ITEM
1.
SECURITY AND
ISSUER
This Schedule 13D (this “Schedule 13D”)
relates to the common stock, no par value per share (the “Common Stock”), of
Isonics Corporation., a California corporation (the “Issuer”). The address of
the principal executive office of the Issuer is
535 8
th
Avenue, 3
rd
floor, New York, NY 10018-2491.
ITEM
2.
IDENTITY AND
BACKGROUND
(a) – (c)
This statement is being filed by YA Global Investments, L.P. (“YA Global”),
Yorkville Advisors, LLC (“Yorkville”) and Mark Angelo (“Angelo”) (YA Global,
Yorkville and Angelo collectively, the “Reporting Persons”). The
filing of this Schedule 13D and any future amendments hereto, and the inclusion
of information herein and therein, shall not be construed as an admission that
any of the Reporting Persons, for the purpose of Section 13(d) of the Act or
otherwise, is the beneficial owner of any shares of Common Stock.
YA Global, a Cayman Islands exempt
limited partnership, whose business address is 101 Hudson Street, Suite 3700,
Jersey City, New Jersey 07302, is a private equity fund that is primarily
engaged in the business in investing in securities and other investment
opportunities. YA Global is the record holder of the Derivative
Securities which are convertible into Common Stock. Yorkville, a
Delaware LLC, whose business address is 101 Hudson Street, Suite 3700, Jersey
City, New Jersey 07302, is the Investment Manager of YA
Global. Angelo, whose business address is 101 Hudson Street, Suite
3700, Jersey City, New Jersey 07302, is the Portfolio Manager of YA Global and
President and Managing Member of Yorkville.
(d) None of the Reporting Persons has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) None of the Reporting Persons has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such
laws.
(f) Angelo is a citizen of the United
States.
ITEM
3.
SOURCE AND AMOUNT OF FUNDS
OR OTHER CONSIDERATION
YA Global purchased the Debentures (as
defined in Item 4) for a total consideration of approximately
$12,000,000. The funds for such transactions were derived from
general working capital of YA Global.
ITEM
4.
PURPOSE OF
TRANSACTION
The
Reporting Persons initially acquired the securities for investment purposes in
the ordinary course of business because the Reporting Persons believed they
represented an attractive investment opportunity.
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 6 of 11
|
The
Reporting Persons evaluate their investments in the Issuer on an ongoing basis
and reserve the right to take action regarding the Issuer, including, without
limitation, attempting to elect or have elected new management or members of the
Issuer’s board of directors, or otherwise influencing the Issuer’s governance,
attempting to influence or change the Issuer’s operations or business
development plans, business strategy, future plans, competitive position,
strategy, capital structure or capital management policy, including, without
limitation, through potential discussions with management, directors, other
shareholders, existing or potential strategic partners or competitors of the
Issuer, industry analysts, investment and financing professionals and/or other
third parties. Such matters and discussions may materially affect,
and result in, the Reporting Persons’ modifying their investment in the Issuer,
exchanging information with any of such persons pursuant to appropriate
confidentiality or similar agreements or otherwise, working together with any of
such persons pursuant to joint agreements or otherwise, proposing changes in the
Issuer’s operations, governance, capitalization or strategic plans, or in
proposing or engaging in one or more other actions set forth
herein. Factors that may influence the Reporting Persons’ actions
include, but are not limited to, their views regarding the Issuer’s operations,
business strategy, prospects, financial position and/or strategic direction, the
outcome of the discussions and actions referenced herein, price levels of the
Common Stock, availability of funds, subsequent developments affecting the
Issuer, other investment and business opportunities available to the Reporting
Persons, conditions in the securities market, general economic and industry
conditions and other factors that the Reporting Persons may deem relevant from
time to time.
Although
none of the Reporting Persons have any specific plan or proposal to acquire or
dispose of the shares of Common Stock, the Reporting Persons at any time and
from time to time may (i) acquire additional shares or securities of the Issuer,
(ii) dispose of any or all of its securities of the Issuer, (iii) enter into
privately negotiated derivative transactions with institutional counterparties
to hedge the market risk of some or all of its positions in the securities of
the Issuer, depending upon the factors described herein and/or other investment
considerations or (iv) exercise its rights in connection with a bankruptcy case
of the Issuer.
