<Page>

ISONICS CORPORATION PROXY STATEMENT - 2001
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )

File by the Registrant [XX]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[XX] Preliminary Proxy Statement [ ] Confidential, for use of
[ ] Definitive Proxy Statement the Commission only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

ISONICS CORPORATION
(Name of Registrant as Specified In Its Charter)

James E. Alexander, President
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate Box:)

[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
O-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11:(1)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.

(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

<Page>

ISONICS CORPORATION
5906 McIntyre Street
Golden, CO 80403
--------------------------------------------------------------------------------

September ___, 2001

Dear Shareholders:

You are cordially invited to attend the Annual Meeting of
Shareholders on ______, November _____, 2001, at 10:00 a.m. at the
Denver-West Marriott located at 1717 Denver-West Marriott Boulevard, Golden,
Colorado 80401 (telephone: 303-279-9100).

The Board of Directors recommends that all shareholders vote for the
election of the nominated directors and for the other proposals presented in
this proxy statement.

Proposal number 2 is for an amendment to our articles of
incorporation to increase our authorized capitalization. Currently we have
insufficient remaining capitalization to accomplish our corporate objectives,
as described in the proxy statement. Consequently the Board of Directors
recommends that the shareholders vote for ratification of this proposal. YOUR
SUPPORT OF THIS PROPOSAL IS VERY IMPORTANT TO THE FUTURE SUCCESS OF YOUR
COMPANY.

Proposals numbered 3 and 4 are for amendments to the Company's 1996
Executives' Equity Incentive Plan and to the Company's 1996 Equity Incentive
Plan to increase the amount of shares available under these plans. The Board
of Directors believes that these plans are necessary to enable us to provide
meaningful equity incentives to attract, motivate, and retain employees.
Consequently the Board of Directors recommends that the shareholders vote for
ratification of these proposals. Isonics operates in an extremely competitive
job market where unemployment is extremely low and where turnover can be very
high. In this job market, equity incentive plans are offered by the majority
of the public companies with whom we compete for talent. YOUR SUPPORT OF THIS
PROPOSAL IS VERY IMPORTANT TO THE FUTURE SUCCESS OF YOUR COMPANY.

Whether or not you plan to attend the Annual Meeting, PLEASE MARK,
SIGN, DATE, AND RETURN your proxy card in the enclosed envelope as soon as
possible. This will assure that your stock will be voted in accordance with
the instructions you give in your proxy card whether or not you attend the
Annual Meeting. You may, of course, attend the Annual Meeting and vote in
person even if you have previously sent in your proxy card. IT IS VERY
IMPORTANT THAT EVERY SHAREHOLDER VOTE. PLEASE SEND IN YOUR PROXY CARD.

Sincerely yours,

/s/ James E. Alexander
James E. Alexander, President

<Page>

ISONICS CORPORATION
5906 McIntyre Street
Golden, CO 80403
-------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November __, 2001
-------------------------------------------------------------------------------

September ____, 2001

TO THE SHAREHOLDERS OF ISONICS CORPORATION:

The Annual Meeting of Shareholders of ISONICS CORPORATION, a
California corporation, ("Isonics" or the "Company") will be held at the
Denver-West Marriott located at 1717 Denver-West Marriott Blvd., Golden, CO
80401 (telephone: 303-279-9100), on November _____, 2001 at 10:00 a.m. local
time, to consider and take action on:

1. The election of five directors to serve until the next
annual meeting of shareholders and until their successors
have been elected and qualified.

2. Amendment to our Articles of Incorporation to increase our
authorized common stock to 40,000,000 shares.

3. Amendment of the 1996 Executives' Equity Incentive Plan to
increase the number of shares of common stock included to
2,000,000.

4. Amendment of the 1996 Equity Incentive Plan to increase the
number of shares of common stock included to 1,000,000.

5. Such other business as may properly come before the
meeting, or any adjournments or postponements thereof.

The discussion of the proposals set forth above is intended only as
a summary, and is qualified in its entirety by the information contained in
the accompanying Proxy Statement.

Only holders of record of common stock and our Series A Convertible
Preferred Stock at the close of business on September 17, 2001, will be
entitled to notice of and to vote at this Annual Meeting, and any
postponements or adjournments thereof.

SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON AND THE
MANAGEMENT OF THE COMPANY HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND.

Shareholders, whether or not they expect to be present at the
meeting, are requested to sign and date the enclosed proxy and return it
promptly in the envelope enclosed for that purpose. Any person giving a proxy
has the power to revoke it at any time by following the instructions provided
in the Proxy Statement.

<Page>

By Order of the Board of Directors:
James E. Alexander, President

PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

YOUR VOTE IS IMPORTANT

<Page>

ISONICS CORPORATION
5906 MCINTYRE STREET
GOLDEN, CO 80403

PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER __, 2001

September _____, 2001

This Proxy Statement is being furnished to shareholders of ISONICS
CORPORATION ("Isonics" or the "Company") in connection with the solicitation of
proxies by and on behalf of the Company's Board of Directors for use at the
Annual Meeting of shareholders of the Company (the "Annual Meeting") and at any
adjournments or postponements thereof. The Annual Meeting will be held at 10:00
a.m. local time, at the Denver-West Marriott located at 1717 Denver-West
Marriott Blvd., Golden, CO 80401 (telephone: 303-279-9100), on November _____,
2001. This Proxy Statement will be first mailed to the shareholders on or before
October ___, 2001.

VOTING SECURITIES

Holders of record of the Company's common stock (the "Common Stock") at
the close of business on September 17, 2001 (the "Record Date") will be entitled
to vote on all matters. On the Record Date, the Company had 9,311,475 shares of
Common Stock outstanding and 963,666 shares of Series A Convertible Preferred
Stock outstanding convertible into 963,666 shares of common stock. The holders
of shares of Common Stock and Series A Stock are entitled to one vote per share.
At the record date, the Company's voting securities include its outstanding
Common Stock and Series A Stock.

A majority of the issued and outstanding shares of the Common Stock
combined with the Series A Stock entitled to vote, represented in person or by
proxy, constitutes a quorum for the transaction of business at the meeting. As
described in more detail below, if there is a quorum present the five nominees
for the Board receiving the greatest number of affirmative votes will be elected
as directors (proposal 1). A majority of the total shares of Common Stock
outstanding and a majority of the two classes combined (Common Stock and Series
A Stock) is necessary for the approval of Proposal 2. If a quorum is present, a
majority of the shares voting is necessary for the approval of Proposals 3 and
4.

With respect to the election of directors, shareholders have cumulative
voting rights, which means that each shareholder has that number of votes equal
to the number of shares held multiplied by the number of directors to be
elected. Each shareholder may give all such votes to one candidate or distribute
such shareholder's votes among the candidates as the shareholder chooses.
However, you may not exercise your right to cumulate votes until the candidate
or candidates have been nominated and a shareholder has given notice at the
Annual Meeting of the shareholder's intention to vote cumulatively.

<Page>

If any shareholder present at the Annual Meeting gives such notice, all
shareholders may cumulate their votes. The candidates receiving the highest
number of votes of shares entitled to vote for them, up to the number of
directors to be elected, will be elected. Votes withheld will be counted for the
purposes of determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting, but will have no other legal effect upon the
election of directors under California law. The Company seeks discretionary
authority to cumulate votes in the event that additional persons are nominated
at the Annual Meeting for the election of directors. In the event that
cumulative voting is invoked, the proxy holders intend to cast the votes covered
by the proxies received by them in such a manner under cumulative voting as they
believe will ensure the election of as many of the Company's nominees as
possible.

While there is no definitive statutory or case law authority in
California as to the proper treatment of abstentions and broker non-votes, the
Company believes that both abstentions and broker non-votes should be counted
for purposes of determining whether a quorum is present at the Annual Meeting.
Abstentions and broker non-votes will not be counted for the purposes of
determining the outcome of the vote on the election of directors or the
proposals to amend our Articles of Incorporation (Proposal 2).

If a proxy card is received with no vote marked, it will be treated as
a vote for the election of the directors and for the approval of Proposals 2, 3,
and 4.

We will bear the cost of soliciting proxies. In addition, we may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may be solicited by certain of our directors,
officers and regular employees, without additional compensation, personally or
by telephone or facsimile. We do not intend to retain a professional solicitor
to assist in the solicitation of proxies.

Management may, in our discretion, seek an adjournment of the meeting
to a specific time and place if a quorum is not present.

A shareholder who gives his proxy pursuant to this solicitation may
revoke it at any time before it is voted either by giving notice of the
revocation thereof to the Secretary of the Company, by filing another proxy with
the Secretary or by attending the Annual Meeting and voting in person. All
properly executed and unrevoked proxies, if received in time, will be voted in
accordance with the instructions of the beneficial owners contained thereon.

<Page>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the ownership of
the our common stock as of September 17, 2001 by: (i) each nominee for director;
(ii) each of the executive officers named in the Summary Compensation Table;
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by us to be beneficial owners of more than five percent of our
common stock.

