WILMINGTON, Mass., Nov. 14, 2014 /PRNewswire/ -- Implant
Sciences Corporation (OTCQB: IMSC), a high technology supplier
of systems and sensors for the homeland security market and related
industries, today announced financial results for the three months
ended September 30,
2014.
Revenues for the three months ended September 30, 2014 increased 60%, to $1.8 million, from $1.2
million for the comparable prior year period. Our net
loss for the three months ended September
30, 2014 was $5.4 million as
compared with a net loss of $6.0
million for the comparable prior year period, a decrease of
$0.6 million. The decrease in the net
loss is primarily due to higher sales and gross margin, decreased
stock-based compensation and a decrease in operating expenses in
the three months ended September 30,
2014, partially offset by an increase in interest
expense.
Earnings before interest, taxes, depreciation, stock-based
compensation, warrants issued to non-employees and common stock
issued to consultants ("Adjusted EBITDA"), which is reconciled to
net loss in this press release, were a loss of $2,328,000 in the three months ended September 30, 2014, compared to a loss of
$2,707,000 in the comparable prior
year period.
Glenn D. Bolduc, President and
CEO of Implant Sciences, commented, "During our recently concluded
quarter we continued to progress through several regulatory
approval processes. Most notably, we achieved Transportation
Security Administration ("TSA") qualification for both air cargo
and checkpoint screening, we passed the European Civil Aviation
Conference ("ECAC") evaluation process and are now qualified in
Europe for airport checkpoint
screening for passengers and checked baggage, and our proposal to
develop next generation explosives trade detection screening
systems, submitted under the U.S. Department of Homeland Security's
("DHS") Science and Technology Directorates Broad Agency
Announcement, was selected for funding. All of these are important
strategic achievements that we believe position the Company for
consistent and sustainable growth, as evidenced by the execution of
an Indefinite Delivery / Indefinite Quantity ("IDIQ") contract with
the TSA for up to $162 million and
the receipt of an initial delivery order under this IDIQ from the
TSA for 1,170 QS-B220's and ancillary services and supplies. We
have taken important steps to broaden the markets we serve,
increase our revenue opportunities, and improve our financial
stability." The following summarizes several strategic
accomplishments:
- On August 28, 2014, the QS-B220
successfully completed and passed testing requirements for the
TSA's qualification test for aviation checkpoint and checked
baggage and has been placed on the TSA's Qualified Product List, or
QPL. The QS-B220 is the first Explosives Trace Detection system
with a non-radioactive source to be approved by the TSA for use in
U.S. airports for passenger and baggage screening.
- On October 6, 2014, the QS-B220
successfully passed ECAC's Common Evaluation Process of Security
Equipment for airport checkpoint screening of passengers and
baggage. The Common Evaluation Process was established to provide
standards for security equipment performance across ECAC's 44
member nations.
- On October 16, 2014, the DHS
selected our proposal to develop next generation explosives trace
detection screening systems for funding. The project, pending
successful negotiations, is potentially worth up to approximately
$2 million. Subject to successful
conclusion of negotiations with the DHS, we expect the project to
commence in the third quarter of fiscal 2015.
- On November 10, 2014, we entered
into an IDIQ contract with the United States Transportation
Security Administration for our QS-B220 desktop explosives trace
detectors. The IDIQ, a necessary prerequisite for competing for
TSA's annual trace detection procurements and establishes contract
terms under which the TSA could purchase up to $162 million of equipment and services.
- On November 13, 2014, we
announced the receipt of an initial delivery order from the TSA for
1,170 QS-B220's and ancillary services and supplies.
Mr. Bolduc concluded, "In addition, we announced earlier in
November that we have entered into an Indefinite Delivery /
Indefinite Quantity (IDIQ) contract with the TSA under which the
TSA may purchase QS-B220 equipment and services valued at up to
$162 million and receipt of an
initial delivery order for 1,170 QS-B220's. We believe that the
qualifications that have been achieved and securing a funding to
develop next-generation explosives trace detection systems
establish our credibility as the next-generation explosives
technology in the competitive global trace explosives industry. We
remain confident about our future prospects."
