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    <title>
      2006 Employee Stock Purchase Plan
</title>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C., 20549 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      S-8 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REGISTRATION
      STATEMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNDER
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      SECURITIES ACT OF 1933 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>IMPLANT
      SCIENCES CORPORATION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-------------------------------------------------------------------------------------------------------------------------------</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Name
      of
      small business issuer in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MASSACHUSETTS
                04-2837126</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction of (IRS Employer Identification No.)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporation
                or Organization) </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">107
      AUDUBON ROAD, #5</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WAKEFIELD,
      MA 01880</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">---------------------------------------------------------------------------------------------------------------------</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of principal executive office)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>IMPLANT
      SCIENCES CORPORATION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006
      EMPLOYEE STOCK PURCHASE PLAN</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-------------------------------------------------------</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(FULL
      TITLE OF THE PLAN)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ANTHONY
      J. ARMINI </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
      Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">107
      Audubon Road, #5 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wakefield,
      Massachusetts 01880 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(781)
      246-0700 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Name,
      address, including zip code, and telephone number, including area code, of
      agent
      for service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">--------------</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Copies
      of
      all communications to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DAVID
      SELENGUT, ESQ. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ELLENOFF
      GROSSMAN &amp; SCHOLE LLP </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">370
      Lexington Avenue</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
      York,
      New York 10017</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(212)
      370-1300 </font></div><br>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>
      <div align="center">
        <table border="1" bordercolor="#000000" cellpadding="0" cellspacing="0" width="50%">

            <tr>
              <td align="left" valign="top" width="16%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title
                  of Securities to be Registered</font></div>
              </td>
              <td align="left" valign="top" width="18%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                  to be Registered</font></div>
              </td>
              <td align="left" valign="top" width="14%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Proposed
                  Maximum Offering Price per Share (2)</font></div>
              </td>
              <td align="left" valign="top" width="17%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Proposed
                  Maximum Aggregate Offering Price (1)</font></div>
              </td>
              <td align="left" valign="top" width="15%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                  of Registration Fee</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="16%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                  Stock</font></div>
              </td>
              <td valign="top" width="18%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,000
                  shares (1)</font></div>
              </td>
              <td valign="top" width="14%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.83</font></div>
              </td>
              <td valign="top" width="17%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$915,000</font></div>
              </td>
              <td valign="top" width="15%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$28.09</font></div>
              </td>
            </tr>

        </table>
      </div><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      Pursuant to Rule 416 promulugated under the Securities Act of 1933, as amended,
      this Registration Statement covers such indeterminate additional shares of
      common stock to be offered or issued to prevent dilution as a result of future
      stock splits, stock dividends or other similar transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)
      Estimated solely for the purposes of determining the registration fee.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)
      In
      accordance with Rules 457(c) and (h) under the Securities Act of 1933, the
      calculation with respect to shares issuable under the 2006 Plan as of July
      20,
      2007 is based on the average of the high and low&#160;price of the Company&#8217;s
      common stock on July 20,&#160;2007, a date within five (5) business days prior
      to the date of filing this registration statement, as reported by the American
      Stock Exchange (&#8220;AMEX&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPLANATORY
      NOTE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Registration Statement contains two parts. The first part contains a &#8220;Reoffer
      Prospectus,&#8221; which has been prepared in accordance with the requirements of Part
      I of Form S-3 (as required by Section C.1. of the General Instructions to Form
      S-8). The Reoffer Prospectus will be used for reoffers and resales by affiliates
      of Implant Sciences Corporation (the &#8220;Registrant&#8221;) of shares of common stock of
      the Registrant to be issued pursuant to the Registrant's 2006 Employee Stock
      Purchase Plan. The second part contains information required in the registration
      statement pursuant to Part II of Form S-8. Pursuant to the introductory note
      to
      Part I of Form S-8, the plan information, which constitutes part of the &#8220;Plan
      Prospectus,&#8221; is not being filed with the Securities and Exchange Commission.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INFORMATION
      REQUIRED IN THE SECTION 10(A) PROSPECTUS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      documents containing the information specified in Part I, Items 1 and 2 of
      Form
      S-8, will be sent or given to any recipient of a stock option or stock award
      in
      accordance with Form S-8 and Rule 428(b)(1) of the Securities Act. We will
      furnish without charge to any person to whom information is required to be
      delivered, upon written or oral request, a copy of each document incorporated
      by
      reference in Item 3 of Part II of this Registration Statement, which documents
      are incorporated by reference in the Section 10(a) prospectus, and any other
      documents required to be delivered to them under Rule 428(b) of the Securities
      Act. Requests should be directed to </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Diane
      J.
      Ryan</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
      President, Finance</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Implant
      Sciences Corporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">107
      Audubon Road #5</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wakefield,
      MA 01880</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(781)
      246-0700</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      re-offer prospectus follows this paragraph.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div><br>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PROSPECTUS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>500,000
      Shares of Common Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>of</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Implant
      Sciences Corporation </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_____________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IMPLANT
      SCIENCES CORPORATION 2006 EMPLOYEE STOCK PURCHASE PLAN</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus is being used in connection with the offering from time to time
      by
      certain selling stockholders of our company or their successors in interest
      of
      shares of the common stock which may be acquired or to be issued pursuant to
      our
      2006 Employee Stock Purchase Plan (the &#8220;2006 Plan&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      closing sales price of our common stock on July 20, 2007, as reported by the
      American Stock Exchange (&#8220;AMEX&#8221;) was $1.80.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus is not an offer to sell these securities and it is not soliciting
      an
      offer to buy these securities in any state where the offer or sale is not
      permitted.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should rely only on the information contained in this prospectus. We have not
      authorized anyone to provide you with information different from that contained
      in this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      common stock may be sold from time to time by the selling stockholders or by
      their pledges, donees, transferees or other successors in interest. Such sales
      may be made in the over-the-counter market or otherwise at prices and at terms
      then prevailing or at prices related to the then current market price, or in
      negotiated transactions. The common stock may be sold by one or more of the
      following: (a) block trades in which the broker or dealer so engaged will
      attempt to sell the shares as agent but may position and resell portions of
      the
      block as principal to facilitate the transaction; (b) purchases by a broker
      or
      dealer as principal and resale by such broker or dealer for its account pursuant
      to this prospectus; (c) an exchange distribution in accordance with the rules
      of
      such exchange; and (d) ordinary brokerage transactions and transactions in
      which
      the broker solicits purchases. In effecting sales, brokers or dealers engaged
      by
      the selling stockholders may arrange for other brokers or dealers to
      participate. Brokers or dealers will receive commissions or discounts from
      selling stockholders in amounts to be negotiated immediately prior to the sale.
      Such brokers or dealers and any other participating brokers or dealers may
      be
      deemed to be &#8220;underwriters&#8221; within the meaning of the Securities Act of 1933, as
      amended (the &#8220;Act&#8221;) in connection with such sales. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144may be
      sold under Rule 144 rather than pursuant to this prospectus. We will not receive
      any of the proceeds from the sale of these shares, and we have paid the expenses
      of preparing this prospectus and the related registration
      statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INVESTING
      IN OUR COMMON STOCK INVOLVES RISKS.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PLEASE
      SEE "RISK FACTORS" BEGINNING ON PAGE 6.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THESE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
      COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
      STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
      PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
      OFFENSE.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_____________________________________________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      date of this Prospectus is July 26, 2007</strong></font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="page_1_4"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TABLE
      OF
      CONTENTS </font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div align="center">
        <table border="1" bordercolor="#000000" cellpadding="0" cellspacing="0" width="50%">

            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prospectus
                  Summary </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;5</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risk
                  Factors </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;6</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward
                  Looking Statements </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;14</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                  Offering</font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;14</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Use
                  of Proceeds</font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;14</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Selling
                  Stockholders</font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;14</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Plan
                  of Distribution </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;15</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Documents
                  Incorporated By Reference </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;16</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Experts</font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;17</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosure
                  of SEC Position on Indemnification for Securities Act
                  Liabilities</font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;17</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legal
                  Matters </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;17</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Where
                  You Can Find More Information </font></div>
              </td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;17</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NO
      PERSON
      HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS,
      OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
      MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
      NOT
      BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
      NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
      ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
      AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
      CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
      OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
      IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
      IS
      NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
      OFFER OR SOLICITATION.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
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        </div>
      </div>
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PROSPECTUS
      SUMMARY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following summary contains basic information about Implant Sciences Corporations
      and this prospectus. It may not contain all of the information that is important
      to you. For a more complete understanding, we encourage you to read the entire
      prospectus and the documents incorporated by reference into this prospectus.
      In
      this prospectus, the words &#8220;Implant, &#8220;Company,&#8221; &#8220;we&#8221;, &#8220;our&#8221; and &#8220;us&#8221; refer to
      Implant Sciences Corporation and our consolidated subsidiaries.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="65%">

          <tr>
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                Stock outstanding before offering</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11,835,561
                shares (1)</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                Stock issuable under the Plan which maybe offered pursuant to this
                prospectus</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,000</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AMEX
                Symbol for Common Stock</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;IMX&#8221;</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risk
                Factors</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
                will not receive any proceeds from the sales of these shares.
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risk
                Factors</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
                are risks associated with an investment in the common stock offered
                by
                this prospectus. You should carefully consider the risk factors described
                in the prospectus in the &#8220;Risk Factors&#8221; section before making a decision t
                o invest.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 54pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;(1)
      As of July 20,
      2007. Does not include shares of common stock issuable upon exercise or
      conversion of options, notes or warrants.</font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prospective
      investors should not rely on any information not contained in this document.
      We
      have not authorized anyone to provide any other information. This document
      may
      only be used where it is legal to sell these securities. The information in
      this
      document may only be accurate as of and on the date of this
      document.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should rely only on the information contained in this Prospectus or incorporated
      by reference herein. Information on our website or the websites of any of our
      subsidiaries or affiliates, if any, is not incorporated into this Prospectus,
      and you should not rely on such information. We have not authorized anyone
      to
      provide you with any other information. This Prospectus may only be used where
      it is legal to sell these securities. The information in this Prospectus is
      accurate only as of the date noted above, regardless of the time of the delivery
      of this prospectus or of any sale of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      COMPANY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Over
      the
      past twenty two years, Implant Sciences Corporation has both developed and
      acquired technologies using ion implantation and thin film coatings. Initially
      this technology was used in semiconductor processing but soon expanded to
      include various medical device applications including the modification of
      orthopedic joint implant surfaces to reduce polyethylene wear generation and
      the
      manufacture of products for radiation therapy treatments. Our latest application
      of this technology includes the manufacturing of trace explosives detection
      equipment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently provide ion implantation services to numerous semiconductor
      manufacturers, research laboratories and universities. In October 2004 and
      March
      2005, we acquired two California semiconductor companies, Core Systems (&#8220;Core&#8221;)
      and Accurel Systems International (&#8220;Accurel&#8221;), respectively. In May 2007, we
      sold our Accurel subsidiary for a total purchase price of approximately
      $12,705,000. Other applications of our ion beam technology had been in the
      area
      of temporary brachytherapy products. In June 2007, we closed this product line.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      May
      1999, we have been performing research to develop a trace explosives detector,
      which could be used to detect hidden bombs in airports and other public places.
      This technology is yet another application of our ion source technology. At
      present, we have developed both portable and bench-top systems for use in
      airports and Department of Defense facilities and have successfully marketed
      these products both domestically and internationally. In fiscal 2006, as part
      of
      a plan to reduce manufacturing costs, we transitioned the production of these
      products to a contract manufacturer. As we continue to sell and deliver these
      products, we work both independently and in conjunction with various government
      agencies, to develop the next generation of trace explosives detectors and
      identify new applications for our proprietary technology. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>An
      investment in us involves a high degree of risk and common stock should not
      be
      purchased by anyone who cannot afford the loss of their entire investment.
      You
      should carefully consider all of the following risk factors discussed below
      as
      well as other information in the prospectus before purchasing the common stock.
      The risks described below are not all of the risks facing us. Additional risks,
      including those that are currently not known to us or that we currently deem
      immaterial, may also impair our business operations. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Company has received a modified audit opinion on its ability to continue
      as&#160;a going concern.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      audit
      report our independent registered public accounting firm issued on our audited
      financial statements for the fiscal year ended June 30, 2006 contains a
      modification regarding our ability to continue as a going concern. This
      modification indicates&#160;that there is substantial doubt on the part of our
      independent registered public accounting firm that we can continue as a going
      concern in that we did not have sufficient cash and liquid assets at June 30,
      2006, to cover our operating capital requirements for the next twelve-month
      period and if sufficient cash cannot be obtained we would have to substantially
      alter our operations, or we may be forced to discontinue operations.&#160; Such
      an opinion from our independent registered public accounting firm may limit
      our
      ability to access certain types of financing, or may prevent us from obtaining
      financing on acceptable terms. There can be no assurance that the auditor will
      not qualify their opinion in the future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      do not operate at a profit and do not expect to be profitable for some time.
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the nine months ended March 31, 2007, we had a net loss from continuing
      operations of</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">approximately
      $4,419,000. We plan to further increase our expenditures to</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">complete
      the development and commercialization of our new products, and to broaden our
      sales and marketing capabilities. As</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      result,
      we believe that we will likely incur losses over the next several</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">quarters.
      Our accumulated deficit as of March 31, 2007 is approximately $40,850,000.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
      believes that our existing cash resources, cash proceeds received from the
      sale
      of Accurel, cash from operations and the availability on our revolving line
      of
      credit will meet working capital requirements over the next twelve months.
      However, unanticipated decreases in operating revenues, unanticipated decreases
      in the market value of our common stock, delays in government funding of grants,
      increases in expenses or further delays in product development may adversely
      impact our cash position and require further cost reductions. No assurance
      can
      be given that we will be able to operate profitably on a consistent
      basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Intense
      competition and rapid technological change could harm our financial
      performance.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      our
      semiconductor market we compete with many companies, including companies that
      have in-house capabilities to implant, diagnose and repair their own wafers.
      In
      our explosives detection equipment market, we compete with many companies,
      including companies that have substantially greater capital resources, greater
      research and development, manufacturing and marketing resources and experience
      and greater name recognition than we do. In addition, we expect new entrants
      into our markets.&#160; There can be no assurance that our competitors will not
      succeed in developing or marketing technologies and products that are more
      effective than our products or that would render our products obsolete or
      noncompetitive. Moreover, there can be no assurance that we will be able to
      price our products and services at or below the prices of competing products
      and
      technologies in order to facilitate market acceptance. Accordingly, our success
      will depend, in part, on our ability to respond quickly to technological changes
      through the development and introduction of new products and enhancements.
      Product development involves a high degree of risk, and there can be no
      assurance that our new product development efforts will result in any
      commercially successful products. Our failure to compete or respond to
      technological change in an effective manner would have a material adverse effect
      on our business and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      medical products and technologies may not be accepted by the medical community
      which could harm our financial performance.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      can
      be no assurance that our medical coatings will achieve acceptance, or continue
      to receive acceptance, by the medical community and market acceptance generally.
