Security Spending Lifts Implant Sciences, Corp. (OTC:IMSC)

With airport security getting tighter and tighter, we may expect demand for snooping technologies to rise. This kind of publicity has lifted volumes and caused price spikes for Implant Sciences, Corp. (OTC:IMSC) and the last month was a dynamic mix of high-volume buying and the realization of profits. At a relatively high $1.20 per share IMSC is not an easily accessible bet, and without an active pump it is hard to point to a single factor for the rise in its stock.

The company, a producer of proprietary technology for chemical analysis of hidden explosives, recently introduced new and improved financial data. It seems the last year in trading coincides with healthier financials:

• $1.3 million cash

• $5.54 million current assets

• $30.4 million debt

• $14.6 million net loss

This is certainly an improvement from previous periods, when the company had depleted its cash to a mere $2,000. But it remains visible that IMSC is still heavily under debt incurred in the innovation stage, and its losses are significant. But the still-unfiled data for the last quarter of 2012 are even better. The net loss has shrunk to $3.3 million and revenues went up five times.

The main source of success for IMSC is the notorious Transport Security Administration (TSA) which constantly seeks to tighten its screening capabilities on explosives carried on a person. The company has sales to all regions, including India, the Middle East and recently Russia. As is the case with security companies, large state-sponsored contracts could make or break their business. In the case of IMSC, despite the lack of pump emails, the stock is going strong on the general uplift in security spending.

Also promising for the IMSC technologies are deals with shipping giants DHL, UPS and FedEx. Wider applications and further government interest may lead this company to even better positions. Yet even in this case of promising growth, nervous investors have the potential to depress the price significantly in only a day of trading, such as Friday’s slump when the ticker lost more than 14%. IMSC has shown in the past deep corrections of up to 30% in a single day, so it is best to estimate your preferred time horizon before absorbing unwanted losses.

This ticker is similar to the story for Valley Forge Composite Technologies, Inc. (OTC:VLYF), a company that in its OTC description states its business model is directly inspired by the 9/11 events. This cheaper ticker trades around 16 cents and recently peaked on investors buying the valley.