All right. Hi everybody. I'm Austin Moeller. I'm the aerospace and defense technology analyst here at Canaccord Genuity. Today, we are joined by Kevin Knopp and Joe Griffith from 908 Devices. We are going to talk about mass spectrometers and why they're so important for military and law enforcement. I guess just to start off, could you just give a brief overview of the company and talk about the company's transition from being a medical device business into the defense and public safety market?
Yeah, absolutely. Thanks so much for hosting us here today Austin. I really appreciate the opportunity. Yeah, so 908 Devices is creating a category of handheld detection solutions aimed at public safety and defense customers, really geared towards chemical detection and drug detection applications specifically. The fentanyl crisis, nitazenes, xylazine, other compounds of the synthetic opioids, as well as toxic industrial chemicals, and having a complete suite of handheld devices to address those applications. From a medical device, as you put it, so 908 really is coming back to our roots a little bit here. When we started the company in 2012, we built a handheld mass spectrometry technology, which is taking a lab-grade technology of mass spectrometry and taking it out of the lab and bringing it to the user that could have access at the point of need for immediate answers.
The pinnacle of that to us was a battery-powered smallest that we could do at the time and developing a solution that didn't exist, new category, and we did so with purpose-built for military and security applications. Now you fast-forward, that mass spectrometry is a platform, and we continue to look through applied areas and markets as well as into life sciences. When Austin's mentioning the medical devices, when we were at the throes of our IPO in 2020, we really were gearing up and launching products into the bioprocessing, biopharma space. About 15 months ago, we've divested that business line, and now we're fully focused on the category of defining handheld detection for these public health, safety, and defense markets.
In many ways, coming back to our roots, an area that we know well, and an area that we've seen a lot of strong growth over those years.
How important is real-time chemical analysis for law enforcement, given the extremely long wait times to get results from laboratories?
Yeah. It is so important because of that fact. We serve law enforcement customers globally, and we serve fire and hazmat customers globally. Speed is of essence to both categories. Starting with the law enforcement side, you are absolutely right. We work with customers that will tell us the backlog of their forensics labs using mass spec and other associated technologies in those labs can be six months or nine months. What that means in practice is in a law enforcement scenario, if someone is arrested, held, charged for a drug case, they may get released while waiting for those results. Then people are back on the street or not getting into therapy or getting other problems associated to it. So by using our technology, they are speeding it up.
They are literally getting an immediate answer, maybe about 30 seconds or so depending on our technology that we have, and they can use that as presumptive evidence in the case of many of our products, approved by the state, and then they can use that for probable cause or for prosecution faster using those results. So time matters a lot. We work a lot with the Ohio Attorney General's Office, proving out this model. They have been strong supporters of this exact fact, that their lab is backlogged, and in this way, they can triage it, they can move cases through faster. Then the same is true on the fire side. Answers matter quickly. So again, we are bringing more closer to lab-grade results right there in the field.
In the case of recent hazmat instances, Los Angeles. Other areas where tanks were leaking, having technology that can come in right away, identify and quantify an unknown gas, and decide the hazard, what is around me. For my community, the exposure to personnel, it is incredibly important to have speed.
Can you talk about some of the key differences in your product line between the VipIR, MX908, and the new NIRLab handheld device?
Yeah, very much. Happy to do so. On the top right of this slide behind us here is our flagship, and that's our MX908. That's our flagship device. We've got about 3,000 of those in the field, in use across a lot of drug applications for Department of Corrections a lot of applications for law enforcement, but also onto military and defense applications. Our flagship, it's our most sensitive device, measuring synthetic opioids through to chemical weapons through to non-traditional chemical agents. It's a very high sensitive, high specific device. Below that, we would have our VipIR product. Our VipIR is our newest FTIR product. That product is a very unique product that takes three technologies into one box to do bulk chemical identification.
It takes a technology called FTIR, and it takes technology called Raman, and it combines it with algorithms layer to give a very confidence-inspiring answer because you have two orthogonal approaches looking at that sample. From an analyte perspective, it can measure 38,000 different analytes and then provide that confirmatory result of a bulk ID. Geared really for customs agencies, ports of entry, hazmat teams, and users of that nature. Then the third product you mentioned is our newest product through acquisition. I brought one today, I'd be happy to show after as well. But this is our NIRLab product.
This is also a bulk identification product where you just take this and you touch it against a potential counterfeit pill, or a pile of a substance, and then there's about 400 different drug substances in here that it can ID in a few seconds, and it's all cloud connected through a subscription. It's the lowest price entry point of this product for us, and it's really meant for fast screening of routine police operations. Police patrol operations on the drug detection side.
