Implant Sciences Corporation Announces Fiscal 2008 First Quarter Results

Implant Sciences Corporation (AMEX: IMX) today announced financial results for its first quarter of fiscal 2008 which ended September 30, 2007. The Company’s financial condition and results of operations are based on continuing operations, which exclude the financial condition and results of operations of Accurel Systems International ("Accurel”), due to the sale of substantially all of the assets of this subsidiary on May 1, 2007. Total revenues for the three months ended September 30, 2007 were $3,218,000 as compared to $3,264,000 for the comparable prior year period, a decrease of $46,000 or 1%. The decrease in total revenues for the quarter ended September 30, 2007 is primarily attributable to the loss of the Company’s primary orthopedics coatings customer during the second quarter of fiscal 2007 combined with the sale of certain assets related to the radioactive prostate seed business during the fourth quarter of fiscal 2007. These decreases were offset by increases in ion implantation services provided by our semiconductor business unit and security product sales. As previously announced, security product sales for the quarter included a 26 unit order to a customer in Japan as well as six benchtop systems sold in support of the Beijing Olympic Games. Net loss applicable to common shareholders for the three months ended September 30, 2007 was $2,509,000, or $0.21 per basic and diluted share, compared to net loss applicable to common shareholders of $1,846,000 or $0.16 per basic and diluted share for the three months ended September 30, 2006. The Company’s Adjusted EBITDA, calculated as the loss from operations net of the effect of depreciation, amortization, and stock based compensation, for the three months ended September 30, 2007 was ($1,577,000) as compared to ($1,296,000) for the comparable prior year period, a decrease in Adjusted EBITDA of $281,000. The Company calculated Adjusted EBITDA as follows:   Three Months Ended September 30,   2007       2006     Loss from operations $ (2,119,000 ) $ (1,855,000 ) Adjustments: Depreciation and amortization 334,000 412,000 Stock-based compensation and warrants   208,000     147,000   Adjusted EBITDA $ (1,577,000 ) $ (1,296,000 ) Adjusted EBITDA is not comparable to earnings determined in accordance with generally accepted accounting principles. Accordingly, Adjusted EBITDA, as determined by the Company, may not be comparable to similarly titled measures reported by other companies. We believe this computation is useful in analyzing operating performance, but should be used only in conjunction with results reported in accordance with generally accepted accounting principles. The decrease in Adjusted EBITDA is primarily a result of i) increased expenditures and investment by the Company to: a) develop new security related technologies, b) improve existing security products, c) improve security sales and marketing infrastructure, d) add technical and engineering resources to develop and commercialize security products and e) add senior management resources to execute the Company’s business plan; ii) increased expenses associated with the consolidation of semiconductor operations at our Sunnyvale, California location; iii) the loss of the Company’s primary orthopedics coatings customer during the second quarter of fiscal 2007 and iv) the sale of certain assets associated with brachytherapy products in June 2007. As of September 30, 2007, our cash position decreased by $2,478,000 to $7,143,000 as compared to $9,621,000 as of June 30, 2007. The decrease in cash is attributable to the continued investment in research and development to further the development and commercialization of security products combined with the execution of the Company’s business plan. The Company reported working capital of $6,790,000 as of September 30, 2007 as compared to $9,089,000 as of June 30, 2007. Additional information on the financial condition and results of operations can be found in the Company’s Quarterly Report on Form 10Q for the quarter ended September 30, 2007 filed with the Securities and Exchange Commission on November 14, 2007. Phillip C. Thomas, Implant Sciences’ President and CEO, stated, "Our overall strategy continues to focus on becoming a leader in the development and sales of security products. Consistent with our recent report on the fourth quarter and fiscal year ended June 30, 2007 financial results, we continue to evaluate those opportunities to streamline operations, including the elimination of disparate and non-strategic business activities and the consolidation of our various business units to provide for more efficient operations. More importantly, in the first quarter of fiscal 2008 we made significant investments in the recruitment of technical and engineering resources necessary for the continued development and commercialization of new security products. We made significant strides in the restructuring of our manufacturing, sales, service and marketing departments to provide for a more effective and team-oriented organization. As part of this effort we are also focusing on the recruitment of new leadership positions within our sales and marketing departments with the goal of driving our sales of handheld and benchtop explosives detection system both domestically and internationally.” Mr. Thomas added, "The first quarter of fiscal 2008, has been an important period in the Company’s development. We believe we have brought together a team of talented individuals that can now execute on the development, engineering, manufacture, sales, marketing and servicing of our security products. Fiscal 2008 promises to be a year where we build upon this important foundation and drive the Company’s security products sales.” Company Conference Call Management will host a conference call on Monday, November 19, 2007 at 4:10 PM Eastern Time to review the Company’s fiscal 2008 first quarter financial results and operations, followed by a Q&A session. The call can be accessed by dialing: 800-706-7749 within the U.S. or 617-614-3474 outside the U.S. and entering the passcode: 27172830. 