Details for the three months ended September 30, 2014 follow below.
Three months Ended September 30,
2014 vs. September 30,
2013
- Revenues for the three months ended September 30, 2014 were $1,869,000 as compared with $1,165,000 for the comparable prior year period,
an increase of $704,000, or 60.4%.
The increase in revenue is due primarily to: a 345.5% increase in
the number of QS-H150 handheld sold in the three months ended
September 30, 2014, due to increased
shipments to China and
Africa, for use in force and
infrastructure protection, which resulted in a 294.4% increase in
QS-H150 revenues and, to a lesser extent increased sales of parts
and supplies. These increases are offset partially by a 9.8%
decrease in the average unit sale prices on sales of QS-B220 units
and an 11.5% decrease in average unit sale prices on sales of our
QS-H150 handheld units.
- Gross margin for the three months ended September 30, 2014 was $618,000 or 33.1% of revenues as compared with
$213,000 or 18.3% of revenues for the
comparable prior year period. The increase in gross margin as a
percent of revenues is primarily the result of increased
manufacturing overhead absorption due to increased unit volume and
a $45,000 decrease in stock-based
compensation, partially offset by a 9.8% decrease in the average
unit sale prices on sales of QS-B220 units and an 11.5% decrease in
average unit sale prices on sales of our QS-H150 handheld
units.
- Research and development expense for the three months ended
September 30, 2014 was $1,284,000 as compared with $1,231,000 for the comparable prior year period,
an increase of $53,000 or 4.3%. The
increase in research and development expense is due primarily to a
$22,000 increase in payroll and
related benefit costs, a $58,000
increase in government qualification testing fees, and a
$23,000 increase in prototype
expense, offset partially by a $37,000 decrease in stock-based
compensation,
- Selling, general and administrative expenses for the three
months ended September 30, 2014 were
$2,675,000 as compared with
$3,408,000 for the comparable prior
year period, a decrease of $733,000,
or 21.5%. The decrease in selling, general and administrative
expenses is due primarily to a $591,000 decrease in stock-based compensation, a
$39,000 decrease in payroll and
related benefit costs, a $35,000
decrease in stock-based compensation on non-employee warrants, the
$37,000 loss on the disposal of
machinery and equipment recorded in the prior year period and a
$66,000 decrease in occupancy costs
due to the relocation of our corporate offices in July 2013.
- For the three months ended September 30,
2014, other expense was $2,034,000 as compared with other expense of
$1,595,000, for the comparable prior
year period, an increase of $439,000.
The increase is due to increased interest expense on higher
borrowings under our credit facilities.
- Our net loss for the three months ended September 30, 2014 was $5,375,000 as compared with a net loss of
$6,021,000 for the comparable prior
year period, a decrease of $646,000,
or 10.7%. The decrease in the net loss is primarily due to higher
sales and gross margin, decreased stock-based compensation and a
decrease in operating expenses in the three months ended
September 30, 2014, partially offset
by an increase in interest expense.
Company Webcast and Conference Call
The Company will host a webcast and conference call on
Friday, November 14, 2014 at
11:00 AM Eastern time to review
financial results for the quarter ended September 30, 2014. Following the Company's
prepared remarks there will be a Q&A session. The
call can be accessed by dialing: 800-271-5140 within the U.S. or
617-213- 8893 outside the U.S. and entering passcode
58919984. Participants are asked to call the assigned
number approximately 5 minutes before the conference call
begins. A replay of the conference call will be
available approximately two hours after the call for one month by
dialing: 888-286-8010 within the U.S. or 617-801-6888 outside the
U.S. and entering passcode 57254167. The conference call
will also be available live over the Internet at the "Webcasts"
page of the Investor Relations section of Implant Sciences' website
at www.implantsciences.com. A replay of the webcast will
be available for one month after the call.
