UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 13, 2016
POSITIVEID CORPORATION
(Exact name of registrant as specified in
its charter)
Delaware |
001-33297 |
06-1637809 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
1690 South Congress Avenue, Suite 201
Delray Beach, Florida 33445
(Address of principal executive offices)
(zip code)
(561) 805-8000
(Registrant's telephone number, including
area code)
_________
(Former Name or Former Address if Changed
Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| o | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Cautionary Note on Forward-Looking Statements
This Current Report on Form 8-K (this “Report”)
and any related statements of representatives and partners of the Company contain, or may contain, among other things, certain
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking
statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect
to the Company’s plans, objectives, projections, expectations and intentions and other statements identified by words such
as “projects,” “may,” “will,” “could,” “would,” “should,”
“believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,”
or similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management
and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with the Securities
and Exchange Commission (the “SEC”). Actual results may differ significantly from those set forth in the forward-looking
statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various
factors (many of which are beyond the Company’s control). The Company undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Item 7.01 Regulation FD Disclosure.
On January 13, 2016, PositiveID Corporation
(“PositiveID”) hosted a shareholder webcast including a question and answer session. An audio recording of the webcast
and the accompanying presentation materials are posted on the Company’s website at http://investors.positiveidcorp.com/events.cfm.
The audio transcript is furnished as Exhibit 99.1 to this Form 8-K.
The discussion on the conference call contains
forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially
from those indicated. Actual results may differ materially due to a number of factors, including those factors discussed in the
attached transcript, and other factors discussed in the Company’s filings with the Securities and Exchange Commission, including
its report on Form 10-K for the year ended December 31, 2014, and its most recent Quarterly Report on Form 10-Q for the quarter
ended September 30, 2015, and subsequent filings. Any forward-looking statements included in the presentation are as of January
13, 2016, and the Company does not intend to update them if its views later change, except as may be required by law. These forward-looking
statements should not be relied upon as representing the Company’s views as of any date subsequent to January 13, 2016.
The information referenced under Item 7.01
(including Exhibit 99.1referenced in Item 9.01 below) of this Current Report on Form 8-K is being “furnished” under
“Item 7.01. Regulation FD Disclosure” and, as such, shall not be deemed to be “filed” for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of that Section. The information set forth in this Current Report on Form 8-K (including Exhibit 99.1referenced in
Item 9.01 below) shall not be incorporated by reference into any registration statement, report or other document filed by PositiveID
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by
specific reference in such filing. PositiveID does not undertake to update the information as posted on its website; however, it
may post additional information included in future press releases and Forms 8-K, as well as posting its periodic Exchange Act reports.
Item 9.01. Financial Statements and
Exhibits.
Exhibit
Number |
|
Description |
99.1 |
|
Transcript of shareholder conference call on January 13, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
POSITIVEID CORPORATION |
|
|
|
|
Date: January 14, 2016 |
By: /s/ William J. Caragol |
|
Name: William J. Caragol |
|
Title: Chief Executive Officer |
|
|
Exhibit 99.1
Transcript of shareholder conference call on January 13, 2016
Operator: Good day, ladies and gentlemen, and welcome to the
PositiveID Shareholder Update Conference Call. As a reminder, this conference may be recorded.
I would now like to introduce your host for today's conference,
Ms. Allison Tomek, Senior Vice President of Corporate Development. Ms. Tomek, you may begin.
Allison Tomek: Thank you, Andrea, and good morning, everyone.
Welcome to PositiveID Corporation Shareholder Update. Before we begin today's webcast, I must remind you that some of the information
we will discuss on this webcast is forward-looking, including, but not limited to, statements about the Company's future expectations,
including future revenues and earnings. These forward-looking statements may be affected by the risks and uncertainties in our
business.
Everything we say here today is qualified in its entirety by
cautionary statements and risk factors set forth in our press releases and SEC filings, particularly those set forth in the Company's
10-K filed on March 30, 2015, as amended December 31, 2015, and 10-Qs filed on November 12, 2015, August 13, 2015, and May 15,
2015, under the caption “Risk Factors.” These documents are publicly available.
