Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

□

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition

On November 14, 2014, the Company issued a press release announcing its financial results for the quarter ended September 30, 2014.

Item 7.01

Regulation FD Disclosure

On November 14, 2014, the Company issued the press release described in Item 2.02 above. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.  

Item 8.01     Other Events

On November 13, 2014, the Company issued a press release announcing that the U.S. Transportation Security Administration has placed an initial order for 1,170 QS-B220 Desktop Explosive Trace Detectors and ancillary supplies.

On November 14, 2014, the Company held a telephonic conference call to discuss the Company’s financial results for the quarter ended September 30, 2014. A copy of the Company’s script read during the conference call is attached hereto at Exhibit 99.3 and is incorporated herein by this reference.

The press releases and the Company’s conference call script furnished under Item 7.01 and 8.01, including exhibits 99.1, 99.2 and 99.3, of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01

Financial Statements and Exhibits

(d)

Exhibits

Exhibit No.

Description

99.1

Press Release of Implant Sciences Corporation, dated November 13, 2014.

99.2

Press Release of Implant Sciences Corporation, dated November 14, 2014.

99.3

Implant Sciences Corporation conference call script held on November 14, 2014 at 11:00 AM ET.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

IMPLANT SCIENCES CORPORATION

By:  /s/  Roger P. Deschenes

Roger P. Deschenes

Vice President, Finance and Chief Financial Officer

Date:  November 18, 2014

3

EXHIBIT INDEX

Exhibit No.

Description

99.1

Press Release of Implant Sciences Corporation, dated November 13, 2014.

99.2

Press Release of Implant Sciences Corporation, dated November 14, 2014.

99.3

Transcript of Implant Sciences Corporation conference call held on November 14, 2014 at 11:00 AM ET.

“Receiving this order from the TSA is a goal that Implant Sciences has been driving towards for a number of years. Achieving it is a major milestone for the Company and a tribute to the ability and dedication of our employees. We are proud to help protect the traveling public in the United States and look forward to a long working relationship with the TSA,” stated Implant Sciences’ CEO, Glenn D. Bolduc.

About the QS-B220 Desktop Explosives Trace Detector

The QS-B220 uses Ion Mobility Spectrometry (IMS) to rapidly detect and identify trace amounts of a wide variety of military, commercial, and homemade explosives. Featuring a radioactive material-free design, push-button maintenance and diagnostics, and a patented inCal™ internal automatic calibration system, the QS-B220 brings new levels of performance and convenience to desktop trace detection users with unsurpassed ease of use.

About Implant Sciences

Implant Sciences is a leader in developing and manufacturing advanced detection capabilities to counter and eliminate the ever-evolving threats from explosives and drugs. The Company’s team of dedicated trace detection experts has developed proprietary technologies used in its commercial products, thousands of which have been sold across more than 50 countries worldwide. The Company’s ETDs have received approvals and certifications from several international regulatory agencies including the TSA in the U.S., STAC in France, the German Ministry of the Interior, and the Ministry of Public Safety in China. It also received a GSN 2013 Homeland Security Award for "Best Explosives Detection Solution".  All Implant Sciences products are recognized as Qualified Anti-Terrorism Technologies by the Department of Homeland Security. For further details on the Company and its products, please visit the Company's website at www.implantsciences.com.

Safe Harbor Statement

This press release may contain certain “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from the forward-looking statements. Such risks and uncertainties include, but are not limited to, the risks that there is no guaranty that U.S. or foreign government and law enforcement agencies or commercial consumers will purchase any of our explosives detection products or that any new products we may develop will be accepted by the TSA or by such other governments, agencies or consumers; economic, political and other risks associated with international sales and operations could adversely affect our sales; our business is subject to intense competition and rapid technological change, and our success will depend on our ability to develop and introduce new products; and other risks and uncertainties described in our filings with the Securities and Exchange Commission, including our most recent Forms 10-K, 10-Q and 8-K. Such statements are based on management’s current expectations and assumptions which could differ materially from the forward-looking statements.

