PositiveID Corp (OTCMKTS:PSID) Just Reinforced Our Bullish Thesis

At the start of the month, we highlighted PositiveID Corp (OTCMKTS:PSID) as being at the top of our watch list. The company looked like it was moving rapidly in the right direction, with a solid base operation in place that looked set to fund the research and development side of its operations while generating bread and butter revenue for PositiveID's day to day operations.This week, the company is up more than 12%, and it is news surrounding this bread and butter that has driven the gains. We think there's more to come, and are happy to reiterate our initial bias. Here's what the company just announced, and what it means for PositiveID and its shareholders as we move forward towards the close of 2016 and beyond.First, a quick look at the company for those who missed our previous coverage. It designs, develops and manufactures detection systems targeting the biologics and life sciences space. It's got a pretty wide suite of tools and systems on sale, but essentially they all come together to form the core of its operations – the core that we are about to get into in a little more detail shortly – mobile laboratories. These are essentially vehicles kited out to enable their users to test for various biological entities in the field – pathogens, infectious diseases, dangerous chemicals, that sort of thing.The area of the business that produces these labs is a subsidiary of PositiveID called E-N-G Mobile Systems (ENG), and the mobile labs division has been the largest, and fastest gowing segment of ENG for the last decade.So, the announcement.The company didn’t put out too much detail, but what we did get relates to the revenues for the third quarter of 2016, as collected by ENG. According to the update, revenues for the third quarter came in at 240% above the quarterly average for the first two quarters of the year, which combined (i.e. revenues for the first half of 2016) came in at $3.3 million. From this, we can extrapolate that revenues for the third quarter (as attributable to ENG only) came in at just short of $4 million (quarterly average of $1.65 million based on a combined $3 million for the half, counted against a 240% gain).This would serve up record revenues for this element of the business if the numbers we extrapolate come out as confirmed when earnings hit, and that means we should see some further upside when Q3 files.So we mentioned in the introduction that these revenues would be going towards the development of the company's pipeline, and we maintain this position. That they have come in higher than expected should expedite the development process, or if not expedite, it should at least reduce the pressure on shareholder value from a dilution perspective.PositiveID closed on a $7 million financing early October, and this is going to go towards the development of its flagship development tech, Firefly. This is a development stage piece of equipment designed to test for, and return output on, a variety of infectious diseases as part of a closed loop handheld system. The current testing protocol requires extensive laboratorial interaction, and if PositiveID can get this tool through to a marketing authorization, it could significantly add to the company's top line longer term.As we noted last time, we're looking to Firefly as being the major source of upside catalysts across the next twelve months (earnings surprises like this one aside, of course), with a registration application submitted to the FDA at some point early next year being a potential upside driver assuming the data supporting it is solid.We're watching earnings closely to judge the dilution required to take firefly to market and beyond. Subscribe below and we'll give you our interpretation free when the numbers hit!Disclosure: We have no position in PSID and have not been compensated for this article.