Implant Sciences (IMX)

Item 1.01. Entry into a Material Definitive Agreement

On September 30, 2005, Implant Sciences Corporation (the “Company”) closed a $5.0M preferred stock instrument with Laurus Master Fund, Ltd, (“Laurus”) a Cayman Islands corporation, and issued 500,000 shares of Series D Cumulative Convertible Preferred Stock (the “Series D”). The terms of the agreement state that repayment can be made in cash or converted into the Company’s common stock at a fixed conversion price equal to $6.80 per common share, up to a maximum of approximately 735,000 shares, over a thirty-six (36) month period. The preferred stock has a dividend equal to the prime rate plus one percent (1%) and provides for monthly redemptions to be paid in cash or common shares at the option of the Company, subject to certain restrictions, commencing on January 1, 2006. In addition, Laurus was granted a warrant to purchase 50,000 shares of the Company’s common stock exercisable at a price of $10.20 per share. The Company utilized the proceeds to repay the $3 million term note signed on July 7, 2005 plus accrued interest, and for working capital. As part of the financing, the Company paid Laurus Capital Management, LLC, the manager of Laurus, a closing payment equal to $90,000, plus due diligence and legal expenses of $27,000.

On May 31, 2006, the Company amended the Series D Securities Purchase Agreement and the Certificate of Vote of Directors Establishing a Class or Series of Stock. The terms of the amendment permit the Company to defer approximately $455,000 of cash payments, representing the January 2006, February 2006 and March 2006 amortization payments, and to defer the October 2006 amortization payment, should such payment be required in cash, to the mandatory redemption date of September 30, 2008. In consideration, the Company has agreed to the conversion of the April 2006, May 2006, June 2006, July 2006, August 2006 and September 2006 amortization payments into 261,233 shares of Common Stock of the Company at a conversion price of $3.48 per share, representing a reduction in principal of approximately $909,000, and to reduce the Fixed Conversion Price from $6.80 per share to $4.15 per share. In addition, Laurus was granted a warrant to purchase 150,000 shares of the Company’s common stock at an exercise price of $4.26 per share.

For a complete description of the terms of this agreement, please refer to the exhibits to this Current Report on Form 8-K:

Item 1.01.  Entry into a Material Definitive Agreement

On September 30, 2005, Implant Sciences Corporation (the “Company”) closed the sale of a $5.0M preferred stock instrument with Laurus Master Fund, Ltd, a Cayman Islands corporation (“Laurus”), and issued 500,000 shares of Series D Cumulative Convertible Preferred Stock.  The terms of the agreement state that repayment can be made in cash or converted into the Company’s common stock at a fixed conversion price equal to $6.80 per common share, up to a maximum of approximately 735,000 shares, over a thirty-six (36) month period.  The preferred stock has a dividend equal to the prime rate plus one percent (1%) and provides for monthly redemptions to be paid in cash or common shares at the option of the Company, subject to certain restrictions, commencing on January 1, 2006.  In addition, Laurus was granted a warrant to purchase 50,000 shares of the Company’s common stock exercisable at a price of $10.20 per share.  The Company utilized the proceeds to repay the $3 million term note payable to Laurus, dated July 7, 2005 plus accrued interest, and for working capital. As part of the financing, the Company paid Laurus Capital Management, LLC, the manager of Laurus, a closing payment equal to $90,000, plus due diligence and legal expenses of $27,000.

For a complete description of the terms of this agreement, please refer to the exhibits to this Current Report on Form 8-K.

Item 1.01.  Entry into a Material Definitive Agreement

On July 6, 2005, Implant Sciences Corporation (the “Company”) closed a $3.0 million secured term note from Laurus Master Fund, Ltd., a Cayman Islands corporation (“Laurus”).  Net proceeds from the financing are to be used for increasing the capacity of the Quantum Sniffer Production Line, increasing unit inventories and the repayment of certain indebtedness due and owing by the Company to the former shareholders of Accurel Systems International.  As part of the financing, the Company paid Laurus Capital Management, LLC, the manager of Laurus, a closing payment equal to $135,000, plus due diligence and legal expenses of $12,000.

The investment, which takes the form of a secured term note (the “Note”) secured by substantially all of the Company’s assets, has a 4-month term and bears interest at a rate equal to prime plus 1% per annum.  In connection with the financing, on September 30, 2005, the Company will issue Laurus a common stock purchase warrant (the “Warrant”) to purchase up to 250,000 shares of the Company’s common stock at a price equal to $3.75 per share.

The following describes certain of the material terms of the financing transaction with Laurus. The description below is not a complete description of the material terms of the financing transaction and is qualified in its entirety by reference to the agreements entered into in connection with the financing which are included as exhibits to this Current Report on Form 8-K:

Maturity Date:     November 6, 2005. Under certain circumstances, the Maturity Date will be extended to December 6, 2005.

Payment of Interest and Principal:  Principal and accrued interest will be paid on the maturity date, if not sooner.

Warrant Terms:  The Company has agreed to issue to Laurus, on September 30, 2005, a five-year warrant to purchase up to 250,000 shares of common stock of the Company at an exercise price of $3.75 per share. This warrant must be exercised by Laurus for cash.

Security for Note:  The Note is secured by a lien on substantially all of the Company’s assets.

Item 1.01.  Entry into Material Definitive Agreement.

