UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report: December 1, 1999
ISONICS CORPORATION
(Name of small business issuer as specified in its charter)
CALIFORNIA 001-12531 77-0338561
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State of Commission File IRS Employer
Incorporation Number Identification No.
5906 MCINTYRE STREET, GOLDEN, COLORADO 80403
Address of principal executive offices
303-279-7900
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Telephone number, including
Area code
NOT APPLICABLE
Former name or former address if changed since last report
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
GENERAL. On December 1, 1999, Isonics Corporation ("Isonics" or the
"Company") completed a sale of its depleted zinc ("DZ") business to Eagle-Picher
Technologies, LLC for $8.2 million dollars, including $1.5 million to be paid
over a period of three years, which amount is subject to certain contingencies.
Isonics received $6,730,303 from Eagle-Picher at the closing, of which
approximately $1,150,570 was used to pay certain accrued liabilities. DZ is used
to prevent corrosion in nuclear power plants. Corrosion is a cause of high
radiation fields in nuclear power plants and can result in radiation exposure to
workers. DZ also reduces environmental cracking in certain kinds of nuclear
reactors which, if not controlled, can require extremely costly repairs or
possibly result in premature shutdown and de-commissioning of the facility.
The Agreement executed between Isonics and Eagle-Picher provides for:
(1) Isonics' sale of the DZ Business to Eagle-Picher for a purchase price
including approximately $6,700,000 in cash plus three additional payments of
$500,000 over a three year period, (2) Eagle-Picher's sale to Isonics of 200
kilograms of silicon-28 in consideration for a 42 month warrant grant to
Eagle-Picher for the purchase of 4,000,000 shares of Isonics common stock at a
purchase price of $3.75 per share. The Warrant is subject to a registration
rights agreement.
Related to, but separate from, the sale of the depleted zinc business,
Isonics contemporaneously signed a ten year supply agreement by which Isonics
will have the exclusive right to purchase quantities of isotopically pure
silicon-28, silicon-29 and silicon-30 and a non-exclusive right to purchase
quantities of carbon-12 and carbon-13 produced by Eagle-Picher from its pilot
plant under construction in Oklahoma for a ten-year period. The Supply Agreement
locks in what Isonics believes is a favorable purchase price for the isotopes.
As partial consideration for the exclusivity provisions, Isonics agreed to pay
Eagle-Picher a fee equal to 3% of the net revenues from all sales made by
Isonics of products incorporating silicon-28, silicon-29 or silicon-30 supplied
by Eagle-Picher. The ability of Eagle-Picher to produce isotopes meeting the
specifications of the supply agreement is contingent upon Eagle-Picher
successfully bringing its Oklahom-based facilities online as scheduled in March
of 2000.
In addition, Isonics purchased 200 kilograms of silicon-28 from
Eagle-Picher in consideration of a warrant to purchase 4,000,000 shares of
Isonics common stock exercisable by Eagle-Picher for $3.75 per share through May
30, 2003. Isonics granted Eagle-Picher certain registration rights related to
the shares of its common stock issuable upon exercise of the warrant.
Eagle-Picher has an obligation to deliver the silicon-28 during calendar year
2000 or, if it fails to do so, it will reduce the warrant proportionately. One
of the properties of isotopically pure silicon-28 is its high thermal
conductivity, which Isonics is currently developing for semiconductor
applications.
Isonics is an advanced materials and technology company which develops
and commercializes products based on enriched stable isotopes. Stable isotopes
can be thought of as ultra-ultra pure materials. This high degree of
purification provides enhanced performance properties compared to normal
materials. Stable isotopes have commercial uses in several areas,
including energy; research, medical diagnostics, and drug development; product
tagging and stewardship; semiconductors; lasers; and optical materials.
Except for historical information contained herein, this document
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve known and unknown risks
and uncertainties that may cause the Company's actual results or outcomes to be
materially different from those anticipated and discussed herein. Further, the
Company operates in industries where securities values may be volatile and may
be influenced by regulatory and other factors beyond the Company's control.
Other important factors that the Company believes might cause such differences
are discussed in the risk factors detailed in the Company's 10-KSB for the year
ended April 30, 1999 filed with the Securities and Exchange Commission, which
include the Company's cash flow difficulties, dependence on significant
customers, and rapid development of technology, among other risks. In assessing
forward-looking statements contained herein, readers are urged to carefully read
all cautionary statements contained in the Company's filings with the Securities
and Exchange Commission.
INFORMATION REQUIRED BY ITEM 701 OF REGULATION S-B.
SECURITIES SOLD. The sale described in the preceding paragraphs
occurred on December 1, 1999. The securities sold consists of one restricted
warrant ("Warrant") to purchase 4,000,000 shares of restricted common stock
issued at an exercise price of $3.75 per share.
UNDERWRITERS AND OTHER PURCHASERS.
No underwriters, agents, or placement agents participated in the
private placement.
The warrant was issued to a single accredited investor as consideration
for the purchase of assets.
The Warrant was issued in consideration for the purchase of 200
kilograms of silicon-28 pursuant to an Asset Purchase Agreement executed between
Isonics and Eagle-Picher.
The transactions were exempt from registration under the Securities Act
of 1933, as amended by reason of Sections 4(2) and 4(6) of the Securities
Act of 1933.
Terms of conversion or exercise are as follows:
The Warrant granted to Eagle-Picher may be exercised to purchase
4,000,000 shares of restricted common stock issued on a
warrant-for-share basis with the Company's common stock (subject to
dilution adjustment) for a purchase price of $3.75 per share through
the expiration date, May 30, 2003
The Company also entered into a registration rights agreement relating
to the shares of common stock underlying the Warrant.
The Company intends to use the 200 kilograms of silicon-28 from the
issuance of the Warrant for the continued development and commercialization of
silicon-28 wafers for the semiconductor industry.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial statements of businesses acquired. NOT APPLICABLE.
Pro forma financial statements. (incorporated from amendment no. 1)
Exhibits (incorporated from the initial filing):
Asset Purchase Agreement
Form of Warrant
Form of Registration Rights Agreement
(filed herewith)
Isotope Supply Agreement by and between Isonics Corporation
and Eagle-Picher Technologies, LLC
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 18th day of April 2000.
ISONICS CORPORATION
By: /s/ James E. Alexander
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James E. Alexander
President and Chief
Executive Officer