These factors and others have affected historical results, may
affect future results, and may cause future results to differ materially from those expressed in any forward-looking statement
we may make. Our statements are as of today, January 13, 2016, and we have no obligation to update any forward-looking statement
we may make. Following our prepared remarks, participants on today's webcast will have the ability to submit questions through
their webcast interface.
Joining me on today's call are Bill Caragol, PositiveID's Chairman
and CEO, and Lyle Probst, PositiveID's President. I will now turn the call over to Bill.
William Caragol: Thank you very much, Allison, and welcome to
everybody. Happy New Year. We are very pleased to have you here to talk about PositiveID. Allison, as we get started, we can move
up to slide three, please.
I want to let everybody know that 2015 was an outstanding year
for PositiveID. We made great strides on many fronts. For those of you who have been with us over the course of the past two years
or so, you know our background story, which is that our base-technology, our intellectual property, know-how and patents were developed
under a long developing contract of a product with Department of Homeland Security in the field of bio-defense.
About two years ago, we completed the strategic design and launch
of a program to develop a handheld device to do molecular diagnostics in the palm of your hand, at the point of need, and we have
been working diligently through design and development of that program, and very heavily over 2015. We're very happy today to give
you an update on the tremendous progress that we've made.
Our Company has, as a platform, extremely strong intellectual
property and patent protection with 18 patents and pending. We have a very experienced management team and we have world-class
customers and partners, all of which we will discuss and brief you on this morning.
With that as a backdrop, we made two very important, exciting
and strategic transactions in December in acquiring E-N-G Mobile Systems and Thermomedics. These are great synergistic fits, companies
that we did a lot of examination and diligence on as well as significant discussion and planning in the process with the management
teams in place at both of those companies, because what we were looking for and what we found were synergistic fits that complement
our current operations, but bring strength in management and new distribution channels, especially in commercial medical, customer
opportunities with a lot of overlap, and opportunities for further synergy, as well as FDA and regulatory experience with clinical
medical devices.
Over the course of these past two years, we've continued to
make progress on our underlying financial goals, which line up with our strategic goals. We did post and recognize revenue of $945,000
in 2014. In the most recently reported period, which would be the nine-months ending 2015, we recorded $2.7 million of revenue,
almost triple, and we're going to be happy to talk to you about what the strategic actions that we've taken lead us to as we move
from 2014 and 2015 into this year, 2016 and beyond.
With all of our accomplishments in 2015, we believe that 2016
will be a bigger and better year for us, and we're very pleased again to be here this morning to talk to you about our plans and
where we are in those plans.
Allison, if you could flip ahead, please, to slide number four;
just going to pause here for a moment because as we talk about what we do, I think it's important to maybe have a few pictures
to go behind our story. The first product, which is in the lower right-hand corner, is the product that I talked about that we
developed for the Department of Homeland Security under a $30 million development contract, and it's the knowledge, know-how, and
the intellectual property that we developed during that process that led us to the design and now development of the Firefly Dx
product, which is pictured top center in this photo of collection.
In the top right corner is a Caregiver FDA-cleared, non-contact,
infrared thermometer. Caregiver is the product that we acquired in our acquisition of Thermomedics in December and it's a very
exciting product that I look forward to speaking with you more about. The last two pictures, which are the lower center, which
is a mobile lab developed for the Department of Homeland Security, as well as the far left picture, which is a photograph of the
inside of one of the mobile labs developed by E-N-G Mobile Systems, gives us an exciting platform to expand our work within both
government as well as commercial customers, and Lyle is going to be giving you a little bit more background on that as we move
forward.
Allison, if you could please flip up to page five. I think,
before we dive into products and the tactics behind what we're doing, I think it's important at the strategic level to talk about
the markets that we are approaching. At the first cut, when you look at our history, our legacy, and everything we've been working
on for the past couple of years, the chemistry that we use in our devices is PCR technology.
And when you look at the global PCR market, which includes clinical
as well as biodetection, you can slice and dice it in a number of different ways, which we've done on the slide before you. But
what's important to note is that the global PCR market is at or approaching $20 billion a year, that is all lab-based. In addition,
you could look at verticals like the food safety vertical, hospital-acquired diseases, all multi, multi-billion markets.
An important thing to revisit here is those markets are fundamentally
lab-based, not currently served by a rapid, handheld, point-of-need device. So, when you look at the opportunity that we have in
front of us with Firefly, you can quite easily draw the line that with only a fraction of the market of lab-based moving out to
point of need, we have a tremendous opportunity in front of us.