On March 9, 2005, Implant Sciences Corporation (the “Company”) entered into a purchase agreement (the “Agreement”) to acquire all of the issued and outstanding capital stock of Accurel Systems International Corporation, a California corporation (“Accurel”) from its two shareholders, Majid Ghafghaichi and Vahe Sarkissian (the “Stockholders”). This transaction (the “Transaction”) is being structured as purchase and sale of all the issued and outstanding common stock of Accurel in return for an aggregate consideration of $11,300,000, consisting of $6,000,000 in cash, a secured promissory note in the amount of $1,650,000, secured by a lien on all of Accurel’s equipment (the “Note”) and $3,650,000 of the Company’s common stock, equal to 419,099 shares calculated at $8.73 per share  (subject to certain adjustments; such stock the “Stock Consideration”).

Reference is made to each of the Agreement, the Note, the Note and Security Agreement and the Holdback and Escrow Agreement, each of which is being filed as an Exhibit to this Form 8-K. All statements made with respect to the transaction discussed in this Item 1.01 are qualified by such reference.

Item 1.01.  Entry into a Material Definitive Agreement

On March 4, 2005, Implant Sciences Corporation (the “Company”) closed a $7.8 million stock purchase agreement (the “Agreement”) with Truk Opportunity Fund LLC, Truk International Fund, L.P.,  Basso Multi-Strategy Holding Fund Ltd.,  Basso Private Opportunity Holding Fund Ltd.,  RHP Master Fund, Ltd.,  SRG Capital LLC,  JGB Capital L.P.,  Generation Capital Associates,  DCOFI Master LDC,  Capital Ventures International,  TCMP 3 Partners L.P.,  OTAPE Investments LLC,  Double U Master Fund L.P.,  Bluegrass Growth Fund Ltd. and Bluegrass Growth Fund L.P. (the “Purchasers”) in a private offering pursuant to exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”).  Net proceeds from the financing are expected to be used primarily for the acquisition of businesses and assets and working capital purposes.  As part of the financing, the Company paid RAM Capital Resources LLC the sum of $15,000 for legal expenses.  Investment banking firm, PacificWave Partners, Ltd., advised the Company on this transaction, for which it received an advisory fee of $312,120 along with warrants (subject to a six-month lockup) to purchase 33,383 shares of the Company’s common stock at an exercise price of $9.35 per share and an additional 21,390 warrants should the additional investment rights be exercised.

The transaction takes the form of a $7.8 million purchase and sale of the Company’s common stock (the “Common Stock”) at a price of $7.22 per share.  In connection with the purchase and sale of the Common Stock, the Company also issued common stock purchase warrants (the “Warrants”) to purchase up to an aggregate of 270,195 shares of the Company’s Common Stock at a price equal to $9.35 per share, which represents an aggregate of 25% of the Common Stock sold under the Agreement, as well as certain additional investment rights (the “Additional Investment Rights”).  The Company has agreed, pursuant to a registration rights agreement, to register the shares of Common Stock sold under the Agreement, as well as the shares of Common Stock underlying the Warrants and the Additional Investment Rights, with the Securities and Exchange Commission.

The following describes certain of the material terms of the financing transaction with the Purchasers. The description below is not a complete description of the material terms of the financing transaction and is qualified in its entirety by reference to the agreements entered into in connection with the financing which are included as exhibits to this Current Report on Form 8-K:

Warrant Terms. The Warrants grant the Purchasers under the Agreement the right to purchase up to an aggregate of 270,195 shares of Common Stock of the Company at an exercise price of $9.35 per share. The Warrants are exercisable beginning on or after September 4, 2005 and will remain exercisable until September 4, 2010.  The Warrants may be exercised, in whole or in part, by payment of cash or, in certain circumstances, via a cashless exercise provision.

Restrictions on Exercise of Warrant.  Notwithstanding anything to the contrary set forth above, the holder of a Warrant is not entitled to receive shares upon exercise of the Warrant if such receipt would cause such holder to be deemed to beneficially own in excess of 4.99% of the outstanding shares of the Company’s Common Stock on the date of issuance of such shares.

Registration Rights. Pursuant to the terms of a Registration Rights Agreement between the Purchasers and the Company, the Company is obligated to file a registration statement on Form S-3 (or if Form S-3 is not available another appropriate form) registering the resale of shares of the Company’s Common Stock and the Common Stock issuable upon exercise of the Warrant and the Additional Investment Rights. The Company is required to file a registration statement within 40 days of March 4, 2005 and have the registration statement declared effective within 90 days of such date (120 days in the event of review by the Securities and Exchange Commission). If the registration statement is not timely filed, or declared effective within the timeframe described, or if the registration is suspended as further set forth in the registration rights agreement, the Company will be obligated to pay as partial liquidated damages 2.0% of the then-outstanding principal amount of the aggregate purchase price paid by a Purchaser under the Agreement .

Additional Investment Right. The Company has granted the Purchasers the right, exercisable beginning on September 4, 2005 (the “Initial Exercise Date”) and ending on or prior to the later of (a) the 6 month anniversary of the date the registration statement required to be filed by the Company pursuant to the registration rights agreement becomes effective or (b) the 6 month anniversary of the Initial Exercise Date, but in no event after March 4, 2010, to purchase from the

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