Except as
set forth in this Item 4, the Reporting Persons have no present plans or
proposals that relate to or that would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D of the Act.
|
ITEM
5.
|
INTEREST IN SECURITIES
OF THE ISSUER
|
(a) On
May 31, 2006, pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement No.1") dated May 31, 2006, by and among the Issuer and YA
Global, YA Global purchased Secured Convertible Debenture (No. CCP-1), which was
amended and restated as Secured Convertible Debenture (No. CCP-3) on June 13,
2006 ("Debenture No.1") and further amended pursuant to Amendment No. 1
(“Amendment to Debenture No. 1”) thereto on June 13, 2008, in the principal
amount of $10,000,000. As amended, Debenture No. 1 is convertible
into shares of Common Stock at a per share price equal to the lower of (i) $.03
or (ii) 80% of the lowest volume weighted average price over the previous two
trading days. A copy of Securities Purchase Agreement No. 1,
Debenture No. 1 and Amendment to Debenture No. 1 are attached hereto as Exhibits
1, 2 and 3, respectively and incorporated herein by reference.
On May
31, 2006, pursuant to Securities Purchase Agreement No. 1, YA Global was issued
the following warrants:
|
|
·
|
Warrant
to Purchase Common Stock (No. CCP-002), which was amended and restated on
June 13, 2006 as Amended and Restated Warrant to Purchase Common Stock
(No. CCP-002), to purchase 2,000,000 shares of Common Stock at a purchase
price of $1.25 per share (“Warrant No.
1”);
|
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 7 of 11
|
|
|
·
|
Warrant
to Purchase Common Stock (No. CCP-003), which was amended and restated on
June 13, 2006 as Amended and Restated Warrant to Purchase Common Stock
(No. CCP-003), to purchase 3,000,000 shares of Common Stock at a purchase
price of $1.75 per share (“Warrant No. 2”);
and
|
|
|
·
|
Warrant
to Purchase Common Stock (No. CCP-004), which was amended and restated on
June 13, 2006, as Amended and Restated Warrant to Purchase Common Stock
(No. CCP-004), to purchase 3,000,000 shares of Common Stock at a purchase
price of $2.00 per share (“Warrant No.
3”).
|
On
February 13, 2007, the Issuer consummated a 4:1 reverse stock split of the
Common Stock as a result of which:
|
|
·
|
the
number of shares of Common Stock that may be purchased pursuant to Warrant
No. 1 was amended on the books of YA Global to
500,000;
|
|
|
·
|
the
number of shares of Common Stock that may be purchased pursuant to Warrant
No. 2 was amended on the books of YA Global to 750,000;
and
|
|
|
·
|
the
number of shares of Common Stock that may be purchased pursuant to Warrant
No. 3 was amended on the books of YA Global to
750,000.
|
The
purchase price for each of Warrants No. 1, Warrant No. 2 and Warrant No. 3
remained the same. A copy of Warrant No. 1, Warrant No. 2 and Warrant
No. 3 are attached hereto as Exhibits 4 through 6 respectively and incorporated
herein by reference.
On April
10, 2007, pursuant to the Securities Purchase Agreement ("Securities Purchase
Agreement No.2") dated April 10, 2006, by and among the Issuer and YA Global, YA
Global purchased Secured Convertible Debenture (No. CCP-2007-1) (“Debenture No.
2”), which was amended pursuant to Amendment No. 1 (“Amendment to Debenture No.
2” and together with Debenture No. 1, Amendment to Debenture No. 1 and Debenture
No. 2, the “Debentures”) thereto on June 13, 2008, in the principal amount of
$2,000,000. As amended, Debenture No. 2 is convertible into shares of
Common Stock at a per share price equal to the lower of (i) $.03 or (ii) 80% of
the average two lowest volume weighted average price over the previous five
trading days. A copy of Securities Purchase Agreement No. 2,
Debenture No. 2 and Amendment to Debenture No. 2 are attached hereto as Exhibits
7 through 9, respectively and incorporated herein by reference.
On April
10, 2007, pursuant to Securities Purchase Agreement No. 2, YA Global was issued
a Warrant to Purchase Common Stock (No. CCP2007-1-1), to purchase 250,000 shares
of Common Stock at a purchase price of $5.00 per share (“Warrant No.
4”). A copy of Warrant No. 4 is attached hereto as Exhibit 10 and
incorporated herein by reference.
On June
13, 2008, pursuant to the Securities Purchase Agreement ("Securities Purchase
Agreement No. 3") dated June 13, 2008, by and among the Issuer and YA Global, YA
Global was issued a Warrant to Purchase Common Stock (No. ISON-1-1) to purchase
13,000,000 shares of Common Stock at purchase price of $0.03 per share (“Warrant
No. 5” and together with Warrant No. 1, Warrant No. 2, Warrant No. 3, Warrant
No. 4, the “Warrants”). A copy of Securities Purchase Agreement No. 3
and Warrant No. 5 is attached hereto as Exhibits 11 and 12 and incorporated
herein by reference.
