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Implant Sciences Reports Q2 Fiscal 2009 Results

Implant Sciences Corporation (Implant Sciences), a US based medical device company, has reported total revenues of $1.5 million for the second quarter of fiscal 2009, compared with the total revenues of $0.4 million in the year-ago quarter. It also reported a net loss of $2.1 million, or $0.15 per share, second quarter of fiscal 2009, compared with the net loss of $4.8 million, or $0.41 per share, in the year-ago quarter.

Highlights of the fiscal second quarter and six-month period ended December 31, 2008 are as follows:

Revenues for the second quarter increased 312%, to $1.5 million from $0.4 million Gross margin for the second quarter increased to 42%, compared with a negative gross margin in the comparable prior period Revenues for the six-month period increased 335%, to $7.5 million from $1.7 million Gross margin for the six-month period increased to 46%, compared with 28% in the comparable prior period. Total security revenues for the three months ended December 31, 2008 were $1,519,000 compared with $369,000 for the comparable prior year period, an increase of $1,150,000 or 312%. Total security revenues for the six months ended December 31, 2008 were $7,467,000 compared with $1,716,000 for the comparable prior year period, an increase of $5,751,000 or 335%. The increase in security revenues for the three and six months ended December 31, 2008 is a result of increased sales of our explosives detection products. For the six months ended December 31, 2008, the increase in sales of explosive detection products was positively affected by a significant shipment of our handheld explosives detection equipment to a customer in China during the first quarter of fiscal 2009. The company also recorded increased revenues from performance on government contracts.

Gross margin for the three months ended December 31, 2008 improved to $638,000, or 42% of security revenue, against negative gross margin of $39,000, or (11%) of security revenue, for the comparable prior year period. Gross margin for the six months ended December 31, 2008 improved to $3,414,000, or 46% of security revenue, as compared with $487,000, or 28% of security revenue, for the comparable prior year period. The improvement in gross margin for the three and six months ended December 31, 2008 is a result of increased sales volume of our handheld explosives detection equipment.

Loss from continuing operations for the three months ended December 31, 2008 was $2,090,000, or $0.15 per basic and diluted share, against a loss of $1,870,000, or $0.16 per basic and diluted share, for the comparable prior year period. The increase in loss from continuing operations for the three months ended December 31, 2008 is primarily a result of the increase in interest expense and realization of unrealized loss of our share of CardioTech’s stock owned by CorNova; offset by increased sales of our handheld explosives detection product and improved gross margins resulting from these sales. Loss from continuing operations for the six months ended December 31, 2008 was $2,724,000, or $0.20 per basic and diluted share, compared with a loss of $3,435,000, or $0.29 per basic and diluted share, for the comparable prior year period. The decrease in loss from continuing operations for the six months ended December 31, 2008 is due primarily to increased sales of our handheld explosives detection product and improved gross margins resulting from these sales; offset by the increase in interest expense and realization of unrealized loss of our share of CardioTech’s stock owned by CorNova.

Net loss for the six months ended December 31, 2008 was $1,705,000, or $0.12 per share, against $7,017,000, or $0.59 per share, for the comparable prior year period. Net loss for the three and six months ended December 31, 2007 included loss from discontinued operations of $2,945,000 and $3,582,000, respectively.

As of December 31, 2008, the company’s cash position improved to $724,000 as compared to $412,000 as of June 30, 2008. The company has approximately $200,000 cash as of today and will need to secure additional cash resources in the next 30 days.

Glenn D. Bolduc, president and chief executive officer of Implant Sciences, commented, “Our second quarter was a quarter of dynamic change where several important objectives were met, and which we believe set the stage for our future growth and success. We have completed the sale of substantially all business units and assets which are not strategic to our security business. As a result, the company is now squarely focused on building its security business and offers investors a “pure-play” in security technology (or explosive detection). Due to our recent financing, we have eliminated our obligations to both Laurus and Bridge Bank. Our relocation into a modern facility should provide much needed operational efficiencies and cost-savings. The restructuring efforts executed in the second quarter left us with a highly qualified and effective team to execute on our ongoing growth strategy.

We believe that the growth in sales of our detection technology solutions, combined with our market research supports growing global demand for explosives trace detection equipment and technology. Our own recent business development activities indicate significant opportunities for sales of our existing handheld explosives detection equipment and soon to be announced air cargo screening products throughout the world. We have targeted Japan, Pakistan and India, in particular, which appear to have significant demand for handheld explosives detection equipment, estimated by us to be as much as $50 million over the next 12 to 18 months.”

Bolduc concluded, “While gratified at the successful accomplishments in our second quarter, we are mindful that there are significant challenges ahead. The company will require capital to execute its business plan and is actively engaged in the pursuit of additional funding. The ongoing litigation with Evans Analytical Group, LLC is scheduled for trial in April 2009 and we hope this matter will soon be brought to its conclusion. However, in spite of the obstacles, we believe we have now put in place the right team to overcome the hurdles and take advantage of the growing worldwide opportunities to demonstrate the benefits of Implant Sciences’ security solutions.”