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World Am has a strong
patent position as it prepares to bring its Senz-It product line to the marketplace. We
have already identified 140 chemicals, biologics and explosives that can be identified
utilizing the Senz-It technology
Services
Security & Protection Services
(WDAM-OTC: BB)
World Am, Inc.
4040 MacArthur, Suite 240
Newport Beach, CA 92660
Phone: 949-955-5355
Robert A. Hovee
Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - January 18, 2007
BIO: Robert
A. Hovee
With a lifelong passion for learning, Bob Hovee is a successful entrepreneur, investor and
corporate veteran. He is a respected boardroom leader, adept at navigating the complex
challenges of business with entrepreneurial spirit and seasoned experience. A student of
the life cycle of companies, he is an eagle-eyed strategic thinker, planner and steward of
resources.
Robert Hovee is a private investor and a business
consultant to CEOs and Boards of Directors. He is active on several public and private
corporate boards. As a consultant, Mr. Hovee’s assignments have focused on corporate
and strategic planning, organizational issues, marketing and new product development.
Mr. Hovee was Chairman of the Board/CEO of Life
Support Products, Inc., a start-up venture he successfully led for more than 10 years.
With 38 patents and another 20 filed, Life Support Products held dominant market positions
in the emergency medical field, averaged a 36 percent increase per year in audited
after-tax profit over the last four years, and operated in more than 40 countries.
Prior to starting Life Support Products in 1983, Mr.
Hovee was Vice President of Marketing and Sales for Atari, Director of Marketing for
Allergan, Director of Sales for Spalding Sports Worldwide, and managed a plant turnaround
for Boise Cascade Corp.
On a volunteer basis, Mr. Hovee was past Co-Chairman
of LINC (Life Science Advisory Council), a board member of the American Red Cross,
Chairman of the UCI Graduate School of Management Accelerate Program, and Chairman of
Venture Point (a technology SBDC). Currently he is Chairman of the UCI Medical Center
Executive Council (Hospital), and is on the board of the UCI Medical School. In addition
he is on the board of the UCI Paul Merage School of Business and the board of the Orange
Coast Venture Group.
Mr. Hovee has two degrees from the University of Washington
and two from the Garvin Graduate School of International Management, where he was honored
with the Barton Kyle Yount Academic Scholarship.
Company Profile:
Senz-It represents an innovative advancement in the field of micro-sensors that have
applications in Homeland Security, Indoor Air Quality monitoring, Food Processing and
Health Care. Its potential products are intended to compete in the developing field of
real-time detection and notification devices. Senz-It is being designed to identify
patterns of molecules present in liquid, blood and air environments for significantly less
cost than current approaches.
Senz-It’s sister subsidiary is Isotec, which
develops, integrates and supplies passage control security products broadly categorized as
Access Control, Weapons Control, or Materials Control Systems that rigorously control
entry or exit of people and materials into and/or out of a facility, while reducing the
need for security personnel. Applications of the technology have been delivered to the
commercial, retail and government sectors. Isotec’s experience in this field allows
it to provide high quality, code compliant, application-optimized solutions at the lowest
cost in the shortest timeframe.
CEOCFO: Mr. Hovee, you’ve been CEO for about a
year now; what was your vision and how has that developed so far?
Mr. Hovee: “The vision to begin with
was to try to develop a vehicle to explore the technology possibilities of both our
operating units. A reverse merger worked for us in that World Am had a small operating
group called Isotec. Isotec designs, develops and manufactures entryway portals -- weapons
portals and material control passage systems for both egress and ingress. Installations
are primarily at major financial and government institutions throughout the United States.
The philosophy was that the Senz-It technology would be embedded into these portals to
provide a competitive advantage, and also allow potential sale of this embedded material
into the Homeland Security marketplace. What I mean by the Senz-It technology, as it
relates to Isotec, is that the Isotec portals would be able to detect things like
chemicals, biologics and explosives heretofore undetectable. In the August 8, 2005 issue
of Business Week, the cover story was on Homeland Security and on advances in the sensor
technology area. Senz-It was the featured technology in that article.