In addition through our actions in December, we have access,
through our new medical device in the temperature monitoring market, which has been estimated to reach $1 billion by 2020. And
when you peel back how that market is built up, the fastest growing market is in the infrared non-contact thermometry. And with
our product, which we believe will be a leader in that space, we have a great product with large margins and great platform to
achieve success and growth in that market.
Looking at our management team, you have Lyle and I here on
the phone with you as well as Allison, and we have a very experienced management team. You'll see that we brought on Gary O'Hara,
the CTO of Thermomedics, and I'll speak a little bit more about Thermomedics and the Caregiver, which will highlight some of Gary's
great experience.
Together with our board of advisors and board of directors,
we have a very deep and experienced team with both strong technical and scientific experience, with significant public company
experience, as well as the business development relationships and expertise, both in government and commercial markets that will
allow us to continue to take the products that we have, taking them to market, and be able to capitalize on the large market opportunities
in front of us.
Moving on to our customers and our partners. This is a slide
that I like to pause on to fully appreciate what we have been able to accomplish over the course of the past two years. When you
look at this lineup, you'll see not just federal, state and local governments, large commercial integrators, healthcare product
distributors, as well as a long list of other impressive S&P 500 and Dow component companies.
It starts with our long history with the Department of Homeland
Security and the $30 million contract that we were awarded to develop our first product, M-BAND. But as you look as you look at
the very recent past, in the past two years of revenue that we've recorded, that revenue comes from Department of Defense, Department
of Homeland Security, and from Boeing. So, you look at what we are building on as we move forward here in 2016 and to 2017 with
our intellectual property platform, with our experienced management team, and with this growing list of customers and partners
as well as those that we have on board that we're not in the position to discuss or disclose. We're well positioned to execute
on our plan.
Having said that, what I would like to do now is hand over the
call to Lyle to take a deeper dive and talk to you about where we are and where we're going with this product platform. Lyle?
Lyle Probst: Thank you, Bill. It's a pleasure to speak with
those who are able to listen in this morning, and good morning to you.
First, getting in to the technology that we developed here at
PositiveID, the foundation of what we began with the development of the M-BAND automated bio-threat detection platform. And we
developed this over a - about a six-year period of time through a contract with the Department of Homeland Security. And what the
system is, it's a stand-alone, autonomous system that collects air, collects samples, and monitors them, tests them for the presence
or absence of a potential biological threat or biological weapon.
It runs for 30 days unattended. It looks for a whole list of
organisms, which I won't go into here. And it runs for 30 days unattended, it just reports the results out autonomously; it's monitoring
itself, letting us know where it's at. This system requires a monthly replenishment of reagents that, is what we, at PositiveID,
would continue to support with this system. We have licensed the instrument to the Boeing Company for a $2.5 million license fee
in 2013 where they have exclusive manufacturing distribution rights in North America, and PositiveID maintains the exclusive right
to supply the monthly reagents and support the platform.
The system has been tested in multiple areas. It's been indoors
and outdoors. It was in Boston for over a year, several units were shipped into the UK and tested. And most recently, this last
year, we sent a unit to Korea where we're testing it under the Department of Defense JUPITR Program where we were under contract
with United Technologies Corporation. And it's been tested multiple times in government laboratories. All this testing has shown
that the instrument runs as is designed to detect the pathogens of interest and it does exactly what we designed it to do, to run
autonomously for 30 days, monitoring air samples on a 24/7 basis without anybody having to go out and touch the instrument.
During the development of this system, we made several technological
breakthroughs in using TaqMan, or real-time PCR sample preparation, because a sample coming into the device, will have a lot of
clutter or environment debris in it and we have to be able to remove that, isolate the organism we're looking at, or looking for,
and be able to detect it. That is a difficult process and one that we've become experts in. And we have several patents issued
to us around those technologies.
What we have done since developing this system and deploying
it and what we've learned, we began the development of the Firefly diagnostic, or Firefly Dx handheld platform, and we've taken
the same capabilities that we use in the M-BAND platform and we've made them down to be smaller, less expensive, faster running;
all of the things you want to do when developing a new type of technology or device.
