Implant Sciences Reports Significant Revenue Growth for Fourth Quarter and FY 2011
Company to Host Earnings Call on Thursday, October 20th at 4:15 pm EDT
WILMINGTON, MA–(Marketwire -10/19/11)- Implant Sciences Corporation (OTCQB: IMSC.PK – News) (Pinksheets: IMSC.PK – News), a high technology supplier of systems and sensors for the homeland security market and related industries, today announced financial results for the fourth quarter and fiscal year ended June 30, 2011.
For the fourth quarter ended June 30, 2011, revenues from continuing operations increased by 447%, to $1.8 million, while revenues for the fiscal year ended June 30, 2011 increased by 92%, to $6.7 million.
Glenn D. Bolduc, President and CEO of Implant Sciences, commented, “Our fourth quarter was a period of significant change where several important objectives were met. In May 2011, we introduced the Quantum Sniffer™ QS-B220 benchtop explosives and narcotics trace detector, which recently received a Developmental Testing & Evaluation (DT&E) Designation from the Department of Homeland Security. The QS-B220 has been deployed in actual operational environments in airport security and air cargo screening facilities, under testing agreements with key end-user sites in the United States, Asia and South America. We are encouraged by the initial feedback that we’ve been able to obtain from these tests, as evidenced by the receipt of our first order for the QS-B220. And toward the end of the first quarter of fiscal 2012, we negotiated amendments to our credit facility with DMRJ Group to extend the maturity of our indebtedness from September 30, 2011 to March 31, 2012 and increase our credit line to $23,000,000 from $15,000,000.”
Mr. Bolduc continued, “Our engineering staff continues to perform admirably to ready our products for submission to the Transportation Security Administration for testing in the ensuing months. Furthermore, we are continuing to develop and expand upon our intellectual property portfolio. In August we were awarded United States Patent #7,994,453, describing a method for cleaning the sample tube of a chemical detection system, and we recently filed a new patent application covering chemical analysis using ‘hyphenated’ low-field and high-field ion mobility spectrometry.”
Details for the fourth quarter and fiscal year ended June 30, 2011 follow below.
Quarter Ended June 30, 2011 vs. June 30, 2010
* Revenues for the fourth quarter were $1,767,000 as compared with $323,000 for the comparable prior year period, an increase of $1,444,000 or 447.1%. The increase is due to increased deployment of our portable explosives detectors in China, Europe and the Middle East for transportation security, airport passenger screening and law enforcement and in the United States for use in law enforcement.
* Gross margin for the fourth quarter was 36.8%, compared with gross margin of 3.1% for the comparable prior year period. The increase in gross margin is a result of reductions in the costs we pay to manufacture our security products due to cost efficiencies realized in the production process, including efficiencies realized by our outsourced contract manufacturer and decreased per unit manufacturing overhead, as overhead costs were allocated to a higher volume. In addition, gross margin in the comparable prior period was adversely affected by the impairment of assets no longer used in our manufacturing process.
* Research and development expense for the fourth quarter was $770,000 as compared with $674,000 for the comparable prior year period, an increase of $96,000 or 14.2%. The increase in research and development expenses is due primarily to increased contracted engineering resources engaged to assist with the development of the QS-B220 benchtop explosives and narcotics detector and direct material costs incurred in the development of QS-B220 beta units.
* Selling, general and administrative expenses for the fourth quarter were $2,216,000 as compared with $1,337,000 for the comparable prior year period, an increase of $879,000, or 65.7%, due primarily to increased consulting expense resulting from the issuance of shares of our common stock, increased payroll, related fringe benefits costs and travel expense resulting from the addition of sales, marketing and administrative personnel, partially offset by the tax settlement of $178,000 with the California Board of Equalization and decreased rent and related occupancy costs.
* For the quarter ended June 30, 2010, we recorded a $5,000,000 benefit resulting from the settlement of the Evans litigation and a $3,136,000 impairment charge to writedown the carrying value of goodwill.
* Non-operating expense increased to $2,540,000 for the three months ended June 30, 2011 as compared to non-operating income of $1,664,000 for the comparable prior period. The increase was primarily due to increases in the fair value adjustment recorded on the note conversion option liability of $1,814,000 and warrant derivative liability of $39,000, in the quarter ended June 30, 2011, both of which are related to our financing with DMRJ, as compared to decreases in the fair value adjustment of $2,105,000 and $30,000, respectively, for the comparable prior period. Interest expense increased to $687,000 from $486,000, or 41.4%, due to higher borrowings under our line of credit.