If anyone's got a bag of drugs, we can test it.
We can do it.
Yeah.
We can do it. Do you want to know what it is?
Since we're on the point of the NIRLab handheld device, you recently completed this acquisition. Can you talk about how the NIRLab acquisition expands your TAM into Europe and other regions? How might the NIRLab product be cross-sold into the U.S. law enforcement market?
Yeah, absolutely. The company has its origins at the University of Lausanne in Switzerland, a forensics institution very well respected across all of Europe. So a great beachhead for publications, acknowledgments across the scientific literature for supporting all of Europe. Great technology that has been vetted and validated. What they have not had is a lot of exposure to the United States markets. Part of 908, we have talked already about our technology, and they are a very differentiated technology. But part of our, I would say, special sauce is really a rockstar sales team that is coming to stride in these public safety markets and defense markets. That means being able at scale, to address those customers across law enforcement and fire emergency services.
That is exactly the playbook we used on a previous acquisition with RedWave, that we bring that platform of sales and marketing, we fill it with a new product that is very differentiated, and bring it to our same customers. So that is exactly what we are doing with NIRLab. So absolutely unlocking potential there and fitting right into the portfolio and being able to sell it as a complementary product. From the TAM side and SAM, we look at it that it is about a $200 million market opportunity that is directly addressing today part of a larger SAM that is in the call it, $1.5 billion - $2 billion for all of the detection equipment in this space.
But I think the really interesting thing to us is not just the head-to-head competition that you might think from an analytical-to-analytical product or that user, but we do get very excited about some of the regulation tailwinds that we are seeing out there, and there are some changes going on. In several states, Colorado being one and about seven other states, there is legislation that is changing on how those frontline police officers do screening of drugs. Today, colorimetric kits are frequently used. A colorimetric kit is a great tool, but it is a small, wet chemistry kit. So it is essentially, you pick out the right bag, you pick the right ampoule, you put in your substance, you break that, you shake it, and it might change a color.
You have to worry about expiration dates. Which kit did you use? Did I use it correctly? Did I interpret the results correctly?
By the way, I might have consumed the sample. So the chain of custody, the chain of evidence, the concern that there can be false positives is causing many states to say that this is no longer allowed for arrest decisions. We do see the NIRLab product opening and addressing that addressable market as well, which we see as meaningful. It is a little bit like we see some of the other public safety companies have done with a subscription model, opening up product and opportunities across other sectors, including body cameras and the like, where you have a complete chain of evidence. Where you are observing a sample. In our case, you know who did that, you know the audit trail of the results, you are housing those results for evidentiary purposes, and the whole thing has that chain of custody associated to it.
That is also a part of the opportunity that we are excited about unlocking.
What is the latest that you have heard about DHS funding from the big, beautiful bill and then the new Reconciliation 2.0 bill for DHS, and how might that translate into revenues for 908?
Yeah, for sure. If I think of our product categories, we sell devices into state and local entities, we sell devices into federal and military customers in the U.S., and then the international equivalent. A lot of our state and local customers use grant funding. They use grant funding to support the purchases of technology. A state, local enterprise a city municipality may use these grants. As you mentioned, the flow of funding to these customers through that grant program is incredibly important and part of how we address that market. There are absolutely some strong signals there, some strong movements by the federal government to ensure that those funds are available. On the DHS side, with the one big, beautiful bill, only about 60% of that allocation has made it to DHS. Part of DHS issues grants. There are grants, the UASI grants.
There are other grants out of other parts of the federal government, including DOJ for the COPS grants. Also through the Office of National Drug Control Policy, there are grants for HIDTA, which are the High Intensity Drug Task Force. Very interesting data points on each of those, that there is a considerable amount of funding going to each of those. Recently, in June and July, each of those grant programs received large sums of money to re-up and make sure that there are opportunities for grants for these organizations. If I think of HIDTA, they received the largest grant ever in June, which is about $277 million. If I think of the COPS program, it is in the $700 million.
I believe about $400 million is specific more towards equipment. That is through DOJ. If I think of UASI, that is another half a billion dollars or so of funding.
They can use for equipment, they can use for vehicles, other apparatus that is required. This administration has quite a priority on fentanyl and the border crisis. Yes, all of that funding I see is now becoming more available. It is not just a one and done. It clearly is a multi-year effect because as we are seeing it, many of these programs are multi-year, in some cases out to FY 2029. That is already being pre-programmed. It is nice to get away from some of that shutdown brinkmanship, which maybe we are doing a little bit better this year than in the past. Absolutely, those funds are starting to get to our customers and should be supported for a number of years.
Can you talk a little bit about your involvement in the Army AVCAD program?
