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Universal
Detection Technology, in collaboration with NASA’s JPL, is in the process of
developing an Anthrax ‘Smoke Detector’, which is a real time biological weapon
detection device
Technology
Security
(UDTT.OB-OTC)
Universal Detection Technology
9300 Wilshire Blvd. – Suite 308
Beverly Hills, CA 90212
Phone: 310-248-3655
Jacques Tizabi
Chairman and
Chief Executive Officer
Amir Ettehadieh
Director of
Research and Development
Interview conducted by:
Walter Banks
Co-Publisher
CEOCFOinterviews.com
November 2003
BIO:
Mr. Tizabi is the appointed Chairman and CEO of Universal Detection Technology (OTCBB:
UDTT), a leading provider of environmental monitoring technologies, including
bio-terrorism detection devices, air monitoring systems, and medical diagnostic equipment.
At Universal Detection, Mr. Tizabi has developed a landmark joint-venture with
NASA’s Jet Propulsion Laboratory, attracted several high profile advisory board
members, launched an innovative pilot program for the Company’s airborne particle
detector, and implemented numerous state and federal grant initiatives.
Mr. Tizabi has been a part of several political
campaigns for state, local, and federal political offices. He is also a member of the
Anti-Defamation Leagues Salvin Leadership Institute.
Mr. Tizabi holds a BS from New York University’s
Stern School of Business and an MBA from Pepperdine University.
Company Profile:
Universal Detection Technology (OTC:BB - UDTT) has specialized in manufacturing airborne
particulate and pollutant detection devices for the past 30 years. With the emergence of
the threat of bio-terrorism and the evident lack of preparedness of the country to such
attacks, the Company focused its research and development efforts in developing a real
time biological weapon detection device. The attacks of September 11, 2001 and the
subsequent spread of anthrax spores have created a new sense of urgency in public health
systems across the world, and especially in the United States. On June 13, 2002 President
Bush signed into law legislation allocating $4.3 billion to protect the country against
future bio-terrorism.
In August 2002, UDT entered its first collaborative
partnering agreement in a deal with NASA’s Jet Propulsion Laboratory (JPL). Under the
terms of the agreement, JPL will develop its proprietary bacterial spore detection
technology for integration into UDT's developing bio-terrorism detection device. With
JPL's technology fully integrated, the targeted operating scenario for the UDT device is
continuous unattended monitoring of airborne bacterial spores in large public spaces, with
real-time automated alert functionality.
UDT’s device, developed in collaboration with
JPL, essentially functions as an Anthrax ‘Smoke Detector.’ The device
continuously monitors the air for Anthrax spores. It then uses a microwave to
“pop” the spores thus releasing a chemical from inside the spores called
dipicolinic acid, which is unique to bacterial spores. This dipicolinic acid
instantaneously reacts with the chemical sensor in the solution. The sensor triggers an
intense green luminescence when viewed under ultraviolet light. The intensity of the
luminescence corresponds to the concentration of bacterial spores in the sample. If an
increase in spore concentration is detected, an alarm sounds notifying both a buildings
internal security as well as local emergency services through the devices landline or
wireless networking capability. The devices response time is 15 minutes, fast enough to
help prevent widespread contamination.
CEOCFOinterviews: Mr.
Tizabi, where was Universal Detection Technology when you became its CEO and what changes
did you orchestrate, and what attracted you?
Mr. Tizabi: “The
Company has been around since 1971, went public 15 or 16 years ago and I took over the
Chairmanship just over two years ago. During much of its 30 years, the company was
primarily engaged in the Air Pollution Monitoring business, held several patents and
developed a lot of high tech equipment for analyzing the air for a variety of pollutants.
Unfortunately, that space got very crowded and was dominated by a few major industry
players, creating a price war, which put the company in a position where it was really
making it difficult to compete. When we got in there with our team to really restructure
the company, what we found is that there was a lot of underlying technology, which had
much more dynamic uses and could propel the company into areas where it could compete much
more vigorously and with a much better competitive advantage. Simultaneously to that this
country experienced the attacks of September 11th, and the subsequent Anthrax
attacks, which remain unsolved. Hence, we have developed this whole new world of combating
terrorism and our focus in particular is on the Biological side of things, because we had
done some preliminary tests on our devices and our patents. In doing so, we discovered
that if teamed with the right partner we would be able to actually detect airborne
particles such as bacterial spores, which would cause diseases. Therefore, we began the
path of both developing our own technology and searching for a key partner to find a
unique way of detecting these types of bacteria that can be used as biological weapons,
which eventually lead us to our technology partnership with NASA’s Jet Propulsion
Laboratories. So that is where we are now; we are right about ending the development stage
and moving into commercializing our product.”
CEOCFOinterviews: With regard to the device, could you
further explain what Universal Detection has developed and what NASA’s Jet Propulsion
Laboratories is bringing to the table?
