ISON Isonics Corporation New (CE)

Isonics Corporation (ISON.OB), a company focused on the provision of homeland security services and the manufacture of 300-millimeter (and smaller diameter) silicon wafer reclaim and test products, wafer thinning and custom wafer products for the semiconductor industry, reported today on the progress made on certain operational targets described in a retrenchment plan last year. As a result of focused efforts to consolidate operational and financial activities in its semiconductor and security services businesses, the Company has made substantial progress in its operational improvement program, in spite of challenging financial and market conditions. In February 2007, Isonics had four operating divisions: semiconductor, security services, life sciences and homeland security products. The Company sold its life sciences division in June 2007. In August 2007, the Company suspended its product development activities in the homeland security sector until it (if ever) can obtain appropriate funding. As a result, the revenue generating semiconductor and security services businesses have received management�s undivided attention. Cost Reduction Beginning in March 2007, management has steadily reduced costs, starting with the corporate headquarters and the homeland security products operations where staffing was reduced by approximately 70 percent and essentially all non-core initiatives, development efforts and other expenses have been eliminated. The executive cadre was further reduced to three key executives, who have led the efforts to improve operations in the Company�s two remaining operating businesses. Chris Toffales, Isonics� Chairman of the Board and Chief Executive Officer, said, �We�ve led by example and are currently providing critical staff support to our divisions. I am active in the daily effort to increase operational efficiency in our security services business, and our Chief Operating Officer is active in supporting our general manager in similar efforts in the semiconductor division. Our Chief Financial Officer has also assumed the controller functions in both our semiconductor and corporate operations, in addition to his normal responsibilities. In addition, he has also continued to support the controller function in our security services business. We�ve flattened the organization and improved our operating effectiveness. In doing so, we have significantly reduced our overall costs.� Benefits of Business Focus Executive management has worked to sharpen the Company�s focus on revenue-generating businesses and eliminate costly development projects. The company�s two core businesses now receive 100% of management�s attention. Along with the Company�s Board of Directors, management concluded that, although worthwhile, development of new technologies in its homeland security products division and in its 90%-owned SenseIt subsidiary were too capital-intensive for a small company. The suspension of such activity has allowed the Company to conserve cash, eliminate a layer of middle management and achieve operating efficiencies impossible before. At the same time, the Company is hopeful that at some point in the future it may be able to reengage in the development of these products. According to Toffales, �We have tightened management of our cash-generating businesses and eliminated the distractions and cost of product development. We have been able to do so by centralizing critical management oversight in corporate headquarters. At the same time we have consolidated the Board of Directors by reducing the number of board members from seven to four. Corporate decision-making has accelerated as a result. The organization is now a very nimble one and able to react promptly.� Introduction of Six Sigma Processes in the Semiconductor Operation Isonics� semiconductor operation, located in Vancouver, WA, is an ISO 9000 certified facility. It has major top-tier customers in the silicon wafer manufacturing sector. Additionally management has begun to introduce the Six Sigma statistical process for quality improvement and has two certified employees (blackbelts) managing key processes, while three other employees are training for certification (greenbelts) and are expected to be completely certified this summer. The Company also recruited a general manager who is, himself, a greenbelt, and raised the awareness of quality improvement requirements in a highly competitive marketplace. Toffales said, �We�ve made substantial improvement on all fronts in that business, and we�ve got very capable people on the ground there. Our focus now is on building customer relationships, listening to their requests and finding a way to meet their needs.� Security Services Business renews its Focus on Customer Relationships Isonics� security services business, Protection Plus Security Corporation (�PPSC�), is headquartered in New York City and provides security services to many different types of businesses throughout the tri-state region. The business does however operate in a highly competitive marketplace, where the barriers to entry are low and prices for services are consistently under pressure. �We must continually review the effectiveness of our efforts to preserve and enhance our relationships with our customers,� said Toffales. �We haven�t done as good job in this activity as we need to, and as a result I intend to become much more involved in that important, daily work. We can and will do better.� Recent Board Actions Taken to Strengthen the Company and Preserve Continuity In January 2008, the Board of Directors approved the appointment of Chris Toffales as Chief Executive Officer in addition to his prior position as Chairman of the Board. Mr. Toffales had served as Chairman of the Board from February 2007 and is now a full-time Isonics employee. John Sakys, who served as interim Chief Executive Officer, remains President and Chief Operating Officer while Greg Meadows, formerly the Company�s Corporate Controller, was appointed Chief Financial Officer. He will also continue to be active in the controller function. In addition, the Board of Directors approved one-year employment agreements for each individual, in order to ensure continuity of executive management and management�s focus on continuous improvement of the Company for its shareholders. As part of the employment agreement each individual was given a performance bonus equal to 25-30% of his salary for past efforts on behalf of the Company and its shareholders. The bonuses will be paid only at the discretion of the Board of Directors compensation committee and only when funds exist for the reasonable payment of such bonuses. Additionally, the Board of Directors adopted the Isonics Corporation 2008 Equity Plan (the �2008 Plan�). This plan replaces the 2007 Restructuring Plan, which, while approved by the Board of Directors, was never effective. �Options granted out of the 2008 Plan will vest at variable intervals and are intended to ensure steady improvement in corporate performance as well as the continuous creation of value for shareholders,� said Toffales. �Importantly, the 2008 Plan will allow for grants to a number of key employees in our operations.� Cautionary Statement 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 estimates, assumptions, 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-K for the year ended April 30, 2007 and reports subsequently filed with the Securities and Exchange Commission, which include the Company's historical 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 these filings with the Securities and Exchange Commission. Additional information may be obtained at the Company's Web site at www.isonics.com.