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 8 of 11
|
Each of
the Warrants and the Debentures contain provisions (the “Ownership Limitations”)
limiting the percent of the outstanding Common Stock that YA Global may
own. The Ownership Limitations may be waived by YA Global on 65 days
notice to the Issuer. On December 30, 2008, YA Global waived the
Ownership Limitation (the “Ownership Waiver”) and the Issuer waived the notice
provisions (the “Notice Waiver” and together with the Ownership Waiver, the
“Waiver”). As result of the Waiver, YA Global can at any time convert
the Debentures and exercise the Warrants for a number of shares of Common Stock
that could exceed 5% of the Issuer’s outstanding shares of Common
Stock. A copy of the Waiver is attached hereto as Exhibit 13 and
incorporated herein by reference.
As
reported in the Issuer’s Form 10-Q filed on December 22, 2008, as of December
12, 2008, the Issuer had 175,000,000 shares of Common Stock authorized and
27,998,252 shares of Common Stock outstanding. Based on the foregoing
and pursuant to Rule 13d-3 of the Act, YA Global may be deemed to beneficially
own 147,001,748 shares of Common Stock representing approximately 84% of the
outstanding shares of Common Stock. At current market prices, the
Debentures could be converted into a number of shares of Common Stock in excess
of the shares of Common Stock that are authorized but not
outstanding. The shares of Common Stock beneficially owned by YA
Global represents the number of shares of Common Stock into which the Debentures
could be converted based on the number of shares of Common Stock that are
authorized but not outstanding.
Yorkville,
as the Investment Manager of YA Global may, pursuant to Rule 13d-3 of the Act be
deemed to be the beneficial owner of 147,001,748 shares of Common Stock
representing approximately 84% of the outstanding shares of Common
Stock. The filing of this Schedule 13D and any future amendments
hereto, and the inclusion of information herein and therein, shall not be
construed as an admission that Yorkville, for the purpose of Section 13(d) of
the Act or otherwise, is the beneficial owner of any Common Stock.
Angelo,
as the Portfolio Manager of YA Global and Managing Member of Yorkville may,
pursuant to Rule 13d-3 of the Act be deemed to be the beneficial owner of
147,001,748 shares of Common Stock representing approximately 84% of the
outstanding shares of Common Stock. The filing of this Schedule 13D
and any future amendments hereto, and the inclusion of information herein and
therein, shall not be construed as an admission that Angelo, for the purpose of
Section 13(d) of the Act or otherwise, is the beneficial owner of any Common
Stock.
(b) YA
Global has the sole power to vote or to direct the vote and to dispose or direct
the disposition of the 147,001,748
of Common
Stock it beneficially owns. Yorkville, as the Investment Manager to
YA Global, has shared power to vote or direct the vote and to dispose or direct
the disposition of the 147,001,748 shares of Common Stock beneficially owned by
YA Global. Angelo, as the Portfolio Manager of YA Global and
President and Managing Member of Yorkville, has shared voting power and
dispositive power over the Common Stock beneficially owned by YA Global and
Yorkville.
(c) YA
Global effected the following transactions during the last sixty
days:
|
Security
|
|
TradeDate
|
|
Buy/Sell
|
|
Volume
|
|
Price
|
|
ISON
|
|
11/11/2008
|
|
Sell
|
|
600,000
|
|
0.0013
|
|
ISON
|
|
11/12/2008
|
|
Sell
|
|
600,000
|
|
0.0010
|
|
ISON
|
|
11/25/2008
|
|
Sell
|
|
400,000
|
|
0.0010
|
|
ISON
|
|
11/26/2008
|
|
Sell
|
|
200,000
|
|
0.0013
|
|
ISON
|
|
11/28/2008
|
|
Sell
|
|
250,000
|
|
0.0012
|
|
ISON
|
|
12/1/2008
|
|
Sell
|
|
200,000
|
|
0.0012
|
|
ISON
|
|
12/2/2008
|
|
Sell
|
|
200,000
|
|
0.0020
|
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 9 of 11
|
In
addition to the Debentures and the Warrants described in Item 5(a), YA Global
has purchased from the Issuer, 6 term promissory notes (the “Notes”) in the
aggregate principal amount of $8,642,384, all of which expire on October 31,
2009. $1,175,000 of the aggregate principal amount of the Notes
represents a new investment in the Issuer and bears interest at the rate of
13%. $3,645,000 of the aggregate principal amount of the Notes were
issued in exchange for outstanding convertible debentures (the “Exchanged
Debentures”) of the Issuer held by YA Global and bear interest at the rate of
13%. The remaining aggregate principal amount of the Notes represent
interest earned but unpaid on the Exchanged Debentures. Notes in the
aggregate principal amount of $375,000 were purchased on November 2, 2008 and
the remaining aggregate principal amount of the Notes were purchased on June 13,
2006.
In
addition, as described in Item 5(a), the Waiver was executed on December 30,
2008.