About Implant Sciences
Implant Sciences is the leader in next generation
Explosives Trace Detection ("ETD") technology. In October
2013, the Company became the third ETD manufacturer, and the sole
American-owned company, to currently have product qualification
from the US Transportation Security Administration. Implant
Sciences develops, manufactures and sells sophisticated sensors and
systems for Security, Safety, and Defense ("SS&D") markets. The
Company has developed proprietary technologies used in its
commercial explosives and narcotics trace detection systems, which
ship to a growing number of locations domestically and
internationally. Implant Sciences' QS-H150 portable explosives
trace detector has received Qualified Anti-Terrorism Technology
Designation and, in addition to receiving TSA qualification for
aviation checkpoint and checked baggage and air cargo screening,
certification by Service Technique de l'Aviation Civile in
France for passenger and air cargo
screening, the Company's QS-B220 has also received Qualified
Anti-Terrorism Technology Designation by the U.S. Department of
Homeland Security under the Support Anti-terrorism by Fostering
Effective Technology Act of 2002 ("the SAFETY Act"). For further
details on the Company and its products, please visit the Company's
website at www.implantsciences.com.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements," as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such statements are based on
management's current expectations and are subject to risks and
uncertainties that could cause the Company's actual results to
differ materially from the forward-looking statements. Such risks
and uncertainties include, but are not limited to, the risks that
we will be required to repay all of our indebtedness to our secured
lenders by March 31, 2015; if we are
unable to satisfy these obligations and to raise additional capital
to fund operations, our lenders may seize our assets and our
business may fail; we continue to incur substantial operating
losses and may never be profitable; our independent registered
public accounting firm has expressed substantial doubt as to our
ability to continue as a going concern; there is no guaranty that
U.S. or foreign governments, law enforcement agencies or commercial
consumers will purchase any of our explosives detection products or
that any new products we may develop will be accepted by the
Transportation Security Administration or by such other
governments, agencies or consumers; economic, political and other
risks associated with international sales and operations could
adversely affect our sales; liability claims related to our
products or our handling of hazardous materials could damage our
reputation and have a material adverse effect on our financial
results; our business is subject to intense competition; our
markets are subject to rapid technology change and our success will
depend on our ability to develop and introduce new products; we may
not be able to retain our management and key employees or identify,
hire and retain additional personnel as needed; we may not be able
to enforce our patent and other intellectual property rights or
operate without infringing on the proprietary rights of others: and
other risks and uncertainties described in our filings with the
Securities and Exchange Commission, including our most recent Forms
10-K, 10-Q and 8-K. Such statements are based on management's
current expectations and assumptions which could differ materially
from the forward-looking statements.
For further information, you are encouraged to review Implant
Sciences' filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K, for the period ended
June 30, 2014. The Company assumes no
obligation to update the information contained in this press
release.