      The degree of market acceptance for our products and services will also depend
      upon a number of factors, including the receipt and timing of regulatory
      approvals and the establishment and demonstration in the medical community
      and
      among health care payers of the clinical safety, efficacy and cost effectiveness
      of our products. Certain of the medical indications that can be treated by
      our
      devices or devices treated using our coatings can also be treated by other
      medical procedures. There can be no assurance that our devices or technologies
      will be able to replace such established treatments or that physicians, health
      care payers, patients or the medical community in general will accept and
      utilize our devices or any other medical products that may be developed or
      treated by us even if regulatory and reimbursement approvals are obtained.
      Long-term market acceptance of our products and services will depend, in part,
      on the capabilities, operating features and price of our products and
      technologies as compared to those of other available products and services.
      Failure of our products and technologies to gain market acceptance would have
      a
      material adverse effect on our business and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      explosives detection products and technologies may not be accepted by government
      agencies, airports or airlines which could harm our future financial
      performance.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      can
      be no assurance that our explosives detection systems will achieve acceptance
      by
      the domestic and international airports, government agencies and airlines,
      and
      market acceptance generally. The degree of market acceptance for our explosives
      detection products and services will also depend upon a number of factors,
      including the receipt and timing of regulatory approvals and the establishment
      and demonstration of the ability of our proposed device to detect trace
      explosives residues on personnel, baggage and other cargo prior to embarking
      on
      aircraft. Our failure to commercially develop our product to compete
      successfully with respect to throughput, the ability to scan personnel, baggage
      and other cargo carried onto airlines, and portability could delay, limit or
      prevent market acceptance. Moreover, the market for explosives detection systems
      technology, especially trace detection technology, is largely undeveloped,
      and
      we believe that the overall demand for explosives detection systems technology
      will depend significantly upon public perception of the risk of terrorist
      attacks. There can be no assurance that the public will perceive the threat
      of
      terrorist bombings to be substantial or that the airline industry and
      governmental agencies will actively pursue explosives detection systems
      technology. Long-term market acceptance of our products and services will
      depend, in part, on the capabilities, operating features and price of our
      products and technologies as compared to those of other available products
      and
      services. As a result, there can be no assurance, if the currently developed
      prototype product is brought to a commercial product, that we will be able
      to
      achieve market penetration, revenue growth or profitability.</font></div>
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      future profitability depends on whether our products can successfully compete
      in
      the commercial marketplace.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently provide ion implantation services for ion implantation of
      semiconductors and medical devices. We plan to market radiopaque coatings,
      and
      explosive detection systems that may require substantial further investment
      in
      research, product development, preclinical and clinical testing and governmental
      regulatory approvals prior to being marketed and sold. Our ability to increase
      revenues and achieve profitability and positive cash flow will depend, in part,
      on our ability to complete such product development efforts, obtain such
      regulatory approvals, and establish manufacturing and marketing programs and
      gain market acceptance for such proposed products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      market for explosive detection systems is intensely competitive and is
      characterized by continuously developing technology and frequent introductions
      of new products and features. We expect competition to increase as other
      companies introduce additional and more competitive products in the explosive
      detection systems market as we develop the capabilities and enhancements of
      our
      trace detection systems. Each of our competitors may have substantially greater
      financial resources than us. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that our ability to compete in the explosive detection systems market
      is
      based upon such factors as: product performance, functionality, quality and
      features; quality of customer support services, documentation and training;
      and
      the capability of the technology to appeal to broader applications beyond the
      inspection of passengers, baggage, and cargo carried on airlines. Although
      we
      believe that our currently developed product has all of the capabilities to
      meet
      the United States government&#8217;s decree that all passengers, baggage, and cargo
      carried on airlines must be screened thoroughly, certain of our competitors
      may
      have an advantage over our existing technology with respect to these factors.
      There can be no assurance that we will be successful in convincing potential
      customers that our products will be superior to other systems given all of
      the
      necessary performance criteria, that new systems with comparable or greater
      performance, lower price and faster or equivalent throughput will not be
      introduced, or that, if such products are introduced, customers will not delay
      or cancel potential orders for us yet to be commercialized system. Further,
      there can be no assurance that we will be able to bring to commercialization
      and
      further enhance our product to better compete on the basis of cost, throughput,
      accommodation of detection of passengers, baggage or other cargo carried onto
      airlines, or that we will otherwise be able to compete successfully with
      existing or new competitors.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      product development efforts are subject to the risks inherent in the development
      of such products. These risks include the possibility that development costs
      will be much greater than currently anticipated, that our products will be
      found
      to be ineffective or unsafe, or will otherwise fail to receive necessary
      regulatory approvals; that the products will be difficult to manufacture on
      a
      large scale or be uneconomical to market; that the proprietary rights of third
      parties will interfere with our product development; or that third parties
      will
      market superior or equivalent products which achieve greater market acceptance.
      Furthermore, there can be no assurance that we will be able to conduct our
      product development efforts within the time frames currently anticipated or
      that
      such efforts will be completed successfully. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>There
      are risks relating to our Development, Distribution and Manufacturing Agreement
      with Rapiscan Systems, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      of 2005, we entered into a Development, Distribution and Manufacturing Agreement
      (the &#8220;Agreement&#8221;) with Rapiscan Systems, Inc. (&#8220;Rapiscan&#8221;).&#160; Under the
      terms of this agreement, we gave Rapiscan the exclusive worldwide rights to
      market our Quantum Sniffer</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>TM</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;portable
      and benchtop trace detection devices under their private label.&#160; We also
      agreed to give Rapiscan the exclusive worldwide rights to distribute certain
      other new security products which we may develop in the future with their
      funding, as well as rights, in some circumstances, to manufacture certain
      components of the Quantum Sniffer</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>TM</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;portable
      and benchtop trace detection devices. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2006, the Company brought suit against Rapiscan and its parent, OSI Systems,
      Inc. The Company is requesting rescission of the Agreement, for lack of
      performance and other grounds or in the alternative, termination of the
      Agreement due to material breaches of contract and implied covenant of good
      faith and fair dealing and for damages. Should the Company be unsuccessful
      in
      prosecuting its lawsuit, it could have a material adverse effect on our business
      and results of operations. </font></div>
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      </div>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2006, the Company received notice that Rapiscan filed a complaint against the
      Company regarding the Agreement. Rapiscan&#8217;s complaint is based upon claims of
      breach of contract, breach of warranty and tortuous interference with
      contractual relations and is requesting a decree for specific performance,
      declaratory relief and injunctive relief. Should the Company be unsuccessful
      in
      defending itself in the lawsuit, it could have a material adverse effect on
      our
      business and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2006, as a result of motions made by both parties, the two lawsuits have been
      consolidated in the United States District Court for the Central District of
      California with the Company as plaintiff. Presently, discovery is in process.
      Rapiscan and OSI have filed a motion to dismiss certain of the Company&#8217;s claims.
      The Company has not yet responded to the motion. Presently, discovery is in
      process. Rapiscan and OSI have filed a motion to dismiss certain of the
      Company&#8217;s claims. As of October 30, 2006, the court has ruled that the Company&#8217;s
      claim of breach of fiduciary duty was dismissed but OSI&#8217;s motion to dismiss all
      other claims was denied. The litigants are presently in the discovery process
      which should be completed by July 2007. Rapiscan has recently filed two motions
      for partial summary judgment, one relating to the manufacturing provisions
      of
      the agreement and the other related to certain types of damages.&#160; We have
      opposed the two motions, which are to be heard on August 6, 2007.&#160; Trial is
      expected in early 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Should
      the Company be unsuccessful in prosecuting this matter, it may have a material
      adverse effect on its business and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      own patents, trade secrets and other intellectual property and know-how that
      we
      believe allows us to compete effectively. Limitations on our ability to protect
      our intellectual property or continue to use our intellectual property could
      harm our financial performance.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to compete effectively will depend, to a significant extent, on our
      ability to operate without infringing the intellectual property rights of
      others. Many participants in the medical device area aggressively seek patent
      protection and have increasing numbers of patents, and have frequently
      demonstrated a readiness to commence litigation based on patent infringement.
      Third parties may assert exclusive patent rights to technologies that are
      important to us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      success will depend on our ability to obtain new patents and operate without
      infringing on the proprietary rights of others.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      we have twenty (20) United States patents issued and ten (10) United States
      patent applications pending for our technology and processes, our success will
      depend, in part, on our ability to obtain the patents applied for and maintain
      trade secret protection for our technology and operate without infringing on
      the
      proprietary rights of third parties. The validity and breadth of claims in
      medical technology patents involve complex legal and factual questions and,
      therefore, may be highly uncertain. No assurance can be given that any pending
      patent applications or any future patent application will issue as patents,
      that
      the scope of any patent protection obtained will be sufficient to exclude
      competitors or provide competitive advantages to us, that any of our patents
      will be held valid if subsequently challenged or that others will not claim
      rights in or ownership of the patents and other proprietary rights held by
      us.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      there can be no assurance that others have not or will not develop similar
      products, duplicate any of our products or design around any patents issued
      or
      that may be issued in the future to us. In addition, whether or not patents
      are
      issued to us, others may hold or receive patents which contain claims having
      a
      scope that covers products or processes developed by us. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moreover,
      there can be no assurances that patents issued to us will not be challenged,
      invalidated or circumvented or that the rights thereunder will provide any
      competitive advantage. We could incur substantial costs in defending any patent
      infringement suits or in asserting any patent rights, including those granted
      to
      third parties. Patents and patent applications in the United States may be
      subject to interference proceedings brought by the United States Patent &amp;
Trademark Office, or to opposition proceedings initiated in a foreign patent
      office by third parties. We may incur significant costs defending such
      proceedings. In addition, we may be required to obtain licenses to patents
      or
      proprietary rights from third parties. There can be no assurance that such
      licenses will be available on acceptable terms if at all. If we do not obtain
      required licenses, we could encounter delays in product development or find
      that
      the development, manufacture or sale of products requiring such licenses could
      be foreclosed.</font></div>
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      rely on unpatented proprietary technology, trade secrets and know-how and no
      assurance can be given that others will not independently develop substantially
      equivalent proprietary information, techniques or processes, that such
      technology or know-how will not be disclosed or that we can meaningfully protect
      our rights to such unpatented proprietary technology, trade secrets, or
      know-how. Although we have entered into non-disclosure agreements with our
      employees and consultants, there can be no assurance that such non-disclosure
      agreements will provide adequate protection for our trade secrets or other
      proprietary know-how.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are not successful in managing our future growth, our business will
      suffer.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      limited experience in the commercial production of explosives detection systems.
      Our future success will depend upon, among other factors, our ability to
      recruit, hire, train and retain highly educated, skilled and experienced
      management and technical personnel, to generate capital from operations, to
      scale-up our manufacturing process and expand our facilities and to manage
      the
      effects of growth on all aspects of our business, including research,
      development, manufacturing, distribution, sales and marketing, administration
      and finance. Our failure to identify and exploit new product and service
      opportunities, attract or retain necessary personnel, generate adequate revenues
      or conduct our expansion or manage growth effectively could have a material
      adverse effect on our business and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      research and manufacturing activities involve the use of hazardous materials.
      Any liability resulting from the misuse of such hazardous materials could
      adversely affect our business.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      research and manufacturing activities sometimes involve the use of various
      hazardous materials. Although we believe that our safety procedures for
      handling, manufacturing, distributing, transporting and disposing of such
      materials comply with the standards for protection of human health, safety,
      and
      the environment, prescribed by local, state, federal and international
      regulations, the risk of accidental contamination or injury from these materials
      cannot be completely eliminated. Nor can we eliminate the risk that one or
      more
      of our hazardous material or hazardous waste handlers may cause contamination
      for which, under laws imposing strict liability, we could be held liable. While
      we currently maintain insurance in amounts which we believe are appropriate
      in
      light of the risk of accident, we could be held liable for any damages that
      might result from any such event. Any such liability could exceed our insurance
      and available resources and could have a material adverse effect on our business
      and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Product
      liability claims could damage our reputation and hurt our financial
      results.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      date
      no product liability claims have been asserted against us; however, the testing,
      marketing and sale of implantable devices and materials entail an inherent
      risk
      that product liability claims will be asserted against us, if the use of our
      devices is alleged to have adverse effects on a patient, including exacerbation
      of a patient's condition, further injury, or death. A product liability claim
      or
      a product recall could have a material adverse effect on our business. Certain
      of our devices are designed to be used in treatments of diseases where there
      is
      a high risk of serious medical complications or death. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      our suppliers cannot provide the components or services we require, our ability
      to manufacture our products could be harmed.</strong></font></div>
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      rely
      on a limited number of suppliers to provide materials and services used to
      manufacture our products. If we cannot obtain adequate quantities of necessary
      materials and services from our suppliers, there can be no assurance that we
      would be able to access alternative sources of supply within a reasonable period
      of time or at commercially reasonable rates. Moreover, in order to maintain
      our
      relationship with major suppliers, we may be required to enter into preferred
      supplier agreements that will increase the cost of materials obtained from
      such
      suppliers, thereby also increasing the prices of our products. The limited
      sources, the unavailability of adequate quantities, the inability to develop
      alternative sources, a reduction or interruption in supply or a significant
      increase in the price of raw materials or services could have a material adverse
      effect on our business and results of operations.</font></div>
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      rely
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      explosives detection products. If these services become unavailable, we would
      be
      required to identify and enter into an agreement with a new contract
      manufacturer or take the manufacturing in house. The loss of our contract
      manufacturer could significantly disrupt production as well as increase the
      cost
      of production, thereby also increasing the prices of our products. These changes
      could have a material adverse effect on our business and results of operations.
