Dow Jones 10410.10 +0.00 10:00 am PST, June 11, 2004  NASDAQ 1999.87 +0.00 For info, visit access.smallcapnetwork.com S & P 500 1136.47 +0.00 To be removed, please click here Russell 2000 569.12 +0.00 VOLUME 04: ISSUE 46  Feature: Isonics - The hotter, the better. Even though I personally believe that computer technology is the result of alien back engineering, the fact remains that as semiconductor chips get smaller and faster, they also run hotter. Isonics Corp (NASDAQ: ISON) not only appears to have the solution to this problem, it has just concluded an agreement to acquire the silicon wafer manufacturing business of Washington state-based EnCompass Materials Group (EMG) (Release below) for 731,930 shares of Isonics common stock, a $1.7 million note and the assumption of up to $800,000 in liabilities. We believe that the potential over the next 6-12 months for Isonics is extremely compelling. We suggest accumulation of the shares at these levels for risk-oriented investors. Remember.... SmallCap Alerted the readership to this unique company on April 26th at $1.46. Within a month, the shares had traded up to $1.80 for a 23 percent return. The shares followed the weakness in the overall market and by week's end had pulled back slightly to the $1.60 level.  As you can see by the chart, Isonics share price trend seems on a firm upswing with a decent support line coming off an equally decent consolidation prior to a breakout in early April. We believe that there is much more upside in store for Isonics as the heat controversy, well, heats up. Its technology and solutions should gain wide exposure as companies such as Intel (NASDAQ: INTC) and AMD (NYSE: AMD) have little choice than to develop, acquire or access technologies that dissipate the problem. Isonics has a process whereby it can produce state of the art silicon on insulator (SOI) wafers. These higher margin wafers can either be produced with natural silicon, or, more importantly, with Isonics isotopically pure silicon-28. By replacing natural silicon with silicon-28, power devices have significantly higher thermal conductivity--a process vitally important to the future development of faster, smaller chips for high performance IC (integrated circuit) applications. ISON plus EMG= lots of product. Isonics acquisition of EMG's silicon wafer manufacturing, recycling business and related assets means that Isonics is now in a position to source, accept and conclude large orders for its SOI technology. Not much point in having cutting edge technology if you can't commercialize it and deliver product.  Integrating Isonic's technology with EMG's capabilities will allow high volume--and higher margin-- SOI manufacturing, which is expected to turn profitable in less than a year. Isonics is also not some one-trick semiconductor pony. The company also intends to triple its Life Sciences division revenues by 2008. As well, it plans to actualize its neutron-based detection (explosive, biological and chemical weapon) product offering during FY 2005. In the trailing twelve months to January 2004, revenues approached $9 million. With a market cap of roughly $24 million, the price to sales ratio based on trailing twelve months revenues is still a compelling 2.7 to 1.  Heat happens... Even though the big chip companies such as Intel have attempted to downplay the heat issues inherent in the development of faster and smaller chips, there is little doubt that the heat issue has legs. Isonic's silicon-28 has been shown to significantly reduce heat loss that can lead chips to actually crack. The thinness of silicon-28 application (10's of nanometers) and its non-porous attributes could well address this critical problem. Interestingly enough, when the chip-heating problem story broke in mid -May, the large chip company shares went down, while Isonics stock went up. Obviously, the industry and investors are taking notice of Isonics potential. With today's EMG deal announcement, Isonics is in position to address, manufacture and ultimately profit--we believe significantly-- as the solution of choice to the semiconductor heat issue.   Press Release Isonics Corporation Completes Wafer Business Acquisition Thursday June 10, 10:23 pm ET Strategic Acquisition Positions Company to Launch High Volume Manufacturing of Silicon-on-Insulator Wafers GOLDEN, Colo.--(BUSINESS WIRE)--June 10, 2004--Isonics Corporation (Nasdaq:ISON - News), a worldwide leader in the development of isotopically engineered semiconductor materials, and a supplier of silicon-on-insulator (SOI) wafers to the semiconductor industry and isotopes for life sciences and health care applications, announced today that the Company has completed the acquisition of the silicon wafer manufacturing and recycling business and related assets from EnCompass Materials Group Ltd. (EMG) of Vancouver, Washington. The transaction will be effective immediately before midnight on Friday, June 11. "This transaction is a major inflection point in Isonics' semiconductor business and Isonics overall," commented James Alexander, chairman and CEO of Isonics. "It will serve as the foundation for building a sizeable and profitable advanced silicon wafer business." "We believe that EMG is an excellent platform for launching the production phase of our SOI wafer business," commented Dr. Hans Walitzki, Isonics' vice president of advanced wafer technology. "We have developed a plan to combine our SOI operations with the test wafer business that we have acquired. This plan calls for reaching cash break-even quickly by focusing on growing revenue in market segments that EMG had chosen not to participate in, and by accessing cost savings through productivity improvements in wafer polishing based on know-how we can borrow from our SOI manufacturing processes. With our substantially reinforced sales and marketing team, we can now aggressively seek and accept large volume SOI orders. With only modest increases in SOI revenue, the combined businesses should turn profitable within 12 months." "The timing of this acquisition is excellent," Mr. Alexander continued. "Based on our conversations with our customers and independent market reports from Gartner Dataquest, the silicon wafer market is strong and is projected to strengthen. We are encouraged by the demand in the SOI wafer segment in particular. We now have the facilities and people to really take advantage of this pregnant market opportunity." About The Transaction The transaction is structured as an asset purchase acquisition with consideration consisting of 731,930 shares of Isonics common stock, a $1.7 million note and the assumption of up to $800,000 in liabilities. About Isonics Corporation Isonics Corporation has three business divisions: (1) Isonics Semiconductor, (2) Isonics Life Sciences, and (3) Homeland Security. Isonics is a world leader in isotopically engineered materials and through its semiconductor division produces isotopically pure silicon-28 chemicals and wafers for the semiconductor industry. The Company is also focused on research and development opportunities for further, value-added product and application development. Isonics' Life Sciences division markets and sells stable isotopes for the health care industry such as carbon-13 for diagnostic breath tests and drug design, and radioisotopes and stable isotopes, such as oxygen-18 for positron emission tomography (PET) imaging. Stable isotopes can be thought of as ultra pure materials. This high degree of purification provides enhanced properties as compared to natural materials. Our efforts in the Homeland Security segment are nascent at the present time as we proceed to develop further our neutron-based detection technology. Additional information may be obtained at the Company's Web site at http://www.isonics.com. 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, 2003, and its quarterly report on Form 10-QSB for the nine months ended January 31, 2004, both as 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. Contact: Isonics Corporation James Alexander, 303-279-7900 jealexander@isonics.com or Investor Relations: Trilogy Capital Partners, Inc. Randall Lewis, 800-342-1467 randy@trilogy-capital.com   Source: Isonics Corporation   We Value Your Feedback Got comments, questions or suggestions? 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