Believing it has too little manpower chasing too many opportunities, Implant Sciences Corp. [IMX] has decided it will bolster its sales and marketing team by adding new personnel and international distributors.
Over a year ago the company decided to make the security business its primary focus but has found the market for its explosive trace detection devices continues to be soft. Implant had thought that its fiscal year 2007, which ended on June 30, would be an improvement over 2006 in terms of security sales due to expected purchases by the Transportation Security Administration (TSA) of new trace detection equipment to replace devices purchased immediately after 9/11.
However, TSA has just begun the process of establishing a new Qualified Product List (QPL) for explosive trace detection equipment and isn’t expected to be finished until sometime in 2008. Implant is one of many companies hoping that TSA will certify its next-generation trace detection equipment.
Early next year the company plans to submit its data package to the TSA for its Quantum Sniffer (QS) BTS explosive detection system. The current QPL includes equipment from General Electric [GE], Smiths Detection, and Thermo Fischer Scientific [TMO].
In addition to its domestic opportunities, Implant believes there is continued international interest in its handheld and benchtop systems. Indeed, the company shipped 26 of its QS H-150 handheld units to Japan at the end of September. Those systems will be used for security purposes. Moreover, Implant recently shipped six of its QS BTS Benchtop explosive detection systems to its distributor in Beijing in connection with security efforts during the Olympics next summer in China’s capital. Implant previously sold over 100 of an earlier version of its handheld trace detector for use by Chinese rail security officials.
But to further its sales and marketing efforts here and abroad will require more investment, Philip Thomas, Implant’s president and CEO, says during the company’s recent fourth quarter earnings call.
“We are recruiting additional people here and abroad,” Thomas says. “Our new team members have specific quarterly sales growth goals. We want to be more aggressive in our U.S. opportunities and expand internationally.” For the first time Implant is also attempting to get its products on the General Services Administration’s contract schedule, he says.
There are more business opportunities than Implant has resources to go after them so the company needs more people, Thomas says. In addition to new hires, it will mean finding new distributors and “strengthening the good ones,” he says.
Implant also has to do a better job “defining” its customer’s requirements for the company’s research and development (R&D) branch and it has to do a better job spending on R&D, Thomas says.
To aid its growth plans Implant also needs to develop relationships with potential partners, especially those with “deep pockets,” that can help expand its product line faster, Thomas says. An earlier marketing and co-development agreement between Implant and OSI Systems [OSIS] ended a year later when Implant filed a lawsuit, which OSI Systems countered, claiming lack of performance (TR2, April 6 and May 4, 2005, May 31, 2006).
Thomas says Implant’s sale earlier this year of a former subsidiary that does advanced failure analysis, microscopy and focused ion beam services, has given it the cash to carry out its new sales and marketing strategy. As of mid-summer Implant’s cash position had grown to $9.6 million from $2.1 million a year earlier due to the sale of Accurel Systems.
In the fourth quarter Implant’s sales fell 35 percent to $3.4 million from $5.2 million due to declines in its Security, Semiconductor and Medical segments. Security sales fell 39 percent to $1.1 million from $1.8 million. Losses widened to $7.1 million, 60 cents earnings per share (EPS), compared to $2.8 million (24 cents EPS) a year ago.
For fiscal year 2007 sales fell 15 percent to $15.4 million from $18.1 million, with the largest decline in the Security segment. Security sales fell 33 percent to $4.6 million from $6.9 million. Losses for the year widened to $11.6 million (99 cents EPS) from $8.2 million (72 cents EPS) a year ago. Implant’s independent audit continues to express “substantial doubt” about the company’s ability to operate as a going concern.