<Table>
<Caption>
BENEFICIAL OWNERSHIP
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL
---------------- -------------------- ----------------

James E. Alexander (1) 1,950,167 20.9%
Boris Rubizhevsky (2) 1,695,865 18.1%
Stephen J. Burden (3) 290,370 3.1%
Daniel J. Grady (4) 244,438 2.6%
Herbert Hegener (5) 48,600 0.5%
Lindsay Gardner (6) 299,761 3.2%
Richard Parker (7) 50,000 0.5%
Larry Wells (8) 117,241 1.3%
John Sakys (9) 100,000 1.1%
All executive officers and directors as a 4,796,442 47.6%
group (9 persons). The address for all of the
above directors and executives officers is:
5906 McIntyre Street, Golden, CO 80403
Richard Grossman (10) 2,080,809 18.3%
Anfel Trading (11) 724,947 7.5%
Silicon Evolution, Inc. (12) 500,000 5.1%
</Table>

(1) Includes: (i) 25,000 shares of common stock underlying options
that are currently exercisable; (ii) 45,455 shares of common
stock held in the name of The James & Carol Alexander Family
Foundation; (iii) 500,000 shares held by wife Carol; (iv) 4,000
shares held by son Jonathan Alexander.

(2) Includes: (i) 1,568,872 shares of common stock held jointly with
wife Nancy Eiden Rubizhevsky; (ii) 22,500 shares of common stock
underlying options that are currently exercisable; (iii) 39,160
shares of common stock underlying 39,160 warrants to purchase
common stock of Isonics; (iv) 33,333 shares of common stock held
by wife Nancy Eiden Rubizhevsky; (v) 16,000 shares of common
stock held by son Zachary Rubizhevsky; and (vi) 16,000 shares of
common stock held by son Ryan Rubizhevsky

(3) Includes 192,887 shares of common stock underlying options of
which 155,738 are vested as of September 17, 2001 and which are
currently exercisable

(4) Includes 222,965 shares of common stock underlying stock options
that are currently exercisable.

(5) Includes 35,000 shares of common stock underlying warrants that
are currently exercisable.

(6) Includes 50,000 shares of common stock underlying stock options
that are currently
<Page>

exercisable.

(7) Includes 50,000 shares of common stock underlying stock options
that are currently exercisable.

(8) Includes 40,000 shares of common stock underlying stock options
that are currently exercisable. Also includes 77,241 shares owned
by Daystar Partners, L.P. of which an affiliate owned by Mr.
Wells, and in which Mr. Wells owns a 9.9% equity interest.

(9) Includes 100,000 shares of common stock underlying stock options
of which 25,000 are vested as of September 17, 2001 and which are
currently exercisable.

(10) Includes beneficial ownership of the following shares: (i) 43,496
shares of common stock underlying 20,000 shares of Series A Stock
and 23,496 warrants owned of record and beneficially by Richard
Grossman; (ii) 43,496 shares of common stock underlying 20,000
shares of Series A Stock and 23,496 warrants owned of record and
beneficially by Orin Hirschman (of which shares Mr. Grossman
disclaims beneficial ownership); (iii) 1,203,411 shares of common
stock underlying 553,334 shares of Series A Stock and 650,077
warrants owned of record and beneficially by Adam Smith
Investment Partners, L.P.; (iv) 246,482 shares of common stock
underlying 113,334 shares of Series A Stock and 133,148 warrants
owned of record and beneficially by Adam Smith Investments, Ltd.;
and (v) 587,420 shares of common stock underlying 587,420
warrants owned of record and beneficially by Adam Smith &
Company, Inc., all as set forth on the Schedule 13D filed by such
persons on August 12, 1999. The business addresses of Richard
Grossman and Orin Hirschman, and the principal executive offices
of Adam Smith Investment Partners, L.P. and Adam Smith & Company,
Inc., are located at 101 East 52nd Street, New York, New York
10022. The principal executive offices of Adam Smith Investments,
Ltd. are c/o Insinger Fund Administration (BVI) Limited, Tropic
Isle Building, P.O. Box 438, Road Town, Tortola, British Virgin
Islands.

(11) Includes 391,613 shares of common stock underlying 391,613
warrants. The principal executive offices of Anfel Trading Ltd.
are c/o M. Andre Zolty, 24 Route De Malagnou, 1208 Geneva,
Switzerland. Andre Zolty is the principal and controlling
shareholder of Anfel Trading Ltd. and may be deemed to
beneficially own these shares.

(12) Includes 500,000 shares of common stock underlying 500,000 shares
of Series B preferred stock issued effective September __, 2001,
after the record date. The principal executive offices of Silicon
Evolution, Inc., are located at 12013 NE 99th Street, Suite 1600,
Vancouver, Washington 98682.
<Page>

The Series A Stock consists of 1,830,000 shares issued with a
liquidation preference and conversion right of $1.50 per share. Through the
record date, 866,334 shares of Series A Stock have elected to convert into
common stock. The conversion right of the preferred stock is on a one-for-one
basis. The Series A Stock is entitled to dividends or distributions equal to the
amount of the dividend or distribution per share of common stock payable at such
time multiplied by the number of shares of common stock then obtainable upon
conversion of such Series A Stock. The Redemption Trigger Date for the Series A
Stock shall be the business day immediately following the thirtieth consecutive
trading day that the average closing price during such trading days (or, if no
closing price is reported, the average of the bid and ask prices) of the shares
of common stock was above $8.00 per share (which minimum price shall be
proportionally adjusted for stock splits, stock dividends, reverse stock splits
and any other subdivision or combination of the common stock). After the
Redemption Date, Isonics may redeem all or any part of the Series A Stock at its
election at any time and from time to time. The Series A Stock is convertible
into common stock at the option of the holder until and unless Isonics chooses
to redeem such shares on the basis of one share of common stock per share of
Series A Stock and, until converted, each share of Series A Stock is entitled to
one vote at any meeting of Isonics' shareholders.

On September _____, 2001, after the record date for this meeting, we
issued 500,000 shares of our Series B Convertible Preferred Stock. We issued the
Series B Stock to Silicon Evolution, Inc. in consideration of a license
agreement. We may terminate the license agreement if certain future events do
not occur and, in that case, we will cancel the Series B Stock issued to Silicon
Evolution. The Series B Stock will automatically convert into common stock on a
share-for-share basis when the Isonics shareholders approve the recapitalization
set forth in proposal 2.

We know of no plans or arrangement that will result in a change of
control at Isonics.

PROPOSAL 1 - ELECTION OF DIRECTORS

The following persons are nominated as directors of the Company for a
term of one year and until the election and qualification of their successors:

James E. Alexander Boris Rubizhevsky Lindsay A. Gardner
Richard Parker Larry J. Wells

These persons will constitute the entire Board of Directors. The person
named in the proxy intends to vote for those nominees, each of whom has been
recommended for election by the Board of Directors of the Company, unless a
shareholder withholds authority to vote for any or all of the nominees. The five
nominees receiving the greatest number of affirmative votes will be elected as
directors. If any nominee is unable to serve or, for good cause, will not serve,
the person named in the proxy reserves the right to substitute another person of
his choice as nominee in his place. Each of the nominees has agreed to serve, if
elected.
<Page>

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages of all the Directors
and Executive Officers of Isonics, and the positions held by each such person as
of September 17, 2001. The directors each serve until their successors are duly
elected and qualified; officers are appointed by, and serve at the pleasure of,
the Board of Directors.

<Table>
<Caption>
NAME AGE POSITION
---- --- --------

James E. Alexander 52 President, Chief Executive Officer, Treasurer,
and Chairman of the Board

Boris Rubizhevsky 50 Senior Vice President, Vice Chairman and Director

Daniel J. Grady 47 Vice President, Life Sciences

Stephen J. Burden 52 Vice President, Semiconductor Materials

John V. Sakys 33 Vice President, Chief Financial Officer and Secretary

Herbert Hegener 55 Managing Director of Chemotrade

Lindsay A. Gardner (1)(2) 50 Director

Richard Parker (1)(2) 57 Director

Larry J. Wells (1)(2) 58 Director
</Table>
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Each of the directors holds office until the next annual meeting of
shareholders and until his or her successor is elected and qualified or until
his or her earlier death, resignation, or removal. Each officer serves at the
discretion of the Board.

JAMES E. ALEXANDER is our co-founder. He has served as our President,
Chief Executive Officer and as a director since our inception. Mr. Alexander has
worked full-time for Isonics since January 1994. From June 1972 to December
1993, he worked in a variety of technology positions at General Electric
Corporation in the aircraft engine and nuclear power divisions, most recently as
Manager of Technology Programs. Mr. Alexander received his Bachelors degree in
Metallurgical Engineering from the University of Cincinnati and performed
graduate work in materials science there. He earned a Masters degree in Business
Administration from Santa Clara University.
<Page>

BORIS RUBIZHEVSKY is a co-founder of Isonics and has been Senior Vice
President and a director since our inception. Mr. Rubizhevsky became Vice
Chairman in March 1997 and has worked exclusively for Isonics during this time.
From November 1986 through December 1994, he owned and operated SAR Marketing, a
consulting firm providing business advice and services to large multinational
corporations. From June 1977 to May 1986, Mr. Rubizhevsky worked at General
Electric Corporation as Business Development Manager in various international
locations. He received his Bachelors degree in Engineering from Stevens
Institute of Technology.

DR. DANIEL J. GRADY joined us as Vice President, Medical, Research and
Diagnostics in 1995. From March 1994 through September 1995, Dr. Grady was Vice
President of Research and Development at Sopha Medical Systems, a medical
diagnostic imaging equipment manufacturer. From April 1991 until March 1994, he
served as Marketing Manager, Nuclear Energy for General Electric Corporation.
From May 1988 through March 1991, Dr. Grady served as Software Engineer Manager,
Nuclear Medicine for General Electric in England. From October 1984 through May
1988, he served as Clinical Applications Manager for General Electric Nuclear
Medicine. Between June 1981 and October 1984, he served as Engineering Analysis
Section Head for TRW. Dr. Grady received his Bachelors and Masters degrees and
Ph.D. in Nuclear Engineering from the University of Michigan.