What the Firefly Dx is, it's a handheld unit that uses a disposable
cartridge which contains the test, or the assay, for the disease or organisms which are being tested for. The platform, the Firefly
Dx handheld platform, is - we'd like to say an agnostic platform.
It will test for whatever is in the cartridge. So, there are
multiple biothreat scenarios in which this could be used. It could be used for bio-defense, for potential weapons to be tested.
It can be used in clinical diagnostics. A common example that I use is influenza; we have an outbreak every year of influenza and
the diagnosis of it often takes quite a while because it requires institutions and laboratories to be able to do that where the
influenza outbreaks usually begin and occur in remote areas where the infrastructure doesn't exist. A device such as the Firefly
Dx changes all of that.
Being able to detect earlier and further out into the field
would reduce the effect of any types of an outbreak, whether it's an influenza or, more recently as we saw little over year ago,
the Ebola outbreak in Africa. To use that as an example, to have the capability available then to test further out in the field
with the handheld device, it would have been much simpler and more effective to identify those who were affected by the Ebola outbreak
and be able to quarantine them earlier, and thereby, be able to reduce the spread of the disease and also to treat those earlier
who've been affected by it. That's one of the main drivers that we have in developing this platform is to be able to get the capabilities
out where they need to be, out where they don't exist.
So far on the platform, the Firefly platform, we have imported
multiple different types of test or assays onto it, and you'll see on the slide there's a list of the few of them, some of the
antibiotic resistant strains, such as MRSA and MSSA. We have assays for C. diff., E. coli, influenza, and then a whole list of
potential biological weapons, such as anthracis and pestis, being the plague, that we have imported onto our system and shown that
we're able to detect these organisms within a 30-minute period of time.
That period of time is significantly faster than what laboratories
can do, but the main thing to point out not only is it faster but it does - this detection it maintains the same level, same quality,
of diagnostics that are performed in the lab. In designing the Firefly Dx, we, early on, we made it an objective that the end-product
needed to have the same detection level as what's done in a laboratory. The reason for this is if you're going to go out into the
field and test samples, you need to have the same confidence in the results that you get in the laboratory. If one needs to take
an additional sample in the field and take it back to the laboratory to confirm the results of the field unit, it kind of defeats
purpose of having a fieldable unit in the first place.
Our objectives were to make this system small, handheld, easy
to use and not compromise on the quality of results. As far as the ease of use, you'll see in the picture there, there's one large
button on it. That's what it takes to operate the instrument. Once the sample is inserted into the cartridge and the cartridge
is placed in the Firefly Dx handheld unit, pressing the button begins the process and runs it through to completion.
It does the same process as in the airborne system where it
has to purify the sample, take out any clutter that may be in there that may inhibit the process, and then it runs the PCR test,
which we use the industry gold standard of real time PCR, and then it shows the results on the screen.
The results that come out of that, again, are identical to those
that are performed on a commercial, standard piece of laboratory equipment. The whole process, our objective is to have everything
running within under 30 minutes. To compare that to a laboratory process, laboratory processes running in parallel on the same
samples can take anywhere from 2-1/2 to 4-hours to complete the same thing.
As far as the partners we have and we have been working with,
we have agreements in place, a Space Act Agreement in place with NASA. We have a Cooperative Research and Development Agreement
in place with USSOCOM, and we have also been under contract with the Department of Homeland Security on their SenseNet program,
which is a program that, looking out the next five years, would be used similar to how the BioWatch Program works now to monitor
for biological weapons.
Bill has already spoken on what the global PCR market looks
like, that looking at the $20 billon market, and as he mentioned, that's just for laboratory-based equipment. This system, having
the capability to be out in the field, we believe, would be a significantly large market for this. Being able to test out in the
field is important and there is a great need for it, as we've discussed with our customers and partners. And one of the recent
acquisitions that we just did of E-N-G mobile technology vehicles ties into that very well. E-N-G is a company that designs in-
field specialty vehicles for communications purposes and for laboratory purposes.
The combination of PositiveID with our team of biologists and
scientists and the engineers here and at E-N-G combines to be able to provide a full solution to the customers. Go back to the
Ebola example; had there been laboratories ready to deploy during that crisis, the results of that crisis would have been much
smaller, because anytime there's any type of an outbreak or a situation where you want to monitor for either a potential weapon
or an outbreak, you need to have infrastructure. It requires laboratories to be there close by and to be able to test samples and
monitor the air and the environment.