Mr. Tizabi: “What we actually developed over the years
was a device capable of sampling the air at a rate faster than a human breathes, and of
capturing particles, which are the specific and very minute size, which then coincide with
the types of things that we are talking about. Therefore, what Universal Detection has
created is the mechanism of that collection for very specific size of particles, because
only then would you be able to have those samples ready for detection. In addition, our
device has always been autonomous, because of this collection mechanism. What NASA’s
Jet Propulsion Laboratories has brought to the table is actually interesting because they
had developed a form of detecting bacterial spores for an entirely different purpose all
together. It was to check for bacterial spores in NASA’s Mars Rovers prior to
launching them into space, because they wanted to be sure, there were no living organisms
on the rovers prior to sending them out. This was because the spacecraft was sterile and
they wanted to ensure that the will not “infect” Mars with life from Earth. The
way they do that is with a very unique detection methodology, which virtually cannot be
wrong and can only ignite an alarm if there are in fact bacterial spores which ought not
be there in the first place. It was really a match made in heaven with these two
technologies.”
CEOCFOinterviews: Was NASA considering other devices and
partners and if so, why did they select Universal Detection’s device?
Mr. Tizabi: “I think the main thing in NASA’s
decision would have to be the business plan which we presented and also the fact that we
were very early in the fold with this type of thing. Now everybody has had a chance to sit
back and realize how large the Homeland Defense budgets are going to be for this type of
thing and how big a problem it really is, because it is not just a passing phase. Further,
this is a very serious issue with very serious energy expended on it and not just over
they next year or two, but over the next twenty to fifty years and beyond. I think,
looking at that scope, it is not something that everyone jumped on immediately and really
not prepared to outline a detailed plan, taking the initiative to do it. None the less,
there were other competitors, but it really came down to our being able to put the right
team together, which we had to do on our side and we’ve brought several very high
profile members of the scientific and medical community to the table. In addition, we were
able to get political support for our company and I think all of those things were key
factors in both of our decisions.”
CEOCFOinterviews: Now that you have the device and the plan
put together, how does your device differ from the competition’s in the detection of
Anthrax?
Mr. Tizabi: “Simply put, we are going after a very
specific market, which if one is truly involved in this industry and talking to the
experts, you will find that the key issue is early detection. This is because once it is
to late and people are symptomatic or once some evidence of foul play is physically found,
such as envelopes full of powder, it is basically to late. These bacteria kill very
quickly and there is not too much you can do about it once symptoms appear. So we clearly
drew that line in the sand, where we were going for early detection. The other thing where
we differentiated ourselves is that we were going for autonomous airborne detection, where
we don’t need to find something suspicious. We are not going to wait until there are
threats made. We have something, which can virtually on a twenty-four hour per day
mechanism, be constantly sampling the air and be constantly detecting and reporting. This
is a key question and I’d like our Director of R&D, Amir Ettehadieh to elaborate
on that.”
Mr. Ettehadieh: “The advantage that the Universal
Detection device has is basically three fold. First, it is faster than any other device
out there. It will give you positive results within 15 minutes of exposure to the Anthrax
bacteria. The second advantage that it has is that it works on its own; you don’t
need an attendant or a technician to be there constantly. If there is a positive detection
result, it will give off an alarm, notifying the appropriate individual. The third major
advantage that our device has is that it never gives false positive results, which is a
serious drawback to the other technologies that are out there. For example, the PCR DNA
based technologies that can give a positive result from pollen or other organic material.
In contrast, our device only gives a positive result in the presence of the Bacterial
spores.”
CEOCFOinterviews: How does this work in a mailroom setting,
how can it be effective?
Mr. Tizabi: “We have discussed several possibilities.
These devices are so sensitive that you wouldn’t have to actually open an envelope,
because with even just a little trace off of an envelope as it is coming through a chute,
the spores would become airborne and stay airborne, that’s what bacterial spores do
and they would be in the environment for people to breath and get sick. However, our
device would be sampling and collecting the bacteria at the same time and detecting the
presence of the spores. The other point to mention is that with the envelop style of
Anthrax attack, there is actually less concern because the evidence is right there and
somebody can see it and do something about it. In that scenario, you would know that you
should be proceeding with caution, whereas the real threat would be an airborne attack
because these are virtually invisible and cannot be seen. Therefore, that is where we are
going.”
CEOCFOinterviews: What is your current research and
development spending?
Mr. Ettehadieh: “Actually, that’s the good news!
Because of the partnership with NASA our R&D budget on this was a lot less than what a
lot of other companies might spend. We have a continuing R&D spending to develop and
commercialize from here on out, but a lot of that is technical and engineering. But, the
need for an actual R&D budget to develop and have the proof of science is already
behind us. We have already done everything and developed the device to where it is ready
for commercialization. That being said, we are however already looking towards the next
generation of the device.”
