WILMINGTON, Mass., Feb. 17, 2015 /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 and six
months ended December 31,
2014.
Revenues for the three months ended December 31, 2014 decreased 32.0%, to
$2.1 million, from $3.2 million for the comparable prior year
period. Our net loss for the three months ended December 31, 2014 was $6.2
million as compared with a net loss of $4.4 million for the comparable prior year
period, an increase of $1.8
million.
Revenues for the six months ended December 31, 2014 decreased 7.1%, to $4.0 million, from $4.3
million for the comparable prior year period. Our net
loss for the six months ended December 31,
2014 was $11.6 million as
compared with a net loss of $10.4
million for the comparable prior year period, an increase of
$1.2 million.
Earnings before interest, taxes, depreciation and amortization,
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
$3,515,000 in the three months ended
December 31, 2014, compared to a loss
of $1,891,000 in the comparable prior
year period and for the six months ended December 31, 2014, a loss of $5,843,000 compared to a loss of $4,598,000 in the comparable prior year
period.
William McGann, President and CEO
of Implant Sciences, commented, "During the recently concluded
quarter we secured product approvals in Russia and China, which we believe positions the Company
for consistent and sustainable growth. Coupled with our
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 in November 2014, we
have taken important steps to broaden the markets we serve,
increase our revenue opportunities, and improve our financial
stability. We remain confident about our future prospects."
Details for the three and six months ended December 31, 2014 follow below.
Three months Ended December 31,
2014 vs. December 31,
2013
- Revenues for the three months ended December 31, 2014 were $2,141,000 as compared with $3,150,000 for the comparable prior year period,
a decrease of $1,009,000, or 32.0%.
The decrease in revenue is due primarily to: a 31.6% decrease in
the number of QS-B220 desktop units sold in the three months ended
December 31, 2014, due to decreased
shipments to U.S. air cargo screening facilities in the current
three month period and a 3.6% decrease in the average unit sales
prices, which resulted in a 34.0% decrease in QS-B220 revenues; a
25.0% decrease in the number of QS-H150 handheld units sold,
compared to the prior period, due to decreased shipments to
Japan and a 15.6% decrease in the
average unit sales prices, which resulted in a 36.7% decrease in
QS-H150 revenues, offset partially by a 50.4% increase in
sales of parts and supplies.
- Gross margin for the three months ended December 31, 2014 was $364,000 or 17.0% of revenues as compared with
$1,170,000 or 37.1% of revenues for
the comparable prior year period. The decrease in gross margin as a
percent of revenues is primarily the result of a decrease in the
average unit sell process on sales of our QS-H150 units and our
QS-B220 units of 15.6% and 3.6%, respectively, decreased
manufacturing overhead absorption due to decreased QS-B220 unit
volume and by a $36,000 increase in
stock-based compensation.
- Research and development expense for the three months ended
December 31, 2014 was $1,288,000 as compared with $1,191,000 for the comparable prior year period,
an increase of $97,000 or 8.1%. The
increase in research and development expense is due primarily to a
$48,000 increase in payroll and
related benefit costs, a $33,000
increase in stock-based compensation, a $31,000 increase in travel expenses incurred in
support of our government qualifications, a $30,000 increase in prototype expense, offset
partially by a $45,000 decrease in
engineering consulting fees.
- Selling, general and administrative expenses for the three
months ended December 31, 2014 were
$3,195,000 as compared with
$2,686,000 for the comparable prior
year period, an increase of $509,000,
or 19.0%. The increase in selling, general and administrative
expenses is due primarily to a $764,000 increase in payroll and related benefit
due to the resignation of our former CEO, $42,000 increase in bad debt expense and a
$32,000 increase in legal expenses.
Partially offsetting these increases are a $218,000 decrease in stock-based compensation
expense on non-employee warrants, a $63,000 decrease in consulting expense, and a
$55,000 decrease in in variable
selling expenses due to lower revenues.
- For the three months ended December 31,
2014, other expense was $2,125,000 as compared with other expense of
$1,674,000, for the comparable prior
year period, an increase of $451,000.
The increase is due to increased interest expense on higher
borrowings under our credit facility with DMRJ and our credit
facility with BAM.
- Our net loss for the three months ended December 31, 2014 was $6,244,000 as compared with a net loss of
$4,381,000 for the comparable prior
year period, an increase of $1,863,000, or 42.5%. The increase in the net
loss is primarily due to costs incurred due to the resignation of
our former CEO, decreased sales and gross margin and an increase in
interest expense.
Six months Ended December 31,
2014 vs. December 31,
2013
- Revenues for the six months ended December 31, 2014 were $4,010,000 as compared with $4,315,000 for the comparable prior year period,
a decrease of $305,000, or 7.1%. The
decrease in revenue is due primarily to a 22.5% decrease in
the number of QS-B220 desktop units sold in the six months ended
December 31, 2014, due to decreased
shipments to U.S. air cargo screening facilities in the current six
month period and a 4.8% decrease in the average unit sales prices,
which resulted in a 26.2% decrease in QS-B220 revenue, offset
partially by a 35.8% increase in the number of QS-H150 handheld
units sold, compared to the prior period, due to increased
shipments to China and
Africa, a 13.4% decrease in the
average unit sales prices, which resulted in a 17.7% increase in
QS-H150 revenues and to a lesser extent by a 55.7% increase in
sales of parts and supplies.
