IdentifySensors

Growth Stage

New Technology — A Medical Testing Lab in the Palm of Your Hand™

Analytics

Raised to Date: Raised: $3,975,927

Aggregate Commitments $

Platform

Dalmore Group

Start Date

10/27/2020

Close Date

01/01/2022

Min. Goal

$323

Max. Goal

$50,000,000

Min. Investment

$323

Security Type

Equity - Common

Funding Type

RegA+

Series

Pre-Seed

Pre-Money Valuation

$212,703,069

Rolling Commitments $

Status

Active

Reporting Date

11/28/2021

Days Remaining

34

% of Min. Goal

1,230,937%

% of Max. Goal

8%

Likelihood of Max
unlikely
Avg. Daily Raise

$10,015

Momentum
cold.svg
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Location

Shaker Heights, Ohio

Industry

Healthcare & Pharmaceuticals

Tech Sector

HealthTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Business Type

Growth

IdentifySensors is an OTC self-testing device for various illnesses and diseases. The product uses "electronic nanosensors to measure precise levels of micro-electric currents that pass through viruses and bacteria." Results are available in minutes from a saliva sample and the tech is both iOS and Android compatible. The team is raising a Regulation A round independently with a $323 minimum investment at $4.25 per share.

Balance Sheet

Cash and Cash Equivalents

$0

Investment Securities

$0

Total Investments

$0

Accounts and Notes Receivable

$0

Loans

$0

Property, Plant and Equipment (PP&E)

$0

Property and Equipment

$0

Total Assets

$980

Accounts Payable & Accrued Liabilities

$4,665

Policy Liabilities and Accruals

$0

Deposits

$0

Long Term Debt

$0

Total Liabilities

$4,665

Total Stockholders' Equity

$-3,685

Total Liabilities and Equity

$980

Statement of Comprehensive Income Information

Total Revenues

$0

Total Interest Income

$0

Costs & Expenses Applicable to Rev

$0

Total Interest Expenses

$0

Depreciation and Amortization

$0

Net Income

$-3,685

Earnings Per Share - Basic

$0

Earnings Per Share - Diluted

$0

Auditor: BF Borgers CPA PC
Financials as of: 10/27/2020
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Ratings

Analyst Report

Synopsis

After a year marked by a global pandemic, the way people think about access to healthcare is changing. It is now more important than ever to have an accurate and efficient means to test for a variety of diseases and illnesses, especially those that are easily transferable. In fact, many at-home diagnostic solutions are arising in direct response to the COVID-19 outbreak. 

IdentifySensors has created a patented diagnostic tool, Check4, that patients can use at home. Check4 uses nanosensors to detect a variety of illnesses including COVID-19, the flu, and HEP C. The Check4 system is a reusable reader that has separate test cartridges for each illness. The reader connects to an app that provides results in minutes from a saliva sample. IdentifySensors has partnered with Purdue University to create this at-home diagnostic technology, and it is moving from development to commercialization at this time. The complementary app is both iOS and Android compatible.

IdentifySensors’ current independent raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

IdentifySensors is raising independently via common equity and is valued at approximately $212.7 million. Considering that the product has yet to be commercialized and the company is still pre-revenue, this is a steep valuation. Additionally, a $212.7 million valuation is very high in comparison to other growth stage startups. As such, IdentifySensors is overvalued in this funding round.

Market

Globally, the at-home diagnostic testing market sat at around $5.5 billion in 2020 with an annual growth rate of 3.98%. Even if North America accounts for at least 20% of the global market, this is a small industry to target. Additionally, these numbers include solutions like glucose testing, pregnancy testing, and drug testing, none of which IdentifySensors does not appear to be targeting at this time. The company could struggle to grow due to limited product offerings and a limited overall market.

Other sources, however, are optimistic around drivers of this market. A growing geriatric population and general consumer sentiment around the importance of accessible diagnostic testing could cause this market to expand more rapidly than initially estimated. In fact, many of these sources were published prior to the COVID-19 pandemic that further stressed the importance of fast, accurate diagnostics. 

In sum, market potential is healthy, and many of these growth metrics were measured pre-COVID. It is reasonable to say that the market may have increased more than estimated previously and cannot be accurately captured. However, IdentifySensors is still only addressing a niche section of this overall market, so it could see limited growth.

Team

IdentifySensors was founded by Gregory Hummer, a seasoned entrepreneur and trauma surgeon. In fact, Hummer began two companies — IdentifySensors Fresh Food Enterprises and IdentifySensors Biologics Corp. (the company in question). IdentifySensors Fresh Food Enterprises appears to have been started to provide intellectual property. Specifically, “IdentifySensors Fresh Food Enterprises, LLC (ISFFE) has granted [IdentifySensors] an exclusive license to use the carbon nanotube intellectual property, including patents, patents pending, technology, enhancements, trade names, trademarks, trade secrets and processes…” This partnership is further explained in the “Intellectual Property” section of the company’s offering circular.

Prior to founding those companies, Hummer worked at SailingChefs — an adventure sailing show — as an Executive Producer and owned a corporate wellness software site. He also served as the Medical Director of the NASA Glenn Research Center. He holds his MD from Ohio State University. 

Hummer is joined by COO Tommy Sors who serves as Assistant Director of Purdue University’s Institute of Inflammation, Immunology, and Infectious Disease. CFO Ann Hawkins holds a law degree from Marquette University. Other key team members include CMO Jeff Spagnola, who has experience in marketing, and President Bruce Raben, a career investment banker. 