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      we were to lose the services of either our president or our chief scientist,
      our
      business would be adversely affected.</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      substantially dependent, for the foreseeable future, upon our Chairman of the
      Board, President and Chief Executive Officer, Dr. Anthony J. Armini and our
      Vice
      President and Chief Scientist, Dr. Stephen N. Bunker, both of whom currently
      devote their full time and efforts to management. We have entered into an
      employment agreement with each of these officers. If we were to lose the
      services of Dr. Armini or Dr. Bunker for any significant period of time, our
      business would be materially adversely affected. </font></div>
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      we cannot attract and retain the management, sales and other personnel we need,
      we will not be successful.</strong></font></div>
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      is
      intense competition for qualified personnel in the high technology field, and
      there can be no assurance that we will be able to continue to attract and retain
      qualified personnel necessary for the development of our business. The loss
      of
      the services of existing personnel as well as the failure to recruit additional
      qualified scientific, technical and managerial personnel in a timely manner
      would be detrimental to our anticipated growth and expansion into areas and
      activities requiring additional expertise such as marketing. The failure to
      attract and retain such personnel could adversely affect our business and
      results of operations.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are unable to complete our assessments as to the adequacy of our internal
      controls over financial reporting as required by Section&#160;404 of the
      Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability
      of our financial statements, which could result in a decrease in the value
      of
      our common stock. </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      directed by Section&#160;404 of the Sarbanes-Oxley Act of 2002, the Securities
      and Exchange Commission adopted rules requiring public companies to include
      a
      report of management on the company's internal control over financial reporting
      in their annual reports on Form&#160;10-K. This report is required to contain an
      assessment by management of the effectiveness of such company's internal
      controls over financial reporting. In addition, the independent registered
      public accounting firm auditing a public company's financial statements must
      attest to and report on management's assessment of the effectiveness of the
      company's internal controls over financial reporting. While we will begin to
      develop the necessary documentation and testing procedures required by
      Section&#160;404, there is a risk that we will not comply with all of the
      requirements imposed by Section&#160;404. If we fail to implement required new
      or improved controls, we may be unable to comply with the requirements of
      Section&#160;404 in a timely manner. This could result in an adverse reaction in
      the financial markets due to a loss of confidence in the reliability of our
      financial statements, which could cause the market price of our common stock
      to
      decline and make it more difficult for us to finance our
      operations.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
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      independent auditors have reported to our Audit Committee certain matters
      involving internal controls that our independent auditors considered to be
      a
      significant deficiency. A significant deficiency is a control deficiency or
      combination of control deficiencies, that adversely affects the company&#8217;s
      ability to initiate, authorize, record, process, or report external financial
      data reliably in accordance with generally accepted accounting principles such
      that there is more than a remote likelihood that a misstatement of the company&#8217;s
      annual or interim financial statements that is more than inconsequential will
      not be prevented or detected. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      reportable condition related primarily to the closing and financial reporting
      process.&#160;&#160;Management is confident that our financial statements for
      the year ended June 30, 2006 fairly present, in all material respects, our
      financial condition and results of operations. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      reportable condition has been discussed in detail among management, our Audit
      Committee and our independent auditors, and we are committed to addressing
      and
      resolving these matters fully and promptly, by putting in place the personnel,
      processes, technology and other resources appropriate to support our financial
      close processes. As part of this commitment,&#160;we intend to use the services
      of an outside consultant to evaluate our closing and financial reporting
      process&#160;and make recommendations to management to improve
      these&#160;processes.&#160; </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      cannot
      assure you that we will successfully address the issues raised by our
      independent auditors above. If we are unable to do so, and a misstatement,
      error
      or fraud is committed and remains undetected, we may suffer a material adverse
      effect to our results of operations.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      quarterly results may fluctuate significantly, which could adversely affect
      our
      stock price.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that our operating results may be subject to substantial quarterly
      fluctuations due to several factors, some of which are outside our control,
      including fluctuating market demand for, and declines in the average selling
      price of our products, the timing of significant orders from customers, delays
      in the introduction of new or improved products, delays in obtaining customer
      acceptance of new or changed products, the cost and availability of raw
      materials, and general economic conditions. We plan to further increase our
      expenditures to complete development and commercialization of our new products,
      to increase our manufacturing capacity, to ensure compliance with the Food
      and
      Drug Administration's Quality Systems Regulations and to broaden our sales
      and
      marketing capabilities. A substantial portion of our revenue in any quarter
      historically has been derived from orders booked in that quarter, and
      historically, backlog has not been a meaningful indicator of revenues for a
      particular period. Accordingly, our sales expectations currently are based
      almost entirely on our internal estimates of future demand and not from firm
      customer orders. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      will be required to redeem the Series D Preferred for cash if the five day
      average market price of our common stock, prior to a redemption date, is less
      than 110% of the fixed conversion price. &#160;&#160;</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      be required to redeem the Series D Preferred for cash if the following
      conditions are not met: (1) the shares must be issued pursuant to an effective
      registration statement, (2) the average closing market price of the common
      stock
      for the five trading days immediately preceding a payment date must exceed
      the
      fixed conversion price of $4.15 by 110% and no one day&#8217;s closing price may be
      less than the fixed conversion price, and (3) the conversion dollar value may
      not exceed the aggregate of the prior 22 trading days&#8217; dollar volume. We cannot
      be certain that we will be able to redeem the monthly payment in shares of
      common stock on a redemption date given the fixed conversion price of the
      preferred stock and the associated market price of the common stock on a
      redemption date. If we are required to redeem monthly payments in cash, this
      will reduce our working capital necessary for our operations.&#160; Failure of
      our ability to convert preferred shares into common shares will have a material
      adverse affect on our cash resources.&#160; We may be required to reduce or
      curtail certain operations and research and development projects to improve
      our
      cash resources. As of July 20, 2007, the closing price of our common stock
      was
      $1.80 per share.&#160; The outstanding balance is approximately
      $3,939,000.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Company may have liability in connection with its recent securities
      transactions.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      amended the Series D financing terms with Laurus Master Fund in May 2006, while
      the Registration Statement on Form S-3 was on file with the SEC but had not
      yet
      been declared effective. This may have been a violation of Section 5 of the
      Securities Act and may provide Laurus with rescission rights. Although Laurus
      has been offered rescission and has declined to rescind such transaction, there
      is a possibility that such transaction could be reversed and the consideration
      received by us may have to be repaid. Because we have made redemption payments
      to Laurus in accordance with the terms of the Series D, if the transaction
      was
      rescinded, we would be required to pay Laurus the aggregate amount of
      approximately $3,939,000, which would have a material adverse affect upon our
      business. </font></div>
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      third party credit is unavailable, our working capital could be restricted;
      restrictions on our ability to raise additional capital under certain
      circumstances.</strong></font></div>
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      we rely on cash generated from our operations, private equity financing and
      third party credit for working capital purposes. If such financing is no longer
      available at acceptable rates, we would be required to reduce or curtail our
      operations and research and development projects. This would have a material
      adverse effect on our business and results of operations.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
      eligible for future sale may adversely affect the market. </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time, certain of our stockholders may be eligible to sell all or some of
      their shares of common stock by means of ordinary brokerage transactions in
      the
      open market pursuant to Rule&#160;144, promulgated under the Securities Act,
      subject to certain limitations. In general, pursuant to Rule&#160;144, a
      stockholder (or stockholders whose shares are aggregated) who has satisfied
      a
      one year holding period may, under certain circumstances, sell within any three
      month period a number of securities which does not exceed the greater of 1%
      of
      the then outstanding shares of common stock or the average weekly trading volume
      of the class during the four calendar weeks prior to such sale. Rule&#160;144
      also permits, under certain circumstances, the sale of securities, without
      any
      limitation, by our stockholders that are non-affiliates that have satisfied
      a
      two year holding period. Any substantial sale of our common stock pursuant
      to
      Rule&#160;144 or pursuant to any resale prospectus may have material adverse
      effect on the market price of our securities. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Because
      of certain limitation on director/officer liability, our stockholders may have
      limited rights to recover for breach of fiduciary duty. </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;As
      permitted
      by Massachusetts law, our Restated Articles of Organization limit the liability
      of our directors for monetary damages for breach of a director's fiduciary
      duty
      except for liability in certain instances. As a result of our charter provision
      and Massachusetts law, stockholders may have limited rights to recover against
      directors for breach of fiduciary duty. In addition, our bylaws provide that
      we
      shall indemnify our directors, officers, employees and agents if such persons
      acted in good faith and reasoned that their conduct was in our best interest.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have no history of paying dividends on our common stock. </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We
      have never
      paid any cash dividends on our common stock and do not anticipate paying any
      cash dividends on our common stock in the foreseeable future. We plan to retain
      any future earnings to finance growth. If we decide to pay dividends to the
      holders of our common stock, such dividends may not be paid on a timely
      basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      anti-takeover provisions of our Restated Articles of Organization and of the
      Massachusetts corporation law may delay, defer or prevent a change of control.
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      board
      of directors has the authority to issue up to 5,000,000 shares of preferred
      stock and to determine the price, rights, preferences and privileges and
      restrictions, including voting rights, of those shares without any further
      vote
      or action by our stockholders. The rights of the holders of common stock will
      be
      subject to, and may be harmed by, the rights of the holders of any shares of
      preferred stock that may be issued in the future. The issuance of preferred
      stock may delay, defer or prevent a change in control because the terms of
      any
      issued preferred stock could potentially prohibit our consummation of any
      acquisition, reorganization, sale of substantially all of our assets,
      liquidation or other extraordinary corporate transaction, without the approval
      of the holders of the outstanding shares of preferred stock. In addition, the
      issuance of preferred stock could have a dilutive effect on our stockholders.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      stockholders must give substantial advance notice prior to the relevant meeting
      to nominate a candidate for director or present a proposal to our stockholders
      at a meeting. These notice requirements could inhibit a takeover by delaying
      stockholder action. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORWARD-LOOKING
      INFORMATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Some
      of
      the information in this prospectus, or incorporated by reference into this
      prospectus, contains forward-looking statements that involve substantial risks
      and uncertainties. Any statement in this prospectus that is not a statement
      of
      an historical fact constitutes a "forward-looking statement". Further, when
      we
      use the words "may", "expect", "anticipate", "plan", "believe", "seek",
      "estimate", "internal", and similar words, we intend to identify statements
      and
      expressions that may be forward-looking statements. We believe it is important
      to communicate certain of our expectations to our investors. Forward-looking
      statements are not guarantees of future performance. They involve risks,
      uncertainties and assumptions that could cause our future results to differ
      materially from those expressed in any forward-looking statements. Many factors
      are beyond our ability to control or predict. You are accordingly cautioned
      not
      to place undue reliance on such forward-looking statements. We have no
      obligation or intent to update publicly any forward-looking statements whether
      in response to new information, future events or otherwise. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      OFFERING</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      registration statement relates to the resale of shares of our common stock
      issued and issuable to certain selling stockholders. Specifically, the shares
      of
      our common stock included in this offering consist of :</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,000
      shares of our common stock issuable under the 2006 Plan. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>USE
      OF PROCEEDS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      of
      the shares of common stock offered by this prospectus are being offered by
      the
      selling stockholders.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We will
      not receive any proceeds from the sales of these shares. All expenses of the
      registration of the shares will be paid for by us. See &#8220;Selling Stockholders&#8221;
and &#8220;Plan of Distribution.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 39.6pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      information about the selling stockholders, see &#8220;Selling Stockholders.&#8221;
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SELLING
      SHAREHOLDERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the name and relationship to Implant and its
      affiliates (within the past three years) of each selling stockholder who
      identity is known as of the date of this prospectus., the number of shares
      of
      common stock which each selling stockholder (1) owned of the record date before
      the offering; and (2) the amount of common stock to be owned by each selling
      stockholder and (if one percent or more) the percentage of the class to be
      owned
      by such stockholder assuming the sale of all shares acquired under the Plan.
      .</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      information contained in this table reflects &#8220;beneficial&#8221; ownership of common
      stock within the meaning of Rule 13d-3 under the Exchange Act. As of July 3,
      2007, we had 11,835,561 shares of common stock outstanding. Beneficial ownership
      information reflected in the table includes shares issuable upon the exercise
      of
      outstanding options/warrants issued by us at their initial exercise
      prices.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="50%">

          <tr>
            <td align="left" valign="bottom" width="24%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">&#160;</td>
            <td valign="bottom" width="14%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                of Common Stock Beneficially Owned As of </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">July
                20, 2007</font></div>
            </td>
            <td valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                Offered </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hereby
                </font></div>
            </td>
            <td valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                of Common Stock and Percentage of Class to be Owned </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
                the Offering</font></div>
            </td>
            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">%
                of Class to be Owned After the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Offering</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None</font></div>
            </td>
            <td valign="bottom" width="3%">&#160;</td>
            <td align="right" valign="bottom" width="14%">&#160;</td>
            <td align="right" valign="bottom" width="12%">&#160;</td>
            <td align="right" valign="bottom" width="16%">&#160;</td>
            <td valign="bottom" width="9%">&#160;</td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="78%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PLAN
      OF DISTRIBUTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      this
      section of the prospectus, the term &#8220;selling stockholder&#8221; means and includes:
      (1) the persons identified in the tables above as the Selling Stockholders;
      and
      (2) any of their donees, pledgees, distributees, transferees or other successors
      in interest who may (a) receive any of the shares of our common stock offered
      hereby after the date of this prospectus and (b) offer or sell those shares
      hereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      shares of our common stock offered by this prospectus may be sold from time
      to
      time directly by the selling stockholders. Alternatively, the selling
      stockholders may from time to time offer such shares through underwriters,
      brokers, dealers, agents or other intermediaries. The selling stockholders
      as of
      the date of this prospectus have advised us that there were no underwriting
      or
      distribution arrangements entered into with respect to the common stock offered
      hereby. The distribution of the common stock by the selling stockholders may
      be
      effected: in one or more transactions that may take place on the AMEX (including
      one or more block transaction) through customary brokerage channels, either
      through brokers acting as agents for the selling stockholders, or through market
      makers, dealers or underwriters acting as principals who may resell these shares
      on the AMEX; in privately-negotiated sales; by a combination of such methods;
      or
      by other means. These transactions may be effected at market prices prevailing
      at the time of sale, at prices related to such prevailing market prices or
      at
      other negotiated prices. Usual and customary or specifically negotiated
      brokerage fees or commissions may be paid by the selling stockholders in
      connection with sales of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders may enter into hedging transactions with broker-dealers
      in
      connection with distributions of the shares or otherwise. In such transactions,
      broker-dealers may engage in short sales of the shares of our common stock
      in
      the course of hedging the positions they assume with the selling stockholders.
