FY08 Security Division Unit Sales Expected To Double

WAKEFIELD, Mass.–Implant Sciences Corporation (AMEX: IMX – News), a high technology supplier of sophisticated systems and sensors for the homeland security market and related industries, today provided an update on its “Corporate Reinvention Plan” to position the Company as a leader in the security, safety and defense (“SS&D”) industry.

Phillip C. Thomas, President and CEO of Implant Sciences, stated, “We have achieved considerable, measurable progress over the past year to transform the Company from one serving disparate industries to one focused on the security industry. We noted at the beginning of FY2008 that our key objectives for the year would include: strengthening our management team; streamlining operations; expanding our product line; and, enhancing distribution efforts. We have made noteworthy progress in all areas. While we recognize there is still considerable work to be done, we believe our ‘Corporate Reinvention’ is substantially underway and beginning to show tangible results.”

Key highlights from FY2008 included:

Strengthened Management Team

In September 2007, Phillip C. Thomas was appointed Implant Sciences’ President and Chief Executive Officer; in December 2007, he was elected to the Board of Directors as Chairman.

In November 2007, Richard Meyerhoff, the former Vice President of Global Sales at L-3 Communications, joined Implant Sciences as Vice President, Sales and Service.

In December 2007, Mr. Joseph Levangie, the CEO of the business advisory firm JEL & Associates, was elected to the Board of Directors. At the same time, Dr. Anthony Armini and Dr. Stephen Bunker retired from the Board of Directors.

In line with the Company’s initiative to move from an R&D orientation to a market and customer orientation, the Company instituted a new marketing function in January 2008 with the arrival of Jeff Tehan as its Director of Product Marketing. His recent industry experience at L-3 Communications has been integral in helping to both define and refine our product line direction and competitive positioning.

In early fiscal 2009, Glenn Bolduc joined Implant Sciences as Chief Financial Officer, bringing broader experience and knowledge to an important area which is expected to become more critical as the

Company continues to grow.

“As we orchestrate a wholesale corporate reinvention from a company addressing diverse markets to a high tech company focused on the urgent needs of the homeland security and related markets, we felt it was important to bring more relevant security experience on board,” said Mr. Thomas. “We now have a very talented, industry-savvy management team. We believe our recent sales successes exemplify this and our year-over-year sales growth demonstrates greater market credibility. While sales volumes are expected to fluctuate, our growth should continue as we roll out innovative product solutions to address the security needs of our growing customer base.”

Streamlined Operations

“In late FY2007, we announced our intention to embark upon a plan to exit from our medical and semiconductor businesses. Since then, we successfully concluded the sale of two segments of our medical business. A third sale is scheduled to be concluded in the first quarter of FY2009 and we have an informal agreement to sell the remaining medical assets in the second quarter of FY2009. At the same time, we have entered into a formal process to sell our semiconductor business. We previously announced our goal to be completely divested of our medical and semiconductor businesses by the end of calendar 2008 and at this point, we believe we are on track to meet that goal,” said Mr. Thomas.

In late FY2007, the Company completed the first phase of its plan for exiting the radioactive prostate seeds business by selling a portion of its assets to a medical device manufacturer for $350,000.

In February 2008, the Company announced the retention of the Noblemen Group to assist in the sale of Core Systems, its semiconductor operation located in Sunnyvale, CA.

In June 2008, the Company sold certain assets, previously used in the production of radioactive prostate seeds, for $750,000.

In July 2008, the Company signed an agreement to sell additional assets associated with its discontinued brachytherapy product line for $400,000.

Fiscal 2008 Growth and Expanded Security Product Line/Distribution

In fiscal 2008, our management team focused on enhancing the performance and reliability of the Quantum Sniffer™ QS-H150 portable explosives detection system. This effort has resulted in increased competitiveness, broadened sales opportunities, and expanded distribution channels. While the Company has not yet completed its financial audit of fiscal 2008, it expects to report the following financial information regarding FY08 operations in its annual earnings release and conference call.

Fiscal 2008 Growth

In fiscal 2008, unit sales of the Company’s Quantum Sniffer security systems more than doubled fiscal 2007 unit sales.

In fiscal 2008, revenue from the Company’s Quantum Sniffer security systems, excluding revenue generated in the performance of government contracts, more than doubled fiscal 2007 revenue.

The Company began fiscal 2009 with a backlog of unshipped security system orders nearly equaling the total number of units shipped in FY 2008.

Expanded Distribution

In September 2007, Implant Sciences’ QS-H150 handheld and QS-BTS benchtop portable explosives detection systems were formally certified by the Russian government.

In January 2008, the Company established a distributor support office in Beijing and hired John Zhang, Ph.D. as Director, Business Development, Asia-Pacific Region to grow the installed base of Implant Sciences’ handheld and benchtop explosives detection systems throughout the region.

By resolving a legal dispute with OSI Systems in January 2008, Implant Sciences not only eliminated the distraction and drain on financial and human resources, it also added a valued partner. The Company entered into a new non-exclusive distribution agreement with Rapiscan, a wholly owned subsidiary of OSI, to sell our Quantum Sniffer products worldwide.