Though the team spans a range of skill sets, few, if any, are full time members. Gaps still exist in crucial areas such as sales and business development. Most of the team appears to be mid-career professionals aiding Hummer on the side. It’s not clear that this team has the necessary level of dedication and skills to bring IdentifySensors to significant success.

Differentiators

Very few at-home diagnostic tools for COVID-19 exist, though Ellume, BinaxNow, and EverlyWell all provide tests. Physician administered tests are also indirectly competing with IdentifySensors.

Should the technology work as promised, IdentifySensors’ real value is in its product differentiation. The test is compatible with cartridges that screen for several illnesses, including flu, HIV, MRSA, and Lyme disease. The technology “uses electronic nanosensors to measure precise levels of micro-electric currents that pass through viruses and bacteria.” This feature provides an advantage over traditional PCR, antigen, and antibody tests, further differentiating the technology. 

The company’s nanosensors detect the genetic materials of pathogens, whereas traditional antigen tests detect proteins on the surface of the virus. PCR tests — which are more accurate than antigen tests — detect viral RNA. However, PCR tests often take at least 24 hours to generate results. Thus, the current system compromises accuracy for efficiency. Additionally, existing tests often rely on a nasal swab or finger prick for blood. These methods can be prone to user error, such as not swabbing high enough up the nasal cavity or for long enough to retrieve an accurate sample. The use of a saliva sample via IdentifySensor’s Check4 will likely decrease these issues and help prevent false results.

Identify Sensors’ technology has five patents, making it quite defensible. The paired app is both iOS and Android compatible. When it comes to accuracy, the team reports that “Check4-COVID™ intends to meet the gold-standard in hospital-grade molecular COVID testing.” Other at-home tests like Ellume claim 96% accuracy, and some of the products currently on the market are still pending regulatory clearance. 

When it comes to cost, IdentifySensors has a slightly different business model than existing solutions. The Check4 reader (which can be reused multiple times) is $130, and test cartridges will cost $25 each. Existing one-off solutions range from $30 to $50 depending on whether tests are purchased alone or in bulk.  

In sum, this unique business model and new technology make IdentifySensors a well-differentiated and defended company.

Performance

Very little can be said with regards to IdentifySensors’ performance metrics. The product has yet to be commercialized, and the company is consequently pre-revenue. According to the team, the test should be available commercially in 2021 both online and through retail stores. Though the product still lacks FDA approval, IdentifySensors is actively seeking regulatory clearance, and few competitors on the market are fully FDA approved. Overall, the company’s performance hinges entirely on technology that remains under development and in the hands of limited suppliers.

Risks

Overall, risk associated with an investment in IdentifySensors is high, especially from a product standpoint. The company’s success is dependent on unproven technology that — though patented — has not yet been introduced to the market. It’s unclear if IdentifySensors will find ample product-market fit for its devices. Additionally, each subsequent product the company develops will have massive regulatory hurdles to overcome. Clearing these hurdles is likely to take significant time and capital commitments from IdentifySensors. Lastly, IdentifySensors has a solo founder that is supported by a lean and largely part-time team. This level of commitment is not optimal for nurturing and growing an early stage company. 

Bearish Outlook

IdentifySensors is the definition of a moonshot company: enormous risk with huge upside potential should all go according to plan. The company is massively overvalued and faces intense product and regulatory risk. It is unclear as to whether or not any retail partnerships have been secured at this time.

Additionally, though the obtainable market has significant upside potential, it is relatively small. And with this upside potential comes more competition. IdentifySensors will need to gain market recognition and overcome competitors in order to provide a return to its early investors. Finally, the already lean c-suite team has clear expertise and commitment gaps. None of the existing members appear to be committed full-time. This factor raises concerns that there is not enough time and effort being put into IdentifySensor’s growth and development.

Bullish Outlook

If IdentifySensor’s technology makes it to market, it has high potential to be disruptive. The reader/cartridge model creates a unique value proposition, especially when paired with the high-accuracy electronic nanosensor technology. Despite the small obtainable market size, customer sentiment following the pandemic will likely play in the company’s favor. Finally, by owning five patents and existing in a highly regulated space, IdentifySensors has created a massive defensibility moat that could be appealing to potential investors.

Executive Summary

IdentifySensors is developing an over-the-counter self-diagnostic device for various illnesses and diseases, including COVID-19. The product uses “electronic nanosensors to measure precise levels of micro-electric currents that pass through viruses and bacteria.” Results are available in minutes from a saliva sample, and the paired app is both iOS and Android compatible. At this time, the product has yet to be commercialized.

IdentifySensors presents both massive risk and significant upside potential. The relatively niche obtainable market does appear to have consumer sentiment on its side. If the past year has taught us anything, it is that accessibility of diagnostic tools is crucial in controlling the spread of disease. IdentifySensors is capitalizing on this need with a hugely differentiated and cost-effective solution. The reader/cartridge model is unique in the market as is the nanosensor processing technology.

That said, the IdentifySensors team is lean and not fully committed. The product risk will also loom until the reader and cartridges can be fully commercialized. A valuation of $212 million at such an early stage of development is unjustifiable and could harm potential returns for investors. Additionally, the at-home diagnostic market is currently small, limiting the company’s future potential. For these reasons, IdentifySensors has been rated a Neutral Deal by the KingsCrowd investment team.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

Analysis written by Olivia Strobl, August 19, 2021.

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IdentifySensors on Dalmore Group 2021
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Platform: Dalmore Group
Security Type: Equity - Common
Valuation: $212,703,069

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