Yeah, I would be very happy to do that. Our flagship device is what this relates to, and that is our MX908. Part of what it can do is measure aerosols and vapors. It can measure a host of toxic industrial chemicals, including traditional chemical agents, pharmaceutical-based agents, and other non-traditional chemical agents at very low levels to detect a hazardous environment and make sure it is safe for breathing. There was a program that has roots and requirements back even prior to 908 Devices' foundation in 2012. That program identified gaps in the aerosol and vapor capabilities of the U.S. and started efforts to close that gap. We teamed with Smiths Detection in about 2014 or so, In 2018. I believe we had maybe our first contract award.
Most recently, we just completed a contract for LRIP, the low-rate initial production, by delivering approximately 150 or so component sets to Smiths to build up a complete solution for the government for testing, debug, and preparation for the next phase of scale. That is all ongoing. What is very interesting to us currently, as that contract has run its course, there is tremendous pressure to modernize the requirements process and modernize the procurement process for such legacy programs. Think of it this way. In Ukraine, drones with an explosive attached to it did not exist in the time frames that I have been covering so far. There is tremendous pressure from the Secretary of War on down to find and field solutions that are let us say, 80% solutions, but that can be done faster to get capabilities to the war fighter to close some of those capability gaps.
Where we sit here today, the government is currently evaluating which way to go. They are currently evaluating whether to move forward with this GOTS, which it is this custom development, and take it to the next stage and build another set and test it and work to roll it out, potentially to fill it with our COTS solution. Our commercial MX908 device, fill it with that or a hybrid of the two in priority areas, perhaps fielding those first with our MX908. The detection technology in the AVCAD development is the same as what is in our COTS MX, which has already been extensively tested and validated. We feel very good that on the market, we have the best and most capable aerosol and vapor detection technology. We really feel good that the opportunity is there and this may be a bit of a pause before an acceleration.
We are currently at that threshold, waiting for decisions from the U.S. government but really feel pretty confident we can win either way as this plays out.
How does having your devices be connected to the cloud allow the end users out there in the field to rapidly identify trends in drug smuggling all over the country or all over the world?
Yeah. Another really area that is untapped that we are working towards unlocking more and more within 908 here. We mentioned that this device, for instance the NIRLab device, it connects to a cloud. It is on a subscription service. It connects through a server where you can see all of your devices connected onto a network and being able to see how they are being used, utility, fleet information, location if you desire. But you can also see within your walled garden, you can see all of the trends that are happening. You can see what is most predominant in your particular area. You could see a particular new substance coming and maybe seeing the track and flow if you have enough nodes. We see that with our NIRLab, but we also see that with our MX908 today, or our VipIR, or our other FTIR products.
We have products where we have a couple hundred devices connected to a similar ecosystem that I described called Team Leader that allows the U.S. Postal Inspection Service to do such a thing, where they can see which one has been active, the location. They can see trends. They can better manage their fleet. They can better prepare their resources and align their resources to it. We're working to connect all of our devices to a single ecosystem, including our next generation of our flagship that we anticipate releasing at the end of this year and should be a driver of 2027. We really see all of these having that common connection, and we're driving to have them all part of that ecosystem to allow such trends.
Today with our MX, we're doing what I described, but often, there's a manual element to it, and we're working to more automate this and have this all available to the customer in real time.
Can you talk about the price points of some of your devices as they scale and how many of each needed to be deployed to a customer at each ASP all the way up from an army unit or a lab down to a squad car or individual officer?
Sure. Happy to maybe use U.S. list prices as a reference, and we have different channel and volume-based discounting that comes into play. But with the acquisition in NIRLab, the device Kevin has there it's $10,000 U.S. list price. And we span all the way up to our VipIR, which is a little over $100,000 U.S. list. So in between, we have a total of six products. You have the ProtectIR that's in the neighborhood of $35,000, an XplorIR that's around $60,000. Our MX908 is $75,000. Our ThreatID is about $80,000. If I think about now kind of the AVCAD solution and what's in the literature out there, that solution that includes the component set of our MX is in the neighborhood of $90,000.
We do look at it from a deployment perspective, that a lot of times it's an initial unit or two that is out there on test or a pilot that ultimately can graduate into an enterprise-type account. State and local, those can be more onesie-twosies, maybe gets up to five or 10, or someone like Ohio could be around 50 from a deployment perspective. But larger military accounts can be 50 in excess of 100 devices at a time. NIRLab at the price point and the ability to get it out into each maybe responding officer or police officer could be in the hundreds of an opportunity in a given account or country. Hopefully that gives you a little bit of color, but really span, and NIRLab brings in a lower price point to address a lower-end market need.