Contact:

Implant Sciences Corporation

Company Contact:

Glenn Bolduc, CEO

978-752-1700

gbolduc@implantsciences.com

or

Investor Contact:

Laurel Moody

646-810-0608

lmoody@corporateprofile.com

Exhibit 99.2

IMPLANT SCIENCES REPORTS FIRST QUARTER FISCAL 2015

FINANCIAL RESULTS

Wilmington, MA… November 14, 2014…Implant Sciences Corporation (OTCQB:IMSC), a high technology supplier of systems and sensors for the homeland security market and related industries, today announced financial results for the three months ended September 30, 2014.  

Revenues for the three months ended September 30, 2014 increased 60%, to $1.8 million, from $1.2 million for the comparable prior year period.  Our net loss for the three months ended September 30, 2014 was $5.4 million as compared with a net loss of $6.0 million for the comparable prior year period, a decrease of $0.6 million. The decrease in the net loss is primarily due to higher sales and gross margin, decreased stock-based compensation and a decrease in operating expenses in the three months ended September 30, 2014, partially offset by an increase in interest expense.

Earnings before interest, taxes, depreciation, stock-based compensation, warrants issued to non-employees and common stock issued to consultants (“Adjusted EBITDA”), which is reconciled to net loss in this press release, were a loss of $2,328,000 in the three months ended September 30, 2014, compared to a loss of $2,707,000 in the comparable prior year period.

Glenn D. Bolduc, President and CEO of Implant Sciences, commented, “During our recently concluded quarter we continued to progress through several regulatory approval processes. Most notably, we achieved Transportation Security Administration (“TSA”) qualification for both air cargo and checkpoint screening, we passed the European Civil Aviation Conference (“ECAC”) evaluation process and are now qualified in Europe for airport checkpoint screening for passengers and checked baggage, and our proposal to develop next generation explosives trade detection screening systems, submitted under the U.S. Department of Homeland Security’s (“DHS”) Science and Technology Directorates Broad Agency Announcement, was selected for funding. All of these are important strategic achievements that we believe position the Company for consistent and sustainable growth, as evidenced by the execution of an Indefinite Delivery / Indefinite Quantity (“IDIQ”) contract with the TSA for up to $162 million and the receipt of an initial delivery order under this IDIQ from the TSA for 1,170 QS-B220’s and ancillary services and supplies. We have taken important steps to broaden the markets we serve, increase our revenue opportunities, and improve our financial stability.” The following summarizes several strategic accomplishments:

§

On August 28, 2014, the QS-B220 successfully completed and passed testing requirements for the TSA’s qualification test for aviation checkpoint and checked baggage and has been placed on the TSA’s Qualified Product List, or QPL. The QS-B220 is the first Explosives Trace Detection system with a non-radioactive source to be approved by the TSA for use in U.S. airports for passenger and baggage screening.

§

On October 6, 2014, the QS-B220 successfully passed ECAC’s Common Evaluation Process of Security Equipment for airport checkpoint screening of passengers and baggage. The Common Evaluation Process was established to provide standards for security equipment performance across ECAC's 44 member nations.

§

On October 16, 2014, the DHS selected our proposal to develop next generation explosives trace detection screening systems for funding. The project, pending successful negotiations, is potentially worth up to approximately $2 million. Subject to successful conclusion of negotiations with the DHS, we expect the project to commence in the third quarter of fiscal 2015.

§

On November 10, 2014, we entered into an IDIQ contract with the United States Transportation Security Administration for our QS-B220 desktop explosives trace detectors. The IDIQ, a necessary prerequisite for competing for TSA’s annual trace detection procurements and establishes contract terms under which the TSA could purchase up to $162 million of equipment and services.

§

On November 13, 2014, we announced the receipt of an initial delivery order from the TSA for 1,170 QS-B220’s and ancillary services and supplies.

Mr. Bolduc concluded, “In addition, we announced earlier in November that we have entered into an Indefinite Delivery / Indefinite Quantity (IDIQ) contract with the TSA under which the TSA may purchase QS-B220 equipment and services valued at up to $162 million and receipt of an initial delivery order for 1,170 QS-B220’sWe believe that the qualifications that have been achieved and securing a funding to develop next-general explosives trace detection systems establish our credibility as the next generation explosives technology in the competitive global trace explosives industry. We remain confident about our future prospects.”