      The selling stockholders also may sell shares short and redeliver the shares
      to
      close out such short positions. The selling stockholders may enter into option
      or other transactions with broker-dealers which require the delivery to the
      broker-dealer of shares of our common stock. The broker-dealer may then resell
      or otherwise transfer such shares of common stock pursuant to this
      prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      selling stockholders also may lend or pledge shares of our common stock to
      a
      broker-dealer. The broker-dealer may sell the shares of common stock so lent,
      or
      upon a default the broker-dealer may sell the pledged shares of common stock
      pursuant to this prospectus. Any securities covered by this prospectus which
      qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
      pursuant to this prospectus. The selling stockholders have advised us that
      they
      have not entered into any agreements, understandings or arrangements with any
      underwriters or broker-dealers regarding the sale of their securities. There
      is
      no underwriter or coordinating broker acting in connection with the proposed
      sale of shares of common stock the selling stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      the shares of common stock covered by this prospectus are not currently being
      underwritten, the selling stockholders or their underwriters, brokers, dealers
      or other agents or other intermediaries, if any, that may participate with
      the
      selling security holders in any offering or distribution of common stock may
      be
      deemed &#8220;underwriters&#8221; within the meaning of the Act and any profits realized or
      commissions received by them may be deemed underwriting compensation
      thereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in a
      distribution of shares of the common stock offered hereby may not simultaneously
      engage in market making activities with respect to the common stock for a period
      of up to five days preceding such distribution. The selling stockholders will
      be
      subject to the applicable provisions of the Exchange Act and the rules and
      regulations promulgated thereunder, including without limitation Regulation
      M,
      which provisions may limit the timing of purchases and sales by the selling
      stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      order
      to comply with certain state securities or blue sky laws and regulations, if
      applicable, the common stock offered hereby will be sold in such jurisdictions
      only through registered or licensed brokers or dealers. In certain states,
      the
      common stock may not be sold unless they are registered or qualified for sale
      in
      such state, or unless an exemption from registration or qualification is
      available and is obtained.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      bear all costs, expenses and fees in connection with the registration of the
      common stock offered hereby. However, the selling stockholders will bear any
      brokerage or underwriting commissions and similar selling expenses, if any,
      attributable to the sale of the shares of common stock offered pursuant to
      this
      prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      agreed to indemnify certain of the selling security holders against certain
      liabilities, including liabilities under the Act, or to contribute to payments
      to which any of those security holders may be required to make in respect
      thereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      can
      be no assurance that the selling stockholders will sell any or all of the
      securities offered by them hereby.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DOCUMENTS
      INCORPORATED BY REFERENCE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      incorporate by reference the documents listed below and any future documents
      we
      subsequently file with the Securities and Exchange Commission pursuant to
      sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, prior to the
      termination of this offering.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      annual report, filed with the Securities and Exchange Commission on Form 10-K,
      for the fiscal year ended June 30, 2006;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      quarterly reports filed with the Securities and Exchange Commission on Form
      10-Q
      for the fiscal quarters ended September 30, December 31 and March
      31;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      description of our common stock contained in the registration statement on
      Form
      S-3 filed with the Securities and Exchange Commission on August 4, 2005 ;
      and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      Report 8-K filed September 29, 2006, January 4, 2007, March 21, 2007,&#160;May
      4, 2007 and July 17, 2007; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      other
      reports filed by the Registrant pursuant to Section 13 (a) or 15 (d) of the
      Exchange Act, since the end of the fiscal year covered by the annual report
      referred to in (a) above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font size="2">(f)&#160;
<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements included in the Form 10-K for the fiscal year ended June
      30, 2006 will be restated in the Form 10-K for the fiscal year ended June 30,
      2007, to reflect the discontinued </font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font size="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font>operations
      treatment for
      the sale of Accurel&#160;</font></font><font size="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Systems
      International on May 1, 2007, in a similar fashion as what was reflected in
      the
      Form 10-Q for the fiscal quarter ended March 31, 2007 </font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font size="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      and in the Current Report 8-K filed July 17, 2007.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      may
      request and receive, at no cost, copies of these filings by writing or
      telephoning us at the following address:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Diane
      J.
      Ryan</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
      President, Finance</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Implant
      Sciences Corporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">107
      Audubon Road #5</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wakefield,
      MA 01880</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -18pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(781)
      246-0700</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and
      15(d) of the Securities Exchange Act of 1934, prior to the filing of a
      post-effective amendment which indicates that all securities offered have been
      sold or which deregisters all securities then remaining unsold, shall be deemed
      to be incorporated by reference in this Registration Statement and to be part
      hereof from the date of filing of such documents.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      statement contained in a document incorporated by reference herein shall be
      deemed to be modified or superseded for purposes of this prospectus to the
      extent that a statement contained herein or in any other subsequently filed
      document which also is or is deemed to be incorporated by reference herein
      modifies or supersedes such statement. Any such statement so modified or
      superseded shall not be deemed, except as so modified or superseded, to
      constitute part of this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      provide without charge to each person to whom this prospectus is delivered,
      upon
      written or oral request of that person, a copy of all documents incorporated
      by
      reference into the registration statement of which this prospectus is a part,
      other than exhibits to those documents (unless such exhibits are specifically
      incorporated by reference into such documents). Requests for such documents
      should be directed to the Chief Financial Officer, Implant Sciences Corporation,
      107 Audubon Road, Wakefield, MA 01880, telephone: (781) 246-0700.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPERTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements of our Company, as of and for the year ended June 30,
      2006
      incorporated by reference in this registration statement on Form S-8, have
      been
      audited by UHY LLP, an independent registered public accounting firm, to the
      extent and for the periods set forth in their report incorporated herein by
      reference, and are incorporated herein in reliance upon such report given upon
      the authority of said firm as experts in auditing and accounting.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements of our Company, as of and for the year ended June 30,
      2005
      incorporated by reference in this registration statement on Form S-8, have
      been
      audited by BDO Seidman, LLP, an independent registered public accounting firm,
      to the extent and for the periods set forth in their report incorporated herein
      by reference, and are incorporated herein in reliance upon such report given
      upon the authority of said firm as experts in auditing and accounting.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DISCLOSURE
      OF SEC POSITION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ON
      INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      amended and restated Articles of Organization and By-Laws provide that we may
      indemnify our directors and officers, to the fullest extent permitted under
      Massachusetts law, including in circumstances in which indemnification is
      otherwise discretionary under Massachusetts law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers or persons controlling us, pursuant to
      the
      foregoing provisions, or otherwise, we have been advised that, in the opinion
      of
      the Securities and Exchange Commission, such indemnification is against public
      policy as expressed in the Securities Act of 1933, and is, therefore,
      unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      MATTERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      validity of the shares of Implant Sciences Corporation common stock being
      offered herein has been passed upon for Implant Sciences Corporation by Ellenoff
      Grossman&#160;&amp; Schole LLP of New York, New York. Such firm has been granted
      a warrant to purchase 10,000 shares of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      common stock of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Implant
      Sciences</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Corporation.&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WHERE
      YOU CAN FIND MORE INFORMATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      file
      annual, quarterly and current reports, proxy statements and other information
      with the Securities and Exchange Commission. You may read and copy, upon payment
      of a fee set by the SEC, any document we subsequently file at the Commission's
      public reference rooms at 100 F. Street, N.E., Washington, D.C. 20549. You
      may
      obtain information on the operation of the Public Reference Room by calling
      the
      SEC at 1-800-SEC-0330. We also make available free of charge our annual,
      quarterly and current reports, proxy statements and other information upon
      request. To request such materials, please contact Diane Ryan, at our address
      as
      set forth below. Additionally, please note that we file our SEC reports
      electronically. The SEC maintains an Internet site that contains reports, proxy
      and information statements, and other information regarding issuers that file
      electronically with the SEC at http://www.sec.gov. Our Internet address is
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>www.implantsciences.com</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Our
      Website and the information contained therein or connected thereto are not
      incorporated into this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus is part of registration statement on Form S-8 that we have filed
      with
      the SEC to register the common stock offered hereby under the Act. As permitted
      by SEC rules, this prospectus does not contain all of the information contained
      in the registration statement and accompanying exhibits and schedules that
      we
      file with the SEC. You may refer to the registration statement, the exhibits
      and
      schedules for more information about us and our common stock. The registration
      statement, exhibits and schedules are available at the SEC's public reference
      rooms or through its EDGAR database on the Internet.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should rely only on the information contained in this prospectus or any
      supplement to this prospectus. We have not authorized anyone to provide you
      with
      different information. Our common stock is quoted on the AMEX under the symbol
      &#8220;IMX.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NO
      PERSON
      HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS,
      OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
      MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
      BE
      RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
      NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
      ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
      AFFAIRS OF THS COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT ONSTITUTE
      AN OFFER TO SELL OR A SOLICIATION OF AN OFFER TO BUY ANY SECURITIES OFFERED
      HEREBY NY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
      NOT
      AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
      QUALIFIED TO DO SO OR TO ANYPERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
      OR
      SOLICITIATION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IMPLANT
      SCIENCES CORPORATION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">500,000
      SHARES OF COMMON STOCK</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">July
      26,
      2007</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      II</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      3. DOCUMENTS INCORPORATED BY REFERENCE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
      in the Prospectus which is a part of this Registration Statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      4. DESCRIPTION OF SECURITIES. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      description of the common stock contained in our Registration Statement (File
      No. 333-115423) on Form&#160;S-3 with the Securities and Exchange
      Commission&#160;on&#160;August&#160;4, 2005. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      5. INTERESTS OF NAMED EXPERTS AND COUNSEL</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
      in the Prospectus which is a part of this Registration Statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      articles provide that none of our directors shall be personally liable to us
      or
      to our stockholder for monetary damages for breach of fiduciary duty as a
      director, except that the limitation shall not eliminate or limit liability
      (i)
      for any breach of the director's duty of loyalty to us or our stockholder,
      (ii)
      for acts or omissions not in good faith or which involve intentional misconduct
      or a knowing violation of law, (iii) under Section 61 or 62 of Chapter 156B
      of
      the Massachusetts General Laws, dealing with liability for unauthorized
      distributions and loans to insiders, respectively, or (iv) for any transaction
      from which the director derived an improper personal benefit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      articles and by-laws further provide for the indemnification of our directors
      and officers to the fullest extent permitted by Section 67 of Chapter 156B
      of
      the Massachusetts General Laws, including circumstances in which indemnification
      is otherwise discretionary.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      principal effect of these provisions is to limit or eliminate the potential
      liability of our directors for monetary damages arising from breaches of their
      duty of care, unless the breach involves one of the four exceptions described
      in
      (i) through (iv) above. These provisions may also shield directors from
      liability under federal and state securities laws. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      directors and officers of Implant Sciences are insured under a policy of
      directors' and officers' liability insurance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      7. EXEMPTION FROM REGISTRATION CLAIMED. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      shares of common stock registered hereunder for reoffer or resale will be issued
      upon exercise of options granted or to be granted pursuant to the Registrant's
      Plans. The options are non-transferable and the underlying shares will be issued
      in transactions not involving a public offering. Upon exercise of an option,
      the
      optionee is required to execute an undertaking not to resell such shares except
      pursuant to an effective registration statement or other exemption under the
      Act, a restrictive legend is placed on the certificates for the shares of common
      stock purchased and transfer stops are placed against such certificates. Such
      shares may only be reoffered and sold pursuant to registration under the Act
      or
      pursuant to an applicable exemption under the Act. As a result, such offers
      and
      sales are exempt from the registration requirements of the Act pursuant to
      the
      provisions of Section 4(2) of the Act.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      8. EXHIBITS. </strong></font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="50%">

          <tr>
            <td align="left" valign="top" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                No.</strong></font></div>
            </td>
            <td align="left" valign="top" width="47%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">&#160;</td>
            <td align="left" valign="top" width="47%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1
                </font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                Employee Stock Purchase Plan</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">&#160;</td>
            <td align="left" valign="top" width="47%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1</font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
                of Counsel</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">&#160;</td>
            <td align="left" valign="top" width="47%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1</font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                of UHY LLP</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">&#160;</td>
            <td align="left" valign="top" width="47%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.2</font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                of BDO Seidman, LLP</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ITEM
      9. UNDERTAKINGS. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.
      The
      undersigned registrant hereby undertakes: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this Registration Statement: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)
      To
      include any prospectus required by Section 10(a)(3) of the Securities Act of
      1933; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)
      To
      reflect in the prospectus any facts or events arising after the effective date
      of the Registration Statement (or the most recent post-effective amendment
      thereof) which, individually or in the aggregate, represent a fundamental change
      in the information set forth in the Registration Statement, Notwithstanding
      the
      foregoing, any increase or decrease in the volume of securities offered (if
      the
      total dollar value of securities offered would not exceed that which was
      registered) and any deviation from the low or high end of the estimated maximum
      offering range may be reflected in the form of prospectus filed with the
      Commission pursuant to Rule 424 (b) if, in the aggregate, the changes in volume
      and price represent no more than a twenty percent (20%) change in the maximum
      aggregate offering price set forth in the &#8220;Calculation of Registration Fee&#8221;
table in the effective registration statement; and </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)
      To
      include any material information with respect to the plan of distribution not
      previously disclosed in the Registration Statement or any material change to
      such information in the Registration Statement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Provided,
      however, that paragraphs 1(a)(i) and 1(a)(ii) do not apply if the Registration
      Statement is on Form S-3 or Form S-8 and the information required to be included
      in a post-effective amendment by those paragraphs is contained in periodic
      reports filed with or furnished to the Commission by the Registrant pursuant
      to
      Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
      incorporated by reference herein. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      That,
      for the purpose of determining any liability under the Securities Act of 1933,
      each such post-effective amendment shall be deemed to be a new registration
      statement relating to the securities offered herein, and the offering of such
      securities at that time shall be deemed to be the initial bona fide offering
      thereof. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      To
      remove from registration by means of a post-effective amendment any of the
      securities being registered which remain unsold at the termination of the
      offering. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.
      The
      undersigned Registrant hereby undertakes that, for purposes of determining
      any
      liability under the Securities Act of 1933, each filing of the Registrant's
      annual report pursuant to Section 13(a) or Section 15(d) of the Securities
      Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
      plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
      of
      1934) that is incorporated by reference in the Registration Statement shall
      be
      deemed to be a new registration statement relating to the securities offered
      herein, and the offering of such securities at that time shall be deemed to
      be
      the initial bona fide offering thereof. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.
      Insofar as indemnification for liabilities arising under the Securities Act
      of
      1933 may be permitted to directors, officers and controlling persons of the
      Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
      has been advised that in the opinion of the Securities and Exchange Commission
      such indemnification is against public policy as expressed in the Act and is,
      therefore, unenforceable. In the event that a claim for indemnification against
      such liabilities (other than the payment by the Registrant of expenses incurred
      or paid by a director, officer or controlling person of the Registrant in the
      successful defense of any action, suit or proceeding) is asserted by such
      director, officer or controlling person in connection with the securities being
      registered, the Registrant will, unless in the opinion of its counsel the matter
      has been settled by controlling precedent, submit to a court of appropriate
      jurisdiction the question whether such indemnification by it is against public
      policy as expressed in the Act and will be governed by the final adjudication
      of
      such issue. </font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      to the requirements of the Securities Act of 1933, the Registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing on Form S-8 and has duly caused this Registration Statement to be signed
      on its behalf by the undersigned, thereunto duly authorized, in the City of
      Wakefield, Massachusetts, on this 26th</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>&#160;</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">day
      of
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            <td align="left" valign="middle" width="40%">
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                /s/ Anthony J. Armini</u></em></font></div>
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            </td>
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      ALL
      MEN BY THESE PRESENTS that each individual whose signature appears below
      constitutes and appoints Anthony J. Armini true and lawful attorney-in-fact
      and
      agent with full power of substitution, for and in such name, place and stead,
      in
      any and all capacities, to sign any and all amendments (including post-effective
      amendments) to this Registration Statement, and to file the same, with all
      exhibits thereto, and all documents in connection therewith, with the Securities
      and Exchange Commission, granting unto said attorney-in-fact and agent full
      power and authority to do and perform each and every act and thing which he
      may
      deem necessary or advisable to be done in connection with this Registration
      Statement, as fully to all intents and purposes as he might or could do in
      person, hereby ratifying and confirming all that said attorney-in-fact and
      agent
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      by
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      Registration Statement has been signed by the following persons in the
      capacities indicated on July 26, 2007.</font></div>
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July
        26,
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
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{"company-data": {"conformed-name": "IMPLANT SCIENCES CORP", "cik": "0001068874", "assigned-sic": "3841", "irs-number": "042837126", "state-of-incorporation": "MA", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-144892", "film-number": "071004162"}, "business-address": {"street1": "107 AUDUBON ROAD #5", "city": "WAKEFIELD", "state": "MA", "zip": "01880-1246", "phone": "7812460700"}, "mail-address": {"street1": "107 AUDUBON ROAD, #5", "city": "WAKEFIELD", "state": "MA", "zip": "01880"}}
2006 Employee Stock Purchase Plan
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C., 20549
FORM
      S-8
REGISTRATION
      STATEMENT
UNDER
THE
      SECURITIES ACT OF 1933
IMPLANT
      SCIENCES CORPORATION
-------------------------------------------------------------------------------------------------------------------------------
(Name
      of
      small business issuer in its charter)
MASSACHUSETTS
                04-2837126
(State
                or other jurisdiction of (IRS Employer Identification No.)