In April 2008, the QS-H150 was certified by an independent testing lab indicating full compliance necessary for European Union CE Marking. The CE Marking allows the Company to market, sell and export the QS-H150 to all member countries of the European Union and European Free Trade Association as well as to countries in other parts of the world that require the CE Marking.

Expanded Product Line

During fiscal 2008, Implant Sciences invested considerable resources improving and enhancing the Company’s flagship product, the QS-H150. These investments resulted in a more capable, robust and reliable product.

In January 2008, Implant Sciences was awarded a six-month $100,000 Phase I Small Business Innovation Research contract by the Department of Homeland Security, Science & Technology Directorate in Washington, DC for the development of a handheld trace explosives sampler.

In April 2008, the Company acquired Ion Metrics, a San Diego-based developer and manufacturer of low-cost, mass spectrometer and related sensor systems for the detection and analysis of chemical compounds. This acquisition was intended to accelerate the improvement and expansion of the Company’s product line to more effectively address the needs of the SS&D sector. The Company now believes that Ion Metrics could also help facilitate our entry into other SS&D market segments such as narcotics, forensics, environmental, chemical warfare and chemical detection in the future.

In May 2008, Implant Sciences introduced its new Quantum Sniffer QS-B200 benchtop explosives trace detection system (the “QS-B200”) at an international exhibition in China. The QS-B200 – the Company’s most advanced benchtop explosives detection system yet – uses dual, non-radioactive ion mobility spectrometers to detect and identify minute quantities of most common explosives. The QS-B200 incorporates all of the performance advantages of the Company’s successful QS-H150 and adds a positive ion mode for the detection of a wider range of substances. Revenues from the QS-B200 are expected to begin during FY2009.

In June 2008, the Company was awarded $500,000 in follow-on funding from the U.S. Department of Homeland Security, Science & Technology Directorate in Washington, DC for a Counter-Improvised Explosive Device Program. The focus of this contract is to develop integrated, miniaturized sub-systems for use in the detection and identification of trace explosives.

Fiscal 2009

“We are pleased to report we have more than doubled the number of units of our Quantum Sniffer products sold year-over-year,” said Mr. Thomas. At the same time, we see substantial new market opportunities in front of us. “Our technical capabilities should allow us to participate in six key detection areas of the future: handheld, benchtop, package scanners, air cargo inspection, people in motion, and vehicle checkpoints. This past fiscal year, we have significantly expanded our servable geographies, introduced a key new product, and made considerable progress on our product roadmap. As a result, we believe the Company is well positioned for continued growth.”

“There are still challenges ahead of us and we have much to do in order for the company to be successful,” said Mr. Thomas. “Specifically, in FY2009 we will continue efforts to expand our security product line, improve government reporting performance, strengthen our cash position, restructure/reduce debt, complete the divestiture of our medical and semiconductor businesses, and continue to leverage relationships and distribution channels to expand customer reach, all with the goal of continuing our year-over-year growth trend. We have a clear path ahead and, in our judgment, the Company is doing the right things to achieve sustainable profitability and long-term success. Of course there are many factors that could impact future results, but with the team we have, and the various technological assets we have in place and under development, we are confident in our ability to grow the company and handle future challenges.”

Fiscal 2008 Earnings Announcement

Implant Sciences expects to announce fiscal 2008 earnings results, and to hold a conference call to discuss those results, in September 2008. The Company will issue a press release stating the date and time of the call, along with relevant dial-in information.

About Implant Sciences

Implant Sciences develops, manufactures and sells sophisticated sensors and systems for the Security, Safety and Defense (SS&D) industries. The Company has developed proprietary technologies used in its commercial portable and bench-top explosive trace detection systems which ship to a growing number of locations domestically and internationally. 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 contains 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 fact that our auditors’ opinion regarding our financial statements for the fiscal year ended June 30, 2007 expresses doubt about our ability to continue as a “going concern”; we do not operate at a profit and do not expect to be profitable for some time; if the American Stock Exchange delists our common stock, we may not be able to raise capital and shareholder liquidity may become extremely limited; an adverse determination in the litigation related to our sale of the assets of our Accurel subsidiary could have a material adverse effect on our financial condition and results of operations; our business is subject to intense competition and rapid technological change; our explosives detection products and technologies (including any new products we may develop) may not be accepted by the market; we may not be able to effectively protect our intellectual property; we may not be able to manage our future growth or attract or retain key personnel; 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; any failures of our suppliers or contract manufacturers could materially damage our business; if we are required to redeem our Series D Preferred Stock for cash, our cash flow and results of operations could be materially and adversely affected; if third party credit is unavailable, our working capital could be restricted and we may not be able to borrow capital; shares of our common stock eligible for future sale may adversely affect the market for our stock; we may not be able to successfully sell and withdraw from our medical and semiconductor businesses by the end of the calendar year; we may not be able to achieve continued growth and acceptance of our Quantum Sniffer product line; we may not be able to successfully integrate the Ion Metrics technology into new product offerings, we may not ship all security systems in backlog due to order cancellation; and other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including its most recent Forms 10-K, 10-Q and 8-K.

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, 2007 and Quarterly Reports for the periods ended September 30, 2007, December 31, 2007 and March 31, 2008. The Company assumes no obligation to update the information contained in this press release.