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 two hours after the call for the following two business days by dialing: 888-286-8010 within the U.S. or 617-801-6888 outside the U.S. and entering passcode: 41811729. About Implant Sciences Implant Sciences develops, manufactures and sells products through its primary business units: (i) trace explosives detection systems for homeland security, defense, and other security related applications and (ii) state of the art services for the medical and semiconductor industries. The Company has developed proprietary technology used in its commercial portable and bench-top systems ("Security Products”), which ship to a growing number of locations both domestically and internationally, and is currently developing the next-generation detection systems. The Company’s Security Products address many important security needs in aviation, cargo, transportation, and other related elements of the government and commercial infrastructure. In addition to its security market focus, the Company provides high technology coatings for a variety of medical products at its main facility in Wakefield, Massachusetts and provides ion implantation services to the semiconductor industry in a state-of-the-art facility in Sunnyvale, California. For further details on the Company and its products, please visit the Company’s new website at www.implantsciences.com. Implant Sciences believes this press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties. Such statements are based on management's current expectations and are subject to facts that could cause results to 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 10K for the period ended June 30, 2007 and Quarterly Reports on Form 10Q for the period ended September 30, 2007. The Company assumes no obligation to update the information contained in this press release. Implant Sciences Corporation Consolidated Balance Sheets (Unaudited)   September 30,   June 30, ASSETS:   2007     2007   Currents assets: Cash and cash equivalents $ 7,143,000 $ 9,621,000 Accounts receivable, net 2,385,000 1,891,000 Accounts receivable, unbilled 90,000 162,000 Inventories 1,123,000 1,166,000 Investments - available for sale securities 165,000 158,000 Prepaid expenses & other current assets   752,000     755,000   Total current assets 11,658,000 13,753,000 Property & equipment, net 2,783,000 2,922,000 Amortizable intangible assets, net 68,000 77,000 Other non-current assets 679,000 786,000 Goodwill   2,062,000     2,062,000   Total assets $ 17,250,000   $ 19,600,000   LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Current maturities of long-term debt & obligations under capital lease $ 706,000 $ 708,000 Payable to Med-Tec 103,000 143,000 Accrued expenses 1,838,000 2,098,000 Accounts payable 1,656,000 1,133,000 Current portion of long-term lease liability 305,000 301,000 Deferred revenue   260,000     281,000   Total current liabilities 4,868,000 4,664,000 Long-term liabilities: Long-term debt & obligations under capital lease, net of current maturities 203,000 633,000 Long-term lease liability 660,000 735,000 Derivatives related to preferred stock features   283,000     133,000   Total liabilities   6,014,000     6,165,000   Commitments and contingencies: Series D Cumulative Redeemable Convertible Preferred Stock   3,057,000     2,989,000   Stockholders' equity Common stock 1,185,000 1,183,000 Additional paid-in capital 57,585,000 57,358,000 Accumulated deficit (50,435,000 ) (47,927,000 ) Deferred compensation (25,000 ) (30,000 ) Accumulated other comprehensive loss (58,000 ) (65,000 ) Treasury stock   (73,000 )   (73,000 ) Total stockholders' equity   8,179,000     10,446,000   Total liabilities and stockholders' equity $ 17,250,000   $ 19,600,000   Implant Sciences Corporation Consolidated Statements of Operations (Unaudited)   Three Months Ended September 30,   2007       2006   Revenues: Security $ 1,347,000 $ 481,000 Semiconductor 1,737,000 1,623,000 Medical   134,000     1,160,000   Total revenues   3,218,000     3,264,000   Cost of revenues: Cost of security revenues 821,000 616,000 Cost of semiconductor revenues 1,775,000 1,599,000 Cost of medical revenues   312,000     850,000   Total cost of revenues   2,908,000     3,065,000   Gross margin   310,000     199,000   Operating expenses: Research & development 690,000 567,000 Selling, general & administrative   1,739,000     1,487,000   Total operating expenses   2,429,000     2,054,000   Loss from operations   (2,119,000 )   (1,855,000 ) Other income (expenses): Interest income 101,000 4,000 Interest expense (34,000 ) (25,000 ) Change in fair value of embedded derivatives related to preferred stock features (150,000 ) 20,000 Equity losses in unconsolidated subsidiaries   -     (120,000 ) Total other income (expense), net   (83,000 )   (121,000 ) Loss from continuing operations (2,202,000 ) (1,976,000 ) Preferred distribution, dividends and accretion   (307,000 )   (236,000 ) Loss from continuing operations applicable to common shareholders (2,509,000 ) (2,212,000 ) Income from discontinued operations   -     366,000   Net loss applicable to common shareholders $ (2,509,000 ) $ (1,846,000 ) Net loss $ (2,202,000 ) $ (1,610,000 ) Loss per share from continuing operations, basic and diluted $ (0.19 ) $ (0.17 ) Loss per share from continuing operations applicable to common shareholders, basic and diluted   $ (0.21 ) $ (0.19 ) Income per share from discontinued operations $ -   $ 0.03   Net loss per share applicable to common shareholders operations, basic and diluted   $ (0.21 ) $ (0.16 ) Net loss per share $ (0.19 ) $ (0.14 ) Weighted average common shares outstanding used in computing basic and diluted loss per share     11,837,768     11,763,574