DR. STEPHEN J. BURDEN joined us in January 1997 as Director of Research
& Development. He was promoted to Vice President, Semiconductor Materials
effective January 1, 1999. From 1993 to 1997, Dr. Burden was Director of Product
Development at sp3, Inc., a manufacturer of diamond-coated tools. From 1984 to
1993, he was Manager of Advanced Materials R&D at GTE Valenite, a subsidiary of
GTE Corporation, a manufacturer of cutting tools. From 1974 to 1984, Dr. Burden
was employed by General Electric Corporation in various capacities. Dr. Burden
received his Ph.D. and Masters of Science degrees in Materials Science and
Engineering from Drexel University, and his Bachelors degree in Science
Engineering from Northwestern University. Dr. Burden also has an MBA from the
University of Michigan.

JOHN SAKYS joined us in May 2001 as Controller. He was promoted to Vice
President, Chief Financial Officer effective September 3, 2001. From September
2000 to April 2001 Mr. Sakys was controller of AuraServ Communications. From
July 1998 to September 2000 Mr. Sakys was Director of Financial Reporting for
Media One, Inc. From December 1994 to July 1998 Mr. Sakys was an audit manager
at Ernst and Young LLP. From September 1990 to December 1994 Mr. Sakys was
employed at Arthur Andersen LLP in various capacities. Mr. Sakys received his
Bachelors degree in Business Economics with an emphasis in accounting from the
University of California at Santa Barbara and is a Certified Public Accountant.
<Page>

HERBERT HEGENER is a co-founder of Chemotrade and has served as its
President since its formation in 1991. From 1988 to 1991, Mr. Hegener was with
Medgenix Deutschland GmbH-Dusseldorf, Germany. He was Medgenix Deutschland's
Managing Director when he left Medgenix Deutschland to found Chemotrade. From
1973 to 1988, Mr. Hegener worked at the Hempel Group, Dusseldorf, Germany, in
various management positions. Mr. Hegener is a specialist in stable and
radioactive isotopes. He has degrees in chemistry and economics.

LINDSAY A. GARDNER was elected a director in September 1993. Ms.
Gardner is currently Director, Corporate Development and Strategic Planning for
Menasha Corporation. From 1991 to 2001, Ms. Gardner was President of LG
Associates, a U.S.-based management consulting firm providing strategic planning
and materials management expertise to foreign company affiliates of U.S.
companies in developing countries. During her tenure at LG Associates, Ms.
Gardner resided in Moscow, Russia from September 1991 to January 1994, and
Beijing, China from January 1994 to April 2000. She currently resides in
Appleton, Wisconsin. From 1977 to 1991, Ms. Gardner worked for General Electric
Corporation in a variety of management and functional positions including
international marketing, quality assurance and supply chain management. Ms.
Gardner received a Bachelors degree in International Economics from The George
Washington University Elliott School of International Affairs and earned a
Masters of Business Administration from the University of Louisville.

RICHARD PARKER has served as a director since August 1998. Mr. Parker
is presently Vice-President of Distribution Sales for Cypress Semiconductor and
has held that position since December 1997. Previously, Mr. Parker was Director
of Sales for Cypress from April 1984 to December 1997. Prior to joining Cypress,
he held various sales and marketing management positions at Fairchild
Semiconductor from 1973 to 1984. He received a Bachelors degree in Education
from the University of North Dakota.

LARRY J. WELLS was elected a director of Isonics in January 2000. Since
1989, Mr. Wells has been a general partner of SVP Management Company, the
management company for Sundance Venture Partners, L.P., a venture capital fund.
From 1983 to 1989, Mr. Wells served as Vice President of Citicorp Venture
Capital. He left Citicorp to become Senior Vice President of Inco Venture
Capital. Mr. Wells is also a director of Cellegy Pharmaceuticals, Identix, Inc.,
as well as several privately held companies. Mr. Wells received his Bachelors
degree in Economics and earned a masters degree in Business Administration from
Stanford University. Mr. Wells was previously a director of Isonics from
September 1996 through December 1998.
<Page>

There are no significant employees who are not also directors or
executive officers as described above. As of April 30, 2001, and subsequently,
there were and are no family relationships among the officers, directors or any
person chosen by the Company to become a director or officer. No arrangement
exists between any of the above officers and directors pursuant to which any one
of those persons was elected to such office or position. There are no material
legal proceedings pending against Isonics, although Isonics is involved in an
arbitration proceeding that is material and is discussed in our annual report to
shareholders.

MEETINGS OF THE BOARD AND COMMITTEES

The Board of Directors held five formal meetings during the fiscal year
ended April 30, 2001, and three meetings subsequently through September 17,
2001. Each director attended all of the formal meetings either in person or by
telephone without exception. In addition, regular communications were maintained
throughout the year among all of the officers and directors of the Company and
the directors acted by unanimous consent four times during fiscal 2001 and one
time subsequently through September 17, 2001. Isonics has standing audit and
compensation committees. It does not have a standing nomination committee.

AUDIT COMMITTEE. The audit committee was formed in 1996, meets the
requirements of Nasdaq Rule 4350(d), and is comprised of Messrs. Wells and
Parker, and Ms. Gardner. Each of the members of the audit committee is
independent as that term is defined in Nasdaq Rule 4200(a)(14). The committee
held one formal meeting during the fiscal year ended April 30, 2001, and two
meetings subsequently through September 17, 2001. Each member of that committee
attended each of those meetings in person or by telephone. The Board of
Directors has adopted a written charter for the audit committee, a copy of which
is attached hereto. The following constitutes the report the Audit Committee has
made to the Board of Directors:
<Page>

REPORT OF THE AUDIT COMMITTEE
TO THE BOARD OF DIRECTORS OF ISONICS CORPORATION

We hereby report to the Board of Directors of Isonics Corporation that,
in connection with the financial statements for the year ended April 30, 2001,
and the anticipated preparation of the financial statements for the year ending
April 30, 2002, we have

- reviewed and discussed the audited financial statements with
management;

- recommended the appointment of independent accountants;

- reviewed the arrangements and standards for and the scope of the
audit by independent accountants;

- reviewed the independence of the independent accountants;

- considered the adequacy of the system of internal accounting
controls and reviewed any proposed corrective actions;

- reviewed and monitored our policies regarding business ethics and
conflicts of interest;

- reviewed the activities and recommendations of our accounting
department;

- discussed with the independent auditors the matters required to be
discussed by SAS 60 (Codification of Statements on Auditing
Standards, AU section 380), as may be modified or supplemented; and

- received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No.1, Independence
Discussions with Audit Committees), as may be modified or
supplemented, and discussed with the independent accountant the
accountant's independence.

Based on those disclosures and discussions, we are not aware of any
relationship between the independent auditors and Isonics that affects the
objectivity or independence of the independent auditors. Based on the
discussions and our review discussed above, we recommended to the Board of
Directors that the audited financial statements for fiscal 2001 be included in
Isonics Corporation's 2001 Annual Report to shareholders.

Respectfully submitted,
The Isonics Corporation Audit Committee
Larry J. Wells, Chairman
Richard Parker, Member
Lindsay A. Parker, Member
<Page>

COMPENSATION COMMITTEE

There were no formal compensation committee meetings during the fiscal
year ended April 30, 2001, however there was one formal meeting subsequently
through August 31, 2001. Each member of that committee attended the meeting in
person or by telephone. The compensation committee has the authority to review
and make recommendations to our board of directors with respect to the
compensation of our executive officers.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

SECTION 16(a) DISCLOSURE

Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires Isonics' directors, executive officers and persons who own more than
ten percent of a registered class of Isonics' equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of Isonics. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
Isonics with copies of all Section 16(a) forms they file.

To our knowledge, based upon a review of the copies of such reports
furnished to us and based upon written representations that no other reports
were required, all Section 16(a) filing requirements applicable to Isonics'
officers, directors and greater than ten percent beneficial owners were complied
with exception (or in addition) to the following during the fiscal year ended
April 30, 2001 and subsequently:

1. Dr. Cuttriss and his affiliate, Metallurgy International, Inc., jointly
filed a Form 3 in February 2000. Dr. Cuttriss became subject to the
Section 16(a) reporting requirements when he became an executive
officer of Isonics in May 1998. A joint filing of two Form 4s was also
made in February 2000 reporting transactions that occurred in July 1999
and September 1999, which Dr. Cuttriss amended in May 2000. Dr.
Cuttriss and Metallurgy International are no longer affiliates of
Isonics effective February 1, 2001.

2. Mr. Herbert Hegener filed Forms 4 in August 2000 reporting sales that
took place in May, June and July of 2000.
<Page>

3. Eagle-Picher Technologies, LLC became subject to the Section 16(a)
reporting requirements when it became a greater than 10% beneficial
owner in December 1999. Eagle-Picher filed a Form 3 in March 2000.
Eagle-Picher attempted to exercise warrants in March 2000 but, to our
knowledge has not yet filed a Form 4 reporting the attempted exercise.
Eagle-Picher has also not yet filed an amendment to its Schedule 13D
reporting this attempted exercise. In February 2001 we cancelled the
shares (subsequent to canceling the warrant) and we have notified
Eagle-Picher of the cancellation. To the knowledge of Isonics,
Eagle-Picher has not filed any report with the Securities and Exchange
Commission regarding the cancellation of the shares.

4. Mr. Alexander filed a Form 4 after July 10, 2000, reporting a transfer
of 536,000 shares in June 2000. Mr. Alexander transferred 500,000 of
these shares to his wife who continues to own these shares.

