-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D81lORBdrzPYtgDL/oX16YRK9R76xwOei3AoD3HAVhAQLariLowBdiUj81PfWGIy /eFDEgpv9uGfagXY9os+UQ== 0001144204-09-006451.txt : 20090210 0001144204-09-006451.hdr.sgml : 20090210 20090210111816 ACCESSION NUMBER: 0001144204-09-006451 CONFORMED SUBMISSION TYPE: SC 13G/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20090210 DATE AS OF CHANGE: 20090210 GROUP MEMBERS: DAVID GRIN GROUP MEMBERS: EUGENE GRIN GROUP MEMBERS: LAURUS CAPITAL MANAGEMENT, LLC GROUP MEMBERS: PSOURCE STRUCTURED DEBT LIMITED GROUP MEMBERS: VALENS CAPITAL MANAGEMENT, LLC GROUP MEMBERS: VALENS OFFSHORE SPV I, LTD. GROUP MEMBERS: VALENS U.S. SPV I, LLC FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LAURUS MASTER FUND LTD CENTRAL INDEX KEY: 0001189294 IRS NUMBER: 980337673 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13G/A BUSINESS ADDRESS: STREET 1: 152 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125415800 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: IMPLANT SCIENCES CORP CENTRAL INDEX KEY: 0001068874 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 042837126 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13G/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-58711 FILM NUMBER: 09584019 BUSINESS ADDRESS: STREET 1: 107 AUDUBON ROAD #5 CITY: WAKEFIELD STATE: MA ZIP: 01880-1246 BUSINESS PHONE: 7812460700 MAIL ADDRESS: STREET 1: 107 AUDUBON ROAD, #5 CITY: WAKEFIELD STATE: MA ZIP: 01880 SC 13G/A 1 v138797_sc13g-a.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment No.3)* IMPLANT SCIENCES CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.10 par value per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 45320R108 - -------------------------------------------------------------------------------- (CUSIP Number) December 31, 2008 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule 13G is filed: |_| Rule 13d-1(b) |X| Rule 13d-1(c) |_| Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Master Fund, Ltd.(In Liquidation)* S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0337673 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99%* - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: PSource Structured Debt Limited S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Guernsey - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101, shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99%* - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-4150669 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Valens U.S. SPV I, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 20-8903266 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99%* - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Valens Offshore SPV I, Ltd. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0539781 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Valens Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 20-8903345 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99%* - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: David Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Israel - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. - -------------------------------------------------------------------------------- CUSIP No. 45320R108 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Eugene Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: SHARES BENEFICIALLY 0 shares of Common Stock.* OWNED BY -------------------------------------------------------------- EACH 6 SHARED VOTING POWER: REPORTING PERSON 1,412,101 shares of Common Stock.* -------------------------------------------------------------- 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock.* -------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 1,412,101 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,412,101 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 9.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. Item 1(a). Name of Issuer: IMPLANT SCIENCE CORPORATION Item 1(b). Address of Issuer's Principal Executive Offices: 107 Audubon Rd., #5 Wakefield, MA 01880 Item 2(a). Name of Person Filing: Laurus Master Fund, Ltd. (In Liquidation) This Schedule 13G, as amended, is also filed on behalf of Laurus Capital Management, LLC, a Delaware limited liability company, PSource Structured Debt Limited, a closed ended company incorporated with limited liability in Guernsey, Valens U.S. SPV I, LLC, a Delaware limited liability company, Valens Offshore SPV I, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, Valens Capital Management, LLC, a Delaware limited liability company, Eugene Grin and David Grin. Laurus Master Fund, Ltd. (In Liquidation) is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC, acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to Laurus Master Fund, Ltd. (In Liquidation) and its two feeder funds concerning their respective assets, including securities owned by Laurus Master Fund, Ltd. (In Liquidation) reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and Laurus Capital Management, LLC's obligations to Laurus Master Fund, Ltd. (In Liquidation) under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. Laurus Capital Management, LLC manages PSource Structured Debt Limited. Valens Capital Management, LLC manages Valens U.S. SPV I, LLC and Valens Offshore SPV I, Ltd. