Security Traders Handbook: IPO Spotlight – The Fluoroscan

By Jerry Jakubovics

The Fluoroscan Is Being Used in Widespread Applications

There are many individuals who question the merit of spending billions of dollars on NASA. But on the other hand there are those who believe such spending worthwhile because the advanced technologies that are developed filter into and eventually benefit the economy, corporations and society.

Northbrook (IL)-based Fluoroscan is giving support to the latter group. The company has licensed technology from NASA and holds three exclusive patents that it used to make the Fluoroscan Imaging System Mini C-arm. While the product itself may be easy to use, the technology that enables it to outperform all existing other systems – while using 99% less radiation – is both complicated and fascinating.

In brief, here’s how it works: The Fluoroscan technology is based on a micro channel plate image intensifier company known as a ‘night vision’ intensifier. This emits a small amount of radiation to be converted to visible light. Using a scintillator, that light is amplified approximately 50,000 times. The Fluoroscan can provide both still X-ray pictures and real-time images similar to those produced by a video camera, permitting users to view, for example, the movement of bones in a flexing hand. (The same technology is used by the military for night vision. In this case, a small amount of light from a distant star is amplified to make a field look as bright as day even in the middle of the night.)

The inherent advantages of the technology – safety, the ability to see low density objects undetectable until now, better resolution and real-time operation – are useful in diverse applications.

For example, Fluoroscan can see low density objects including condensation. Special versions have been built to check for water or condensation deposits inside of airplane wings for Boeing, Lockheed, Northrop and McDonnell Douglas; prior to using this technology the wing had to be taken off of a plan and weighed to determine whether it was okay to use.

The device has also been used in quality control in the electronic industry by Motorola, Texas Instruments and Zenith. And tire manufacturers Michelin, Goodyear and Banda use it to check for the ‘zipper effect’ in steel belted radials; uncorrected, this could lead to blowouts, a major problem especially for trucks.

And a special unit was built for the CIA. Some year ago, when the US embassy was being built in Moscow, so many plastic listening devices were placed into the walls that the structure was rendered unusable. The Fluoroscan scanned the walls and very successfully detected those bugs. There are other potential security applications, too, because the device can ‘see’ plastic explosives.

“We’re able to solve a lot of problems very inexpensively and very quickly,” explained Larry Grossman, chairman and CEO. “It’s a tremendous technology, not just for the medical market but for the industrial applications as well.”

Nevertheless, sales are being generated mostly from the medical market at this time, and those appear to be sustainable.

There are Fluoroscans in every major teaching hospital in the country, as well as all Fellowship programs. As doctors learn how to operate using the machine and then go to various hospitals that don’t have the Fluoroscan, there is a demand for those units. And hospitals that have already purchased one unit may buy additional units because of the demand to use the machine, according to the company.

Also in the medical area, Fluoroscan may license its technology to companies in the mammography area. In fact, some preliminary talks to that effect are already underway.

In 1996, the first of the company’s three exclusive NASA patents will expire. This means that other firms would be able to use the technology to get real-time X-ray imaging – however, not with the same low level radiation built into the Fluoroscan because that technology will still be patent-protected.

“In the medical market it won’t affect us too badly,” says Grossman. “And in the industrial market, it would affect us only when other firms will have a closed, incorporated X-ray system.”

In other words, the patent expiration will allow limited competition but the serious competition won’t begin until 2002, when the other two exclusive patents expire. And by that time, Fluoroscan hopes to be well entrenched in its targeted markets.