SHORT-SWING LIABILITY

On behalf of Metallurgy International, Inc., an affiliate of Dr.
Cuttriss, but without authorization from Dr. Cuttriss or Isonics, a
broker-dealer sold and purchased shares of Isonics common stock in July and
September 1999, respectively. With authorization from Dr. Cuttriss and Isonics,
Metallurgy International, Inc. sold additional shares in February and March
2000. As a result, Isonics raised the concern that Dr. Cuttriss may have
obtained a short-swing profit. Subsequently, Isonics received an opinion of
counsel in which counsel opined that "a court would likely not impose liability
on [Dr.] Cuttriss for the unauthorized July 1999 and September 1999 transactions
under Section 16(b) of the Securities Exchange Act of 1934." Dr. Cuttriss and
his affiliate, Metallurgy International, Inc., jointly filed two Form 4s in
February 2000 reporting these transactions. Dr. Cuttriss amended these forms in
May 2000. Effective February 1, 2001, Dr. Cuttriss and Metallurgy are no longer
affiliates of Isonics and, therefore, are no longer subject to the reporting
requirements of Section 16(a).
<Page>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information regarding compensation
awarded, paid to, or earned by the chief executive officer and the other
principal officers of Isonics for the three years ended April 30, 1999, 2000,
and 2001. No other executive officer earned salary and bonus compensation
exceeding $100,000 during any of those years. This includes all compensation
paid to each by Isonics and any subsidiary.

<Table>
<Caption>
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION AWARDS
-------------------
AWARDS PAYOUT
------ SECURITIES ------
($) UNDERLYING
NAME AND FISCAL ($) ($) ($) RESTRICTED OPTIONS & LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OTHER(a) AWARDS SARS (#) PAYOUT COMPENSATION
------------------ ---- ------ ----- -------- ------ -------- ------- ------------

James E. Alexander 1999 200,000 50,000 35,016(f) 0 25,000(o) 0 0
President & CEO 2000 212,000 172,549(d) 39,280(g) 0 0 0 0
2001 240,000 0 6,704 (h) 0 0 0 0

Boris Rubizhevsky 1999 184,100 45,000 25,404(f) 0 22,500(p) 0 0
Senior Vice 2000 191,000 147,670(e) 28,185(i) 0 0 0 0
President 2001 216,000 0 14,280(j) 0 0 0 0

Stephen J. Burden, 1999 0 0 0 0 121,458(r) 0 0
Vice President (b) 2000 125,000 0 23,452 0 0 0 0
2001 125,000 0 9,750(m) 0 0 0 0

Daniel J. Grady 1999 127,188 16,000 0 0 15,625(q) 0 0
Vice President 2000 125,000 10,271 23,833(k) 0 0 0 0
2001 143,208 0 13,320(l) 0 0 0 0

Brantley J. 1999 22,182 0 0 0 116,000(s) 0 0
Halstead, 2000 102,000 16,000 3,870 0 25,000(t) 0 0
Vice President (c) 2001 122,000 24,000 12,330(n) 0 0 0 0
</Table>
(a) Excludes other compensation, the aggregate amount of which does not
exceed the lesser of $50,000 or 10% of such named Executive Officers'
annual compensation.
(b) Dr. Burden became an officer of Isonics effective January 1999.
(c) Mr. Halstead became an officer of Isonics in February 1999, upon his
joining Isonics as Chief Financial Officer. Mr. Halstead was promoted
to Vice President, Finance in January 2000. Mr. Halstead resigned
effective May 1, 2001.
(d) Mr. Alexander's amount includes $133,451 for forgiveness of a loan owed
to Isonics, and $39,098 to pay applicable payroll taxes on a stock
bonus granted in January 1999. Please see "CORPORATE LOANS TO
OFFICERS."
<Page>

(e) Mr. Rubizhevsky's amount includes $113,598 for forgiveness of a loan
owed to Isonics, and $29,072 to pay applicable taxes on stock bonus
granted in January 1999, and a $5,000 additional cash bonus. Please see
"CORPORATE LOANS TO OFFICERS."
(f) Mr. Alexander's amounts represent $35,016 for interest and taxes
payable as a result of a loan in fiscal year 1999. Mr. Rubizhevsky's
amounts represent $25,404 for interest and taxes payable as a result of
a loan in fiscal year 1999.
(g) Mr. Alexander's amount includes $26,543 for accrued vacation that was
paid in December 1999, $9,487 car allowance, and $3,250 employer
matching contribution to Isonics' 401k plan.
(h) Mr. Alexander's amount includes $1,704 car allowance and $5,000
employer matching contribution to Isonic's 401k plan.
(h) Mr. Rubizhevsky's amount includes $15,005 for accrued vacation that was
paid in December 1999, $9,000 car allowance, and $4,180 employer
matching contribution to Isonics' 401k plan.
(i) Mr. Rubizhevsky's amount includes $9,000 car allowance and $5,280
employer matching contribution to Isonic's 401k plan.
(k) Dr. Grady's amount includes $12,020 for accrued vacation that was paid
in December 1999, $9,000 car allowance, and $2,813 employer matching
contribution to the Isonics' 401k plan.
(l) Dr. Grady's amount includes $9,000 car allowance and $4,320 employer
matching contribution to Isonics 401k plan.
(m) Dr. Burden's amount includes $6,000 car allowance and $3,750 employer
matching contribution to Isonics 401k plan.
(n) Mr. Halstead's amount includes $9,000 car allowance and $3,330 employer
matching contribution to Isonics 401k plan.
(o) Options to purchase 25,000 shares of common stock were granted in April
1999, as consideration for delaying salary in March and April 1999, and
are currently exercisable at $1.4375 per share and expire April 26,
2004.
(p) Options to purchase 22,500 shares of common stock were granted in April
1999, as consideration for delaying salary in March and April 1999, and
are currently exercisable at $1.4375 per share and expire April 26,
2004.
(q) Options to purchase 15,625 shares of common stock were granted in April
1999, as consideration for delaying salary in March and April 1999, and
are currently exercisable at $1.4375 per share and expire April 26,
2004.
(r) Options to purchase 100,000 shares of common stock were granted in
January 1999 as consideration for Dr. Burden's promotion to vice
president in January 1999, with an exercise price of $1.10 per share
(of which 70,000 have vested as of September 17, 2001, and continue to
vest at a rate of 5%, or 5,000, per quarter). Options to purchase
21,458 shares of common stock were granted in April 1999 as
consideration for delaying salary in March and April 1999, and are
currently exercisable at $1.4375 per share and expire April 26, 2004.
<Page>

(s) Options to purchase 100,000 shares of common stock were granted in
February 1999, as consideration for Mr. Halstead joining the Company as
Chief Financial Officer, with an exercise price of $2.5625 per share.
As a result of Mr. Halstead's resignation, his unexercised options
expired July 31, 2001.
(t) Options to purchase 25,000 shares of common stock were granted in
January 2000, as consideration for Mr. Halstead's promotion to Vice
President in January 2000. As a result of Mr. Halstead's resignation,
his unexercised options expired July 31, 2001.

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL AGREEMENTS

In September 1997, we entered into employment agreements with James E.
Alexander and Boris Rubizhevsky. The agreements have a term of four years and
provide for annual salaries of $200,000 and $180,000, respectively, although
either Isonics or the individuals may terminate these agreements prematurely in
their discretion. By resolution of the Board of the Directors made on January
30, 2000, both Mr. Alexander and Mr. Rubizhevsky received salary increases
commencing February 1, 2000, equal to 20% of their current salary, $240,000, and
$216,000, respectively. The salary increases were granted in recognition of
their performance for Isonics and the fact that neither Mr. Alexander nor Mr.
Rubizhevsky had received salary increases in approximately two and one-half
years. Under the agreements, each officer is entitled to receive incentive
compensation up to 50% of the officer's annual salary, as we approve, pursuant
to such executive compensation plan as we may approve. The agreements provide
that upon a termination of employment other than for cause (as defined in the
agreements), the officer is entitled to severance compensation of eighteen (18)
months of his salary, paid at the same time as salary payments, 25% of the
officer's annual prevailing salary, paid upon termination, and in addition all
outstanding stock options held by the officer will be accelerated and will
become exercisable in full and our right of repurchase will terminate with
respect to such shares. The agreements provide for similar accelerated vesting
of outstanding stock options upon a change in control of Isonics. Although these
contracts have expired in September 2001, the compensation committee has not yet
determined whether to offer new contracts to these officers.

We have also entered into employment agreements with Dr. Daniel J.
Grady, Dr. Stephen J. Burden and Mr. John Sakys. The agreements have an
indefinite term and provide for at-will employment, terminable at any time by
either party. The agreements provide for a rate of annual compensation, which we
will review annually. Under each agreement, Dr. Grady, Dr. Burden and Mr. John
Sakys are entitled to participate in our standard plans and policies. The
agreements also include confidentiality and invention assignment provisions.
Additionally, Mr. Herbert Hegener is covered by an employment agreement
extending through December 2001. Dr. Cuttriss and Isonics agreed to a
cancellation of his previous employment agreement (which extended through
September 2003) in connection with our sale of IPRC to a management group that
included him.
<Page>

STOCK OPTIONS AND OPTION PLANS

We grant options to executive officers, employees, and consultants under the
following plans (collectively the "Plans"):

(A) 1996 STOCK OPTION PLAN. Although this plan has been
terminated, there are options outstanding.

