January 29, 2007 – Isonics Corp. directors have decided to exit the life sciences business following two years of a “challenging operating environment” in order to pursue a brighter future in semiconductor wafer services. They also voted in favor of a 1:4 reverse stock split in order to help maintain the company’s Nasdaq listing.

Last quarter the company had warned that it was evaluating strategic options for this line of business, disclosing that the unit was “being significantly and adversely affected by increased domestic and international competition,” with some market spot prices falling below costs, and new markets still too early in development to sustain results.

The company’s life sciences business, primarily a distribution business incorporating stable and radioisotopes in elemental and simple compound forms, had been the middle child of the company’s three businesses, contributing 28% of revenues in fiscal 2Q05 (Oct. 2005 quarter). But over the past year that life sciences unit has seen sales shrivel by 65% to just 7% of total revenues in fiscal 2Q06 (ended in October).

Meanwhile, the company’s semiconductor product/services unit has enjoyed nearly threefold growth, rocketing from just 21% of total sales products/services a year ago to account for ~45% of all sales. Results for the fiscal half-year are similarly ugly: shriveling sales (-63%), from nearly 30% of total sales to ~8% of revenues.

And the life sciences unit is still generating a small loss (~$43K), while the chip unit has rebounded from a $1.4M loss a year ago to a $151K profit by December.

So, the company now says it will seek a buyer for the business in order to focus management and resources on better growth opportunities in the semiconductor and homeland security product areas. “We believe the sale of the business will improve our overall operations and heighten our focus on developing our core business units,” said James Alexander, Isonics’ chairman/CEO.