* The loss from continuing operations for the quarter was $4,875,000 as compared with income of $1,527,000 for the comparable prior year period, a decrease of $6,402,000 or 419.3%. This quarter’s net loss is primarily the result of a $975,000 increase in operating expenses in the quarter ended June 30, 2011, $5,000,000 of non-cash benefit recorded in the quarter ended June 30, 2010 due to the settlement of the Evans litigation and the increase in the fair value adjustments recorded on the note conversion option and warrant derivative liability, offset partially by the $3,136,000 goodwill impairment charge recorded in the prior period.
Fiscal Year Ended June 30, 2011 vs. June 30, 2010
* Revenues for the year ended June 30, 2011 were $6,652,000 as compared with $3,474,000 for the prior year, an increase of $3,178,000 or 91.5%. The increase is primarily a result of an increase in the number of units sold of our explosives detection products during the year ended June 30, 2011 as compared to the prior year, due to continued deployment of our portable explosives detectors in China, Spain, Mexico and Japan.
* Gross margin for the year ended June 30, 2011 was 39.7% as compared with 35.8% for the prior year. The increase in gross margin is a result of reductions in the costs we pay to manufacture our security products due to cost efficiencies realized in the production process, including efficiencies realized by our outsourced contract manufacturer and decreased per unit manufacturing overhead, as overhead costs were allocated to a higher volume.
* Research and development expense for the fiscal year ended June 30, 2011 was $2,719,000 as compared with $2,399,000 for the prior year, an increase of $320,000 or 13.3%. The increase in research and development expenses is due primarily to increased contracted engineering resources engaged to assist with the development of the QS-B220 benchtop explosives and narcotics detector, and direct material costs incurred in the development of QS-B220 beta units, offset partially by decreased payroll and related fringe benefits costs resulting from a reduction in personnel in the first six months of fiscal 2011.
* Selling, general and administrative expenses for the year ended June 30, 2011 were $5,746,000 as compared with $4,422,000 for the prior fiscal year, an increase of $1,324,000, or 29.9%. The increase is due primarily to increased payroll, related fringe benefits costs and travel expense resulting from the addition of sales, marketing and administrative personnel, increased consulting expense, due to the issuance of shares of our common stock, the early termination payment discount of $201,000 with respect to the note receivable from Core Systems Incorporated, and increased insurance expense, partially offset by the tax settlement of $178,000 with the California Board of Equalization, decreased legal fees, decreased loan financing fees, decreased rent and related occupancy costs.
* For the year ended June 30, 2010, we recorded $5,384,000 in non-cash benefits resulting from the settlement of the Evans and the lease termination litigation, and a $3,136,000 impairment charge to writedown the carrying value of goodwill.
* For the year ended June 30, 2011, we recorded other expense, net of $9,730,000 as compared with other expense, net of $12,071,000, for the prior year, a decrease of $2,341,000, or 19.4%. The decrease was primarily due to increases in the fair value adjustment recorded on the note conversion option liability of $7,159,000 and warrant derivative liability of $160,000, in the year ended June 30, 2011, as compared to increases in the fair value adjustment of $9,503,000 and $217,000, respectively, in the prior year. Interest expense increased $14,000 to $2,426,000 in the year ended June 30, 2011 from $2,412,000 in the prior year, due to higher borrowings under our credit facility with DMRJ, partially offset by a $1,107,000 decrease in the debt discount amortization related to our financing with DMRJ. In April 2011, we entered into an amendment to our credit facility with DMRJ and fixed the note conversion and warrant price at $0.08 per share. As of that date, the note conversion feature and warrant were no longer subject to adjustment and we were no longer required to record changes in the fair value in our statement of operations.
* Loss from continuing operations for the year ended June 30, 2011 was $15,554,000 as compared with $15,399,000 for the prior year, an increase of $155,000, or 1.0%. The increase in loss from continuing operations is primarily due to a $1,644,000 increase in operating expenses, $5,384,000 of non-cash benefit recorded due to the settlement of the Evans and the Accurel lease termination litigation, offset partially by the $3,136,000 goodwill impairment charge and the result of the fiscal year 2010 decreases in fair value adjustments recorded on the note conversion option liability and warrant derivative liability.
Additional information on the financial condition and results of operations can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed with the Securities and Exchange Commission.
About Implant Sciences
Implant Sciences develops, manufactures and sells sophisticated sensors and systems for the Security, Safety and Defense (SS&D) industries. The Company has developed proprietary technologies used in its commercial portable and bench-top explosive trace detection systems which ship to a growing number of locations domestically and internationally. For further details on the Company and its products, please visit the Company’s website at http://www.implantsciences.com.