Details for the three months ended September 30, 2014 follow below.

Three months Ended September 30, 2014 vs. September 30, 2013

Ø

Revenues for the three months ended September 30, 2014 were $1,869,000 as compared with $1,165,000 for the comparable prior year period, an increase of $704,000, or 60.4%.  The increase in revenue is due primarily to: a 345.5% increase in the number of QS-H150 handheld sold in the three months ended September 30, 2014, due to increased shipments to China and Africa, for use in force and infrastructure protection, which resulted in a 294.4% increase in QS-H150 revenues and, to a lesser extent increased sales of parts and supplies. These increases are offset partially by a 9.8% decrease in the average unit sale prices on sales of QS-B220 units and an 11.5% decrease in average unit sale prices on sales of our QS-H150 handheld units.

Ø

Gross margin for the three months ended September 30, 2014 was $618,000 or 33.1% of revenues as compared with $213,000 or 18.3% of revenues for the comparable prior year period.  The increase in gross margin as a percent of revenues is primarily the result of increased manufacturing overhead absorption due to increased unit volume and a $45,000 decrease in stock-based compensation, partially offset by a 9.8% decrease in the average unit sale prices on sales of QS-B220 units and an 11.5% decrease in average unit sale prices on sales of our QS-H150 handheld units.

Ø

Research and development expense for the three months ended September 30, 2014 was $1,284,000 as compared with $1,231,000 for the comparable prior year period, an increase of $53,000 or 4.3%.  The increase in research and development expense is due primarily to a $22,000 increase in payroll and related benefit costs, a  $58,000 increase in government qualification testing fees, and a $23,000 increase in prototype expense, offset partially by a $37,000 decrease in stock-based compensation,  

Ø

Selling, general and administrative expenses for the three months ended September 30, 2014 were $2,675,000 as compared with $3,408,000 for the comparable prior year period, a decrease of $733,000, or 21.5%. The decrease in selling, general and administrative expenses is due primarily to a $591,000 decrease in stock-based compensation, a $39,000 decrease in payroll and related benefit costs, a $35,000 decrease in stock-based compensation on non-employee warrants, the $37,000 loss on the disposal of machinery and equipment recorded in the prior year period and a $66,000 decrease in occupancy costs due to the relocation of our corporate offices in July 2013.

Ø

For the three months ended September 30, 2014, other expense was $2,034,000 as compared with other expense of $1,595,000, for the comparable prior year period, an increase of $439,000. The increase is due to increased interest expense on higher borrowings under our credit facilities.

Ø

Our net loss for the three months ended September 30, 2014 was $5,375,000 as compared with a net loss of $6,021,000 for the comparable prior year period, a decrease of $646,000, or 10.7%.  The decrease in the net loss is primarily due to higher sales and gross margin, decreased stock-based compensation and a decrease in operating expenses in the three months ended September 30, 2014, partially offset by an increase in interest expense.

Company Webcast and Conference Call

The Company will host a webcast and conference call on Friday, November 14, 2014 at 11:00 AM Eastern time to review financial results for the quarter ended September 30, 2014. Following the Company’s prepared remarks there will be a Q&A session.  The call can be accessed by dialing: 800-271-5140 within the U.S. or 617-213- 8893 outside the U.S. and entering passcode 58919984.  Participants are asked to call the assigned number approximately 5 minutes before the conference call begins.  A replay of the conference call will be available approximately two hours after the call for one month by dialing: 888-286-8010 within the U.S. or 617-801-6888 outside the U.S. and entering passcode 57254167.  The conference call will also be available live over the Internet at the “Webcasts” page of the Investor Relations section of Implant Sciences’ website at www.implantsciences.com.  A replay of the webcast will be available for one month after the call.