For further information contact:
Implant Sciences
Corporation
Glenn Bolduc,
President and CEO
(978) 752-1700
or
Investor Contact:
Laurel Moody
646-810-0608
Implant Sciences
Corporation
|
Consolidated
Balance Sheets
|
(In thousands
except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
June
30,
|
|
2014
|
|
2014
|
|
(Unaudited)
|
|
(Audited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
82
|
|
$
391
|
Restricted cash and
investments
|
312
|
|
312
|
Accounts
receivable-trade, net
|
1,039
|
|
545
|
Inventories,
net
|
2,880
|
|
2,868
|
Prepaid expenses and
other current assets
|
274
|
|
315
|
Total current
assets
|
4,587
|
|
4,431
|
Property and
equipment, net
|
589
|
|
619
|
Restricted cash and
investments
|
312
|
|
312
|
Other non-current
assets
|
116
|
|
117
|
Total
assets
|
$
5,604
|
|
$
5,479
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Senior secured
promissory note - BAM
|
$
20,000
|
|
$
20,000
|
Senior secured
convertible promissory note
|
3,184
|
|
3,184
|
Senior secured
promissory note - DMRJ
|
1,000
|
|
1,000
|
Second senior secured
convertible promissory note
|
12,000
|
|
12,000
|
Third senior secured
convertible promissory note
|
12,000
|
|
12,000
|
Line of
credit
|
5,253
|
|
2,995
|
Current maturities of
obligations under capital lease
|
47
|
|
45
|
Accrued
expenses
|
12,016
|
|
11,094
|
Accounts
payable
|
3,262
|
|
3,675
|
Deferred
revenue
|
1,947
|
|
483
|
Total current
liabilities
|
70,709
|
|
66,476
|
Long-term
liabilities:
|
|
|
|
Long-term obligations
under capital lease, net of current maturities
|
54
|
|
66
|
Deferred revenue, net
of current
|
100
|
|
142
|
Total long-term
liabilities
|
154
|
|
208
|
Total
liabilities
|
70,863
|
|
66,684
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Common stock; $0.001
par value; 200,000,000 shares authorized; 66,698,665 and
66,688,120
shares issued and outstanding at September 30,
2014 and 200,000,000 shares authorized;
63,634,171
|
|
|
|
and 66,623,626
issued and outstanding at June 30, 2014
|
67
|
|
64
|
Preferred stock; no
stated value; 5,000,000 shares authorized
|
|
|
|
Series G Convertible
Preferred Stock, no stated value; 650,000 shares authorized,
no
|
|
|
|
shares issued and
outstanding at September 30, 2014 and June 30, 2014
|
-
|
|
-
|
Series H Convertible
Preferred Stock, no stated value; 15,000 shares
authorized,
|
|
|
|
no shares issued and
outstanding
|
-
|
|
-
|
Series I Convertible
Preferred Stock, no stated value; 15,000 shares
authorized,
|
|
|
|
no shares issued and
outstanding
|
-
|
|
-
|
Series J Convertible
Preferred Stock, no stated value; 6,000 shares
authorized,
|
|
|
|
no shares issued and
outstanding
|
-
|
|
-
|
Additional paid-in
capital
|
108,215
|
|
107,055
|
Accumulated
deficit
|
(173,261)
|
|
(167,886)
|
Deferred
compensation
|
(206)
|
|
(367)
|
Other comprehensive
(loss) income
|
(1)
|
|
2
|
Treasury stock,
10,545 common shares, at cost
|
(73)
|
|
(73)
|
Total stockholders'
deficit
|
(65,259)
|
|
(61,205)
|
Total liabilities and
stockholders' deficit
|
$
5,604
|
|
$
5,479
|
Implant Sciences
Corporation
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
(In thousands
except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
Revenues
|
$
1,869
|
|
$
1,165
|
|
Cost of
revenues
|
1,251
|
|
952
|
|
Gross
margin
|
618
|
|
213
|
|
Operating
expenses:
|
|
|
|
|
Research and
development
|
1,284
|
|
1,231
|
|
Selling, general and
administrative
|
2,675
|
|
3,408
|
|
Total operating
expenses
|
3,959
|
|
4,639
|
|
Loss from
operations
|
(3,341)
|
|
(4,426)
|
|
Other
expense:
|
|
|
|
|
Interest
expense
|
(2,034)
|
|
(1,595)
|
|
Total other
expense
|
(2,034)
|
|
(1,595)
|
|
Net
loss
|
(5,375)
|
|
(6,021)
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
Foreign currency
translation adjustments
|
(3)
|
|
(1)
|
|
Other comprehensive
loss
|
(3)
|
|
(1)
|
|
Comprehensive
loss
|
$
(5,378)
|
|
$
(6,022)
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.08)
|
|
$
(0.10)
|
|
Weighted average
shares used in computing net loss
|
|
|
|
|