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and Valens Capital Management, LLC and share sole voting and investment power over the securities owned by PSource Structured Debt Limited, Valens U.S. SPV I, LLC and Valens Offshore SPV I, Ltd. reported in this Schedule 13G, as amended. Information related to each of Laurus Capital Management, LLC, PSource Structured Debt Limited, Valens U.S. SPV I, LLC, Valens Offshore SPV I, Ltd., Valens Capital Management, LLC, Eugene Grin and David Grin is set forth on Appendix A hereto. Item 2(b). Address of Principal Business Office or if none, Residence: c/o Laurus Capital Management, LLC, 335 Madison Avenue, 10th Floor, New York, NY 10017 Item 2(c). Citizenship: Cayman Islands Item 2(d). Title of Class of Securities: Class A Common Stock Item 2(e). CUSIP Number: 45320R108 Item 3. Not Applicable Item 4. Ownership: (a) Amount Beneficially Owned: 1,412,101 shares of Common Stock* (b) Percent of Class: 9.99%* (c) Number of shares as to which such person has: (i) sole power to vote or to direct the vote: 0 shares of Common Stock* (ii) shared power to vote or to direct the vote: 1,412,101 shares of Common Stock* (iii) sole power to dispose or to direct the disposition of: 0 shares of Common Stock* (iv) shared power to dispose or to direct the disposition of: 1,412,101 shares of Common Stock* Item 5. Ownership of Five Percent or Less of a Class: Not applicable Item 6. Ownership of More than Five Percent on Behalf of Another Person: Not applicable Item 7. Identification and Classification of Subsidiary Which Acquired the Securities: Not applicable Item 8. Identification and Classification of Members of the Group: Not applicable Item 9. Notice of Dissolution of Group: Not applicable Item 10. Certification: By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. - ------------ * Based on 14,135,155 shares of the common stock, par value $.10 per share (the "Shares") of Implant Sciences Corporation, a Massachusetts corporation (the "Company") outstanding as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. As of December 31, 2008, Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"), Valens U.S. SPV I, LLC, ("Valens U.S."), Valens Offshore SPV I, Ltd ("Valens Offshore")and PSource Structured Debt Limited ("PSource" and together with Valens U.S., Valens Offshore and the Fund, the "Investors"), held (i) a common stock purchase warrant (the "2003 Warrant") to acquire 100,000 Shares at the following exercise prices: (A) 50,000 at an exercise price of $8.44 and (B) 50,000 at an exercise price of $10.13, all subject to certain adjustments, (ii) a common stock purchase warrant (the "2005 Warrant #1") to acquire 250,000 Shares at an exercise price of $3.75, subject to certain adjustments, (iii) a common stock purchase warrant (the "2005 Warrant #2") to acquire 50,000 Shares, at an exercise price of $10.20, subject to certain adjustments, (iv) a common stock purchase warrant (the "2006 Warrant #1", and together with the 2005 Warrant #1 and the 2005 Warrant #2, the "First Tranche Warrants"), to acquire 150,000 Shares at an exercise price of $4.26, subject to certain adjustments, (v) a common stock purchase warrant (the "2006 Warrant #2") to acquire 458,000 Shares at an exercise price of $2.50, subject to certain adjustments, and (vi) 1,058,808 Shares. The 2003 Warrant, and the First Tranche Warrants each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 2006 Warrant #2 contains an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99% Issuance Limitation" and together with the 4.99% Issuance Limitation, the "Issuance Limitations"). The 4.99 Issuance Limitation in the 2003 Warrant may be revoked by the Investors upon 75 days prior notice and is automatically null and void upon an Event of Default (as defined in the applicable instrument). The 4.99 Issuance Limitation in the First Tranche Warrants may be waived by the Investors upon 75 days prior notice and shall automatically become null and void following notice to the Issuer upon the occurrence and during the continuance of an event of default (as defined in the applicable instrument). The 9.99 Issuance Limitation may be waived by the holder upon at least 61 days notice, and shall become automatically null and void follow notice to the Issuer of the occurrence and/or continuance of an event of default (as defined in the applicable instrument) or automatically upon receipt by the holder of a Notice of Redemption (as defined in the applicable instrument). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by the Fund reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens U.S. and Valens Offshore are managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource, Valens U.S. and Valens Offshore reported in this Schedule 13G, as amended. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 10, 2009 ----------------------------------- Date LAURUS MASTER FUND, LTD. (In Liquidation) By: Laurus Capital Management, LLC its investment manager /s/ Eugene Grin ----------------------------------- Eugene Grin Principal APPENDIX A A. Name: Laurus Capital Management, LLC, a Delaware limited liability company Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware B. Name: PSource Structured Debt Limited, a closed ended company incorporated with limited liability in Guernsey Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Guernsey C. Name: Valens U.S. SPV I, LLC a Delaware limited liability company Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware D. Name: Valens Capital Management, LLC, a Delaware limited liability company Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware E. Name: Valens Offshore SPV I, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Cayman Islands F. Name: Eugene Grin Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: United States G. Name: David Grin Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: Israel Each of Laurus Capital Management, LLC, PSource Structured Debt Limited, Valens U.S. SPV I, LLC, Valens Offshore SPV I, Ltd., Valens Capital Management, LLC, Eugene Grin and David Grin hereby agrees, by their execution below, that the Schedule 13G, as amended, to which this Appendix A is attached is filed on behalf of each of them, respectively. PSource Structured Debt Limited Laurus Capital Management, LLC By: Laurus Capital Management, Individually and as investment manager /s/ Eugene Grin - --------------------------------- Eugene Grin Principal February 10, 2009 Valens U.S. SPV I, LLC Valens Offshore SPV I, Ltd. Valens Capital Management, LLC By: Valens Capital Management, LLC Individually and as investment manager /s/ Eugene Grin - --------------------------------- Eugene Grin Principal February 10, 2009 /s/ David Grin - --------------------------------- David Grin, on his individual behalf February 10, 2009 /s/ Eugene Grin - --------------------------------- Eugene Grin, on his individual behalf February 10, 2009 -----END PRIVACY-ENHANCED MESSAGE-----