Senz-It is able to provide rapid and continuous
onsite detection and measurement of biological and chemical substances in water, blood,
air and other real world environments. It virtually eliminates false positives. Therefore,
it delivers very high accuracy and sensitivity compared to current laboratory tests. The
beauty of Senz-It is that it is a very smart device, combining what you might think of as
nanotechnology. Basically, we can put a thousand sensor analytes on an array half the size
of a little fingernail. In addition, we can detect in water or in air in terms of parts
per billion. We have been trying to figure out how to utilize some of this technology in
this country for the past 20 years, and we believe that we have a leg up on this with more
than 19 patents either issued or filed, and with several more in development. We can do
this fairly inexpensively by eliminating the expense of reagents that are required in
traditional laboratory chemistry. Therefore, once these systems are up and running, we can
also work in hazardous material environments. We use xerogel technology and software to
deliver a readout to a simple CRT. For example, you could take one of our handheld devices
and run it over food and identify things such as salmonella or E. coli, and do it in a
matter of seconds. Further, you can do this in the field. We are working with a group
right now to do just that. There are four primary markets for Senz-It: Food Safety and
Security, Transportation Authority, Indoor Air Quality and Disease Diagnostics. That is
also the order in which they will be developed.”
CEOCFO: Why that particular order for
deploying your technology?
Mr. Hovee: “ There are two types of
materials that we are trying to detect; one is called SSTTX and the other is PIXIES. SSTTX
to detect explosives and chemicals and PIXIES to detect biological substances that are
more complex, so they are more difficult to detect. It also costs a little more for each
PIXIE analyte or each molecular structure that you are trying to detect. Therefore, we are
going after the SSTTX part of the structure first, and we plan to have product within the
next 11 months. We are forecasting the more complicated projects, such as the biologics,
within 24 months.”
CEOCFO: Is the market ready; so much lip
service is given to protection but not a lot has been implemented?
Mr. Hovee: “It is incumbent on us to be
able to determine who the early adaptors are. For example, if you look at Food Safety and
Security, you could have a simple sensing device that you could hold over food and tell
whether or not it was contaminated. That would be a significant improvement to what
exists, especially if you could do this inexpensively. In the area of Homeland Security,
we can detect things like chemicals, biologics and explosives that we were not previously
able to detect. This can be used at airports. If you want to detect contraband at
Immigration checkpoints, it costs $165,000 annually for an inspector and a canine. We
believe we could supply a handheld device about the size of a handheld vacuum cleaner and
run it over a bag. You might be trying to detect 10 different drugs, and that would be
fairly simple for us to do. In fact, we’ve identified about 140 chemicals, biologics
and explosives that we are confident we can detect.
This is through the combined efforts on our part and with SUNY Buffalo, where the
technology originated. In Indoor Air Quality, imagine putting the device inside the ducts.
If someone were trying to introduce Sarin gas into a building, the Senz-It technology
could literally shut down all of the vents, notify fire and police, and give the people a
chance to exit the building or facility. In Healthcare Diagnostics, right now to detect
lung cancer they are using scanners and x-rays. When detected by x-ray there is a
93% to 94% morbidity rate. We could make this part of an ongoing physical for people that
have issues with black lung, asbestos or smoking. We could initially detect cancer and
hopefully in the early stages. The same is true for each one of the other areas. Avian Flu
is a very hot topic right now. We think we have the ability to detect Avian Flu by walking
through a chicken coop. Currently, if you want to detect Avian Flu, the CDC (Centers
for Disease Control) would have to receive a chicken, dismember it, and then it would take
about 4 hours to examine and detect if the bird tested positive. We believe we can do this
in a matter of seconds. In that sense, it is a very disruptive technology. We have a
product for diagnosis in each of the four markets, and the revenue potential for the
four markets combined already exceed $25 billion. It is a huge market.”
CEOCFO: It almost sounds too good to be
true!
Mr. Hovee: “You can start off with
things that are fairly simple. For example, you can detect mold, which is very easy for
our device to detect as well as E. coli and Salmonella. Picture a farmer in a field.
Before he irrigates he could place the sensor in the water and know instantly if he has E.
coli in the water, and that is a pretty simple thing for us to do. We believe this is
something that people would like to have, that it is a breakthrough, and that it is
relatively inexpensive.”
CEOCFO: How do you introduce your technology
and foster awareness of the possibilities?