Incorporation
                or Organization)
107
      AUDUBON ROAD, #5
WAKEFIELD,
      MA 01880
---------------------------------------------------------------------------------------------------------------------
(Address
      of principal executive office)
IMPLANT
      SCIENCES CORPORATION
2006
      EMPLOYEE STOCK PURCHASE PLAN
-------------------------------------------------------
(FULL
      TITLE OF THE PLAN)
ANTHONY
      J. ARMINI
Chief
      Executive Officer
107
      Audubon Road, #5
Wakefield,
      Massachusetts 01880
(781)
      246-0700
(Name,
      address, including zip code, and telephone number, including area code, of
      agent
      for service)
--------------
Copies
      of
      all communications to:
DAVID
      SELENGUT, ESQ.
ELLENOFF
      GROSSMAN & SCHOLE LLP
370
      Lexington Avenue
New
      York,
      New York 10017
(212)
      370-1300
Title
                  of Securities to be Registered
Amount
                  to be Registered
Proposed
                  Maximum Offering Price per Share (2)
Proposed
                  Maximum Aggregate Offering Price (1)
Amount
                  of Registration Fee
Common
                  Stock
500,000
                  shares (1)
$1.83
$915,000
$28.09
(1)
      Pursuant to Rule 416 promulugated under the Securities Act of 1933, as amended,
      this Registration Statement covers such indeterminate additional shares of
      common stock to be offered or issued to prevent dilution as a result of future
      stock splits, stock dividends or other similar transactions.
(2)
      Estimated solely for the purposes of determining the registration fee.
(3)
      In
      accordance with Rules 457(c) and (h) under the Securities Act of 1933, the
      calculation with respect to shares issuable under the 2006 Plan as of July
      20,
      2007 is based on the average of the high and low price of the Company's
      common stock on July 20, 2007, a date within five (5) business days prior
      to the date of filing this registration statement, as reported by the American
      Stock Exchange ("AMEX").
EXPLANATORY
      NOTE
This
      Registration Statement contains two parts. The first part contains a "Reoffer
      Prospectus," which has been prepared in accordance with the requirements of Part
      I of Form S-3 (as required by Section C.1. of the General Instructions to Form
      S-8). The Reoffer Prospectus will be used for reoffers and resales by affiliates
      of Implant Sciences Corporation (the "Registrant") of shares of common stock of
      the Registrant to be issued pursuant to the Registrant's 2006 Employee Stock
      Purchase Plan. The second part contains information required in the registration
      statement pursuant to Part II of Form S-8. Pursuant to the introductory note
      to
      Part I of Form S-8, the plan information, which constitutes part of the "Plan
      Prospectus," is not being filed with the Securities and Exchange Commission.
INFORMATION
      REQUIRED IN THE SECTION 10(A) PROSPECTUS
The
      documents containing the information specified in Part I, Items 1 and 2 of
      Form
      S-8, will be sent or given to any recipient of a stock option or stock award
      in
      accordance with Form S-8 and Rule 428(b)(1) of the Securities Act. We will
      furnish without charge to any person to whom information is required to be
      delivered, upon written or oral request, a copy of each document incorporated
      by
      reference in Item 3 of Part II of this Registration Statement, which documents
      are incorporated by reference in the Section 10(a) prospectus, and any other
      documents required to be delivered to them under Rule 428(b) of the Securities
      Act. Requests should be directed to
Diane
      J.
      Ryan
Vice
      President, Finance
Implant
      Sciences Corporation
107
      Audubon Road #5
Wakefield,
      MA 01880
(781)
      246-0700
The
      re-offer prospectus follows this paragraph.
PROSPECTUS
500,000
      Shares of Common Stock
of
Implant
      Sciences Corporation
_____________
IMPLANT
      SCIENCES CORPORATION 2006 EMPLOYEE STOCK PURCHASE PLAN
This
      prospectus is being used in connection with the offering from time to time
      by
      certain selling stockholders of our company or their successors in interest
      of
      shares of the common stock which may be acquired or to be issued pursuant to
      our
      2006 Employee Stock Purchase Plan (the "2006 Plan").
The
      closing sales price of our common stock on July 20, 2007, as reported by the
      American Stock Exchange ("AMEX") was $1.80.
This
      prospectus is not an offer to sell these securities and it is not soliciting
      an
      offer to buy these securities in any state where the offer or sale is not
      permitted.
You
      should rely only on the information contained in this prospectus. We have not
      authorized anyone to provide you with information different from that contained
      in this prospectus.
The
      common stock may be sold from time to time by the selling stockholders or by
      their pledges, donees, transferees or other successors in interest. Such sales
      may be made in the over-the-counter market or otherwise at prices and at terms
      then prevailing or at prices related to the then current market price, or in
      negotiated transactions. The common stock may be sold by one or more of the
      following: (a) block trades in which the broker or dealer so engaged will
      attempt to sell the shares as agent but may position and resell portions of
      the
      block as principal to facilitate the transaction; (b) purchases by a broker
      or
      dealer as principal and resale by such broker or dealer for its account pursuant
      to this prospectus; (c) an exchange distribution in accordance with the rules
      of
      such exchange; and (d) ordinary brokerage transactions and transactions in
      which
      the broker solicits purchases. In effecting sales, brokers or dealers engaged
      by
      the selling stockholders may arrange for other brokers or dealers to
      participate. Brokers or dealers will receive commissions or discounts from
      selling stockholders in amounts to be negotiated immediately prior to the sale.
      Such brokers or dealers and any other participating brokers or dealers may
      be
      deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
      amended (the "Act") in connection with such sales. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144may be
      sold under Rule 144 rather than pursuant to this prospectus. We will not receive
      any of the proceeds from the sale of these shares, and we have paid the expenses
      of preparing this prospectus and the related registration
      statement.
INVESTING
      IN OUR COMMON STOCK INVOLVES RISKS.
PLEASE
      SEE "RISK FACTORS" BEGINNING ON PAGE 6.
THESE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
      COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
      STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
      PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
      OFFENSE.
_____________________________________________________
The
      date of this Prospectus is July 26, 2007
TABLE
      OF
      CONTENTS
Prospectus
                  Summary
5
Risk
                  Factors
6
Forward
                  Looking Statements
14
The
                  Offering
14
Use
                  of Proceeds
14
Selling
                  Stockholders
14
Plan
                  of Distribution
15
Documents
                  Incorporated By Reference
16
Experts
17
Disclosure
                  of SEC Position on Indemnification for Securities Act
                  Liabilities
17
Legal
                  Matters
17
Where
                  You Can Find More Information
17
NO
      PERSON
      HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS,
      OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
      MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
      NOT
      BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
      NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
      ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
      AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
      CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
      OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
      IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
      IS
      NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
      OFFER OR SOLICITATION.
PROSPECTUS
      SUMMARY
The
      following summary contains basic information about Implant Sciences Corporations
      and this prospectus. It may not contain all of the information that is important
      to you. For a more complete understanding, we encourage you to read the entire
      prospectus and the documents incorporated by reference into this prospectus.
      In
      this prospectus, the words "Implant, "Company," "we", "our" and "us" refer to
      Implant Sciences Corporation and our consolidated subsidiaries.
Common
                Stock outstanding before offering
11,835,561
                shares (1)
Common
                Stock issuable under the Plan which maybe offered pursuant to this
                prospectus
500,000
AMEX
                Symbol for Common Stock
"IMX"
Risk
                Factors
We
                will not receive any proceeds from the sales of these shares.
Risk
                Factors
There
                are risks associated with an investment in the common stock offered
                by
                this prospectus. You should carefully consider the risk factors described
                in the prospectus in the "Risk Factors" section before making a decision t
                o invest.
(1)
      As of July 20,
      2007. Does not include shares of common stock issuable upon exercise or
      conversion of options, notes or warrants.
Prospective
      investors should not rely on any information not contained in this document.
      We
      have not authorized anyone to provide any other information. This document
      may
      only be used where it is legal to sell these securities. The information in
      this
      document may only be accurate as of and on the date of this
      document.
You
      should rely only on the information contained in this Prospectus or incorporated
      by reference herein. Information on our website or the websites of any of our
      subsidiaries or affiliates, if any, is not incorporated into this Prospectus,
      and you should not rely on such information. We have not authorized anyone
      to
      provide you with any other information. This Prospectus may only be used where
      it is legal to sell these securities. The information in this Prospectus is
      accurate only as of the date noted above, regardless of the time of the delivery
      of this prospectus or of any sale of our common stock.
THE
      COMPANY
Over
      the
      past twenty two years, Implant Sciences Corporation has both developed and
      acquired technologies using ion implantation and thin film coatings. Initially
      this technology was used in semiconductor processing but soon expanded to
      include various medical device applications including the modification of
      orthopedic joint implant surfaces to reduce polyethylene wear generation and
      the
      manufacture of products for radiation therapy treatments. Our latest application
      of this technology includes the manufacturing of trace explosives detection
      equipment.
We
      currently provide ion implantation services to numerous semiconductor
      manufacturers, research laboratories and universities. In October 2004 and
      March
      2005, we acquired two California semiconductor companies, Core Systems ("Core")
      and Accurel Systems International ("Accurel"), respectively. In May 2007, we
      sold our Accurel subsidiary for a total purchase price of approximately
      $12,705,000. Other applications of our ion beam technology had been in the
      area
      of temporary brachytherapy products. In June 2007, we closed this product line.
Since
      May
      1999, we have been performing research to develop a trace explosives detector,
      which could be used to detect hidden bombs in airports and other public places.
      This technology is yet another application of our ion source technology. At
      present, we have developed both portable and bench-top systems for use in
      airports and Department of Defense facilities and have successfully marketed
      these products both domestically and internationally. In fiscal 2006, as part
      of
      a plan to reduce manufacturing costs, we transitioned the production of these
      products to a contract manufacturer. As we continue to sell and deliver these
      products, we work both independently and in conjunction with various government
      agencies, to develop the next generation of trace explosives detectors and
      identify new applications for our proprietary technology.
RISK
      FACTORS
An
      investment in us involves a high degree of risk and common stock should not
      be
      purchased by anyone who cannot afford the loss of their entire investment.
      You
      should carefully consider all of the following risk factors discussed below
      as
      well as other information in the prospectus before purchasing the common stock.
      The risks described below are not all of the risks facing us. Additional risks,
      including those that are currently not known to us or that we currently deem
      immaterial, may also impair our business operations.
The
      Company has received a modified audit opinion on its ability to continue
      as a going concern.
The
      audit
      report our independent registered public accounting firm issued on our audited
      financial statements for the fiscal year ended June 30, 2006 contains a
      modification regarding our ability to continue as a going concern. This
      modification indicates that there is substantial doubt on the part of our
      independent registered public accounting firm that we can continue as a going
      concern in that we did not have sufficient cash and liquid assets at June 30,
      2006, to cover our operating capital requirements for the next twelve-month
      period and if sufficient cash cannot be obtained we would have to substantially
      alter our operations, or we may be forced to discontinue operations.  Such
      an opinion from our independent registered public accounting firm may limit
      our
      ability to access certain types of financing, or may prevent us from obtaining
      financing on acceptable terms. There can be no assurance that the auditor will
      not qualify their opinion in the future.
We
      do not operate at a profit and do not expect to be profitable for some time.
During
      the nine months ended March 31, 2007, we had a net loss from continuing
      operations of
approximately
      $4,419,000. We plan to further increase our expenditures to
complete
      the development and commercialization of our new products, and to broaden our
      sales and marketing capabilities. As
a
      result,
      we believe that we will likely incur losses over the next several
quarters.
      Our accumulated deficit as of March 31, 2007 is approximately $40,850,000.
Management
      believes that our existing cash resources, cash proceeds received from the
      sale
      of Accurel, cash from operations and the availability on our revolving line
      of
      credit will meet working capital requirements over the next twelve months.
      However, unanticipated decreases in operating revenues, unanticipated decreases
      in the market value of our common stock, delays in government funding of grants,
      increases in expenses or further delays in product development may adversely
      impact our cash position and require further cost reductions. No assurance
      can
      be given that we will be able to operate profitably on a consistent
      basis.
Intense
      competition and rapid technological change could harm our financial
      performance.
In
      our
      semiconductor market we compete with many companies, including companies that
      have in-house capabilities to implant, diagnose and repair their own wafers.
      In
      our explosives detection equipment market, we compete with many companies,
      including companies that have substantially greater capital resources, greater
      research and development, manufacturing and marketing resources and experience
      and greater name recognition than we do. In addition, we expect new entrants
      into our markets.  There can be no assurance that our competitors will not
      succeed in developing or marketing technologies and products that are more
      effective than our products or that would render our products obsolete or
      noncompetitive. Moreover, there can be no assurance that we will be able to
      price our products and services at or below the prices of competing products
      and
      technologies in order to facilitate market acceptance. Accordingly, our success
      will depend, in part, on our ability to respond quickly to technological changes
      through the development and introduction of new products and enhancements.
      Product development involves a high degree of risk, and there can be no
      assurance that our new product development efforts will result in any
      commercially successful products. Our failure to compete or respond to
      technological change in an effective manner would have a material adverse effect
      on our business and results of operations.
Our
      medical products and technologies may not be accepted by the medical community
      which could harm our financial performance.
There
      can
      be no assurance that our medical coatings will achieve acceptance, or continue
      to receive acceptance, by the medical community and market acceptance generally.
      The degree of market acceptance for our products and services will also depend
      upon a number of factors, including the receipt and timing of regulatory
      approvals and the establishment and demonstration in the medical community
      and
      among health care payers of the clinical safety, efficacy and cost effectiveness
      of our products. Certain of the medical indications that can be treated by
      our
      devices or devices treated using our coatings can also be treated by other
      medical procedures. There can be no assurance that our devices or technologies
      will be able to replace such established treatments or that physicians, health
      care payers, patients or the medical community in general will accept and
      utilize our devices or any other medical products that may be developed or
      treated by us even if regulatory and reimbursement approvals are obtained.