(B) 1996 EXECUTIVES' EQUITY INCENTIVE PLAN. The Executives' Plan
authorized the grant of options to purchase 1,000,000 stock
options. The options granted may be either incentive stock
options, if they meet the requirements of Section 422 of the
Internal Revenue Code, or non-qualified stock options. The
directors approved this plan in September 1996 and the
shareholders in October 1996. The directors approved an
amendment to this plan in August 2000; the shareholders
approved the amendment in October 2000. We are presenting a
further amendment to this plan to the shareholders at the
meeting described in this proxy statement.

(C) 1996 EQUITY INCENTIVE PLAN. The Employees' Plan authorized the
grant of options to purchase 500,000 stock options. The
options granted may be either incentive stock options, if they
meet the requirements of Section 422 of the Internal Revenue
Code, or non-qualified stock options. The directors approved
this plan in September 1996 and the shareholders in October
1996. The directors approved an amendment to this plan in
August 2000; the shareholders approved the amendment in
October 2000. We are presenting a further amendment to this
plan to the shareholders at the meeting described in this
proxy statement.

(d) 1998 EMPLOYEE STOCK PURCHASE PLAN. The Stock Purchase Plan
authorized employee purchase of up to 200,000 shares of
Isonics common stock. The directors approved this plan in
August 1998. Shareholders approved it in October 1998.

As of September 17, 2001, options to purchase a total of 263,125
shares, 101,458 shares, and 358,769 shares respectively, were outstanding under
the Executives' Plan, Employees' Plan, and 1996 Stock Option Plan, and options
to purchase 664,417, 354,362, and 0 shares, respectively, remained available for
grant.

Except for the Director's Plan, we have not adopted any other stock
option or stock appreciation rights plan. SEE "COMPENSATION OF DIRECTORS."
<Page>

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

The following options were granted to executive officers named in the
compensation table during the fiscal year ended April 30, 2001. We did not grant
any stock appreciation rights to any person during fiscal year 2001 or
subsequently. We have not granted any stock options to executives named in the
compensation table in fiscal 2002.

<Table>
<Caption>
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/ STOCK
OPTIONS/STOCK APPRECIATION RIGHTS
NAME AND PRINCIPAL APPRECIATION RIGHTS GRANTED TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
POSITION GRANTED (#) FISCAL YEAR ($/SH) DATE
-------- ----------- ----------- ------ ----

James E. Alexander 0 0.0% N/A N/A
President & CEO
Boris Rubizhevsky 0 0.0% N/A N/A
Senior Vice President(a)
Daniel J. Grady 0 0.0% N/A N/A
Vice President
Stephen J. Burden 0 0.0% N/A N/A
Vice President
Brantley J. Halstead 0 0% N/A N/A
Vice President (b)
</Table>

-------------------
(a) Does not include 33,333 warrants obtained in a private transaction
completed in July 1999 or the additional 2,123 warrants obtained under
anti-dilution provisions in January 2001.
(b) Mr. Halstead resigned effective May 1, 2001.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

Mr. Halstead exercised 16,000 stock options for cash in October 2000.
These stock options were granted in April 1999, and approved by the board of
directors in October 1999. No other officer exercised employee stock options
during the fiscal year ended April 30, 2001, or subsequently.

The following table sets forth information regarding the year-end value
of options being held by the Chief Executive Officer and the other such named
officers and persons on April 30, 2001.

<Page>

<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS/STOCK
SHARES OPTIONS/STOCK APPRECIATION APPRECIATION RIGHTS AT APRIL
NAME AND ACQUIRED ON VALUE RIGHTS AT APRIL 30, 2001 30, 2001 EXERCISABLE/
PRINCIPAL POSITION EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
------------------ ------------ -------- ------------------------- -------------

James E. Alexander 0 0 25,000/0 $0/$0
President & CEO
Boris Rubizhevsky 0 0 22,500/0 $0/$0
Senior Vice President (a)
Daniel J. Grady 0 0 222,965/0 $174,423/$0
Vice President
Stephen J. Burden 0 0 167,167/25,720 $27,200/$4,800
Vice President
Brantley J. Halstead 16,000 $16,000 90,000/35,000 $0/$0
Vice President (b)
</Table>

(b) Mr. Halstead resigned effective May 1, 2001. As a result, the 90,000
outstanding stock options held by Mr. Halstead expired July 31, 2001.

LONG TERM INCENTIVE COMPENSATION PLANS, AND DEFINED BENEFIT AND ACTUARIAL PLANS

Isonics has no long term incentive compensation plans, defined benefit
plans, or actuarial plans.

COMPENSATION OF DIRECTORS

In January 2000, we agreed to compensate non-employee directors $2,000
for attending Board of Directors' meetings in person, and $500 for attending
Board of Directors' meetings telephonically beginning January 1, 2000.
Previously we had not compensated our directors for their service as such.

The 1998 Directors' Plan authorized each person serving as a member of
the Board who is not an employee of Isonics to receive options to purchase
20,000 shares of Isonics common stock when such person accepts his position as a
Director and to receive an additional option to purchase 10,000 shares when such
person is re-elected as a Director provided such person is not an Isonics
employee. The exercise price for the options is the Fair Market Value (as
defined in the Executives' Plan) on the date such person becomes a director and
the options are exercisable for five years from such date. The options granted
under the Directors' plan vest immediately upon the date of the grant. In the
event a Director resigns or is not re-elected to the Board, failure to exercise
the options in three months results in the options' termination prior to the
expiration of their term. Although the Directors adopted the plan in 1998, the
Board formalized the plan by resolution in January 2000.

<Page>

Under the Directors' Plan the following individuals have been granted
options through September 17, 2001:

<Table>
<Caption>
NAME SHARES UNDER OPTION EXERCISE PRICE EXPIRATION
------------------------------- --------------------------- --------------------------- ---------------------------

Lindsay Gardner 20,000 $2.375 May 21, 2003
10,000 $1.1875 October 5, 2003
10,000 $6.250 April 26, 2005
10,000 $2.1875 October 10, 2005

Richard Parker 20,000 $1.656 August 17, 2003
10,000 $1.1875 October 5, 2003
10,000 $6.250 April 26, 2005
10,000 $2.1875 October 10, 2005

Larry Wells 20,000 $7.3125 January 29, 2005
10,000 $6.250 April 26, 2005
10,000 $2.1875 October 10, 2005
</Table>

We do not have any other arrangements pursuant to which we compensate
the Directors for acting in their capacities as such.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We provide the following information regarding transactions among
officers, directors and significant shareholders of Isonics during the most
recent two fiscal years and during the subsequent fiscal year.

SALE OF INTERNATIONAL PROCESS RESEARCH CORPORATION

Effective February 1, 2001, we sold International Process Research
Corporation("IPRC") to a limited liability company, Interpro Zinc LLC, in a
management buy-out. Robert H. Cuttriss, Ph.D. (formerly an executive officer of
Isonics) is the manager of Interpro Zinc LLC and a 25% owner. James E. Alexander
(president, chief executive officer, and a director of Isonics) and Boris I.
Rubizhevsky (senior vice president and a director of Isonics) are also 25%
owners of Interpro Zinc LLC and participated in the purchase of IPRC. Mr.
Alexander and Mr. Rubizhevsky advised our board that they do not intend to
participate actively in Interpro Zinc's activities.

<Page>

CORPORATE LOANS TO OFFICERS

In the past, Isonics has from time-to-time made loans to Messrs.
Alexander and Rubizhevsky. In each case, the loans have been interest-bearing
and have been repaid. The following table sets forth some information regarding
these loans through April 30, 2001. Isonics has not made any loans to any
officers subsequently..

<Table>
<Caption>
JAMES E. ALEXANDER BORIS RUBIZHEVSKY
PRESIDENT & CEO SENIOR VICE PRESIDENT
--------------- ---------------------

Balance as of April 30, 1999 $236,360.38 $223,325.22
FY 2000 Borrowings (a) 7,690.49 7,221.34
FY 2000 Repayments (a) 244,050.87(b) 230,546.56(c)
---------- ----------
Balance as of April 30, 2000 $0.00 $0.00
FY 2001 Borrowings (a) 100,000.00 100,000.00
FY 2001 Repayments (a) 100,000 (d) 100,000 (d)
Balance as of April 30, 2001 $0.00 $0.00
</Table>

(a) Includes interest accrued and paid. Amounts are aggregated.
(b) In October 1999 Mr. Alexander applied $74,038.54 of a bonus awarded to
him to the repayment of this indebtedness. In February 2000, Mr.
Alexander surrendered 30,437 shares of Isonics common stock in
satisfaction of the remaining $165,000 principal and $10,012.33
interest.
(c) In October 1999 Mr. Rubizhevsky applied $60,534.23 of a bonus awarded
to him to the repayment of this indebtedness. In February 2000, Mr.
Rubizhevsky surrendered 30,437 shares of Isonics common stock in
satisfaction of the remaining $165,000 principal and $10,012.33
interest.
(d) The loans were made to the officers in March ($50,000 each) and April
($50,000 each), 2001, and were repaid, with interest at 6.6% per annum,
on April 30, 2001.

CORPORATE LOANS FROM OFFICERS AND EMPLOYEES

During the fiscal years ended April 30, 2000 and 2001, Isonics'
officers, directors and employees loaned Isonics funds. The following schedule
summarizes these borrowing and repayments.

