UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JULY 29, 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
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Address of principal executive offices
303-279-7900
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Telephone number, including
Area code
Not applicable
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Former name or former address if changed since last report
ITEM 5 - OTHER EVENTS
GENERAL. On July 29, 1999, Isonics Corporation completed a private
placement financing to accredited investors and conversion of debt valued in
total at $2.7 million. Isonics issued 1,830,000 units, each unit (a "Unit")
consisting of one share of preferred stock and one warrant. The $2,250,000
cash proceeds will be used for repayment of debt, working capital, and to
finance the continued growth of operations including the continued
development and commercialization of Silicon-28 wafers for the semiconductor
industry. Of the 1,830,000 Units, 330,000 Units were issued in payment of
certain corporate obligations.
The investors were primarily institutions, but also included several
individual accredited investors and two officers of the Company.
The Preferred Stock issued as part of the unit may be converted to
common shares of Isonics stock at a fixed conversion price of $1.50 per
share. Each warrant issued in the placement allows the investor to purchase
a share of Isonics stock for $3.75 through July 29, 2002.
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, 1998 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.
(a) SECURITIES SOLD. The sale of securities described in the preceding
paragraphs occurred on July 29, 1999. The securities sold include:
1,830,000 shares of restricted Series A Convertible Preferred Stock,
created by filing an amended certificate of determination of preferences
and rights (the "Certificate of Determination") with the California
Secretary of State; and
1,830,000 restricted warrants to purchase shares of restricted common stock
issued on a warrant-for-share basis with the Series A Convertible Preferred
Stock; and
500,000 restricted warrants issued as a fee pursuant to an investment
banking agreement
(b) UNDERWRITERS AND OTHER PURCHASERS.
(i) No underwriters, agents, or placement agents participated in the
private placement.
(ii) 1,500,000 Units (each Unit consisting of one share of Series A
Convertible Preferred Stock and one warrant) were sold to accredited
investors for cash; and
(iii) 330,000 Units were issued to accredited investors in settlement
of debt obligations; and
(iv) 500,000 warrants were issued to a single accredited investor as
compensation pursuant to an investment banking agreement.
(c) The Units were sold for a purchase price of $1.50 per Unit. The Units
described in (b)(ii) above were sold for cash; the Units described in
(b)(iii) above were issued in satisfaction of debt obligations.
(d) 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, and Rule 506 of Regulation D thereunder.
(e) Terms of conversion or exercise are as follows:
(i) The Series A Convertible Preferred Stock is convertible into shares
of common stock on a share-for-share basis, subject to dilution
adjustments. The Series A Convertible Preferred Stock is entitled
to receive dividends on a share-for-share basis with the shares of
common stock except in the case of a "Silicon Isotope Transaction"
as defined in the Certificate of Determination, in which case the
holders of Series A Convertible Preferred Stock have certain
additional rights. The Series A Convertible Preferred Stock is
entitled to a liquidation preference of $1.50 per share.
(ii) The warrants are each exercisable to purchase a single share of
common stock (subject to dilution adjustment) for a purchase price
of $3.75 per share through the expiration date, July 29, 2002.
(iii) The Company also entered into a registration rights agreement
relating to the shares of common stock underlying the Series A
Convertible Preferred Stock and the warrants, by which (subject to
certain conditions) the Company is required to register the
underlying common stock on the request of the holders of 30% or
more of the "registrable securities." The Company is not obligated
to obtain
effectiveness for more than two such registration statements during
the term of the registration rights agreement, which expires upon
the unanimous consent of the holders and the Company.
(f) The Company intends to use the cash proceeds from the sale of the Units for
repayment of debt, working capital, and to finance the continued growth of
operations including the continued development and commercialization of
Silicon-28 wafers for the semiconductor industry.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. NOT APPLICABLE.
(b) Pro forma financial statements. NOT APPLICABLE.
(c) Exhibits:
1. Certificate of Determination of Preferences and Rights of
the Series A Preferred Stock
2. Form of Subscription Agreement
3. Form of Warrant
4. Investment Banking Agreement
5. Form of Registration Rights Agreement
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 11th day of August 1999.
ISONICS CORPORATION
By: /s/ James E. Alexander
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James E. Alexander
President and Chief Executive Officer
and Director