      Long-term market acceptance of our products and services will depend, in part,
      on the capabilities, operating features and price of our products and
      technologies as compared to those of other available products and services.
      Failure of our products and technologies to gain market acceptance would have
      a
      material adverse effect on our business and results of operations.
Our
      explosives detection products and technologies may not be accepted by government
      agencies, airports or airlines which could harm our future financial
      performance.
There
      can
      be no assurance that our explosives detection systems will achieve acceptance
      by
      the domestic and international airports, government agencies and airlines,
      and
      market acceptance generally. The degree of market acceptance for our explosives
      detection products and services will also depend upon a number of factors,
      including the receipt and timing of regulatory approvals and the establishment
      and demonstration of the ability of our proposed device to detect trace
      explosives residues on personnel, baggage and other cargo prior to embarking
      on
      aircraft. Our failure to commercially develop our product to compete
      successfully with respect to throughput, the ability to scan personnel, baggage
      and other cargo carried onto airlines, and portability could delay, limit or
      prevent market acceptance. Moreover, the market for explosives detection systems
      technology, especially trace detection technology, is largely undeveloped,
      and
      we believe that the overall demand for explosives detection systems technology
      will depend significantly upon public perception of the risk of terrorist
      attacks. There can be no assurance that the public will perceive the threat
      of
      terrorist bombings to be substantial or that the airline industry and
      governmental agencies will actively pursue explosives detection systems
      technology. Long-term market acceptance of our products and services will
      depend, in part, on the capabilities, operating features and price of our
      products and technologies as compared to those of other available products
      and
      services. As a result, there can be no assurance, if the currently developed
      prototype product is brought to a commercial product, that we will be able
      to
      achieve market penetration, revenue growth or profitability.
Our
      future profitability depends on whether our products can successfully compete
      in
      the commercial marketplace.
We
      currently provide ion implantation services for ion implantation of
      semiconductors and medical devices. We plan to market radiopaque coatings,
      and
      explosive detection systems that may require substantial further investment
      in
      research, product development, preclinical and clinical testing and governmental
      regulatory approvals prior to being marketed and sold. Our ability to increase
      revenues and achieve profitability and positive cash flow will depend, in part,
      on our ability to complete such product development efforts, obtain such
      regulatory approvals, and establish manufacturing and marketing programs and
      gain market acceptance for such proposed products.
The
      market for explosive detection systems is intensely competitive and is
      characterized by continuously developing technology and frequent introductions
      of new products and features. We expect competition to increase as other
      companies introduce additional and more competitive products in the explosive
      detection systems market as we develop the capabilities and enhancements of
      our
      trace detection systems. Each of our competitors may have substantially greater
      financial resources than us.
We
      believe that our ability to compete in the explosive detection systems market
      is
      based upon such factors as: product performance, functionality, quality and
      features; quality of customer support services, documentation and training;
      and
      the capability of the technology to appeal to broader applications beyond the
      inspection of passengers, baggage, and cargo carried on airlines. Although
      we
      believe that our currently developed product has all of the capabilities to
      meet
      the United States government's decree that all passengers, baggage, and cargo
      carried on airlines must be screened thoroughly, certain of our competitors
      may
      have an advantage over our existing technology with respect to these factors.
      There can be no assurance that we will be successful in convincing potential
      customers that our products will be superior to other systems given all of
      the
      necessary performance criteria, that new systems with comparable or greater
      performance, lower price and faster or equivalent throughput will not be
      introduced, or that, if such products are introduced, customers will not delay
      or cancel potential orders for us yet to be commercialized system. Further,
      there can be no assurance that we will be able to bring to commercialization
      and
      further enhance our product to better compete on the basis of cost, throughput,
      accommodation of detection of passengers, baggage or other cargo carried onto
      airlines, or that we will otherwise be able to compete successfully with
      existing or new competitors.
Our
      product development efforts are subject to the risks inherent in the development
      of such products. These risks include the possibility that development costs
      will be much greater than currently anticipated, that our products will be
      found
      to be ineffective or unsafe, or will otherwise fail to receive necessary
      regulatory approvals; that the products will be difficult to manufacture on
      a
      large scale or be uneconomical to market; that the proprietary rights of third
      parties will interfere with our product development; or that third parties
      will
      market superior or equivalent products which achieve greater market acceptance.
      Furthermore, there can be no assurance that we will be able to conduct our
      product development efforts within the time frames currently anticipated or
      that
      such efforts will be completed successfully.
There
      are risks relating to our Development, Distribution and Manufacturing Agreement
      with Rapiscan Systems, Inc.
In
      March
      of 2005, we entered into a Development, Distribution and Manufacturing Agreement
      (the "Agreement") with Rapiscan Systems, Inc. ("Rapiscan").  Under the
      terms of this agreement, we gave Rapiscan the exclusive worldwide rights to
      market our Quantum Sniffer
TM
portable
      and benchtop trace detection devices under their private label.  We also
      agreed to give Rapiscan the exclusive worldwide rights to distribute certain
      other new security products which we may develop in the future with their
      funding, as well as rights, in some circumstances, to manufacture certain
      components of the Quantum Sniffer
TM
portable
      and benchtop trace detection devices.
In
      March
      2006, the Company brought suit against Rapiscan and its parent, OSI Systems,
      Inc. The Company is requesting rescission of the Agreement, for lack of
      performance and other grounds or in the alternative, termination of the
      Agreement due to material breaches of contract and implied covenant of good
      faith and fair dealing and for damages. Should the Company be unsuccessful
      in
      prosecuting its lawsuit, it could have a material adverse effect on our business
      and results of operations.
In
      March
      2006, the Company received notice that Rapiscan filed a complaint against the
      Company regarding the Agreement. Rapiscan's complaint is based upon claims of
      breach of contract, breach of warranty and tortuous interference with
      contractual relations and is requesting a decree for specific performance,
      declaratory relief and injunctive relief. Should the Company be unsuccessful
      in
      defending itself in the lawsuit, it could have a material adverse effect on
      our
      business and results of operations.
In
      August
      2006, as a result of motions made by both parties, the two lawsuits have been
      consolidated in the United States District Court for the Central District of
      California with the Company as plaintiff. Presently, discovery is in process.
      Rapiscan and OSI have filed a motion to dismiss certain of the Company's claims.
      The Company has not yet responded to the motion. Presently, discovery is in
      process. Rapiscan and OSI have filed a motion to dismiss certain of the
      Company's claims. As of October 30, 2006, the court has ruled that the Company's
      claim of breach of fiduciary duty was dismissed but OSI's motion to dismiss all
      other claims was denied. The litigants are presently in the discovery process
      which should be completed by July 2007. Rapiscan has recently filed two motions
      for partial summary judgment, one relating to the manufacturing provisions
      of
      the agreement and the other related to certain types of damages.  We have
      opposed the two motions, which are to be heard on August 6, 2007.  Trial is
      expected in early 2008.
Should
      the Company be unsuccessful in prosecuting this matter, it may have a material
      adverse effect on its business and results of operations.
We
      own patents, trade secrets and other intellectual property and know-how that
      we
      believe allows us to compete effectively. Limitations on our ability to protect
      our intellectual property or continue to use our intellectual property could
      harm our financial performance.
Our
      ability to compete effectively will depend, to a significant extent, on our
      ability to operate without infringing the intellectual property rights of
      others. Many participants in the medical device area aggressively seek patent
      protection and have increasing numbers of patents, and have frequently
      demonstrated a readiness to commence litigation based on patent infringement.
      Third parties may assert exclusive patent rights to technologies that are
      important to us.
Our
      success will depend on our ability to obtain new patents and operate without
      infringing on the proprietary rights of others.
Although
      we have twenty (20) United States patents issued and ten (10) United States
      patent applications pending for our technology and processes, our success will
      depend, in part, on our ability to obtain the patents applied for and maintain
      trade secret protection for our technology and operate without infringing on
      the
      proprietary rights of third parties. The validity and breadth of claims in
      medical technology patents involve complex legal and factual questions and,
      therefore, may be highly uncertain. No assurance can be given that any pending
      patent applications or any future patent application will issue as patents,
      that
      the scope of any patent protection obtained will be sufficient to exclude
      competitors or provide competitive advantages to us, that any of our patents
      will be held valid if subsequently challenged or that others will not claim
      rights in or ownership of the patents and other proprietary rights held by
      us.
Furthermore,
      there can be no assurance that others have not or will not develop similar
      products, duplicate any of our products or design around any patents issued
      or
      that may be issued in the future to us. In addition, whether or not patents
      are
      issued to us, others may hold or receive patents which contain claims having
      a
      scope that covers products or processes developed by us.
Moreover,
      there can be no assurances that patents issued to us will not be challenged,
      invalidated or circumvented or that the rights thereunder will provide any
      competitive advantage. We could incur substantial costs in defending any patent
      infringement suits or in asserting any patent rights, including those granted
      to
      third parties. Patents and patent applications in the United States may be
      subject to interference proceedings brought by the United States Patent &
Trademark Office, or to opposition proceedings initiated in a foreign patent
      office by third parties. We may incur significant costs defending such
      proceedings. In addition, we may be required to obtain licenses to patents
      or
      proprietary rights from third parties. There can be no assurance that such
      licenses will be available on acceptable terms if at all. If we do not obtain
      required licenses, we could encounter delays in product development or find
      that
      the development, manufacture or sale of products requiring such licenses could
      be foreclosed.
We
      also
      rely on unpatented proprietary technology, trade secrets and know-how and no
      assurance can be given that others will not independently develop substantially
      equivalent proprietary information, techniques or processes, that such
      technology or know-how will not be disclosed or that we can meaningfully protect
      our rights to such unpatented proprietary technology, trade secrets, or
      know-how. Although we have entered into non-disclosure agreements with our
      employees and consultants, there can be no assurance that such non-disclosure
      agreements will provide adequate protection for our trade secrets or other
      proprietary know-how.
If
      we are not successful in managing our future growth, our business will
      suffer.
We
      have
      limited experience in the commercial production of explosives detection systems.
      Our future success will depend upon, among other factors, our ability to
      recruit, hire, train and retain highly educated, skilled and experienced
      management and technical personnel, to generate capital from operations, to
      scale-up our manufacturing process and expand our facilities and to manage
      the
      effects of growth on all aspects of our business, including research,
      development, manufacturing, distribution, sales and marketing, administration
      and finance. Our failure to identify and exploit new product and service
      opportunities, attract or retain necessary personnel, generate adequate revenues
      or conduct our expansion or manage growth effectively could have a material
      adverse effect on our business and results of operations.
Our
      research and manufacturing activities involve the use of hazardous materials.
      Any liability resulting from the misuse of such hazardous materials could
      adversely affect our business.
Our
      research and manufacturing activities sometimes involve the use of various
      hazardous materials. Although we believe that our safety procedures for
      handling, manufacturing, distributing, transporting and disposing of such
      materials comply with the standards for protection of human health, safety,
      and
      the environment, prescribed by local, state, federal and international
      regulations, the risk of accidental contamination or injury from these materials
      cannot be completely eliminated. Nor can we eliminate the risk that one or
      more
      of our hazardous material or hazardous waste handlers may cause contamination
      for which, under laws imposing strict liability, we could be held liable. While
      we currently maintain insurance in amounts which we believe are appropriate
      in
      light of the risk of accident, we could be held liable for any damages that
      might result from any such event. Any such liability could exceed our insurance
      and available resources and could have a material adverse effect on our business
      and results of operations.
Product
      liability claims could damage our reputation and hurt our financial
      results.
To
      date
      no product liability claims have been asserted against us; however, the testing,
      marketing and sale of implantable devices and materials entail an inherent
      risk
      that product liability claims will be asserted against us, if the use of our
      devices is alleged to have adverse effects on a patient, including exacerbation
      of a patient's condition, further injury, or death. A product liability claim
      or
      a product recall could have a material adverse effect on our business. Certain
      of our devices are designed to be used in treatments of diseases where there
      is
      a high risk of serious medical complications or death.
If
      our suppliers cannot provide the components or services we require, our ability
      to manufacture our products could be harmed.
We
      rely
      on a limited number of suppliers to provide materials and services used to
      manufacture our products. If we cannot obtain adequate quantities of necessary
      materials and services from our suppliers, there can be no assurance that we
      would be able to access alternative sources of supply within a reasonable period
      of time or at commercially reasonable rates. Moreover, in order to maintain
      our
      relationship with major suppliers, we may be required to enter into preferred
      supplier agreements that will increase the cost of materials obtained from
      such
      suppliers, thereby also increasing the prices of our products. The limited
      sources, the unavailability of adequate quantities, the inability to develop
      alternative sources, a reduction or interruption in supply or a significant
      increase in the price of raw materials or services could have a material adverse
      effect on our business and results of operations.
If
      our contract manufacturer cannot provide the services we require, our ability
      to
      manufacture our products could be harmed.
We
      rely
      on a single contract manufacturer to provide manufacturing services for our
      explosives detection products. If these services become unavailable, we would
      be
      required to identify and enter into an agreement with a new contract
      manufacturer or take the manufacturing in house. The loss of our contract
      manufacturer could significantly disrupt production as well as increase the
      cost
      of production, thereby also increasing the prices of our products. These changes
      could have a material adverse effect on our business and results of operations.
If
      we were to lose the services of either our president or our chief scientist,
      our
      business would be adversely affected.
We
      are
      substantially dependent, for the foreseeable future, upon our Chairman of the
      Board, President and Chief Executive Officer, Dr. Anthony J. Armini and our
      Vice
      President and Chief Scientist, Dr. Stephen N. Bunker, both of whom currently
      devote their full time and efforts to management. We have entered into an
      employment agreement with each of these officers. If we were to lose the
      services of Dr. Armini or Dr. Bunker for any significant period of time, our
      business would be materially adversely affected.
If
      we cannot attract and retain the management, sales and other personnel we need,
      we will not be successful.
There
      is
      intense competition for qualified personnel in the high technology field, and
      there can be no assurance that we will be able to continue to attract and retain
      qualified personnel necessary for the development of our business. The loss
      of
      the services of existing personnel as well as the failure to recruit additional
      qualified scientific, technical and managerial personnel in a timely manner
      would be detrimental to our anticipated growth and expansion into areas and
      activities requiring additional expertise such as marketing. The failure to
      attract and retain such personnel could adversely affect our business and
      results of operations.
If
      we are unable to complete our assessments as to the adequacy of our internal
      controls over financial reporting as required by Section 404 of the
      Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability
      of our financial statements, which could result in a decrease in the value
      of
      our common stock.