<Table>
<Caption>
NAME AND BALANCE AS OF FY 2000 FY 2000 BALANCE AS OF
PRINCIPAL POSITION MAY 1, 1999 BORROWINGS (a) REPAYMENTS (a) APRIL 30 2000
------------------ ----------- ----------- ----------- -------------

James E. Alexander $0.00 $0.00 $0.00 $0.00
President & CEO....................
Boris Rubizhevsky $44,290.20 $8,858.04 $53,148.24 $0.00
Senior Vice President (b)..........
Daniel J. Grady $0.00 $0.00 $0.00 $0.00
Vice President.....................

<Page>

Stephen J. Burden $0.00 $57,500.00 $57,500.00 $0.00
Vice President (c).................
Lindsay Gardner $0.00 $0.00 $0.00 $0.00
Director...........................
</Table>

(a) Includes interest accrued and paid through April 30, 2000. Amounts are
aggregated.
(b) Mr. Rubizhevsky's note to Isonics was converted into 66,666 shares of
common stock underlying 33,333 shares of Series A Stock and 33,333
warrants issued in connection with a second private placement of Series
A convertible preferred stock and warrants to purchase Isonics common
stock on July 30, 1999.
(c) Dr. Burden's note to Isonics was converted into 66,666 shares of common
stock underlying 33,333 shares of Series A Stock and 33,333 warrants
issued in connection with the second private placement on July 30,
1999.

<Table>
<Caption>
NAME AND BALANCE AS OF FY 2001 FY 2001 BALANCE AS OF
PRINCIPAL POSITION MAY 1, 2000 BORROWINGS REPAYMENTS APRIL 30 2001
------------------ ----------- ----------- ----------- -------------

James E. Alexander $0.00 $0.00 $0.00 $0.00
President & CEO....................
Boris Rubizhevsky $0.00 $0.00 $0.00 $0.00
Senior Vice President .............
Daniel J. Grady $0.00 $0.00 $0.00 $0.00
Vice President.....................
Stephen J. Burden $0.00 $0.00 $0.00 $0.00
Vice President ....................
Lindsay Gardner $0.00 $0.00 $0.00 $0.00
Director...........................
</Table>

Mr. Hegener had a loan payable to him from Isonics in the amount of
$438,314 resulting from the 1998 purchase of Chemotrade by Isonics. Isonics paid
all monies owed to Mr. Hegener in December 1999 and issued to Mr. Hegener 35,000
warrants to purchase common stock at $3.00 per share through June 30, 2004, to
compensate him for a late loan payment.

There are no monies currently owed to Mr. Hegener under the premise of
corporate loans. All monies owed were repaid in December 1999.

Effective April 30, 2001 we owe approximately $114,000 to the former owners of
Chemotrade resulting from contingent consideration payable to the sellers based
on the 2001 earnings of Chemotrade. Included in the $114,000 is approximately
$57,000 payable to Mr. Hegener.

<Page>

PROPOSAL 2 - INCREASE IN AUTHORIZED CAPITALIZATION

GENERAL DESCRIPTION

COMMON STOCK. The Board of Directors has approved and recommends that
the shareholders approve an increase in the number of shares of Common Stock
Isonics is authorized to issue. Isonics' articles of incorporation presently
authorizes it to issue up to 20,000,000 shares of Common Stock. The following
table sets forth the number of shares Isonics currently has outstanding and
committed for issuance as of the record date for the Special Meeting:

<Table>

------------------------------------------------------ ------------------------------------
Common Stock outstanding 9,311,475

Common Stock issuable upon conversion of outstanding
Series A Stock 963,666

Common Stock underlying options that are outstanding
or are issuable pursuant to our stock option plans 1,882,131

Common Stock underlying outstanding Class A Common
Stock Purchase Warrants* 177,390

Common Stock underlying outstanding Class B Common
Stock Purchase Warrants 1,780,110

Common Stock underlying authorized Class C Common
Stock Purchase Warrants 202,500

Common Stock underlying Class C Common Stock
Purchase Warrants issuable upon exercise of
outstanding Class B Common Stock Purchase Warrants 1,780,110

Common Stock underlying other warrants 3,374,012

Common Stock reserved for ESPP 172,063

Common Stock issuable upon conversion of outstanding
Series B Stock issuable in connection with the
acquisition of certain technology of Silicon 500,000
Evolution, Inc.**

Total 20,143,457

</Table>
* The Class A Warrants expire on September 21, 2001 and will not be
outstanding as of the date of the meeting.

** The Series B Stock was issued September _____, 2001, after the record
date.

As described in the table, we have plans to issue more than the total
number of shares of
<Page>

Common Stock, which we are currently authorized to issue. Unless the
shareholders approve an increase in authorized capital, we will not be able
to accomplish further equity-based financing or acquisitions using our Common
Stock. While we have no agreements to complete either a financing or
acquisition at the present time (other than the proposed acquisition from
Silicon Evolution, Inc.), such plans may change in the future.

PREFERRED STOCK. We currently have 10,000,000 shares of our preferred
stock authorized. The proposed recapitalization will not affect the authorized
preferred stock.

We have established a series of our preferred stock, the Series A
Stock. The Series A Stock consists of 1,830,000 shares issued with a liquidation
preference and conversion right of $1.50 per share. Through the record date,
866,334 shares of Series A Stock have elected to convert into Common Stock. The
Series A Stock is entitled to dividends or distributions equal to the amount of
the dividend or distribution per share of Common Stock payable at such time
multiplied by the number of shares of Common Stock then obtainable upon
conversion of such Series A Stock. The Redemption Trigger Date for the Series A
Stock is the business day immediately following the thirtieth consecutive
trading day that the average closing price during such trading days (or, if no
closing price is reported, the average of the bid and ask prices) of the shares
of Common Stock was above $8.00 per share (which minimum price shall be
proportionally adjusted for stock splits, stock dividends, reverse stock splits
and any other subdivision or combination of the Common Stock). After the
Redemption Date, we may redeem all or any part of the Series A Stock at our
election at any time, and from time to time. The Series A Stock is convertible
into Common Stock at the option of the holder until the Company, if at all,
chooses to redeem such shares on the basis of one share of Common Stock per
share of Series A Stock and, until converted, each share of Series A Stock is
entitled to one vote at any meeting of the shareholders of the Company.

COMMON STOCK. Subject to preferences that may be applicable to any
preferred stock outstanding at the time, the holders of outstanding shares of
common stock are entitled to receive dividends from assets legally available at
such times and in such amounts as the Board of Directors may from time to time
determine.

Each shareholder is entitled to one vote for each share of common stock
held on all matters submitted to a vote of shareholders.

Cumulative voting for the election of directors is specifically
authorized by California law and the Bylaws. Under cumulative voting for the
election of directors, upon a proper and timely
<Page>

request by a shareholder, each shareholder is entitled to cast a number of
votes equal to the number of shares held multiplied by the number of
directors to be elected. The votes may be cast for one or more candidates.
Thus, under cumulative voting, a majority of the outstanding shares will not
necessarily be able to elect all of the directors, and minority shareholders
may be entitled to greater voting power with respect to election of directors
than if cumulative voting did not apply.

The Bylaws provide that so long as we are a "listed company" as defined
by applicable California law, there will not be cumulative voting in connection
with the election of directors. Generally, a "listed company" is a company that
is traded on the New York Stock Exchange, the American Stock Exchange or Nasdaq
- National Market System. At the present time, we are not a "listed company" as
defined in California law, and therefore cumulative voting will continue to
apply in connection with the election of directors.

The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Upon Isonics' liquidation, dissolution or
winding up, the remaining assets legally available for distribution to
shareholders, after payment of claims or creditors and payment of liquidation
preferences, if any, on outstanding preferred stock, are distributable ratably
among the holders of the common stock and any participating preferred stock
outstanding at that time. Each outstanding share of common stock is fully paid
and nonassessable.

PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION.

The Board of Directors has adopted resolutions authorizing amendments
to Article III, Section (a) of our Articles of Incorporation, subject to
shareholder approval, increasing the number of shares of Common Stock, which the
Company may issue to 40,000,000, an increase of 20,000,000 shares.

The Board of Directors proposes that the recapitalization described in
this proposal be approved and completed, as follows:

<Table>
<Caption>
CURRENT FOLLOWING RECAPITALIZATION
------------------------------ -----------------------------
Outstanding Authorized Outstanding Authorized
and Reserved and Reserved
------------ ---------- ------------ ----------

Common Stock 20,143,457 20,000,000 20,143,457 40,000,000

Preferred Stock 1,463,666 10,000,000 963,666 10,000,000
</Table>

If the recapitalization is approved, we expect to have sufficient
capitalization to accomplish our corporate goals as expressed below.

REASONS FOR THE RECAPITALIZATION DESCRIBED IN THIS PROPOSAL
<Page>

In the recent past, we have used our authorized but unissued Common
Stock for numerous different purposes, including:

- financing activities in private placements of our securities,

- for the issuance of stock upon exercise of options or
conversion of our Series A Stock,

- as partial consideration for a promise to deliver 200
kilograms of silicon-28 from Eagle-Picher Technologies, LLC
(although the shares issuable to Eagle-Picher were
subsequently cancelled because of its failure to deliver the
silicon-28), and

- in connection with the conversion of the Series B Stock issued
to Silicon Evolution, Inc.

At the present time, we have no remaining unissued and unreserved
shares of our Common Stock. In fact, if all outstanding options and warrants
were exercised and if all outstanding shares of our Series A Stock were
converted to Common Stock, we would not be able to meet our contractual
obligations to deliver shares of Common Stock from our authorized
capitalization.