- Gross margin for the six months ended December 31, 2014 was $982,000 or 24.5% of revenues as compared with
$1,383,000 or 32.1% of revenues for
the comparable prior year period. The decrease in gross margin as a
percent of revenues is primarily the result of a decrease in the
average unit sell process on sales of our QS-H150 units and our
QS-B220 units of 13.4% and 4.8%, respectively, decreased
manufacturing overhead absorption due to decreased QS-B220 unit
volume, offset partially by a $9,000
decrease in stock-based compensation.
- Research and development expense for the six months ended
December 31, 2014 was $2,572,000 as compared with $2,422,000 for the comparable prior year period,
an increase of $150,000 or 6.2%. The
increase in research and development expense is due primarily to a
$70,000 increase in payroll and
related benefit costs, a $80,000
increase in prototype expense and materials, a $30,000 increase in travel expenses incurred in
support of our government qualifications and a $29,000 increase in government qualification
testing fees, offset partially by a $61,000 decrease in engineering consulting fees
and a $4,000 decrease in stock-based
compensation.
- Selling, general and administrative expenses for the six months
ended December 31, 2014 were
$5,870,000 as compared with
$6,094,000 for the comparable prior
year period, a decrease of $224,000,
or 3.7%. The decrease in selling, general and administrative
expenses is due primarily a $586,000
decrease in stock-based compensation, a $253,000 decrease in stock-based compensation
expense on non-employee warrants, an $84,000 decrease in occupancy costs due to the
relocation of our corporate offices in July
2013, $66,000 decrease in
consulting expense and the $42,000
loss on the disposal of machinery and equipment recorded in the
prior year period. Partially offsetting these decreases are a
$725,000 increase in payroll and
related benefits due to the resignation of our former CEO, a
$45,000 increase in legal fees and a
$44,000 increase in bad debt
expense.
- For the six months ended December 31,
2014, other expense was $4,159,000 as compared with other expense of
$3,269,000, for the comparable prior
year period, an increase of $890,000.
The increase is due to increased interest expense on higher
borrowings under our credit facility with DMRJ and our credit
facility with BAM.
- Our net loss for the six months ended December 31, 2014 was $11,619,000 as compared with a net loss of
$10,402,000 for the comparable prior
year period, an increase of $1,217,000, or 11.7%. The increase in the net
loss is primarily due to lower sales and gross margin, costs
incurred due to the resignation of our former CEO and an increase
in interest expense.
Company Webcast and Conference Call
The Company will host a webcast and conference call on
Tuesday, February 17, 2015 at
4:15 PM Eastern time to review
financial results for the quarter ended December 31, 2014. Following the Company's
prepared remarks there will be a Q&A session. The
call can be accessed by dialing: 800-706-7749 within the U.S. or
617-614-3474 outside the U.S. and entering passcode
36117383. 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 31927612. 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
Roger Deschenes, CFO
(978) 752-1700
or
Investor Contact:
Laurel Moody
646-810-0608
Implant Sciences
Corporation
|
Condensed
Consolidated Balance Sheets
|
(In thousand
except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
June
30,
|
|
2014
|
|
2014
|
|
(Unaudited)
|
|
(Audited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
26
|
|
$
391
|
Restricted cash and
investments
|
312
|
|
312
|
Accounts
receivable-trade, net
|
915
|
|
545
|
Inventories,
net
|
2,698
|
|
2,868
|
Prepaid expenses and
other current assets
|
273
|
|
315
|
Total current
assets
|
4,224
|
|
4,431
|
Property and
equipment, net
|
852
|
|
619
|
Restricted cash and
investments
|
312
|
|
312
|
Other non-current
assets
|
122
|
|
117
|
Total
assets
|
$
5,510
|
|
$
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
|
8,600
|
|
2,995
|
Current maturities of
obligations under capital lease
|
48
|
|
45
|
Accrued
expenses
|
13,330
|
|
11,094
|
Accounts
payable
|
3,541
|
|
3,675
|
Deferred
revenue
|
1,709
|
|
483
|
Total current
liabilities
|
75,412
|
|
66,476
|
Long-term
liabilities:
|
|
|
|
Long-term obligations