As
      directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Securities
      and Exchange Commission adopted rules requiring public companies to include
      a
      report of management on the company's internal control over financial reporting
      in their annual reports on Form 10-K. This report is required to contain an
      assessment by management of the effectiveness of such company's internal
      controls over financial reporting. In addition, the independent registered
      public accounting firm auditing a public company's financial statements must
      attest to and report on management's assessment of the effectiveness of the
      company's internal controls over financial reporting. While we will begin to
      develop the necessary documentation and testing procedures required by
      Section 404, there is a risk that we will not comply with all of the
      requirements imposed by Section 404. If we fail to implement required new
      or improved controls, we may be unable to comply with the requirements of
      Section 404 in a timely manner. This could result in an adverse reaction in
      the financial markets due to a loss of confidence in the reliability of our
      financial statements, which could cause the market price of our common stock
      to
      decline and make it more difficult for us to finance our
      operations.
In
      our
      report on Form 10-K for the year ended June 30, 2006, o
ur
      independent auditors have reported to our Audit Committee certain matters
      involving internal controls that our independent auditors considered to be
      a
      significant deficiency. A significant deficiency is a control deficiency or
      combination of control deficiencies, that adversely affects the company's
      ability to initiate, authorize, record, process, or report external financial
      data reliably in accordance with generally accepted accounting principles such
      that there is more than a remote likelihood that a misstatement of the company's
      annual or interim financial statements that is more than inconsequential will
      not be prevented or detected.
The
      reportable condition related primarily to the closing and financial reporting
      process.  Management is confident that our financial statements for
      the year ended June 30, 2006 fairly present, in all material respects, our
      financial condition and results of operations.
The
      reportable condition has been discussed in detail among management, our Audit
      Committee and our independent auditors, and we are committed to addressing
      and
      resolving these matters fully and promptly, by putting in place the personnel,
      processes, technology and other resources appropriate to support our financial
      close processes. As part of this commitment, we intend to use the services
      of an outside consultant to evaluate our closing and financial reporting
      process and make recommendations to management to improve
      these processes.
We
      cannot
      assure you that we will successfully address the issues raised by our
      independent auditors above. If we are unable to do so, and a misstatement,
      error
      or fraud is committed and remains undetected, we may suffer a material adverse
      effect to our results of operations.
Our
      quarterly results may fluctuate significantly, which could adversely affect
      our
      stock price.
We
      believe that our operating results may be subject to substantial quarterly
      fluctuations due to several factors, some of which are outside our control,
      including fluctuating market demand for, and declines in the average selling
      price of our products, the timing of significant orders from customers, delays
      in the introduction of new or improved products, delays in obtaining customer
      acceptance of new or changed products, the cost and availability of raw
      materials, and general economic conditions. We plan to further increase our
      expenditures to complete development and commercialization of our new products,
      to increase our manufacturing capacity, to ensure compliance with the Food
      and
      Drug Administration's Quality Systems Regulations and to broaden our sales
      and
      marketing capabilities. A substantial portion of our revenue in any quarter
      historically has been derived from orders booked in that quarter, and
      historically, backlog has not been a meaningful indicator of revenues for a
      particular period. Accordingly, our sales expectations currently are based
      almost entirely on our internal estimates of future demand and not from firm
      customer orders.
We
      will be required to redeem the Series D Preferred for cash if the five day
      average market price of our common stock, prior to a redemption date, is less
      than 110% of the fixed conversion price.
We
      will
      be required to redeem the Series D Preferred for cash if the following
      conditions are not met: (1) the shares must be issued pursuant to an effective
      registration statement, (2) the average closing market price of the common
      stock
      for the five trading days immediately preceding a payment date must exceed
      the
      fixed conversion price of $4.15 by 110% and no one day's closing price may be
      less than the fixed conversion price, and (3) the conversion dollar value may
      not exceed the aggregate of the prior 22 trading days' dollar volume. We cannot
      be certain that we will be able to redeem the monthly payment in shares of
      common stock on a redemption date given the fixed conversion price of the
      preferred stock and the associated market price of the common stock on a
      redemption date. If we are required to redeem monthly payments in cash, this
      will reduce our working capital necessary for our operations.  Failure of
      our ability to convert preferred shares into common shares will have a material
      adverse affect on our cash resources.  We may be required to reduce or
      curtail certain operations and research and development projects to improve
      our
      cash resources. As of July 20, 2007, the closing price of our common stock
      was
      $1.80 per share.  The outstanding balance is approximately
      $3,939,000.
The
      Company may have liability in connection with its recent securities
      transactions.
We
      amended the Series D financing terms with Laurus Master Fund in May 2006, while
      the Registration Statement on Form S-3 was on file with the SEC but had not
      yet
      been declared effective. This may have been a violation of Section 5 of the
      Securities Act and may provide Laurus with rescission rights. Although Laurus
      has been offered rescission and has declined to rescind such transaction, there
      is a possibility that such transaction could be reversed and the consideration
      received by us may have to be repaid. Because we have made redemption payments
      to Laurus in accordance with the terms of the Series D, if the transaction
      was
      rescinded, we would be required to pay Laurus the aggregate amount of
      approximately $3,939,000, which would have a material adverse affect upon our
      business.
If
      third party credit is unavailable, our working capital could be restricted;
      restrictions on our ability to raise additional capital under certain
      circumstances.
Currently,
      we rely on cash generated from our operations, private equity financing and
      third party credit for working capital purposes. If such financing is no longer
      available at acceptable rates, we would be required to reduce or curtail our
      operations and research and development projects. This would have a material
      adverse effect on our business and results of operations.
Shares
      eligible for future sale may adversely affect the market.
From
      time
      to time, certain of our stockholders may be eligible to sell all or some of
      their shares of common stock by means of ordinary brokerage transactions in
      the
      open market pursuant to Rule 144, promulgated under the Securities Act,
      subject to certain limitations. In general, pursuant to Rule 144, a
      stockholder (or stockholders whose shares are aggregated) who has satisfied
      a
      one year holding period may, under certain circumstances, sell within any three
      month period a number of securities which does not exceed the greater of 1%
      of
      the then outstanding shares of common stock or the average weekly trading volume
      of the class during the four calendar weeks prior to such sale. Rule 144
      also permits, under certain circumstances, the sale of securities, without
      any
      limitation, by our stockholders that are non-affiliates that have satisfied
      a
      two year holding period. Any substantial sale of our common stock pursuant
      to
      Rule 144 or pursuant to any resale prospectus may have material adverse
      effect on the market price of our securities.
Because
      of certain limitation on director/officer liability, our stockholders may have
      limited rights to recover for breach of fiduciary duty.
As
      permitted
      by Massachusetts law, our Restated Articles of Organization limit the liability
      of our directors for monetary damages for breach of a director's fiduciary
      duty
      except for liability in certain instances. As a result of our charter provision
      and Massachusetts law, stockholders may have limited rights to recover against
      directors for breach of fiduciary duty. In addition, our bylaws provide that
      we
      shall indemnify our directors, officers, employees and agents if such persons
      acted in good faith and reasoned that their conduct was in our best interest.
We
      have no history of paying dividends on our common stock.
We
      have never
      paid any cash dividends on our common stock and do not anticipate paying any
      cash dividends on our common stock in the foreseeable future. We plan to retain
      any future earnings to finance growth. If we decide to pay dividends to the
      holders of our common stock, such dividends may not be paid on a timely
      basis.
The
      anti-takeover provisions of our Restated Articles of Organization and of the
      Massachusetts corporation law may delay, defer or prevent a change of control.
Our
      board
      of directors has the authority to issue up to 5,000,000 shares of preferred
      stock and to determine the price, rights, preferences and privileges and
      restrictions, including voting rights, of those shares without any further
      vote
      or action by our stockholders. The rights of the holders of common stock will
      be
      subject to, and may be harmed by, the rights of the holders of any shares of
      preferred stock that may be issued in the future. The issuance of preferred
      stock may delay, defer or prevent a change in control because the terms of
      any
      issued preferred stock could potentially prohibit our consummation of any
      acquisition, reorganization, sale of substantially all of our assets,
      liquidation or other extraordinary corporate transaction, without the approval
      of the holders of the outstanding shares of preferred stock. In addition, the
      issuance of preferred stock could have a dilutive effect on our stockholders.
Our
      stockholders must give substantial advance notice prior to the relevant meeting
      to nominate a candidate for director or present a proposal to our stockholders
      at a meeting. These notice requirements could inhibit a takeover by delaying
      stockholder action.
FORWARD-LOOKING
      INFORMATION
Some
      of
      the information in this prospectus, or incorporated by reference into this
      prospectus, contains forward-looking statements that involve substantial risks
      and uncertainties. Any statement in this prospectus that is not a statement
      of
      an historical fact constitutes a "forward-looking statement". Further, when
      we
      use the words "may", "expect", "anticipate", "plan", "believe", "seek",
      "estimate", "internal", and similar words, we intend to identify statements
      and
      expressions that may be forward-looking statements. We believe it is important
      to communicate certain of our expectations to our investors. Forward-looking
      statements are not guarantees of future performance. They involve risks,
      uncertainties and assumptions that could cause our future results to differ
      materially from those expressed in any forward-looking statements. Many factors
      are beyond our ability to control or predict. You are accordingly cautioned
      not
      to place undue reliance on such forward-looking statements. We have no
      obligation or intent to update publicly any forward-looking statements whether
      in response to new information, future events or otherwise.
THE
      OFFERING
This
      registration statement relates to the resale of shares of our common stock
      issued and issuable to certain selling stockholders. Specifically, the shares
      of
      our common stock included in this offering consist of :
500,000
      shares of our common stock issuable under the 2006 Plan.
USE
      OF PROCEEDS
All
      of
      the shares of common stock offered by this prospectus are being offered by
      the
      selling stockholders.
We will
      not receive any proceeds from the sales of these shares. All expenses of the
      registration of the shares will be paid for by us. See "Selling Stockholders"
and "Plan of Distribution."
For
      information about the selling stockholders, see "Selling Stockholders."
SELLING
      SHAREHOLDERS
The
      following table sets forth the name and relationship to Implant and its
      affiliates (within the past three years) of each selling stockholder who
      identity is known as of the date of this prospectus., the number of shares
      of
      common stock which each selling stockholder (1) owned of the record date before
      the offering; and (2) the amount of common stock to be owned by each selling
      stockholder and (if one percent or more) the percentage of the class to be
      owned
      by such stockholder assuming the sale of all shares acquired under the Plan.
      .
The
      information contained in this table reflects "beneficial" ownership of common
      stock within the meaning of Rule 13d-3 under the Exchange Act. As of July 3,
      2007, we had 11,835,561 shares of common stock outstanding. Beneficial ownership
      information reflected in the table includes shares issuable upon the exercise
      of
      outstanding options/warrants issued by us at their initial exercise
      prices.
Name
Amount
                of Common Stock Beneficially Owned As of
July
                20, 2007
Amount
                Offered
Hereby
Amount
                of Common Stock and Percentage of Class to be Owned
After
                the Offering
%
                of Class to be Owned After the
Offering
None
PLAN
      OF DISTRIBUTION
In
      this
      section of the prospectus, the term "selling stockholder" means and includes:
      (1) the persons identified in the tables above as the Selling Stockholders;
      and
      (2) any of their donees, pledgees, distributees, transferees or other successors
      in interest who may (a) receive any of the shares of our common stock offered
      hereby after the date of this prospectus and (b) offer or sell those shares
      hereunder.
The
      shares of our common stock offered by this prospectus may be sold from time
      to
      time directly by the selling stockholders. Alternatively, the selling
      stockholders may from time to time offer such shares through underwriters,
      brokers, dealers, agents or other intermediaries. The selling stockholders
      as of
      the date of this prospectus have advised us that there were no underwriting
      or
      distribution arrangements entered into with respect to the common stock offered
      hereby. The distribution of the common stock by the selling stockholders may
      be
      effected: in one or more transactions that may take place on the AMEX (including
      one or more block transaction) through customary brokerage channels, either
      through brokers acting as agents for the selling stockholders, or through market
      makers, dealers or underwriters acting as principals who may resell these shares
      on the AMEX; in privately-negotiated sales; by a combination of such methods;
      or
      by other means. These transactions may be effected at market prices prevailing
      at the time of sale, at prices related to such prevailing market prices or
      at
      other negotiated prices. Usual and customary or specifically negotiated
      brokerage fees or commissions may be paid by the selling stockholders in
      connection with sales of our common stock.
The
      selling stockholders may enter into hedging transactions with broker-dealers
      in
      connection with distributions of the shares or otherwise. In such transactions,
      broker-dealers may engage in short sales of the shares of our common stock
      in
      the course of hedging the positions they assume with the selling stockholders.
      The selling stockholders also may sell shares short and redeliver the shares
      to
      close out such short positions. The selling stockholders may enter into option
      or other transactions with broker-dealers which require the delivery to the
      broker-dealer of shares of our common stock. The broker-dealer may then resell
      or otherwise transfer such shares of common stock pursuant to this
      prospectus.
The
      selling stockholders also may lend or pledge shares of our common stock to
      a
      broker-dealer. The broker-dealer may sell the shares of common stock so lent,
      or
      upon a default the broker-dealer may sell the pledged shares of common stock
      pursuant to this prospectus. Any securities covered by this prospectus which
      qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
      pursuant to this prospectus. The selling stockholders have advised us that
      they
      have not entered into any agreements, understandings or arrangements with any
      underwriters or broker-dealers regarding the sale of their securities. There
      is
      no underwriter or coordinating broker acting in connection with the proposed
      sale of shares of common stock the selling stockholders.
Although
      the shares of common stock covered by this prospectus are not currently being
      underwritten, the selling stockholders or their underwriters, brokers, dealers
      or other agents or other intermediaries, if any, that may participate with
      the
      selling security holders in any offering or distribution of common stock may
      be
      deemed "underwriters" within the meaning of the Act and any profits realized or
      commissions received by them may be deemed underwriting compensation
      thereunder.
Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in a
      distribution of shares of the common stock offered hereby may not simultaneously
      engage in market making activities with respect to the common stock for a period
      of up to five days preceding such distribution. The selling stockholders will
      be
      subject to the applicable provisions of the Exchange Act and the rules and
      regulations promulgated thereunder, including without limitation Regulation
      M,
      which provisions may limit the timing of purchases and sales by the selling
      stockholders.
In
      order
      to comply with certain state securities or blue sky laws and regulations, if
      applicable, the common stock offered hereby will be sold in such jurisdictions
      only through registered or licensed brokers or dealers. In certain states,
      the
      common stock may not be sold unless they are registered or qualified for sale
      in
      such state, or unless an exemption from registration or qualification is
      available and is obtained.
We
      will
      bear all costs, expenses and fees in connection with the registration of the
      common stock offered hereby. However, the selling stockholders will bear any
      brokerage or underwriting commissions and similar selling expenses, if any,
      attributable to the sale of the shares of common stock offered pursuant to
      this
      prospectus.