That combined with something such as the Firefly Dx, provides
a whole solution because there are command centers that would be needed for the communications of all the personnel, there's laboratories
that would meet the biosafety level requirements for what they're testing that could be deployed, and the equipment that goes out
and be able to test it. So, there's a strong synergy bringing that company into PositiveID.
Now, personally I've been associated, or have been aware of
and worked with E-N-G over the last 10 years, as I worked with them to design the mobile laboratory when I was at Lawrence Livermore
Laboratory about 10 years ago, and have stayed in contact with them and know of the superiority of the products that they produce.
To date, E-N-G, looking over last 10 years, they average a little over $4 million a year in revenues and that's with gross margins
of about 35%.
There's a strong pipeline of opportunities and they've been
working close to capacity or at capacity for several years to meet the demands for the communications vehicles in the growing market
of mobile laboratories. Over the last several years, mobile laboratories has been the fastest growing segment of E-N-G's business.
That includes chemical labs, biological labs, nuclear radiological explosive testing labs for field- use purposes, and E-N-G has
shipped multiple units worldwide to multiple countries and for many different governments, as well as the US government.
Having PositiveID's, our bio-detection capabilities and expertise,
combined with E-N-G's mobile capabilities, it creates a turnkey mobile lab system where we can conduct analysis pretty much anywhere
in the world to be able to deploy these systems and have them on the ground where they're needed at any time. Also we added to
our portfolio recently with the acquisition of the Caregiver, and to add to that, I will turn time back over to Bill Caragol to
discuss the Caregiver thermometer and how that fits into the bigger picture of PositiveID.
William Caragol: Thanks, Lyle. As you can probably tell from
listening to both of us, we're very excited about these two acquisitions and additions to the PositiveID family. In looking at
Caregiver, what we have is the first of its kind, FDA cleared for clinical use, non-contact thermometer. Our non-contact thermometer
uses infrared. So, it has no touch and no consumable.
It takes a patient's temperature in under 2 seconds, faster
than industry standards. By being no-touch, not touching the patient, it reduces the risk of infection and cross contamination,
and by having no consumables, no probe covers that go on the typical oral predictive or tympanic thermometer, it saves money as
those probe covers can cost a nickel to a dime, which is a cost each and every time a thermometer is used in a doctor's office
or in a hospital, which, as you can imagine, adds up and escalates quite quickly.
Thermomedics, the company that created Caregiver, has a very
strong history and track record. It includes the inventor, now our CTO, who is the inventor of the first tympanic thermometer,
and coming with that team is the Senior Vice President, who built the sales of that company under the first tympanic, which is
also an infrared device. So, we have key members who are very experienced in bringing an infrared thermometry product to market,
and we think by moving into the non-contact space, which with what we believed is the better and best mousetrap, we are very well
positioned in what is, as I discussed before, the fastest growing section, or sector, within the thermometry market.
This acquisition brings us great synergies also. If you just
think back to Firefly and you think about the commercial medical sales channel that Caregiver and the Thermomedics' guys have built
with commercial medical distribution companies of great significance, the large national distribution chains, as well as the regulatory
experience of taking this product through FDA 510k.
We bring together a very strong team that helps us across our
entire platform and when you look at the gross margins of Caregiver in excess of 80%, we're well positioned with growth to be able
to drive not just strong revenues, but strong profit and cash flows, which is a good setup to speak to you about our historical,
as well as go-forward, financials.
As I mentioned earlier, and I'm up to slide 12 now; between
2014 for the full year of revenue and the first nine months of 2015 - through 2015, what we saw is revenue close to triple to where
the revenue for the nine months ending September 30th was just below $2.7 million, so tracking towards the $3 million mark. In
addition, what you have seen over the course of the past two years is shrinking operating losses, as we are still investing in
R&D in bringing Firefly to market, we continue to have a burn significantly dominated by that R&D, but what you have seen
over the course of the past two years and what you have seen going forward with the addition of E-N-G mobile systems and Thermomedics
is that as operating profits from those product lines and subsidiaries increase, that will mitigate and continue to decrease our
total operating loss.