The Board of Directors is concerned that this lack of remaining
capitalization may result in adverse consequences to Isonics should we be unable
to issue Common Stock to meet certain contractual requirements. The Board also
believes that we need a significant amount of authorized capitalization for
Isonics to accomplish its future growth objectives.

You should note, however, that we have no plans currently to issue any
shares of our Common Stock in connection with any contemplated transaction other
than satisfaction of our outstanding obligations to the holders of options,
warrants, Series A Stock, and Series B Stock.

EFFECT OF THE RECAPITALIZATION DESCRIBED IN THIS PROPOSAL

The recapitalization described in this Proposal will result in Isonics
being able to issue a large number of additional shares of its Common Stock.
Subject to fiduciary requirements under the business judgment rule, the Board of
Directors may authorize the issuance of additional shares of Common Stock
without the need to obtain further shareholder approval. If issued, these shares
would greatly affect the percentage interest of our present shareholders by
reducing the proportionate voting power of the outstanding shares of Common
Stock.
<Page>

In addition, the power to issue a substantial number of shares of
Common Stock following the proposed recapitalization could be used by incumbent
management to make any change in control of the Company more difficult. Under
certain circumstances, such shares could be used to create voting impediments or
to frustrate persons seeking to affect a takeover or otherwise gain control of
the Company. For example, additional shares of Common Stock could be privately
placed with purchasers who might side with the Board in opposing a hostile
takeover bid or to dilute the stock ownership of a person or entity seeking to
obtain control of the Company.

Despite such anti-takeover implications, the recapitalization is not
the result of our knowledge of any specific effort to accumulate our securities
or to obtain control of Isonics by means of a merger, tender offer, proxy
solicitation in opposition to management, or otherwise. We are not submitting
the proposed amendment for the recapitalization to enable us to frustrate any
known efforts by another party to acquire a controlling interest in Isonics or
to seek Board representation.

Furthermore, the proposed recapitalization is not a part of any plan by
our management to adopt a series of amendments to render the takeover of Isonics
more difficult. Management does not presently intend to propose any
anti-takeover measures in future proxy solicitations. Except as indicated below,
management is not aware of the existence of any other provisions currently in
the Articles of Incorporation or Bylaws having any anti-takeover effects which
would impose any burden in excess of requirements imposed by the California
Corporation Code or federal law upon potential tender offerors or others seeking
a takeover of Isonics.

- We have a class of preferred stock, which could also be used by the
Board of Directors to delay or frustrate a change of control
transaction.

- Our Articles of Incorporation provide that the liability of corporate
directors for monetary damages resulting from alleged breaches of their
duty of care has been eliminated to the maximum extent provided by
California law. Notwithstanding the amendment, directors remain
potentially liable for breaches by them of their duty of loyalty to the
Company.

- California law allows indemnification of directors, officers,
employees, and agents against liabilities incurred in any proceeding in
which an individual is made a party because he was a director, officer,
employee, or agent of the company if such person conducted himself in
accordance with the applicable standard of care (requiring, among other
things, actions taken in good faith in a manner reasonably believed to
be in, or at least not opposed to, the best interests of the
corporation). The availability of indemnification to directors for
liability based upon their actions in choosing to issue shares in an
attempt to resist a takeover could influence a director in choosing
whether to approve the issuance of Common Stock or preferred stock or
in taking other actions to resist a takeover.

FEDERAL INCOME TAX CONSEQUENCES
<Page>

Existing holders of our Common Stock will not be required to recognize
any gain or loss for federal income tax purposes resulting from the approval and
the completion of the recapitalization described in this Proposal.

VOTES REQUIRED AND RECOMMENDED

Approval of the proposal for the Company to amend the Articles to
effect the recapitalization requires the affirmative vote of:

- a majority of the outstanding shares of our Common
Stock, as well as

- a majority of the outstanding shares of the Company's
Common Stock and Series A Stock voting as a single
class.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE PROPOSAL FOR THE RECAPITALIZATION OF ISONICS. Unless otherwise
specified, the enclosed proxy will be voted "FOR" the approval of the
recapitalization described in this Proposal.
<Page>

AMENDMENT OF THE 1996 EXECUTIVES' EQUITY INCENTIVE PLAN
( PROPOSAL NO. 3)
AND
AMENDMENT OF THE 1996 EQUITY INCENTIVE PLAN
( PROPOSAL NO. 4)

YOUR BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 1996 EXECUTIVES' EQUITY INCENTIVE PLAN
AND
"FOR" THE AMENDMENT OF
THE 1996 EQUITY INCENTIVE PLAN

THE 1996 EXECUTIVES' EQUITY INCENTIVE PLAN. The 1996 Executives' Equity
Incentive Plan (the "Executives' Plan") was adopted by the Board of Directors in
November 1996 and ratified by the shareholders of the Company at the 1997 Annual
Meeting. At the 2000 Annual Meeting, the shareholders approved an amendment to
this plan to increase to 1,000,000 the number of shares reserved for issuance
under this plan. The purpose of the Executives' Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company and its subsidiaries,
by offering them an opportunity to participate in the Company's future
performance through awards of stock options, restricted stock and stock bonuses.
The proposed amendment will increase from 1,000,000 to 2,000,000 the number of
shares reserved for issuance under the Executives' Plan. As of September 17,
2001, 664,417 shares or options remain issuable under the Executives' Plan.

THE 1996 EQUITY INCENTIVE PLAN. The 1996 Equity Incentive Plan (the
"Employees' Plan") was adopted by the Board of Directors in November 1996 and
ratified by the shareholders of the Company at the 1997 Annual Meeting. At the
2000 Annual Meeting, the shareholders approved an amendment to this plan to
increase to 500,000 the number of shares reserved for issuance under this plan.
As the case of the Executives' Plan, the purpose of the Employees' Plan is to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company and its subsidiaries,
by offering them an opportunity to participate in the Company's future
performance through awards of stock options, restricted stock and stock bonuses.
The proposed amendment will increase from 500,000 to 1,000,000 the number of
shares reserved for issuance under the Employees' Plan. As of September 17,
2001, only 354,362 shares or options remain issuable under the Employees' Plan.
<Page>

REASONS FOR THE RECOMMENDATION. We have recently acquired certain
business assets from Silicon Evolution, Inc., an unaffiliated manufacturer of
silicon-on-insulation and other forms of silicon wafers for the electronics
industry. At the same time, we entered into employment arrangements with certain
persons previously affiliated with Silicon Evolution which requires us to issue
stock bonus shares and options to these persons as described below. These
employment agreements will be effective on the earliest of Isonic's receipt of
adequate funding as defined, Isonics commencing a wafer manufacturing business
on a commercial scale, or Isonics providing written notice to the employee that
the agreement has become effective. We also wish to grant additional stock
options to certain current employees as described below.

Name Stock Bonus Shares Stock Options Stock Bonus Shares Stock Options
(Executives' Plan) (Executives Plan) (Employees' Plan) (Employees' Plan)
---- ------------------ ----------------- ------------------ -----------------

Hans J. Watlitzki 200,000 200,000 -0- -0-
Ralph Ahlgren 100,000 100,000 -0- -0-
Kurt Dichmann -0- -0- 100,000 100,000
Robert Bissell -0- -0- 50,000 75,000
Howard Hogle -0- -0- 50,000 75,000
James E. Alexander -0- 100,000 -0- -0-
Boris Rubizhevsky -0- 100,000 -0- -0-
Stephen Burden -0- 100,000 -0- -0-
Daniel Grady -0- 100,000 -0- -0-
</Table>

The increase in the number of shares subject to the plans permits us to
meet these obligations.

In addition, Isonics operates in an extremely competitive high tech job
market where unemployment is extremely low and where turnover can be very high.
In this job market, stock option and other equity incentive plans are offered by
the majority of the firms with whom the Company competes for talent.

RECOMMENDATION OF THE BOARD. At the Annual Meeting, the shareholders
are being requested to ratify the amendments to increase the number of shares
available under the Executives' Plan to 2,000,000 (an increase of 1,000,000
shares, Proposal No. 3) and to increase the number of shares available under the
Employees' Plan to 1,000,000 shares (an increase of 500,000 shares, Proposal No.
4).

Your Board recommends amending both of the Plans to increase the number
of shares of reserved for issuance under the plans. These amendments will allow
the Compensation Committee of the Board and the Board itself to issue options
and stock bonuses, and to provide for the issuance of restricted stock to
executives and employees of the Company to encourage them to continue to share
in the growth and prosperity of the Company.
<Page>

The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present, or represented and entitled to vote at the
Annual Meeting, will be required to ratify the adoption of both Proposals. If
only one Proposal is adopted, that Proposal will be implemented regardless of
whether the other Proposal is adopted.

The Board of Directors believes that the Executives' Plan and the
Employees' Plan each continues to be necessary to allow the Company to provide
meaningful equity incentives to attract, motivate and retain executives and
employees. Consequently, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE

FOR PROPOSAL NO 3 TO INCREASE THE NUMBER OF SHARES INCLUDED IN THE
EXECUTIVES' PLAN; AND

FOR PROPOSAL NO 4 TO INCREASE THE NUMBER OF SHARES INCLUDED IN THE
EMPLOYEES' PLAN.

PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THIS PROPOSAL UNLESS
SHAREHOLDERS SPECIFY OTHERWISE IN THOSE PROXIES.

SUMMARY OF THE PLANS. The terms of both the Executives' Plan and the
Employees' Plan are similar. A summary of the principal provisions of the Plans
is set forth below.

