Implant Sciences Provides Additional Information on the Equity Component of Recent Credit Arrangement Extensions

WILMINGTON, Mass., April 12, 2016 /PRNewswire/ -- Implant Sciences Corporation (OTCQB: IMSC) ("Implant Sciences" or the "Company"), a leading manufacturer of explosives trace detection (ETD) and drugs detection solutions for homeland security, today provided additional detail regarding the terms and conditions of the Company's recently extended secured credit arrangements with DMRJ Group, LLC ("DMRJ") and Montsant Partners LLC ("Montsant") and the group of investors represented by BAM Administrative Services, LLC ("BAM"). 

The changes to the terms and conditions of our amended secured credit arrangements with DMRJ, Montsant and BAM are intended to secure the required extension of the maturity dates to allow for the necessary time to permit our Board of Directors and management to complete our previously announced evaluation and potential implementation of strategic alternatives.

The following is only a summary of certain key provisions of the DMRJ and Montsant credit extension amendments as they relate to the Company's equity securities.  Implant Sciences filed a Current Report on Form 8-K on April 8, 2016 with the SEC to report these matters, as well as the BAM credit extension amendments, and interested parties should review such report and its exhibits in its entirety for further information and a full explanation of the amended credit arrangements and the related amendment to the Company's articles of organization. 

Under the revised secured credit arrangements with DMRJ and Montsant, the maturity date of the indebtedness owed to DMRJ under the non-convertible debt was extended from March 31, 2016 to June 30, 2016 and the maturity date of the indebtedness owed to DMRJ and Montsant under the convertible notes (the "Convertible Debt") was extended from March 31 to December 30, 2016.  In consideration for this extension, Implant Sciences has agreed, among other things, to:

1. Amend the Company's (i) Series H Convertible Preferred Stock to increase the number of shares designated from 15,000 shares to 22,500 shares; (ii) Series I Convertible Preferred Stock to increase the number of shares designated from 15,000 shares to 21,000 shares; and (iii) Series J Convertible Preferred Stock to increase the number of shares designated from 6,000 shares to 6,500 shares.  The Convertible Debt is convertible into such series of preferred stock (and the Convertible Debt owed to Montsant is also convertible directly into shares of common stock).
2. Amend the Company's Series H, I and J Convertible Preferred Stock to provide that the holders thereof are given voting rights equivalent to the voting rights of holders of the Company's common stock on any "Major Transaction" (such as a merger, business combination or asset sale) that is approved by the Company's Board of Directors and presented to the Company's stockholders for their action or consideration at any meeting of the stockholders of the Company.
3. Amend the Company's Series H, I and J Convertible Preferred Stock to provide that if there is a liquidation event, including certain mergers, consolidations or asset sales involving the Company, any Series H, I and J Convertible Preferred Stock will be paid the greater of the original issue price plus accrued dividends or the amount that it would have received if converted into common stock.
4. Agreed that if Implant Sciences receives an offer with respect to a Major Transaction and DMRJ notifies the Company that the offer is satisfactory to DMRJ, if the transaction is not approved by the board or the stockholders (or if a proxy statement filed with the SEC) within a certain time frame thereafter, all obligations to DMRJ and Montsant will be immediately due and payable.
5. Agreed to prepay the interest due on the Convertible Debt for the period from March 31, 2016 to June 30, 2016 by increasing the outstanding principal amount of each such note for both such prepaid interest and all accrued interest to date.
6. Agreed to give the Series J Convertible Preferred Stock preferred dividends of 15% per year.
7. Removed the "blocker" provisions of each of the amended preferred stock series which previously precluded the holders thereof from beneficially owning in excess of 4.99% of the issued and outstanding shares of the Company's common stock outstanding.

The effect of these transactions is to provide DMRJ and Montsant with a significant (potentially a majority) equity stake in Implant Sciences with the ability to vote on certain Major Transactions (including a merger, business combination or asset sale) if all of the Convertible Debt is converted into preferred stock and/or common stock of the Company.  As of March 31, 2016, and in light of the foregoing transactions, the equity component of the Convertible Debt, as if converted, is summarized as follows:

As of March 31, 2016, Implant Sciences had 79,025,620 shares of common stock outstanding, and if such Convertible Debt was fully converted Implant Sciences would have 177,326,606 shares outstanding, with the holders of the Convertible Debt holding approximately 55.4% of the total number of shares of common stock.

About Implant Sciences

Implant Sciences is a leader in developing and manufacturing advanced detection capabilities to counter and eliminate the ever-evolving threats from explosives and drugs. The Company's team of dedicated trace detection experts has developed proprietary technologies used in its commercial products, thousands of which have been sold across more than 70 countries worldwide. The Company's ETDs have received approvals and certifications from several international regulatory agencies including the TSA in the U.S., ECAC in Europe, CAAC and the Ministry of Public Safety in China, Russia FSB, STAC in France, and the German Ministry of the Interior. It has also received the 2015 GSN Airport/Seaport/Border Security Award for "Best Security Checkpoint". For further details on the Company and its products, please visit the Company's website at www.implantsciences.com.

Cautionary Note Regarding Forward-Looking Statements

This press release and any statements of employees, representatives and partners of Implant Sciences Corporation related thereto contain or may contain certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995.  Such statements may include, without limitation, statements with respect to the Company's plans, objectives, projections, expectations and intentions and other statements identified by words such as "projects," "may," "will," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "potential" or similar expressions.  Such statements are based on management's current expectations and are subject to significant risks and uncertainties (many of which are beyond the Company's control) that could cause the Company's actual results to differ materially from the forward-looking statements.  Such risks and uncertainties include, but are not limited to (i) the risk that the Company's strategic initiatives referenced herein may not actually occur, or if they occur, that they will not benefit the Company's shareholders, (ii) the risk that the Company has no control over the actions that the holders of the Convertible Debt may take in the future in enforcing their rights against the Company; (iii) risk that deployment of the Company's devices may not occur as planned, and (iv) other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, including its most recent Forms 10-K, 10-Q and 8-K.  In light of these risks and uncertainties, readers are cautioned that actual results may differ significantly from those described or anticipated in the forward-looking statements.  The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future presentations or otherwise, except as required by applicable law.

Contact:

Implant Sciences Corporation
Company Contact:
Robert Liscouski
978-752-1700 x 116  

SOURCE Implant Sciences Corporation

Related Links

http://www.implantsciences.com