Implant Sciences narrows Q2 losses, grows sales pipeline

US-based security systems and sensors supplier Implant Sciences Corporation (OTCQB:IMSC) announced late Friday that second quarter losses narrowed substantially.
For the three months that ended December 31, 2011, Implant recorded a net loss of $3.3 million, compared to $9.4 million a year earlier.
The company said the decline was primarily due to the non-cash fair value adjustment charges recorded in the year-earlier quarter on certain note conversion and warrant derivatives liabilities.
Revenues, however, for the latest period decreased 64 percent to $1.1 million,  due primarily to lower sales of its explosives detection products sold into China.
"During the past two quarters Implant Sciences has achieved a number of strategic goals that we believe position the company for long-term growth," said president and CEO, Glenn D. Bolduc.
"However, we are clearly disappointed by our current financial performance. We are seeing increased activity in the markets we serve, but also a delay in procurement decisions as projects are deferred or temporarily put on hold.
"We have taken a number of steps to broaden the markets we serve and increase our distribution so as to diversify our revenue opportunities."
Indeed, the company has announced numerous orders for its devices as of late, into several different markets.
Last month, the company said that a major global oil corporation had purchased units of the QS-H150, to be used in securing the unnamed oil business' facilities in Africa. This followed new orders for the device from the Middle East and Japan.
Implant Sciences' systems are used by private companies and government agencies to screen baggage, cargo, vehicles, among other objects, and people for the detection of trace amounts of explosives.
The Quantum Sniffer QS-H150 is a handheld explosives trace detector that rapidly detects trace amounts of a number of military, commercial, and homemade explosives. The QS-H150 uses no radioactive materials and has a low-maintenance design.
The Quantum Sniffer QS-B220, which was introduced in May 2011, is a trace detector that uses ion mobility spectrometry to identify a number of military, commercial and homemade explosives and narcotic substances.
The benchtop explosives and narcotics detector is suited for a number of security settings, including high-traffic airports, borders, and prisons.
In December, the QS-B220 device received CE Certification, an important step for generating sales in Europe, and earlier this month, achieved ASTM E2520-07 certification, meaning the device performs to required standards.
Implant also signed a cooperative research and development agreement with the Transportation Security Laboratory, which has been working closely with the QS-B220 product to help the company in preparing for TSA qualification and certification.
Bolduc said in a statement Tuesday that it is increasing geographic coverage for its devices, announcing a new distributor in Uzbekistan and sales in 10 different countries. Customers are also diversified - ranging from airports and banks to nuclear power plants and embassies.
Implant said it grew its sales pipeline by 25 percent from the end of its fiscal year 2011.
Bolduc concluded: "We have much work ahead of ourselves, but remain excited about our future prospects."
Gross margin for the second quarter decreased to 32.2 percent of security revenues, compared to 45.2 percent a year earlier - a result of increased unabsorbed manufacturing overhead, the company said.
Research and development expenses grew nearly 15 percent year-over-year, while selling, general and administrative costs rose 52 percent.
For the six months that ended December 31, the company posted a smaller net loss of $6.4 million, versus $10 million a year earlier, on revenues of $2.2 million - down 48 percent.