CEOCFOinterviews: Will you be attempting to manufacture and
bring the device to the marketplace yourself or looking for another partner to handle that
end of it?
Mr. Tizabi: “That is a great question and it is
something that we have been considering from day one, well before we have reached this
point and I think the answer is obvious. We will not be manufacturing the device
ourselves; we’ve been discussing with several different manufacturers completely
reengineer and manufacture the device. The other way, which we’ve also been
discussing is integrating our device into other larger security systems and that would
entail partnering with other larger defense contractors. This is because this is something
unique where somebody else may be doing major contract work in defense in general and a
lot of this is done in contract work that may involve everything from physical security to
cyber security. Therefore, they are really putting together components and we would be the
leading one in biological terror security, so we would be able to integrate our device
into theirs. The important thing to note is that the field is open to us and that we are
not boxed in, in any way. We have the exclusive rights to all of these patents and could
go in any direction we choose and which would make the most sense for us. So we may
manufacture a standalone devices depending on where they are to be installed and then we
also could be part of a larger subcontract under a larger outfit, a major contractor. Then
we would be part of a massive integration.”
CEOCFOinterviews: Can you tell us about the size of the
market?
Mr. Ettehadieh: “The Homeland Security Department has
dedicated a 4.3 billion dollar budget towards bio-security and each state has an
allocation of that money to spend on its own homeland security budget. As far as the
private sector goes, we’ve been talking to convention centers, large casinos and
sports arenas that are all interested in installing our device for further protection. The
private sector could actually outspend the Government sector in this market over the years
as businesses look at this as a part of their general security. Of course, there is also a
tremendous international market as well.”
Mr. Tizabi: “We actually did our very first pilot
program not in the government sector, but in the private sector. We installed our very
first device, at the Anaheim Hilton Hotel. We are now subsequently beta testing our newer
device. But Amir makes a good point in that the massive number in the government sector
could very easily be dwarfed in comparison to what the private sector will be funding.
Further, that will come both from necessity from the private sector and it could come by
way of mandate and government aid as well as insurance, which drives a lot of these new
developments. What are pie in the sky ideas today, five to ten years from now will become
reality.”
CEOCFOinterviews: With terrorism on the rise globally, the
attacks are not just focused on larger targets such as the Twin Towers, but also on busses
and storefronts, etc. Is your device applicable to these smaller targets?
Mr. Tizabi: “Absolutely, and you are really making
another underlying point and talking about is what has been come to known as ‘soft
targets’. Certain things or areas which terrorist would like to get their hands on
have simply have been made to secure, so they go on to the softer targets. Much like
anything else, when you are securing these places, you are securing them for both if an
actual attack is planed, so that you can spoil it, but obviously the other major thing
going on there is the deterrent. Much like when you install an alarm system in your house,
its great to have the alarm, but a lot of people are in it just to have the sign that says
that you have the alarm. Similar to the affect of the ‘Beware of Dog’ sign, so
the would be attacker will go somewhere else that is a lot easier and that is really the
point that we are drilling home. The more places that get outfitted with devices such as
our device, it just makes it unfeasible for terrorist to attempt a biological attack. This
is because they would not be able to kill a large amount of people if our device is
installed, and as graphic as that may sound, that is the ultimate goal. The point is to
outfit as many places as you can with our device, not to catch someone, but the hope is
that they will just go on to somewhere else.”
CEOCFOinterviews: Would the same device used to defend a
large facility, be used at soft target?
Mr. Tizabi: “Absolutely! What you are really talking
about is the function of time, because as we continue down the years of time, this device
will get smaller, less expensive and more available to the masses, much like any other
breakthrough technology. The other thing is that if you think of how these things can be
sold in systems, instead of individual units, all this means is that depending on how much
square footage you are trying to cover, will determine how many of these devices you will
need to install and integrate. So there is absolutely nothing stopping this from being a
mainstream product.”
CEOCFOinterviews: With regard to our government, do you get a
sense that bio-terrorism a growing concern?
Mr. Tizabi: “Bio-terrorism I would absolutely say is a
growing concern. Unfortunately, what a lot of people in the government are concerned about
is that there is a creeping complacency amongst the actual public. That is actually
because people get weary of the system of orange alert, yellow alert, red alert, these
types of things. I would have to say that biological is priority number one on the lists
of types of terrorism, because of the shock factor and the horrific results, which could
happen if an attack were to really occur. This is something that we’ve never had to
deal with on a massive scale and if you really think about it, a couple of years ago when
we had a few Anthrax mailings, that was really a very small event compared to what can
actually be done and we still don’t even know where that came from. The other think
to think about is that people tend to think that it is very difficult to create these and
weaponize these types of bacteria, but the truth of the matter is that it is not as
difficult as it was once thought to be. Like anything else, creating these bio- weapons is
getting easier and easier. It used to be thought of and probably true that only
governments with very sophisticated laboratories would be capable of actually developing
these weapons, but that could not be further from the truth right now. The simple fact of
the matter is that somebody with the technical know-how could actually produce Anthrax.
