Implant Sciences Corp. [IMSC], a small explosives trace detection company that scored a major win a year ago with a contract for the Transportation Security Administration (TSA), on Thursday said it is exploring its strategic alternatives to maximize shareholder value.
“We are in an event-driven industry, and as a company we need to explore all corporate options available to us to help ensure we are able to respond to what we expect will be a continuing surge in demand for our technologies based upon world events,” Bob Liscouski, president of Implant Sciences, said in a statement.
TSA in November 2014 awarded Implant Sciences a potential $162 million contract to supply the agency with the Quantum Sniffer BS-220 desktop explosives trace detector (ETD), marking the largest potential order ever for the Massachusetts-based firm. The award was protested by Morpho Detection, part of France’s Safran Group, but the Government Accountability Office ultimately upheld TSA’s decision.
Up until the award to Implant Sciences, Morpho and Smiths Detection, which is part of Britain’s Smiths Group, were the only two companies that have provided TSA with desktop ETDs.
Implant Science’s win with TSA opened the door to more success for the company overseas. This year the company won and delivered on a number of tenders for more than 800 of its desktop ETD systems for use in aviation security at airports throughout Europe.
In its fiscal year 2015 that ended in June, Implant posted $13 million in sales and a $21.5 million net loss. In the first quarter of its fiscal year 2016, the company reported $14.4 million in sales and a $911,000 loss. The company is expecting sales between $40 million and $43 million this fiscal year based on a backlog that exceeds $40 million.
Implant Sciences is highly leveraged and in November Bill McGann, the company’s CEO, said it has stopped “borrowing expensive money,” and for the most part self-funded the working capital to ramp up ETD production for the European deliveries. The company is slated to begin delivering on the TSA order of nearly 1,200 systems this month.
Michael Turmelle, chairman of Implant Sciences, said in a statement that it has spent the past few months reviewing its business prospects and options to create value, adding that “now is an opportune time to explore all strategic alternatives available to the company.”
Implant Sciences said that there is no assurance that its review will lead to an agreement or a particular transaction. The company has retained Chardan Capital Markets, LLC and Noble Financial Capital Markets as its financial advisers for the review.
In addition to its desktop ETD, Implant Sciences also manufactures a handheld ETD, which has accounts for a smaller portion of its revenue.
Among potential buyers for Implant Sciences there are American Science and Engineering [ASEI], which designs and manufactures a wide range of cargo and vehicle screening systems and has a handheld imaging system but no trace detection products, OSI Systems [OSIS] Rapiscan systems division, which sells cargo and baggage screening systems worldwide and is developing a desktop ETD system, L-3 Communications [LLL], which supplies the TSA and other customers with X-ray and millimeter wave systems to screen bags, people and cargo but failed years ago in efforts to develop a trace detection system for TSA to certify, and Leidos [LDOS], which also supplies baggage and cargo scanning systems as well as a range of radiation detection products.