About Implant Sciences

Implant Sciences is the leader in next generation Explosives Trace Detection (“ETD”) technology. In October 2013, the Company became the third ETD manufacturer, and the sole American-owned company, to currently have product qualification from the US Transportation Security Administration. Implant Sciences develops, manufactures and sells sophisticated sensors and systems for Security, Safety, and Defense (“SS&D”) markets. The Company has developed proprietary technologies used in its commercial explosives and narcotics trace detection systems, which ship to a growing number of locations domestically and internationally. Implant Sciences’ QS-H150 portable explosives trace detector has received Qualified Anti-Terrorism Technology Designation and, in addition to receiving TSA qualification for aviation checkpoint and checked baggage and air cargo screening, certification by Service Technique de l’Aviation Civile in France for passenger and air cargo screening, the Company’s QS-B220 has also received Qualified Anti-Terrorism Technology Designation by the U.S. Department of Homeland Security under the Support Anti-terrorism by Fostering Effective Technology Act of 2002 (“the SAFETY Act”). For further details on the Company and its products, please visit the Company's website at www.implantsciences.com.

Safe Harbor Statement

This press release may contain certain “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from the forward-looking statements. Such risks and uncertainties include, but are not limited to, the risks that we will be required to repay all of our indebtedness to our secured lenders by March 31, 2015; if we are unable to satisfy these obligations and to raise additional capital to fund operations, our lenders may seize our assets and our business may fail; we continue to incur substantial operating losses and may never be profitable; our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern; there is no guaranty that U.S. or foreign governments, law enforcement agencies or commercial consumers will purchase any of our explosives detection products or that any new products we may develop will be accepted by the Transportation Security Administration or by such other governments, agencies or consumers; economic, political and other risks associated with international sales and operations could adversely affect our sales; liability claims related to our products or our handling of hazardous materials could damage our reputation and have a material adverse effect on our financial results; our business is subject to intense competition; our markets are subject to rapid technology change and our success will depend on our ability to develop and introduce new products; we may not be able to retain our management and key employees or identify, hire and retain additional personnel as needed; we may not be able to enforce our patent and other intellectual property rights or operate without infringing on the proprietary rights of others: and other risks and uncertainties described in our filings with the Securities and Exchange Commission, including our most recent Forms 10-K, 10-Q and 8-K. Such statements are based on management’s current expectations and assumptions which could differ materially from the forward-looking statements.

For further information, you are encouraged to review Implant Sciences’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, for the period ended June 30, 2014. The Company assumes no obligation to update the information contained in this press release.

For further information contact:

Implant Sciences Corporation

Glenn Bolduc, President and CEO

(978) 752-1700

gbolduc@implantsciences.com

or

Investor Contact:

Laurel Moody

646-810-0608

lmoody@corporateprofile.com

______________________________________

(1) Adjusted EBITDA is defined as net loss plus interest expense, net of interest income, income taxes, depreciation, stock-based compensation, fair value of warrants issued to non-employees and the fair value of common stock issued to consultants.  EBITDA is commonly used in the technology industry, and we present Adjusted EBITDA to enhance your understanding of our financial performance.  We use Adjusted EBITDA as an internal performance measurement and believe that it provides investors and analysts with a measure of operating results unaffected by differences in capital structures and capital investment among otherwise comparable companies and improves comparability of results of operations. Management uses this supplemental measure to evaluate performance over a period of time and to analyze underlying trends in the Company's business and to establish operational goals and forecast that are used in allocating resources.  We expect to compute our non-GAAP financial measure, using the same consistent method from quarter to quarter and year to year.            

While we believe that Adjusted EBITDA is a useful measure for investors, it is not a measurement presented in accordance with United States generally accepted accounting principles, or GAAP.  You should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operations, or any other performance measures calculated in accordance with GAAP.  In addition, Adjusted EBITDA has inherent material limitations as a performance measure.  It does not include interest expense, but because we have borrowed money, interest expense is a necessary element of our costs.  In addition, Adjusted EBITDA does not include depreciation.  Since we have capital assets, depreciation expense is a necessary element of our costs.  Adjusted EBITDA does not include stock-based compensation, which is a necessary element of our costs since we issue stock awards to employees as an important incentive to maximize overall company performance and as a benefit of employment with the company.  Adjusted EBITDA does not include the fair value of warrants issued to non-employees, which is a necessary element of our costs since we have issued warrants to non-employees and as part of our financing strategy. Finally, Adjusted EBITDA does not include the fair value of common stock issued to consultants, which is a necessary element of our costs since we have issued shares of our common stock in lieu of cash payments to consultants we have retained. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