under capital lease, net of current maturities
|
40
|
|
66
|
Accrued expenses, net
of current
|
262
|
|
-
|
Deferred revenue, net
of current
|
195
|
|
142
|
Total long-term
liabilities
|
497
|
|
208
|
Total
liabilities
|
75,909
|
|
66,684
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Common stock; $0.001
par value; 200,000,000 shares authorized; 71,873,665 and
71,863,120
shares issued and outstanding at December 31,
2014 and 63,634,171 and 63,623,626 shares issued and outstanding at
June 30, 2014
|
|
|
|
and 66,623,626
issued and outstanding at June 30, 2014
|
72
|
|
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
|
-
|
|
-
|
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
|
109,281
|
|
107,055
|
Accumulated
deficit
|
(179,505)
|
|
(167,886)
|
Deferred
compensation
|
(177)
|
|
(367)
|
Other comprehensive
income
|
3
|
|
2
|
Treasury stock,
10,545 common shares, at cost
|
(73)
|
|
(73)
|
Total
stockholders' deficit
|
(70,399)
|
|
(61,205)
|
Total liabilities and
stockholders' deficit
|
$
5,510
|
|
$
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
|
|
For the Six Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues
|
$
2,141
|
|
$
3,150
|
|
$
4,010
|
|
$
4,315
|
Cost of
revenues
|
1,777
|
|
1,980
|
|
3,028
|
|
2,932
|
Gross
margin
|
364
|
|
1,170
|
|
982
|
|
1,383
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
1,288
|
|
1,191
|
|
2,572
|
|
2,422
|
Selling, general and
administrative
|
3,195
|
|
2,686
|
|
5,870
|
|
6,094
|
Total operating
expenses
|
4,483
|
|
3,877
|
|
8,442
|
|
8,516
|
Loss from
operations
|
(4,119)
|
|
(2,707)
|
|
(7,460)
|
|
(7,133)
|
Other
expense:
|
|
|
|
|
|
|
|
Interest
income
|
-
|
|
1
|
|
-
|
|
1
|
Interest
expense
|
(2,125)
|
|
(1,675)
|
|
(4,159)
|
|
(3,270)
|
Total other
expense
|
(2,125)
|
|
(1,674)
|
|
(4,159)
|
|
(3,269)
|
Net
loss
|
(6,244)
|
|
(4,381)
|
|
(11,619)
|
|
(10,402)
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
4
|
|
-
|
|
1
|
|
(1)
|
Other comprehensive
income (loss)
|
4
|
|
-
|
|
1
|
|
(1)
|
Comprehensive
loss
|
$
(6,240)
|
|
$
(4,381)
|
|
$
(11,618)
|
|
$
(10,403)
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.09)
|
|
$
(0.07)
|
|
$
(0.17)
|
|
$
(0.18)
|
Weighted average
shares used in computing net
loss
|
|
|
|
|
|
|
|
per common share,
basic and diluted
|
70,938,120
|
|
59,358,296
|
|
67,842,872
|
|
58,776,097
|
Implant Sciences
Corporation
|
Consolidated Sales
by Product
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Three
Months Ended
|
|
|
|
|
December 31,
2014
|
|
December 31,
2013
|
|
|
|
|
Amount
|
|
Mix
|
|
Amount
|
|
Mix
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
|
QS-H150
|
$
805
|
|
37.6%
|
|
$
1,272
|
|
40.4%
|
|
(36.7)
|
%
|
QS-B220
|
1,163
|
|
54.3%
|
|
1,763
|
|
56.0%
|
|
(34.0)
|
%
|
Parts &
supplies
|
173
|
|
8.1%
|
|
115
|
|
3.6%
|
|
50.4
|
%
|
|
$
2,141
|
|
100.0%
|
|
$
3,150
|
|
100.0%
|
|
(32.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
|
December 31,
2014
|
|
December 31,
2013
|
|
|
|
|
Amount
|
|
Mix
|
|
Amount
|
|
Mix
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
|
QS-H150
|
$
1,791
|
|
44.7%
|
|
$
1,522
|
|
35.3%
|
|
17.7
|
%
|
QS-B220
|
1,917
|
|
47.8%
|
|
2,599
|
|
60.2%
|
|
(26.2)
|
%
|
Parts &
supplies
|
302
|
|
7.5%
|
|
194
|
|
4.5%
|
|
55.7
|
%
|
|
$
4,010
|
|
100.0%
|
|
$
4,315
|
|
100.0%
|
|
(7.1)
|
%
|
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
|
|
For the Six Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net
loss
|
$
(6,244)
|
|
$
(4,381)
|
|
$
(11,619)
|
|
$
(10,402)
|
Interest expense,
net
|
2,125
|
|
1,674
|
|
4,159
|
|
3,269
|
Income
taxes
|
-
|
|
-
|
|
-
|
|
-
|
Depreciation
|
40
|
|
38
|
|
81
|
|
74
|
Stock-based
compensation
|
535
|
|
460
|
|
1,227
|
|
1,825
|
Warrants issued to
non-employees
|
29
|
|
247
|
|
241
|
|
494
|
Common stock issued
to consultants
|
-
|
|
71
|
|
68
|
|
142
|
Adjusted EBITDA
(1)
|
$
(3,515)
|
|
$
(1,891)
|
|
$
(5,843)
|
|
$
(4,598)
|
|
|
|
|
|
|
(1) Adjusted EBITDA
is defined as net loss plus interest expense, net of interest
income, income taxes, depreciation and amortization, 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 EBITDA may not be comparable to other similarly titled
measures of other companies.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/implant-sciences-reports-second-quarter-fiscal-2015-financial-results-300036844.html
SOURCE Implant Sciences Corporation