per common share,
basic and diluted
|
64,747,624
|
|
58,193,898
|
|
Implant Sciences
Corporation
|
Consolidated Sales
by Product
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Three
Months Ended
|
|
|
|
September 30,
2014
|
|
September 30,
2013
|
|
|
|
Amount
|
|
Mix
|
|
Amount
|
|
Mix
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
QS-H150
|
$
986
|
|
52.8%
|
|
$
250
|
|
21.4%
|
|
294.4%
|
QS-B220
|
754
|
|
40.3%
|
|
836
|
|
71.8%
|
|
-9.8%
|
Parts &
supplies
|
129
|
|
6.9%
|
|
79
|
|
6.8%
|
|
63.3%
|
|
$
1,869
|
|
100.0%
|
|
$
1,165
|
|
100.0%
|
|
60.4%
|
Implant Sciences
Corporation
|
|
Earnings Before
Interest, Taxes, Depreciation and Stock-Based Compensation
("Adjusted EBITDA")
|
|
(In thousands
except share and per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
|
September
30,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
Net
loss
|
$
(5,375)
|
|
$
(6,021)
|
|
|
|
|
Interest expense,
net
|
2,034
|
|
1,595
|
|
|
|
|
Income
taxes
|
-
|
|
-
|
|
|
|
|
Depreciation
|
41
|
|
36
|
|
|
|
|
Stock-based
compensation
|
692
|
|
1,365
|
|
|
|
|
Warrants issued to
non-employees
|
212
|
|
247
|
|
|
|
|
Common stock issued
to consultants
|
68
|
|
71
|
|
|
|
|
Adjusted EBITDA
(1)
|
$
(2,328)
|
|
$
(2,707)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted EBITDA
is defined as net loss plus interest expense, net of interest
income, income taxes, depreciation, stock-based compensation, fair
value of warrants issued to non-employees and the fair value of
common stock issued to consultants. EBITDA is commonly used
in the technology industry, and we present Adjusted EBITDA to
enhance your understanding of our financial performance. We
use Adjusted EBITDA as an internal performance measurement and
believe that it provides investors and analysts with a measure of
operating results unaffected by differences in capital structures
and capital investment among otherwise comparable companies and
improves comparability of results of operations. Management uses
this supplemental measure to evaluate performance over a period of
time and to analyze underlying trends in the Company's business and
to establish operational goals and forecast that are used in
allocating resources. We expect to compute our non-GAAP
financial measure, using the same consistent method from quarter to
quarter and year to
year.
|
|
While we believe that
Adjusted EBITDA is a useful measure for investors, it is not a
measurement presented in accordance with United States generally
accepted accounting principles, or GAAP. You should not
consider Adjusted EBITDA in isolation or as a substitute for net
income, cash flows from operations, or any other performance
measures calculated in accordance with GAAP. In addition,
Adjusted EBITDA has inherent material limitations as a performance
measure. It does not include interest expense, but because we
have borrowed money, interest expense is a necessary element of our
costs. In addition, Adjusted EBITDA does not include
depreciation. Since we have capital assets, depreciation
expense is a necessary element of our costs. Adjusted EBITDA
does not include stock-based compensation, which is a necessary
element of our costs since we issue stock awards to employees as an
important incentive to maximize overall company performance and as
a benefit of employment with the company. Adjusted EBITDA
does not include the fair value of warrants issued to
non-employees, which is a necessary element of our costs since we
have issued warrants to non-employees and as part of our financing
strategy. Finally, Adjusted EBITDA does not include the fair value
of common stock issued to consultants, which is a necessary element
of our costs since we have issued shares of our common stock in
lieu of cash payments to consultants we have retained. Because not
all companies use identical calculations, our presentation of
Adjusted EDITDA may not be comparable to other similarly titled
measures of other companies.
|
SOURCE Implant Sciences Corporation