to raise such additional financing.
On October 7, 2002, we issued 250,000 shares of Series A 7% Cumulative Convertible Preferred Stock having a stated value of $10 per share, pursuant to a Securities Purchase Agreement executed on October 7, 2002 with the Laurus Master Fund, Ltd. We received $2,500,000 in gross proceeds, less a management fee and placement agent fee of approximately $300,000, and related transaction costs estimated to be an additional $100,000. The terms of the Series A 7% Cumulative Convertible Preferred Stock provide for repayment in cash or with shares of common stock beginning three months subsequent to the execution of the Securities Purchase Agreement. If the market price, determined as the lowest closing price for the eleven-day period prior to a conversion date, is less than $5.70, then for repayment purposes, the common stock will be valued at the greater of 83% of the average market price of the three lowest closing prices during the 30 trading days immediately preceding the conversion date or $2.02. Otherwise, the fixed conversion price is $5.19. We also issued to Laurus Master Fund, Ltd., a warrant to purchase 55,000 shares of our common stock at $6.23 per share. The Securities Purchase Agreement also provides for a security interest in substantially all of our assets. We utilized approximately $192,000 to repay the remaining outstanding Term Loan to a bank on October 7, 2002. Additionally, the Securities Purchase Agreement contains default covenants, including certain financial covenants. We will utilize the proceeds of this financing to commercialize our explosives detection system, purchase certain equipment to expand our semiconductor business, and for general working capital purposes.
We will require substantial funds for further research and development, future pre-clinical and clinical trials, regulatory approvals, continued expansion of commercial-scale manufacturing capabilities, and the marketing of its products. Our capital requirements depend on numerous factors, including but not limited to, the progress of its research and development programs; the progress of pre-clinical and clinical testing; the time and costs involved in obtaining regulatory approvals; the cost of filing, prosecuting, defending and enforcing any intellectual property rights; competing technological and market developments; changes in our development of commercialization activities and arrangements; and the purchase of additional facilities and capital equipment.
As of June 30, 2002, we were conducting our operations with approximately $1,014,000 in cash and cash equivalents. We estimate such amounts combined with our cash flow from operations and borrowing arrangements will be sufficient to fund our working capital and research and development activities in the next twelve months. Future expenditures for product development, especially relating to outside testing and clinical trials, are discretionary and, accordingly, can be adjusted, as can certain selling, general and administrative expenses, based on the availability of cash. |