Implant Sciences Reports Significant Revenue Growth for Fourth Quarter and FY 2011
Company to Host Earnings Call on Thursday, October 20th at 4:15 pm EDT
WILMINGTON, MA–(Marketwire -10/19/11)- Implant Sciences Corporation (OTCQB: IMSC.PK – News) (Pinksheets: IMSC.PK – News), a high technology supplier of systems and sensors for the homeland security market and related industries, today announced financial results for the fourth quarter and fiscal year ended June 30, 2011.
For the fourth quarter ended June 30, 2011, revenues from continuing operations increased by 447%, to $1.8 million, while revenues for the fiscal year ended June 30, 2011 increased by 92%, to $6.7 million.
Glenn D. Bolduc, President and CEO of Implant Sciences, commented, “Our fourth quarter was a period of significant change where several important objectives were met. In May 2011, we introduced the Quantum Sniffer™ QS-B220 benchtop explosives and narcotics trace detector, which recently received a Developmental Testing & Evaluation (DT&E) Designation from the Department of Homeland Security. The QS-B220 has been deployed in actual operational environments in airport security and air cargo screening facilities, under testing agreements with key end-user sites in the United States, Asia and South America. We are encouraged by the initial feedback that we’ve been able to obtain from these tests, as evidenced by the receipt of our first order for the QS-B220. And toward the end of the first quarter of fiscal 2012, we negotiated amendments to our credit facility with DMRJ Group to extend the maturity of our indebtedness from September 30, 2011 to March 31, 2012 and increase our credit line to $23,000,000 from $15,000,000.”
Mr. Bolduc continued, “Our engineering staff continues to perform admirably to ready our products for submission to the Transportation Security Administration for testing in the ensuing months. Furthermore, we are continuing to develop and expand upon our intellectual property portfolio. In August we were awarded United States Patent #7,994,453, describing a method for cleaning the sample tube of a chemical detection system, and we recently filed a new patent application covering chemical analysis using ‘hyphenated’ low-field and high-field ion mobility spectrometry.”
Details for the fourth quarter and fiscal year ended June 30, 2011 follow below.
Quarter Ended June 30, 2011 vs. June 30, 2010
* Revenues for the fourth quarter were $1,767,000 as compared with $323,000 for the comparable prior year period, an increase of $1,444,000 or 447.1%. The increase is due to increased deployment of our portable explosives detectors in China, Europe and the Middle East for transportation security, airport passenger screening and law enforcement and in the United States for use in law enforcement.
* Gross margin for the fourth quarter was 36.8%, compared with gross margin of 3.1% for the comparable prior year period. The increase in gross margin is a result of reductions in the costs we pay to manufacture our security products due to cost efficiencies realized in the production process, including efficiencies realized by our outsourced contract manufacturer and decreased per unit manufacturing overhead, as overhead costs were allocated to a higher volume. In addition, gross margin in the comparable prior period was adversely affected by the impairment of assets no longer used in our manufacturing process.
* Research and development expense for the fourth quarter was $770,000 as compared with $674,000 for the comparable prior year period, an increase of $96,000 or 14.2%. The increase in research and development expenses is due primarily to increased contracted engineering resources engaged to assist with the development of the QS-B220 benchtop explosives and narcotics detector and direct material costs incurred in the development of QS-B220 beta units.
* Selling, general and administrative expenses for the fourth quarter were $2,216,000 as compared with $1,337,000 for the comparable prior year period, an increase of $879,000, or 65.7%, due primarily to increased consulting expense resulting from the issuance of shares of our common stock, increased payroll, related fringe benefits costs and travel expense resulting from the addition of sales, marketing and administrative personnel, partially offset by the tax settlement of $178,000 with the California Board of Equalization and decreased rent and related occupancy costs.
* For the quarter ended June 30, 2010, we recorded a $5,000,000 benefit resulting from the settlement of the Evans litigation and a $3,136,000 impairment charge to writedown the carrying value of goodwill.
* Non-operating expense increased to $2,540,000 for the three months ended June 30, 2011 as compared to non-operating income of $1,664,000 for the comparable prior period. The increase was primarily due to increases in the fair value adjustment recorded on the note conversion option liability of $1,814,000 and warrant derivative liability of $39,000, in the quarter ended June 30, 2011, both of which are related to our financing with DMRJ, as compared to decreases in the fair value adjustment of $2,105,000 and $30,000, respectively, for the comparable prior period. Interest expense increased to $687,000 from $486,000, or 41.4%, due to higher borrowings under our line of credit.