Taking a peek down at the balance sheet, you'll see that we
maintain adequate cash on-hand to operate our business. And I guess an important highlight I would make as it relates to our balance
sheet; this is as of our last 10-Q as of September 30th and with the two acquisitions that we made in December, by year-end, our
year-end balance sheet, we will have significantly changed the look of our balance sheet. So, I would just advise shareholders
to look for that 10-K in March and, importantly before then, we will be filing with the SEC audited financial statements historical
for both of the subsidiaries so that everybody has an opportunity to take a further look and dive into what we saw as we were going
through the analysis and due diligence process.
As I said, with a great platform built in 2015, we put ourselves
in a position to continue to execute against our strategy and to be able to drive continued improved results as we move into 2016.
So, building on that approximate $3 million in revenue of 2015, it is our target in 2016 to deliver revenue, and recognize revenue,
of between $5 million to $6 million. Our target is to continue to improve on our overall operations, which leads to operating profits
at the subsidiary level and the decrease in the consolidated burn, or operating loss.
We will continue to strive to meet those goals and what you
would expect to see is in our underlying reporting of results, again, continued improvement on the bottom-line on an operating
basis, which will decrease, or mitigate the amount of R&D we're spending in developing the important Firefly product and bringing
it to market, which will lead us to our target of being cash-flow - hitting the point of cash-flow profitability from operations
on a consolidated basis during next year, 2017.
Moving ahead to our capitalization, you'll see our cap table
and our cap structure is predominantly denominated at the diluted level in common and preferred shares. We have common shares outstanding
of 444 million and a diluted share count of 566 million. In addition, you'll see from a financing standpoint, a convertible debt
balance as of our last Q at 09/30 that was at $4.7 million and what I would also remind people is that doesn't reflect what we
did in the fourth quarter up to December, which included the financing of the two acquisitions we did. So, that number will be
updated as we move forward here to our year-end 10-K in our full balance sheet reporting.
Having gone through our business, walking you through the tremendous
accomplishments we made in 2015, I hope that we've shed some light on who PositiveID is today and what tremendous opportunities
we have in front of us as we look in 2016/2017 and beyond. We took Firefly from a design to full prototype on the bench during
this past year. That has positioned us well to productize Firefly in 2016.
In December, we made two exciting and synergistic acquisitions,
so that we could grow our platform, our product offerings, our customer-base. We tripled our revenue, and we set ourselves up for
ambitious goals in 2016 and 2017. I would highlight those goals as being the completion of the Firefly to be able to bring it to
market and commercialization in 2017, delivering on our revenue growth both organic as well as the synergistic acquisition revenue
growth in 2016 and into 2017, allowing us to deliver on our 2016 revenue target of $5 million to $6 million, with improved cash
flow and profitability during that period of time, leading to our goal of cash-flow positive from operations making that turn in
2017.
We believe that 2016 will be another very good year for us.
It is our intention to make it better than 2015 and I will tell you on behalf of myself, Lyle, Allison and the entire team, we
are very keenly focused on continuing to deliver results at PositiveID. So, with that said I turn it to - I'm not sure if I'm turning
it back over to Andrea or to Allison to go through any of the Q&A that may have been entered.
Q&A
Allison Tomek: Thank you, Bill. The first question comes from
Howard Halpern from Taglich Brothers and his question is whether E-N-G operates the Mobile Labs globally or if the Mobile Labs
are designed and then sold to end-users who then operate the labs?
Lyle Probst: Yes, so this is Lyle Probst. To answer that question
the labs are not operated by E-N-G or by PositiveID. They are manufactured for specific customers to meet their needs, and we work
with them to design laboratories to the capabilities which they require and that's where our strengths come from – the unity
of the PositiveID scientific engineering team with the engineering team at E-N-G, as we are the only company that will be able
to offer that level of expertise in the design of these types of laboratories for the different customers.
Allison Tomek: Thank you. We also have a follow-up from Howard,
which is what is our growth plan for the E-N-G business?
Lyle Probst: So, E-N-G has seen the biggest growth over the
last four or five years in the Mobile Laboratory space. They have continued to maintain the communication vehicles and the growth
in that area, but the lab aspect of it has come up to equal the growth in the communications and command centers. We fully expect
that the growth of the Mobile Lab area is going to continue.