Exhibit 99.3

IMPLANT SCIENCES CORPORATION

FIRST QUARTER FISCAL 2015

EARNINGS CONFERENCE CALL SCRIPT

November 14, 2014

Glenn Bolduc - Implant Sciences Corp. – President and Chief Executive Officer

Thank you. I'd like to welcome everyone to Implant Sciences' First Quarter Fiscal 2015 Earnings Conference Call.  We also welcome those of you joining us on the webcast. On the call with me this afternoon are Bill McGann, Chief Operating Officer, Roger Deschenes, Chief Financial Officer, Darryl Jones, Vice President, Sales and Marketing, and Todd Silvestri, Chief Technology Officer.  

This week, Implant Sciences passed the inflection point that we spoke of during the last two calls. Our trajectory is forever altered, and we believe the Company is now on a path to achieve grand new heights.

Since the end of our previous fiscal year, we made strong progress against the Company’s long term goals with achievements that demonstrate the excellence of our products, the strength of our technology, and the ability of the Company to achieve a solid financial footing. Our B220 was added to TSA’s Qualified Products List, or QPL. We became the first Company to pass the European Civil Aviation Conference , or ECAC, Common Evaluation Process, making the B220 the first, and as of today still only, product to meet the requirements of both TSA and ECAC. Our ideas for new trace detection technologies have been selected by the Department of Homeland Security for research funding.

Then came this week. A week in which we both signed the largest contact in the Company history, an IDIQ contract with the US government to purchase up to $162 million of equipment and services, and we received the first order from TSA against that IDIQ.  These events would be monumental for any company, and certainly are for Implant Sciences. They will provide stability to our revenues and form a solid foundation for future growth. The implications are so large that we have decided to hold a separate press event on Monday, November 17^th, so that we can discuss them in detail. We will be offering a simultaneous webcast of the event, and we invite all of you to join us for that event.

This morning, Roger will give a brief financial report on the Company’s results for the quarter ended September 30, 2014.  We will then provide deeper insight into the non-financial aspects of the Company, its operations, and our plans going forward. Following our prepared remarks, we will open the call up for questions from today’s participants.

I now turn the call over to Roger.

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Roger Deschenes - Implant Sciences Corp. – Chief Financial Officer

Thank you, Glenn.

During this morning‘s presentation, we will make forward-looking statements concerning upcoming events and our expectations regarding the Company's financial performance.  Each time we do, we will try to identify these statements with words such as “expect,” “believe,” “anticipate” or other words that indicate potential events.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those stated in the forward-looking statements.  Please consider the risk factors contained in the press release issued on November 14, 2014 and stated during this conference call, as well as the risk factors and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, which is on file with the Securities and Exchange Commission.

During our presentation we may discuss or disclose non-GAAP measures.  These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with US GAAP. The presentation of non-GAAP information is intended instead to provide additional information to investors to facilitate the comparison of past and present results.

A replay of the conference call will be available for a limited time by dialing 888-286-8010 within the U.S. or 617-801-6888 outside the U.S. and entering the pass code 57254167.  Any forward-looking statements we make today are based on assumptions which we believe to be reasonable as of today, November 14th, 2014.  We undertake no obligation to update these statements as a result of future events.  Finally, this conference call is the property of Implant Sciences Corporation and any recording, reproduction or rebroadcast of this conference call without the expressed written consent of Implant Sciences Corporation is prohibited.

On November 14, 2014, we issued an earnings press release summarizing the Company’s financial performance for the quarter ended September 30, 2014.  Our Quarterly Report on Form 10-Q for the just concluded quarter will be filed with the Securities and Exchange Commission, today, November 14, 2014.  

Review of fiscal results

Revenues for the quarter ended September 30, 2014 were $1,869,000 as compared with $1,165,000 for the comparable prior year period, an increase of $704,000, or 60.4%.  

The increase in revenue is due primarily to: a 345.5% increase in the number of QS-H150 handheld units sold in the quarter ended September 30, 2014, due to increased shipments to China and Africa, for use in force and infrastructure protection, which resulted in a 294.4% increase in QS-H150 revenues and, to a lesser extent, increased sales of parts and supplies. Offsetting these increases, the average unit sale price of our QS-B220 and QS-H150 decreased 9.8% and 11.5%, respectively, in the current quarter, as compared to the prior period.