We
      have
      agreed to indemnify certain of the selling security holders against certain
      liabilities, including liabilities under the Act, or to contribute to payments
      to which any of those security holders may be required to make in respect
      thereof.
There
      can
      be no assurance that the selling stockholders will sell any or all of the
      securities offered by them hereby.
DOCUMENTS
      INCORPORATED BY REFERENCE
We
      incorporate by reference the documents listed below and any future documents
      we
      subsequently file with the Securities and Exchange Commission pursuant to
      sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, prior to the
      termination of this offering.
(a)
Our
      annual report, filed with the Securities and Exchange Commission on Form 10-K,
      for the fiscal year ended June 30, 2006;
(b)
Our
      quarterly reports filed with the Securities and Exchange Commission on Form
      10-Q
      for the fiscal quarters ended September 30, December 31 and March
      31;
(c)
The
      description of our common stock contained in the registration statement on
      Form
      S-3 filed with the Securities and Exchange Commission on August 4, 2005 ;
      and
(d)
Current
      Report 8-K filed September 29, 2006, January 4, 2007, March 21, 2007, May
      4, 2007 and July 17, 2007; and
(e)
All
      other
      reports filed by the Registrant pursuant to Section 13 (a) or 15 (d) of the
      Exchange Act, since the end of the fiscal year covered by the annual report
      referred to in (a) above.
(f)
The
      financial statements included in the Form 10-K for the fiscal year ended June
      30, 2006 will be restated in the Form 10-K for the fiscal year ended June 30,
      2007, to reflect the discontinued
operations
      treatment for
      the sale of Accurel
Systems
      International on May 1, 2007, in a similar fashion as what was reflected in
      the
      Form 10-Q for the fiscal quarter ended March 31, 2007
and in the Current Report 8-K filed July 17, 2007.
You
      may
      request and receive, at no cost, copies of these filings by writing or
      telephoning us at the following address:
Diane
      J.
      Ryan
Vice
      President, Finance
Implant
      Sciences Corporation
107
      Audubon Road #5
Wakefield,
      MA 01880
(781)
      246-0700
All
      documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and
      15(d) of the Securities Exchange Act of 1934, prior to the filing of a
      post-effective amendment which indicates that all securities offered have been
      sold or which deregisters all securities then remaining unsold, shall be deemed
      to be incorporated by reference in this Registration Statement and to be part
      hereof from the date of filing of such documents.
Any
      statement contained in a document incorporated by reference herein shall be
      deemed to be modified or superseded for purposes of this prospectus to the
      extent that a statement contained herein or in any other subsequently filed
      document which also is or is deemed to be incorporated by reference herein
      modifies or supersedes such statement. Any such statement so modified or
      superseded shall not be deemed, except as so modified or superseded, to
      constitute part of this prospectus.
We
      will
      provide without charge to each person to whom this prospectus is delivered,
      upon
      written or oral request of that person, a copy of all documents incorporated
      by
      reference into the registration statement of which this prospectus is a part,
      other than exhibits to those documents (unless such exhibits are specifically
      incorporated by reference into such documents). Requests for such documents
      should be directed to the Chief Financial Officer, Implant Sciences Corporation,
      107 Audubon Road, Wakefield, MA 01880, telephone: (781) 246-0700.
EXPERTS
The
      financial statements of our Company, as of and for the year ended June 30,
      2006
      incorporated by reference in this registration statement on Form S-8, have
      been
      audited by UHY LLP, an independent registered public accounting firm, to the
      extent and for the periods set forth in their report incorporated herein by
      reference, and are incorporated herein in reliance upon such report given upon
      the authority of said firm as experts in auditing and accounting.
The
      financial statements of our Company, as of and for the year ended June 30,
      2005
      incorporated by reference in this registration statement on Form S-8, have
      been
      audited by BDO Seidman, LLP, an independent registered public accounting firm,
      to the extent and for the periods set forth in their report incorporated herein
      by reference, and are incorporated herein in reliance upon such report given
      upon the authority of said firm as experts in auditing and accounting.
DISCLOSURE
      OF SEC POSITION
ON
      INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our
      amended and restated Articles of Organization and By-Laws provide that we may
      indemnify our directors and officers, to the fullest extent permitted under
      Massachusetts law, including in circumstances in which indemnification is
      otherwise discretionary under Massachusetts law.
Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers or persons controlling us, pursuant to
      the
      foregoing provisions, or otherwise, we have been advised that, in the opinion
      of
      the Securities and Exchange Commission, such indemnification is against public
      policy as expressed in the Securities Act of 1933, and is, therefore,
      unenforceable.
LEGAL
      MATTERS
The
      validity of the shares of Implant Sciences Corporation common stock being
      offered herein has been passed upon for Implant Sciences Corporation by Ellenoff
      Grossman & Schole LLP of New York, New York. Such firm has been granted
      a warrant to purchase 10,000 shares of
the
      common stock of
Implant
      Sciences
Corporation.
WHERE
      YOU CAN FIND MORE INFORMATION
We
      file
      annual, quarterly and current reports, proxy statements and other information
      with the Securities and Exchange Commission. You may read and copy, upon payment
      of a fee set by the SEC, any document we subsequently file at the Commission's
      public reference rooms at 100 F. Street, N.E., Washington, D.C. 20549. You
      may
      obtain information on the operation of the Public Reference Room by calling
      the
      SEC at 1-800-SEC-0330. We also make available free of charge our annual,
      quarterly and current reports, proxy statements and other information upon
      request. To request such materials, please contact Diane Ryan, at our address
      as
      set forth below. Additionally, please note that we file our SEC reports
      electronically. The SEC maintains an Internet site that contains reports, proxy
      and information statements, and other information regarding issuers that file
      electronically with the SEC at http://www.sec.gov. Our Internet address is
www.implantsciences.com
.
      Our
      Website and the information contained therein or connected thereto are not
      incorporated into this prospectus.
This
      prospectus is part of registration statement on Form S-8 that we have filed
      with
      the SEC to register the common stock offered hereby under the Act. As permitted
      by SEC rules, this prospectus does not contain all of the information contained
      in the registration statement and accompanying exhibits and schedules that
      we
      file with the SEC. You may refer to the registration statement, the exhibits
      and
      schedules for more information about us and our common stock. The registration
      statement, exhibits and schedules are available at the SEC's public reference
      rooms or through its EDGAR database on the Internet.
You
      should rely only on the information contained in this prospectus or any
      supplement to this prospectus. We have not authorized anyone to provide you
      with
      different information. Our common stock is quoted on the AMEX under the symbol
      "IMX."
NO
      PERSON
      HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS,
      OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
      MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
      BE
      RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
      NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
      ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
      AFFAIRS OF THS COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT ONSTITUTE
      AN OFFER TO SELL OR A SOLICIATION OF AN OFFER TO BUY ANY SECURITIES OFFERED
      HEREBY NY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
      NOT
      AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
      QUALIFIED TO DO SO OR TO ANYPERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
      OR
      SOLICITIATION
IMPLANT
      SCIENCES CORPORATION
500,000
      SHARES OF COMMON STOCK
July
      26,
      2007
PART
      II
ITEM
      3. DOCUMENTS INCORPORATED BY REFERENCE
Included
      in the Prospectus which is a part of this Registration Statement.
ITEM
      4. DESCRIPTION OF SECURITIES.
The
      description of the common stock contained in our Registration Statement (File
      No. 333-115423) on Form S-3 with the Securities and Exchange
      Commission on August 4, 2005.
ITEM
      5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Included
      in the Prospectus which is a part of this Registration Statement.
ITEM
      6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our
      articles provide that none of our directors shall be personally liable to us
      or
      to our stockholder for monetary damages for breach of fiduciary duty as a
      director, except that the limitation shall not eliminate or limit liability
      (i)
      for any breach of the director's duty of loyalty to us or our stockholder,
      (ii)
      for acts or omissions not in good faith or which involve intentional misconduct
      or a knowing violation of law, (iii) under Section 61 or 62 of Chapter 156B
      of
      the Massachusetts General Laws, dealing with liability for unauthorized
      distributions and loans to insiders, respectively, or (iv) for any transaction
      from which the director derived an improper personal benefit.
Our
      articles and by-laws further provide for the indemnification of our directors
      and officers to the fullest extent permitted by Section 67 of Chapter 156B
      of
      the Massachusetts General Laws, including circumstances in which indemnification
      is otherwise discretionary.
A
      principal effect of these provisions is to limit or eliminate the potential
      liability of our directors for monetary damages arising from breaches of their
      duty of care, unless the breach involves one of the four exceptions described
      in
      (i) through (iv) above. These provisions may also shield directors from
      liability under federal and state securities laws.
The
      directors and officers of Implant Sciences are insured under a policy of
      directors' and officers' liability insurance.
ITEM
      7. EXEMPTION FROM REGISTRATION CLAIMED.
All
      shares of common stock registered hereunder for reoffer or resale will be issued
      upon exercise of options granted or to be granted pursuant to the Registrant's
      Plans. The options are non-transferable and the underlying shares will be issued
      in transactions not involving a public offering. Upon exercise of an option,
      the
      optionee is required to execute an undertaking not to resell such shares except
      pursuant to an effective registration statement or other exemption under the
      Act, a restrictive legend is placed on the certificates for the shares of common
      stock purchased and transfer stops are placed against such certificates. Such
      shares may only be reoffered and sold pursuant to registration under the Act
      or
      pursuant to an applicable exemption under the Act. As a result, such offers
      and
      sales are exempt from the registration requirements of the Act pursuant to
      the
      provisions of Section 4(2) of the Act.
ITEM
      8. EXHIBITS.
Exhibit
                No.
Description
4.1
2006
                Employee Stock Purchase Plan
5.1
Opinion
                of Counsel
23.1
Consent
                of UHY LLP
23.2
Consent
                of BDO Seidman, LLP
ITEM
      9. UNDERTAKINGS.
1.
      The
      undersigned registrant hereby undertakes:
(a)
      To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this Registration Statement:
(i)
      To
      include any prospectus required by Section 10(a)(3) of the Securities Act of
      1933;
(ii)
      To
      reflect in the prospectus any facts or events arising after the effective date
      of the Registration Statement (or the most recent post-effective amendment
      thereof) which, individually or in the aggregate, represent a fundamental change
      in the information set forth in the Registration Statement, Notwithstanding
      the
      foregoing, any increase or decrease in the volume of securities offered (if
      the
      total dollar value of securities offered would not exceed that which was
      registered) and any deviation from the low or high end of the estimated maximum
      offering range may be reflected in the form of prospectus filed with the
      Commission pursuant to Rule 424 (b) if, in the aggregate, the changes in volume
      and price represent no more than a twenty percent (20%) change in the maximum
      aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii)
      To
      include any material information with respect to the plan of distribution not
      previously disclosed in the Registration Statement or any material change to
      such information in the Registration Statement.
Provided,
      however, that paragraphs 1(a)(i) and 1(a)(ii) do not apply if the Registration
      Statement is on Form S-3 or Form S-8 and the information required to be included
      in a post-effective amendment by those paragraphs is contained in periodic
      reports filed with or furnished to the Commission by the Registrant pursuant
      to
      Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
      incorporated by reference herein.
(b)
      That,
      for the purpose of determining any liability under the Securities Act of 1933,
      each such post-effective amendment shall be deemed to be a new registration
      statement relating to the securities offered herein, and the offering of such
      securities at that time shall be deemed to be the initial bona fide offering
      thereof.
(c)
      To
      remove from registration by means of a post-effective amendment any of the
      securities being registered which remain unsold at the termination of the
      offering.
2.
      The
      undersigned Registrant hereby undertakes that, for purposes of determining
      any
      liability under the Securities Act of 1933, each filing of the Registrant's
      annual report pursuant to Section 13(a) or Section 15(d) of the Securities
      Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
      plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
      of
      1934) that is incorporated by reference in the Registration Statement shall
      be
      deemed to be a new registration statement relating to the securities offered
      herein, and the offering of such securities at that time shall be deemed to
      be
      the initial bona fide offering thereof.
3.
      Insofar as indemnification for liabilities arising under the Securities Act
      of
      1933 may be permitted to directors, officers and controlling persons of the
      Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
      has been advised that in the opinion of the Securities and Exchange Commission
      such indemnification is against public policy as expressed in the Act and is,
      therefore, unenforceable. In the event that a claim for indemnification against
      such liabilities (other than the payment by the Registrant of expenses incurred
      or paid by a director, officer or controlling person of the Registrant in the
      successful defense of any action, suit or proceeding) is asserted by such
      director, officer or controlling person in connection with the securities being
      registered, the Registrant will, unless in the opinion of its counsel the matter
      has been settled by controlling precedent, submit to a court of appropriate
      jurisdiction the question whether such indemnification by it is against public
      policy as expressed in the Act and will be governed by the final adjudication
      of
      such issue.
SIGNATURES
Pursuant
      to the requirements of the Securities Act of 1933, the Registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing on Form S-8 and has duly caused this Registration Statement to be signed
      on its behalf by the undersigned, thereunto duly authorized, in the City of
      Wakefield, Massachusetts, on this 26th
day
      of
      July, 2007.
IMPLANT
      SCIENCES CORPORATION
By:
/s/ Anthony J. Armini
Anthony
                J. Armini
President,
                Chief Executive Officer &
Chairman
                of the Board of Directors
(Principal
                Executive Officer)
POWER
      OF ATTORNEY
KNOW
      ALL
      MEN BY THESE PRESENTS that each individual whose signature appears below
      constitutes and appoints Anthony J. Armini true and lawful attorney-in-fact
      and
      agent with full power of substitution, for and in such name, place and stead,
      in
      any and all capacities, to sign any and all amendments (including post-effective
      amendments) to this Registration Statement, and to file the same, with all
      exhibits thereto, and all documents in connection therewith, with the Securities
      and Exchange Commission, granting unto said attorney-in-fact and agent full
      power and authority to do and perform each and every act and thing which he
      may
      deem necessary or advisable to be done in connection with this Registration
      Statement, as fully to all intents and purposes as he might or could do in
      person, hereby ratifying and confirming all that said attorney-in-fact and
      agent
      or any substitute or substitutes for him may lawfully do or cause to be done
      by
      virtue hereof.
In
      accordance with the requirements of the Securities Act of 1933, this
      Registration Statement has been signed by the following persons in the
      capacities indicated on July 26, 2007.
Signature
T
itle
Date
____________________
President, Chief Executive Officer
July
      26, 2007
/s/
      Anthony J. Armini
(Principal
      Executive
      Officer)
and Director
____________________
Chief Financial
        Officer
July
        26,
        2007
/s/
        Diane J. Ryan
____________________
Secretary/Director
J
uly
          26, 2007
/s/
          Stephen N. Bunker
____________________
Director
July 26, 2007
/s/
            Michael Szycher
____________________
Director
July
            26, 2007
/s/
            David Eisenhaure
____________________
Director
July
        26,
        2007
/s/
            Michael Turmelle