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Implant Sciences Corp. (OTCQB:IMSC) is a developer and manufacturer of sophisticated sensors for use in domestic and international security markets. Implant Sciences has traded as high as $1.84 and as low as $0.48 in the past year with a historical volatility of 88.4%. Though the latest article by Ben Sharvy titled Implant Sciences: Diluted and Deluded focuses on the company's risks, as stated in their recently released annual report "risks factors" section, this article will focus on their past development and future potential.

To be fair, Implant Sciences is in a precarious financial situation and does face a multitude of challenges, as is often the case with small tech companies looking for footing in a large market. However, Implant Sciences is one approval away from opening doors to streams of revenue and future contracts which could position this company as a major player in their industry.

Currently, Implant Sciences Quantum Sniffer QS-B220 Benchtop Explosives and Narcotics Detector is in the process of completing the Transportation and Security Administration's final stage of approval for its Air Cargo Screening Technology List (ACSTL). In August, the company announced that the QS-B220 had recently completed the certification readiness testing conducted by the TSA's testing facility the Transportation Security Laboratory (TSL) and began testing in early October. Though no timeline has been given for completion of TSL testing, CEO and President Glenn Bolduc stated in a recent press release:

We continue to enjoy a strong working relationship with TSL, and have every reason to believe that we will successfully achieve qualification for our QS-B220 trace detector in the near term.

One of the many concerns analysts have about Implant Sciences is the inability to attract domestic customers for its products, with 95% of revenues coming from international customers. Though, as Implant Sciences writes in its annual report:

Since we made the strategic decision to focus exclusively on our security business, foreign sales have represented a large majority of our revenue. We believe, however, that our long-term success will depend substantially on our ability to penetrate the U.S. market for explosives trace detection equipment. We are therefore focused on obtaining the necessary approvals from the U.S. Transportation Security Administration.

Furthermore, the company has positioned itself to capitalize, not only on any government contracts, but also on private sector sales to freight-forwarders and manufacturers:

We believe the designation of the QS-B220 as "qualified" equipment on the Air Cargo Screening Technology List would allow us to begin to address the U.S. market, both in domestic airports but also among freight-forwarders and originators of air cargo that are required to purchase "qualified" detection equipment.

Another key tale Implant Sciences is on a successful path is their recent hiring of several top level executives from competitors and the TSA, most notably the acquisition of Dr. Darryl Jones, Dr. William McGann, and Mr. Mo McGowan. Dr. Jones, a former Vice President of Global Product Management for Morpho of Safran, and Dr. McGann, a former Vice President at GE Security, have been extremely successful in their past positions and have reaffirmed their faith in Implant Sciences on numerous occasions.

Those hires coupled with the hiring of Mo McGowan as an advisor, a previous TSA senior executive, could provide the needed guidance for the company to successfully navigate TSA approval and growth in the explosives trace detection market. Though often downplayed by skeptics, the recent hiring of these top level individuals speaks to the faith those who are informed have in Implant Sciences products and its future. While never a guarantee, top tier talent being attracted to a small and inexperienced company such as Implant Sciences bodes well for their future.

With the recent re-election of President Obama and the increased focus on increasing American jobs, Implant Sciences stands to gain from being the only American manufacturer of explosives detection devices. Implant Sciences major competitors, as listed in their annual report, Morpho Detection Inc. (France), Smith's Detection Inc. (United Kingdom), and NucTech Company Limited (China), not being American companies allows Implant Sciences to capitalize on the American market. The TSA, whose reputation is continuously tarnished and is one of the most unpopular government agencies, also would benefit from the approval of an American company's product. Approval also allows for government contracts themselves, which of course means growth and jobs for an American company.

Additionally, Implant Sciences is the only ETD manufacturer that does not use radioactive sources in detection, as noted in their annual report. With the recent global crackdown, most notably the European Union's, on radioactive sources in security devices, the company is uniquely positioned to attract customers who wish to avoid radioactive ETDs.

Given all the company offers to customers, both domestically and internationally, in its current products and with the company continuously developing new detectors and sensors, Implant Sciences has strong future potential for growth in the ETD field. As the global marketplace for security grows and the company is validated in the form of TSA approval, a surge for Implant Sciences is in the foreseeable future.

Source: Implant Sciences: What The Financials Don't Say