Gross margin for the quarter ended September 30, 2014 was $618,000 or 33.1% of revenues as compared with $213,000 or 18.3% of revenues for the comparable prior year period.  

2 | Page

The increase in gross margin as a percent of revenues is primarily the result of increased manufacturing overhead absorption due to increased unit volume and a $45,000 decrease in stock-based compensation, partially offset by the previously mentioned decline in average unit sale price.

Research and development expense for the quarter ended September 30, 2014 was $1,284,000 as compared with $1,231,000 for the comparable prior year period, an increase of $53,000 or 4.3%.  The increase in research and development expense is due primarily to a $58,000 increase in government qualification testing fees.  

Selling, general and administrative expenses for the quarter ended September 30, 2014 were $2,675,000 as compared with $3,408,000 for the comparable prior year period, a decrease of $733,000, or 21.5%. The decrease in selling, general and administrative expenses is due primarily to a $591,000 decrease in stock-based compensation, and changes in spending disclosed in the earnings release.

For the quarter ended September 30, 2014, other expense was $2,034,000 as compared with other expense of $1,595,000, for the comparable prior year period, an increase of $439,000. The increase is due to increased interest expense on higher borrowings under our credit facilities.

Our net loss for the quarter ended September 30, 2014 was $5,375,000 as compared with a net loss of $6,021,000 for the comparable prior year period, a decrease of $646,000, or 10.7%.  The decrease in the net loss is primarily due to higher sales and gross margin, decreased stock-based compensation and a decrease in operating expenses in the quarter ended September 30, 2014, partially offset by an increase in interest expense.

Aggregate stock based compensation recorded on employee stock options and non-employee warrants amounted to $904,000 for the quarter ended September 30, 2014, compared to $1,612,000 in the prior year period.

That concludes the financial report and I will now turn the call over to Glenn.

3 | Page

Glenn Bolduc - Implant Sciences Corp. – President and Chief Executive Officer

Thank you, Roger.

As excited as we are about this week’s news, and it would be an understatement to say that we are pretty excited, it is only part of the story here at Implant Sciences. The complete story spans greater distances than just North America and it involves many more units than just the 1,170 unit order we booked with TSA. The full story is the birth of a global leader in the trace detection industry, and over the next few minutes we will share this larger view with you.

Earlier this year, three transformational events occurred that we expect will have profound effects for the ETD industry in general and will shape the future for Implant Sciences. Starting in Europe, ECAC finalized its performance standards for trace detection equipment. Following this, the European Union enacted enhanced passenger screening regulations that will significantly expand the use of ETD equipment in European airports. Finally, in the United States, the Transportation Security Administration announced that for the first time in years it would be acquiring new ETD systems.

We expect that these events will substantially accelerate what has been a slow sales environment for global aviation security. A recent market research report from Visiongain shows that over the last few years the ETD market has been flat to declining. In such an environment, every sale we have made has been a takeaway from a competitor, and our sales team is to be commended on the job they have done.

But Visiongain sees the change coming as well. They predict robust sales of ETD equipment over the next few years with strong growth year to year, driven primarily by aviation security sales. We believe our ability to win what we estimate to be one-third of the new air cargo business last year offers a preview of what is coming as the industry enters a period of growing sales.

This represents exactly the opportunity we have been preparing for over the last few years, and let there be no doubt in your minds: we are ready.

In August, our B220 was added to the QPL, making it eligible for deployment at U.S. airports. In October, we became the first company to pass the new ECAC test that establishes the baseline for trace detection performance in European aviation security. Our B220 is the only product that has passed both passenger and cargo testing at ECAC and it is also the only product to meet the requirements of both ECAC and TSA.

Today, there is only one ETD product that governments or corporations can standardize on and meet the requirements for aviation security in both the US and Europe. That product is Implant Sciences’ B220.

Of course, it takes more than certifications to sell security equipment. Customers need to evaluate the system. They want to know that it works in their environment and that a first class service organization stands behind the product. These are all things that we have been working on concurrently with our certification efforts.