PURPOSE. The purpose of each of the Plans is to attract and retain the
best available personnel, to provide additional incentives to the employees of
the Company and its subsidiaries, to promote the success of the Company's
business and to enable the executives and employees to share in the growth and
prosperity of the Company by providing them stock options, stock bonuses, and
restricted stock awards.

ADMINISTRATION. The Executives' Plan and the Employees' Plan are each
administered by a committee of the Board of Directors formed pursuant to the
Executives' Plan (the "Committee"). Currently the members of the Committee are
Lindsay Gardner, Richard Parker, and Larry Wells, all outside (non-employee)
directors who are not eligible to participate in the Executives' Plan. All
questions of interpretation of the Executives' Plan or the Employees' Plan are
determined in the sole discretion of the Committee, and its determinations are
final and binding upon all participants.

ELIGIBILITY. Incentive stock options may be granted only to employees
(including officers and directors who are also employees) of the Company or of a
subsidiary. All other awards may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any
subsidiary provided such consultants, contractors and advisors render BONA FIDE
services not in connection with the offer and sale of securities in a capital-
raising transaction.
<Page>

PURCHASE PRICE. The exercise price for incentive stock options issued
under the plan must be no less than 100% of the market price of the Company's
common stock on the date the options are granted; non-qualified stock options
can be issued with an exercise price no less than 85% of the fair market value
of the Common Stock. The purchase price of shares sold under either of the Plans
pursuant to a restricted stock award must be at least 85% of the fair market
value of the shares on the date the restricted stock award is granted. Stock
bonuses issued to persons under either of the Plans will be treated as
compensation to the recipient based on the current fair market value of the
shares. The determination of the fair market value of the shares on a grant date
is based upon the price at which the shares are traded on the public market.

CAPITAL CHANGES. In the event any change is made in the Company's
capitalization, such as a stock split or stock dividend, which results in an
increase or decrease in the number of outstanding shares of common stock without
receipt of consideration by the Company, appropriate adjustments will be made by
the Board of Directs in the shares subject to purchase under the Executives'
Plan or the Employees' Plan and in the purchase price per share.

NON-ASSIGNABILITY. No person receiving any options or rights under the
Executives' Plan or the Employees' Plan may pledge, assign or transfer the
options or rights for any reason. Shares issued under the Executives' Plan or
the Employees' Plan, or upon the exercise of an option issued under either Plan
can only be transferred in accordance with the requirements of federal and
applicable state securities laws.

AMENDMENT AND TERMINATION OF THE PLANS. The Board may at any time
terminate or amend the Executives' Plan or the Employees' Plan in any respect;
provided, however, that the Board will not, without the approval of the
shareholders of the Company, amend either Plan in any manner that requires such
shareholder approval pursuant to the Internal Revenue Code, the Securities
Exchange Act of 1934, or the regulations promulgated thereunder as such
provisions apply to plans such as the Executives' Plan or the Employees' Plan.

FEDERAL TAX INFORMATION. The grant or exercise of a stock option
pursuant to any of the Option Plans, the purchase of stock pursuant, the receipt
of a stock bonus or a restricted stock award, or the sale of the Common Stock
received each is a taxable event with ramifications under the federal Internal
Revenue Code of 1986 and under applicable state laws. There are no federal
income tax consequences to the Company upon the grant of options. Stock bonuses
are treated as the payment of compensation to the recipient. The Company is
currently entitled to a deduction to the extent amounts are taxed as ordinary
income to a participant.

The foregoing is only a summary of the effect of federal income
taxation upon the participant and the Company with respect to shares purchased
under the Executives' Plan and does not purport to be complete, and does not
discuss the income tax laws of any municipality, state or foreign country in
which a participant may reside.
<Page>

INDEPENDENT AUDITORS

The independent accounting firm of Grant Thornton LLP was selected by
the Board of Directors with respect to the audit of the consolidated financial
statements of the company for the fiscal year ending April 30, 2001, as well as
many prior fiscal years. A representative of Grant Thornton LLP is expected to
be present at the annual meeting.

PROPOSALS FROM SHAREHOLDERS

The Company expects to hold its Fiscal Year 2002 Annual Meeting of
Shareholders in October 2002. Proposals from shareholders intended to be
presented at the next Annual Meeting of shareholders should be addressed to the
Company at Isonics Corporation, Attention: Corporate Secretary, 5906 McIntyre
Street, Golden, CO 80403 and must be received by the Company by June 30, 2002.
Upon receipt of any such proposal, the Company shall determine whether or not to
include any such proposal in the Proxy Statement and proxy in accordance with
applicable law. It is suggested that such proposals be forwarded by Certified
Mail-Return Receipt Requested.

ANNUAL REPORT TO SHAREHOLDERS

This proxy statement is being accompanied by the Company's annual
report to shareholders. The annual report to shareholders does include the
audited financial statements for the Company.

ANNUAL REPORT ON FORM 10-KSB AND
OTHER REPORTS

THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
APRIL 30, 2001, AND OTHER REPORTS FILED BY ISONICS UNDER THE SECURITIES EXCHANGE
ACT OF 1934, ARE AVAILABLE TO ANY SHAREHOLDER AT NO COST UPON REQUEST TO:
CORPORATE SECRETARY, 5906 MCINTYRE STREET, GOLDEN, CO 80403, OR BY TELEPHONE:
(303) 279-7900.
<Page>

OTHER MATTERS

Management does not know of any other matters to be brought before the
meeting. Should any other matter requiring a vote of shareholders arise at the
meeting, the persons named in the proxy will vote the proxies in accordance with
their best judgment.

By Order of the Board of Directors:

ISONICS CORPORATION
James E. Alexander, President
<Page>

ISONICS CORPORATION
AUDIT COMMITTEE CHARTER

ORGANIZATION

There shall be a committee of the Board of Directors of Isonics
Corporation to be known as the Audit Committee. The Audit Committee shall be
composed of directors who are independent of the management of the corporation
and are free of any relationship that, in the opinion of the Board of Directors,
would interfere with their exercise of independent judgment as a committee
member. All members of the committee shall have a working familiarity with basic
finance and accounting practices.

The members of the committee shall be elected by the Board of Directors
at its annual organizational meeting and shall serve thereafter until their
successors shall be duly elected. Unless a Chair is elected by the full Board of
Directors, the members of the committee may designate a Chair by majority of the
full committee membership.

PURPOSE

The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation.

In doing so, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the corporation.

RESPONSIBILITIES

In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible in order to best react to
changing conditions; and to ensure to the directors and shareholders the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.

In carrying out these responsibilities, the Audit Committee will:

- Review and recommend to the directors the independent auditors
to be selected to audit the financial statements of the
corporation and its divisions and subsidiaries.
<Page>

- Meet with the independent auditors and financial management of
the corporation at a minimum of once a year 1) to review any
comments or recommendations of the independent auditors; 2) to
review the adequacy and effectiveness of the accounting and
financial controls of the corporation; 3) to assess the
quality of earnings; and 4) to review the annual report to
shareholders to ensure the independent auditors are satisfied
with the disclosure and content of the financial statements
and other financial information presented to the shareholders.

- Meet quarterly in person or via telephone with management and
the independent auditor to review current financial results
and interim financial statements.

- Periodically review company policy statements to determine
their adherence to a Code of Conduct.

- Inquire of management and the independent auditor about
significant risks or exposures and assess the steps management
has taken to minimize such risk to the company.

- Review accounting and financial human resources and succession
planning within the company.

- Submit the minutes of all meetings of the Audit Committee to,
or discuss the matters discussed at each committee meeting
with, the Board of Directors.

- Investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside counsel
for this purpose if, in its judgment, that is appropriate.

- Review and update the committee's charter at least annually.

- In addition to the above-mentioned meetings and as part of the
Audit Committee's job to foster open communication, the
committee should meet at least annually with management and
the independent auditors in separate executive sessions to
discuss any matters the committee or each of these groups
believe should be discussed privately.
<Page>
<Table>

ISONICS CORPORATION
5906 MCINTYRE STREET
GOLDEN, CO 80403

PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints James E. Alexander and Boris Rubizhevsky,
or either one of them, as Proxy, each with the power to appoint his substitute,
and hereby authorizes them to vote, as designated below, all of the shares of
Common Stock or Series A Convertible Preferred Stock of ISONICS CORPORATION held
of record by the undersigned on September 17, 2001, at the Annual Meeting of
Shareholders to be held on November ____, 2001 and at any adjournments or
postponements thereof.

1. ELECTION OF DIRECTORS FOR all nominees listed below ______ WITHHOLD AUTHORITY _____
(EXCEPT AS MARKED TO THE CONTRARY BELOW) to vote for all nominees listed below

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
MARK THE BOX NEXT TO THE NOMINEE'S NAME BELOW.)

James E. Alexander ___ Boris Rubizhevsky ____ Lindsay A. Gardner ____
Richard Parker ____ Larry J. Wells ____

2. AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED
CAPITALIZATION

FOR: ____ AGAINST: ____ ABSTAIN: ____

3. AMENDMENT OF 1996 EXECUTIVES' EQUITY INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES AUTHORIZED TO 2,000,000

FOR: ____ AGAINST: ____ ABSTAIN: ____

4. AMENDMENT OF 1996 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED TO 1,000,000

FOR: ____ AGAINST: ____ ABSTAIN: ____

5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.

(OVER)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES AND WILL ABSTAIN FROM
VOTING ON ALL OTHER MATTERS.

PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.

Please check here if you plan to attend the Annual Meeting: [ ]

---------------------------------------
Signature
Date: , 2001
----------------------------

---------------------------------------
Signature if held jointly

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE
</Table>