Even if they don’t have the sophisticated equipment, which would enable them to
shield themselves from getting sick from the Anthrax that they themselves are developing,
they could just constantly take Ciprofloxacin antibiotics as you are developing this and
you could live forever. That is because if you are taking the antibiotics you won’t
get sick, which is good news for us in the event of an attack, but the bad news is that
anybody with the know-how can develop these weapons while taking that same Cipro.”
CEOCFOinterviews: So I guess the real good news in the event
of an attack is the development of your device. Tell us about your patent protection.
Mr. Tizabi: “All of the pieces of technology that went
into this are patented by NASA’s Jet Propulsion Lab and they are under full exclusive
license to Universal Detection Technology. As we move forward with the newer development,
we will co-patent all of them together.”
CEOCFOinterviews: Can you tell us about what the revenue
model will look like? Will there be any reoccurring revenues and what will be the sharing
between Universal Detection Technology and NASA?
Mr. Tizabi: “What we are looking at is a revenue stream
that will include initial installation and delivery of a per-unit, which from all of our
market research leads us to a price somewhere is the 35 to 45 thousand dollar range
per-unit on a one time purchase. In addition, there will be a revenue stream in the
periodic maintenance of the devices and consumables. The good news is that these devices
really don’t break down, they are very rugged and durable and the mechanics of the
device are very robust. Therefore, from a customer standpoint you won’t have
interruptions and breakage. From our revenue model standpoint, there are consumables such
as the sensor chemicals, which are located within the device that will need to be replaced
and that provides an ongoing revenue, as does training and consulting. All of those other
types of revenues are ours fully, with NASA receiving a royalty of 4% on the device
sales.”
CEOCFOinterviews: What is your current cash and credit
position?
Mr. Tizabi: “I’m happy to report once again that
our funding commitment to the R&D on this project is and has been fully funded.
Therefore, we are in a terrific position from that standpoint. Further, we have no
immediate liabilities, regular debt or research and development debt, we additionally own
everything outright. We will at some point, either be looking to raise additional capital
to actually manufacture or do the final stages of development or be doing it on a
per-contract basis. Much of that is depending on how contracts happen from this point
forward. It is important to note that we have come through the development process, where
although we do not have a device ready to be shrink-wrapped and delivered, we do have a
device ready to be marketed to the government and private sector, locally and for
battlefield applications. We will then decide based on which way these contracts
ultimately play-out. The sales cycle is obviously quite long, so we will either need to
bridge that ourselves or go to Wall Street for those funds or they will be done contract
basis. However, no matter how you slice it we are in a sound position, having all of the
development costs behind us.”
CEOCFOinterviews: How close to market are you?
Mr. Tizabi: “I would say that we are months away from
the ability to actually begin projecting actual contracts.”
CEOCFOinterviews: In closing, could you address the
investment community and why they should consider Universal Detection Technology?
Mr. Tizabi: “To look at it from a very logical
perspective, take a step back and look at the overall spectrum that we have come to know
as homeland security. You really have to understand how awesome and tremendous a market
this is and how it really is going to change things. The change will not necessarily be in
how we live day to day, but if you really think behind the scenes and what has been going
on over the last fifty years, when you had the ‘Cold War’ and you had these
swelling Defense Department budgets, this is really a big, big piece of the overall
economy. This is because there is something out there, which needs to be addresses and
there is constant innovation and constant spending in those types of industries. And that
really is a large part of the engine that keeps the economy going. Believe it or not, the
homeland security and homeland defense, will be that for the next fifty years. It is like
that for two reasons, both out of necessity, because we have a real threat and also
because that is where the money is going to be. Which means the lobbyist and the large
defense contractors and all of the people in charge of these huge budgets are going to be
effectuating that exact plan, which mean that’s where the dollar signs are. A lot of
times, what happens there is that with all of this money being spent it gets cut-up into
several pieces amongst very large players. So the only real beneficiaries of this are the
large contractors, but they are already big and I’m not here giving out investment
advise to go buy those big names. The only way to realize a large gain is by getting into
small companies, which will at some point become large and be a big part of this. That is
all difficult, as we all know unless you happen to be a small company with a really large
partner that is government backed and that is the really the path that we have decided to
take. It is very competitive and difficult if you want to develop fully proprietary
technology within a small company and then take it to a government sector. However, when
you are in partnership with NASA’s Jet Propulsion Laboratory, as we are, and you
bring that kind of credibility and science and government backing in partnership with
yourself, that is where you all of a sudden find yourself having a lot of potential for
the future.”
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