* The loss from continuing operations for the quarter was $4,875,000 as compared with income of $1,527,000 for the comparable prior year period, a decrease of $6,402,000 or 419.3%. This quarter’s net loss is primarily the result of a $975,000 increase in operating expenses in the quarter ended June 30, 2011, $5,000,000 of non-cash benefit recorded in the quarter ended June 30, 2010 due to the settlement of the Evans litigation and the increase in the fair value adjustments recorded on the note conversion option and warrant derivative liability, offset partially by the $3,136,000 goodwill impairment charge recorded in the prior period.
Fiscal Year Ended June 30, 2011 vs. June 30, 2010
* Revenues for the year ended June 30, 2011 were $6,652,000 as compared with $3,474,000 for the prior year, an increase of $3,178,000 or 91.5%. The increase is primarily a result of an increase in the number of units sold of our explosives detection products during the year ended June 30, 2011 as compared to the prior year, due to continued deployment of our portable explosives detectors in China, Spain, Mexico and Japan.
* Gross margin for the year ended June 30, 2011 was 39.7% as compared with 35.8% for the prior year. The increase in gross margin is a result of reductions in the costs we pay to manufacture our security products due to cost efficiencies realized in the production process, including efficiencies realized by our outsourced contract manufacturer and decreased per unit manufacturing overhead, as overhead costs were allocated to a higher volume.
* Research and development expense for the fiscal year ended June 30, 2011 was $2,719,000 as compared with $2,399,000 for the prior year, an increase of $320,000 or 13.3%. The increase in research and development expenses is due primarily to increased contracted engineering resources engaged to assist with the development of the QS-B220 benchtop explosives and narcotics detector, and direct material costs incurred in the development of QS-B220 beta units, offset partially by decreased payroll and related fringe benefits costs resulting from a reduction in personnel in the first six months of fiscal 2011.
* Selling, general and administrative expenses for the year ended June 30, 2011 were $5,746,000 as compared with $4,422,000 for the prior fiscal year, an increase of $1,324,000, or 29.9%. The increase is due primarily to increased payroll, related fringe benefits costs and travel expense resulting from the addition of sales, marketing and administrative personnel, increased consulting expense, due to the issuance of shares of our common stock, the early termination payment discount of $201,000 with respect to the note receivable from Core Systems Incorporated, and increased insurance expense, partially offset by the tax settlement of $178,000 with the California Board of Equalization, decreased legal fees, decreased loan financing fees, decreased rent and related occupancy costs.
* For the year ended June 30, 2010, we recorded $5,384,000 in non-cash benefits resulting from the settlement of the Evans and the lease termination litigation, and a $3,136,000 impairment charge to writedown the carrying value of goodwill.
* For the year ended June 30, 2011, we recorded other expense, net of $9,730,000 as compared with other expense, net of $12,071,000, for the prior year, a decrease of $2,341,000, or 19.4%. The decrease was primarily due to increases in the fair value adjustment recorded on the note conversion option liability of $7,159,000 and warrant derivative liability of $160,000, in the year ended June 30, 2011, as compared to increases in the fair value adjustment of $9,503,000 and $217,000, respectively, in the prior year. Interest expense increased $14,000 to $2,426,000 in the year ended June 30, 2011 from $2,412,000 in the prior year, due to higher borrowings under our credit facility with DMRJ, partially offset by a $1,107,000 decrease in the debt discount amortization related to our financing with DMRJ. In April 2011, we entered into an amendment to our credit facility with DMRJ and fixed the note conversion and warrant price at $0.08 per share. As of that date, the note conversion feature and warrant were no longer subject to adjustment and we were no longer required to record changes in the fair value in our statement of operations.
* Loss from continuing operations for the year ended June 30, 2011 was $15,554,000 as compared with $15,399,000 for the prior year, an increase of $155,000, or 1.0%. The increase in loss from continuing operations is primarily due to a $1,644,000 increase in operating expenses, $5,384,000 of non-cash benefit recorded due to the settlement of the Evans and the Accurel lease termination litigation, offset partially by the $3,136,000 goodwill impairment charge and the result of the fiscal year 2010 decreases in fair value adjustments recorded on the note conversion option liability and warrant derivative liability.
Additional information on the financial condition and results of operations can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed with the Securities and Exchange Commission.
About Implant Sciences
Implant Sciences develops, manufactures and sells sophisticated sensors and systems for the Security, Safety and Defense (SS&D) industries. The Company has developed proprietary technologies used in its commercial portable and bench-top explosive trace detection systems which ship to a growing number of locations domestically and internationally. For further details on the Company and its products, please visit the Company’s website at http://www.implantsciences.com.