We expect to see significant growth this year in the Mobile
Labs, especially since bringing these two teams together and the capabilities to design even better labs than have been done to
date, and to be able to complete those quickly and to have a better outreach to the different customer bases that we have. So,
we expect a significant growth rate in the mobile lab area over this year, and even more so in 2017, we see that as the largest
opportunity for the E-N-G product line.
Allison Tomek: Thank you, Lyle. The next line of questioning
is about Caregiver. Caregiver, there are competing technologies, how will we set this device apart from others on the market using
infrared thermometry and how specifically will this acquisition benefit PositiveID?
William Caragol: So, let me split that question into two. When
you look at how our product has been designed and how we compete in the field of infrared non-contact thermometry, you'll have
home-use thermometers, which are far less precise and are not equipped to be put in to doctors’ offices and hospitals. So,
when you peel that away and look at the devices and products that we'll compete against in that non-contact space, we believe that
we are the only true non-contact thermometer not used as rub against the forehead and not requiring a significant user process
or protocol.
You just point it at the forehead, push the button, and you'll
have the temperature in under two seconds. We believe that what we will continue to see, which we have seen over the course of
the 18 months, is that as these thermometers get in to the hands of the nurses and technicians in hospitals and into doctors’
offices, they will continue to choose ours because it is the best performing device in the field.
We think that, based on what we've seen over the course of the
launch of the product in over the past 18 months and the feedback we get from customers as well as distribution channeling and
other commercial partners, that we do have the product that is going to be able to be a major mover in the space.
When it comes to how does that make PositiveID better, when
you look at, again, back to the synergies I discussed and where we're going with Firefly, which has a large medical and clinical
opportunity, as well as what we've talked about earlier a very large market opportunity through both the sales and distribution
channels that we currently have and continue to build as well as the regulatory expertise and overall technical and scientific
expertise.
We have both broadened our team across all of those fronts as
well as broadened our product portfolio, giving it strength and diversity as we continue to move forward here in 2016 and into
2017.
Allison Tomek: We've also received several questions regarding
Firefly; when do we expect Firefly to be available for field testing, and then, thereafter, commercial sales and what kind of growth
do we see with that product?
William Caragol: Lyle, let me touch on this first, because I
think we did discuss that and I want to be sensitive to our customer-base, but when we talked about our goals for 2016 and 2017
we talked about the productization of Firefly in 2016, which is taking the successful fully integrated prototype that we built
on the bench and working it to a field testable unit during 2016, which allows us to, in 2017, work through the FDA and commercialization
of the product to commercial sales.
We do not intend at this time, based on the sensitivities to
our customers and partners, to put out specific dates, but I think those are very important targets and guidelines that we are
operating to here, and measuring ourselves internally, and I think it's fair for those who are following and watching to look at
and to hold us to overtime.
Allison Tomek: And another question on the applications for
Firefly; have we considered using Firefly in the service industry, specifically restaurants, after the various outbreaks at restaurants?
Lyle Probst: Yes, so there are several different industries
and markets that Firefly applies to because the platform is an agnostic platform. The different sample types will require the different
cartridges, which are unique to what you're testing for. That is a potential market for this type of device. Our initial market
where we see the greatest need and potential, just like in the clinical diagnostics, is the defense market initially and then looking
out into agricultural and then the food markets would come shortly thereafter.
Allison Tomek: Thank you. Our next line of questioning, I had
a number of questions related to financing, capital structure and stock price, and investors are asking what our expectations are
to raise capital to fund the business this year and on a go-forward basis?
William Caragol: Thank you, Allison, and I want to thank everybody
for all of these great questions. I think it's important to look at where we are today and where we expect to be over 2016 and
2017 by accomplishing what we did by taking the Firefly from design to a full prototype bench-top device over the course of the
year, which was done with a significant amount of R&D investment as well as an incredibly brilliant team as well as the acquisitions
that we did in December.
What we're going to see over the course of 2016 is significantly
increased revenue and, as I talked about, increased operating profits. What those increased operating profits at the business unit
level do is they mitigate the R&D, it brings our overall spending and burn down and will continue to do so at an increasing
amount over the course of this year with our goal of being profitable, turning the corner to profitability, no longer being in
a net bottom-line burn position during 2017.