Mr. Hovee: “The phase that we are going
through right now is funding. We believe that will be in place in the first quarter of
2007. These documents and agreements have been disclosed in our SEC filings. We need the
funding in order to build out the Senz-It technology. The Isotec sister division is
operating to plan. We have new and very skilled management, and we have added seven new
dealers in the last six months, two domestic and five international. We have already
received orders from one of the domestic distributors, and they are excited about the
prospects of Senz-It on the security side of the business. Therefore, the potential for
embedding this into the Isotec product line is very real, and that will be one of the
first efforts as well, along with our focus on food safety.”
CEOCFO: You said that it is a relatively
inexpensive device; when you sell your device, are there parts that need to be replaced
and will it provide residual income?
Mr. Hovee: “It depends on the device
and the circumstance. For example, if you were in Immigration, and you had identified
contraband, you would not want to reuse that array because that would be part of the
evidence file. In terms of medicine, if you were in a physician’s office and you were
testing for strep throat, you probably would not want to use that device on the next
patient. Right now, if you bring in a small child that you think has strep throat, the
physician swabs the throat. The child is crying and the mother is upset. It is sent out to
a lab and the mother has to wait 24 hours to find out if it is bacterial or viral. With
our device, you can blow into a tube and you will know instantly if you have strep or a
viral infection. The child and mother would be happy, and the doctor could charge for the
procedure. In another transportation reality, there was a recent test done in Atlanta, and
20 out of 22 times the people being tested were able to pass through the existing
detectors with some type of ferrous metal such as knives or guns, without being
detected.”
CEOCFO: What are you competing against in
newer technologies?
Mr. Hovee: “I think we have something
that doesn’t exist today.”
CEOCFO: What is your process of finding
early adaptors?
Mr. Hovee: “The process for finding
early adaptors in the physician community would be to go to a physician and ask him if he
was the type of person that would be interested in trying a new technology. The people
that are early adaptors know other early adaptors. Once you find a few, they can lead you
to several others. The second thing we do in that arena is seek industry endorsements, and
we expect some of those in the near future. We have three manufacturing agreements in
place with recognized experts in the field, and that helps underscore credibility.
We’ve identified International Smart Sourcing, or ISS, as the electronic and
collection component provider, Kurt Deckert Associates, with 30 years of experience in the
development of new optical reader systems, and Source Scientific for manufacturing and
assembling the Senz-It project. We will write our own algorithms, which we believe are
nearly complete, as we have already run several tests as we continue to enhance the code.
Therefore, by the time we are ready to go to the market, these will have been tested over
a large number of analytes. We have already tested the sensors on different types of
identified chemical compounds, and we’ve had zero false positives on the tests that
we’ve run.”
CEOCFO: Address potential investors; why
should people be interested now and have confidence that World Am can deliver on its
promise?
Mr. Hovee: “The first reason that
people should have confidence in what we are doing is that we have put together an
extraordinary management team. We have people that have previously been CEO’s, that
have seen what we have, believe our model, understand the technology, and are now working
with us to execute the plan. The second reason is that we have a very solid history in the
development of this through SUNY Buffalo and Dr. Frank V. Bright. He is one of the
foremost chemists in this field in the country. His work is well known among his peers,
and he continues to develop additional analytes. Not only do we have an agreement with
SUNY Buffalo, we also have independent consulting contracts in place with Dr. Bright and
his staff to continue to expand the number of analytes. That is why I mentioned that we
have 140 chemicals and biologics and explosives that we’ve already identified, and
that we are confident we can recognize with our Senz-It technology.”
CEOCFO: Do you have any final thoughts for
our readers and what they should remember about World Am?
Mr. Hovee: “There are two key
considerations. One is that we have totally changed the direction and the management of
World Am. Isotec is operating to plan and is adding new dealers and improving sales. In
the Senz-It area, we have extremely large markets, a very strong patent position, and
manufacturing agreements in place. Therefore, we are further down the road than a pure
startup, although we are a development stage company and we do need the funding to
complete the project. As far as my background is concerned, I have been a guest lecturer
at the UCI Paul Merage School of Business, focusing on evaluating seed and startup
technology companies. I look at a couple of hundred companies per year and I can tell you
that World Am is tremendously undervalued. The patent alone, when we did the merger, was
independently valued at more than $8 million, and our current market cap is $1
million. Therefore, you have to ask yourself why it is so undervalued. I think that as
World Am previously existed, it was not able to turn the corner with its Isotec group. We
found World Am, completed a reverse merger, and we are excited about the future.”
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