(d) No person other than the Reporting
Persons are known to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of the Common Shares
issuable to YA Global.
(e) Not applicable.
|
ITEM
6.
|
CONTRACTS,
ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER
|
To the knowledge of the Reporting
Persons, except as described herein, the Reporting Persons do not have any
contract, arrangement, understanding or relationship (legal or otherwise) with
any person with respect to securities of the Issuer, including, but not limited
to transfer or voting of any such securities, finder’s fees, joint ventures,
loans or option agreement, puts or call, guarantees of profits, division of
profits or losses or the giving or withholding of proxies.
MATERIAL TO BE FILED AS
EXHIBITS
The following documents are filed as
appendices and exhibits:
EXHIBITS
|
1.
|
Securities
Purchase Agreement, dated May 31, 2006, by and among the Issuer and YA
Global (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by the Issuer on June 6,
2006).
|
|
2.
|
Amended
and Restated Secured Convertible Debenture (No. CCP-1), dated May 31,
2006, in the original principal amount of $10,000,000 (incorporated by
reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the
Issuer on June 6, 2006).
|
|
3.
|
Amendment
No. 1 to Amended and Restated Secured Convertible Debenture (No. CCP-1),
dated June 13, 2008
|
|
4.
|
Amended
and Restated Warrant to Purchase Common Stock (No. CCP-002), dated June
13, 2006 to purchase 2,000,000 shares of Common Stock at a purchase price
of $1.25 per share (incorporated by reference to Exhibit 10.6 to the
Current Report on Form 8-K filed by the Issuer on June 16,
2006)
|
|
5.
|
Amended
and Restated Warrant to Purchase Common Stock (No. CCP-003), dated June
13, 2006, to purchase 3,000,000 shares of Common Stock at a purchase price
of $1.75 per share (incorporated by reference to Exhibit 10.7 to the
Current Report on Form 8-K filed by the Issuer on June 16,
2006).
|
|
6.
|
Amended
and Restated Warrant to Purchase Common Stock (No. CCP-004), dated June
13, 2006, to purchase 3,000,000 shares of Common Stock at a purchase price
of $2.00 per share
|
|
7.
|
Securities
Purchase Agreement, dated April 10, 2006, by and among the Issuer and YA
Global (incorporated by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed by the Issuer on April 11,
2007).
|
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 10 of 11
|
|
8.
|
Secured
Convertible Debenture (No. CCP-2007-1), dated April 10, 2007, in the
original , in the principal amount of $2,000,000 (incorporated by
reference to Exhibit 10.6 to the Current Report on Form 8-K filed by the
Issuer on April 11, 2007)
|
|
9.
|
Amendment
No. 1 to Secured Convertible Debenture (No. CCP-2007-1), dated June 13,
2008
|
|
10.
|
Warrant
to Purchase Common Stock (No. CCP2007-1-1), to purchase 250,000 shares of
Common Stock at a purchase price of $5.00 per share (incorporated by
reference to Exhibit 10.7 to the Current Report on Form 8-K filed by the
Issuer on April 11, 2007).
|
|
11.
|
Securities
Purchase Agreement, dated June 13, 2008, by and among the Issuer and YA
Global (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by the Issuer on June 18,
2007).
|
|
12.
|
Warrant
to Purchase Common Stock (No. ISON-1-1) to purchase 13,000,000 shares of
Common Stock at purchase price of $0.03 per share (incorporated by
reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the
Issuer on June 18, 2008).
|
|
13.
|
Waiver,
dated December 30, 2008
|
|
14.
|
Joint
Filing Agreement
|
SCHEDULE
13D
|
CUSIP
No. 464895309
|
|
Page 11 of 11
|
SIGNATURE
After
reasonable inquiry and to the best of each of the undersigned's knowledge and
belief, each certifies that the information set forth in this statement is true,
complete and correct.
|
Dated:
January
12, 2009
|
REPORTING PERSONS
:
|
|
|
|
|
|
YA
GLOBAL INVESTMENTS, L.P.
|
|
|
By:
|
Yorkville
Advisors, LLC
|
|
|
Its:
|
Investment
Manager
|
|
|
|
|
|
By:
|
/s/ Steven S. Goldstein
|
|
|
Name:
|
Steven S. Goldstein, Esq.
|
|
|
Its:
|
Chief Compliance Officer
|
|
|
|
|
|
YORKVILLE
ADVISORS, LLC
|
|
|
|
|
|
By:
|
/s/ Steven S. Goldstein
|
|
|
Name:
|
Steven S. Goldstein, Esq.
|
|
|
Its:
|
Chief Compliance Officer
|
|
|
|
|
|
/s/ Mark
Angelo
|
|
|
Mark
Angelo
|