Can you talk about 908's manufacturing operations in Connecticut and Massachusetts, and what the capacity expansion needs might be over the next 12 to 24 months to meet customer demand?
Yeah, we have a great team down in Danbury, Connecticut that does all of our manufacturing. We went through a significant transformation in 2025, where we used to be right in the Seaport around the corner here in Boston. We were doing our mass spectrometry manufacturing. That's all being done out of Danbury now. So it's great to have everything under one roof. Also, all of our products are able to be nimble with labor, ramp up on mixed changes, common components. Thinking about baseline, we produced about 700 devices in 2025. The facility has capacity to do in the thousands. It's really about ramping up labor, allocating square footage. We have about a 40,000 sq ft facility there in Danbury. So it's a great hotbed.
Some companies that are in the area with an experienced labor force, so it was a nice transformation that was leveraged by an acquisition we did a few years ago to move everything under one roof.
Maybe could you talk about how your systems can be incorporated into drone payloads? Do you see the drone instrument market as the next major growth driver for your TAM?
Yeah, that's a great question. We were speaking earlier about your panel there. A lot of activity in that space. Very clear, right? There's a lot of hazards that you'd prefer that you didn't have to put a human in harm's way. Absolutely, we see over time that more of their handheld devices will have opportunity to be on an unmanned drone platform or an unmanned vehicle of some sort. Today, we have some exposure there with our distributors, other partners that will take our equipment and then mount it on something like a Quadrabot or in some cases, even drones. Our limiter right there, I would say, is size and weight and as the drones get more capacity, that opens up more opportunity for sensors and sensor payloads like ours on the chemical detection side.
As our roadmap keeps shrinking the technologies down and reducing their SWaP, we further believe that opens up. Today, we have absolutely had some demonstrations. We're seeding areas of doing on fixed-wing aircraft or doing on the Quadrabots, and I think that can, over time, become a more substantial portion. Today, we really do that through integrators, through distributors that we're providing the detection payload, and then they're putting it on to their vehicle or drone platform.
When we think about the balance sheet, does your existing cash balance enable you to execute on the key programs that are in the current business plan and your expansion into Europe over the next 12 to 24 months?
It does, yes. We finished the quarter at June 30th with over $100 million of cash on the balance sheet. Through our transformation in 2025, the divestiture of our desktop, we have really reduced our burn. Our adjusted EBITDA is kind of in the mid-single-digit range, mid-single-digit million range here in 2026, which gives us multiple years of runway to focus on organic growth opportunities and investing in international expansion, product launches. Also potentially to be opportunistic if we see things on the inorganic side. NIRLab just recently in the spring, but also as we think about filling out potential capabilities that our customers have needs, and we can provide additional capabilities leveraging that commercial channel that Kevin highlighted. Yes, feeling good about the balance sheet as it sits today and can be opportunistic if we are able to check boxes on opportunities going forward.
I definitely stress that we are focused on organic and the great portfolio we have today.
What new mass spectrometers or detection devices may need to be developed for customers in the near future just based on the conversations you are having with them?
Yeah. We have a very R&D-centric organization that is very novel, always thinking of the next thing and working on it, and as I alluded to, we are working on a next generation version of our flagship there on the top right, our MX908. Very excited for that. Looking at something that is about half the size, half the weight, a little easier to use. Very modern in its approach with communications connected to the cloud. As I previously was describing with our Team Leader App functionality. I think that the feedback we get is that people, for drone reasons or handheld reasons, they appreciate size and weight reduction. First and foremost, we are working there. They appreciate the simplicity of an iPhone. So, we are always striving to meet that need as close as we possibly can with the mass spectrometer. That is an area that we are doing those developments.
In the connectivity, whether it is into military systems with programs like AVCAD, but incredibly important across domestic systems as well, being able to track in trends and do some of the forementioned things that we mentioned NIRLab does.
Do I have any audience questions here?
In the U.S., there is a big concern with fentanyl and opioid-related deaths. Are you seeing increased demand from other countries where that is starting to become a major issue, maybe for that MX908 specifically or any of your products?
Yeah. The illicit drug crisis, if you just think of it in a broad context beyond fentanyl, absolutely drives demand for this product internationally. For instance, our NIRLab product. It doesn't have to necessarily be fentanyl. There can be different substances and different locales that are under different regulations or under different usage patterns, and we strive to ensure we have the right signatures so it's localized to meet that need.
Excellent. Well, I think we've come to the end of our time, but I just want to thank you again, Kevin and Joe.
Thank you.
For just taking the time to teach us more about 908 Devices.
Yeah, thanks for the opportunity.