What that allows us to do is to have both a target and a process
to get from being neutral R&D burn to profitability and no more burn, or eliminating our need to go to capital markets for
continued financing. As it relates to our stock price, as you know, we can't control our stock price. What we can control is what
we do on a day-in and day-out basis with our team across all of our divisions, with our partners, and we will continue to execute
and we will continue to drive results.
And we believe that by continuing to do that with the team that
we have with the patent portfolio and platform that we have, from the incredible market opportunity, we will deliver results and
with delivering results, our stock price will reflect that value and will begin to reflect that value I hope as soon as possible.
And just so that all of our shareholders know, we are focused day-in and day-out on executing so we can deliver on that promise.
Allison Tomek: Thank you. I've also received a couple of questions
regarding our M&A outlook following the two acquisitions at the end of this past year; what are our expectations for 2016 and
do we intend to pursue additional acquisitions?
William Caragol: Thank you, Allison. We are extremely pleased
with the two acquisitions we made in December, and I will tell you that both of these companies - Lyle described to you, that he
has known E-N-G for 10 years-plus, so that's an example not just of a great synergistic acquisition, but one that comes with a
strong relationship, and therefore, strong knowledge of the quality of the company that we're acquiring.
Similarly, we had been around and been introduced and worked
around Thermomedics for a significant period of time before making that acquisition. In addition, we've looked at a lot of other
opportunities that have been brought to us over the course of the past two years. So, we were very careful in selecting and making
sure the acquisitions we made here at the end of 2015, coming in to 2016, were synergistic and were strong that we did everything
we can to make sure that we set ourselves up to be successful.
What comes next is the thoughtful and tactical integration of
those acquisitions into our operations, which we are focused on right now, and I will tell you, through the initial period on both
fronts have been making great strides. When we are satisfied that we have properly and effectively integrated the operations of
those two companies, we will continue to look and evaluate other growth opportunities through acquisitions.
The core to our strategy is about synergistic and organic growth
and our number one focus of bringing Firefly to market, but when the time is right we will continue to evaluate good strategic
and synergistic acquisitions that add to our platform.
Allison Tomek: Thank you, Bill. And our last question is related
to the projections that the company has made and how achievable those projections are in the company’s being able to be a
leader in the field of biodetection, also if you could add what the company's plans are to ensure its sustainability for the future
and its positioning versus its competitors.
William Caragol: Well, I think that wraps a lot of things together,
and I think the very heart of it is what we've accomplished to date and where we're going for Firefly, so, Lyle, I'd like you to
take that one.
Lyle Probst: Sure. For where we're going and, especially on
the - our focus on the Firefly front; as we've discussed, we have a strong background in bio-detection and we have several patents,
a strong portfolio of patents related to that that we are now applying to the Firefly platform. And as we mentioned earlier, we've
taken our design into an operational bench prototype that we're having exceptional results come out of.
Adding E-N-G and the Caregiver to our portfolio only strengthens
our position, both in the government sector and in the larger global market that we're looking at and penetrating into new markets.
We see that we will have significant growth in all of these fronts. We haven't backed off from the Firefly; we are very focused
on its development, and plan to have units into first responders’ hands for testing later this year. We are on track for
that.
And once we go into productization of that in 2017, as Bill
mentioned, that's where we see the most growth coming to PositiveID. And it's an exciting time for us; these acquisitions have
only helped us and will bolster us even more and it's very synergistic to what we're doing and, indeed, our mission. So, from my
perspective, the future for us and the growth for us and our technology growth is all very exciting and very positive.
So, thank you, Allison, for the questions and those who were
able to listen in.
William Caragol: Yes, Allison, I would just add that I want
to thank everybody for joining us this morning. As you've heard from us, we are very excited about what we have accomplished in
2015. And more so, we're extremely excited about what we're prepared to deliver in 2016 and 2017. So, I hope you'll keep watching,
we'll keep executing. And we look forward to our next update.
Thank you.
Allison Tomek: Thank you, Bill and Lyle. Andrea, that completes
our prepared remarks and Q&A.
Operator: Ladies and gentlemen, thank you for participating
in today's conference. This does conclude the program and you may now disconnect. Everyone have a great day.