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With TSA, the customer evaluation takes place during operational testing. We received our passing grade when the product was added to the QPL, and no further evaluations will be necessary. In many countries, however, security equipment is owned by the airports, and operational evaluations need to be performed by them individually.

If you follow our press releases, you are aware that Implant Sciences has been selling B220 systems into airports and air cargo facilities for the last couple of years. With these sales, we have been sowing the seeds for the crop we expect to harvest as the market grows, and those seeds are bearing fruit. For example, at the AVSEC conference just two weeks ago, we had someone approach our booth and say, “I want that little unit I saw at another airline’s facility.”

This early growth period has also offered us the opportunity to demonstrate our commitment to our customers. Our service team, which manages all training and installation support, is winning accolades. So is our innovative remote diagnostic capability, which allows us to evaluate the state of a system and make adjustments without a site visit. When a repair is required, they usually know in advance just what parts are needed, speeding the repair process. Among our customers, the service team has earned a reputation for being “all over” any issue that comes up, and sites that have experienced our commitment to service are often our biggest fans.  

This will be an important factor to establishing our product globally.  We have recognized that we, as a Company, possess a “culture of service” in our DNA.  Now we will be able to demonstrate this attribute on an expansive, global scale.  We believe it will be a crucial customer factor with decision makers.

Perhaps most importantly in an industry that is, by nature, risk-adverse, Implant Sciences has now also proven that it can win the big deals. Earlier this week we announced our IDIQ contract for up to $162 million with the U.S. Department of Homeland Security. Yesterday we announced the initial 1,170 unit order under this contract. The effect of these announcements reaches far beyond the short term revenue implications. What they imply about the performance of the QS-B220 and the long term stability of the Company makes Implant Sciences the preferred choice for purchasing officers domestically and abroad. For years, our competitors have been saying, “If you want the best ETD, look no further than what TSA buys.” As of yesterday, we have to admit that, in this, they were right.

All this has taken a lot of planning and hard work. In past calls, we have talked about the efforts that have gone into building our engineering team, our manufacturing team, and our sales team. We have forged strong relationships with regulators around the world and proved the performance of our system in one certification test after another. We have achieved one of the most notable marks for quality excellence there is, ISO 9001 and ISO 14001 registrations. For all these reasons and more, we believe that we are now at the right place, the right time, and with the right product to achieve our goals.

That doesn’t mean everything will happen immediately. Some sales may close quickly, but others are likely to take longer. While we estimate that the events we mentioned a few moments ago will lead directly to procurements totaling thousands of units over the next few years, these procurements will still require bid and negotiation cycles. Many of our sales will still be subject to the rhythms and schedules of various governments and their agencies. We will still need to win the business over the other companies—companies that are now actively competing against us.

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That in itself signals just how far we have come. By their actions, the other manufacturers have acknowledged that we have a seat at the table. Anyone remember the “silver bullet test” conversation from the call before last? There is no longer any question that the company our competition is worried about has changed. They are now worried about Implant Sciences.

To remain at the forefront of the industry, Implant Sciences is committed to continuing to innovate in the future. This commitment received strong support in October when our proposal to develop a new generation of explosives screening equipment was selected for funding by the Department of Homeland Security. This $2 million contract will allow the Company to continue to enhance the capabilities of ETD with the goals of increasing security and providing a better passenger experience with the highest levels of service and availability.

Not that long ago, people in the security industry were declaring that trace was dead, but along came Implant Sciences with some new ideas on how to do things. The innovations we have introduced to trace detection have become the new benchmark. Our B220 is truly the new standard in trace detection and a catalyst for change in the industry. Our vision for the future moves trace detection to the front lines of security and, not coincidentally, greatly increases the size of the ETD market.

Not that long ago, people might have been declaring Implant Sciences dead as well. But we came with a plan. We built the team, we put in the hard work, and we executed the plan. As a result, we have the product, we have the certifications, and we have the momentum. We have brought all these pieces together at the moment when market forces are leading customers to significantly increase ETD purchases. This is the intersection of opportunity and preparation, a place we are pretty sure is called success.

As always, we thank our shareholders for their encouragement; we thank Platinum Partners for their financial support; and we thank especially our employees for their dedication and hard work. We couldn’t be successful without all of you.

We will now take your questions.

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