8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 8-K
                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                         DATE OF REPORT: JANUARY 8, 2002

                               ISONICS CORPORATION
           (Name of small business issuer as specified in its charter)


CALIFORNIA                         001-12531                  77-0338561
- ----------                         ---------                  ----------
State of                           Commission File            IRS Employer
Incorporation                      Number                     Identification No.


                  5906 MCINTYRE STREET, GOLDEN, COLORADO 80403
                  --------------------------------------------
                     Address of principal executive offices

                                  303-279-7900
                               ------------------
                           Telephone number, including
                                    Area code

                                 NOT APPLICABLE
                                 --------------
           Former name or former address if changed since last report



ITEM 5 - OTHER EVENTS

A.   AMENDMENT OF ARTICLES OF INCORPORATION

     On November 13, 2001, the shareholders of Isonics Corporation approved an
amendment to Isonics' articles of incorporation to increase authorized
capitalization to 40,000,000 shares of common stock and 10,000,000 shares of
preferred stock.

B.   ALLIANCE WITH SILICON QUEST INTERNATIONAL, INC.

     On January 8, 2002, Isonics Corporation (Nasdaq:ISON), a leader in the
development of isotopically engineered semiconductor materials and a supplier of
isotopes for life sciences and health care applications, announced that it has
agreed to work with a Santa Clara, California, company, Silicon Quest
International, Inc. (SQI), to manufacture, market and sell silicon-on-insulator
(SOI) wafers under Isonics' brand name. SOI wafers, which have a thin layer of
silicon dioxide below the surface of the single crystal silicon wafer, are used
to manufacture advanced integrated circuits ("ICs" or "chips"), components for
fiber-optic networks, and micro-electrical mechanical devices (MEMS). This oxide
layer electrically isolates the surface layer from the bulk of the wafer,
allowing an improvement in transistor speed and power efficiency as well as
unique benefits in building 3-dimensional mechanical structures. Intel, AMD, and
IBM have all announced their intention to produce advanced microprocessors using
SOI, which is now the fastest growing segment of the $7 billion silicon wafer
market.

     In the February 2001 issue of Solid State Technology magazine, Gartner
Dataquest projected SOI wafer demand as growing at a 48% compound annual growth
rate, reaching $1.068 billion in 2005. Isonics, a world leader in isotopically
engineered materials and is commercializing isotopically pure silicon- 28 wafers
for the semiconductor industry, believes that SOI wafers manufactured from it's
high thermal conductivity silicon-28 will be desirable in a large number of
product applications in addition to microprocessors. The oxide layer which
provides electrical insulation also provides thermal insulation. Isonics
believes performance of SOI devices could be improved by utilization of high
thermal conductivity silicon-28 in such wafers. Isonics began shipping
thick-film SOI wafers to its customers in late January 2002.

     The alliance calls for SQI to manufacture SOI wafers utilizing Isonics'
intellectual property and to provide marketing and sales services. Isonics will
provide SQI access to certain manufacturing know-how, perform technical
marketing and will utilize SQI's facilities to further develop other SOI wafer
products. The partners have agreed to explore alternative structures as a means
to further strengthen their relationship. "This alliance is an ideal platform
from which to launch our SOI wafer business. We are able to take advantage of
SQI's aggressively low manufacturing cost structure and their experienced sales
and marketing organization," said James E. Alexander, Isonics Chairman and CEO.
"This eliminates Isonics' need to invest in capital equipment and to hire a
dedicated sales force. SQI's `can do' attitude will allow us to quickly become a
serious competitor in the SOI wafer market," he added.

     "This alliance allows Silicon Quest to use it's facilities for higher value
products, enhancing our profitability," added Richard E. Mee, President of
Silicon Quest International, Inc. "We have established a fast track program and
are working with Isonics to ship the first commercial SOI wafer before the end
of this month. Our initial products will be focused on natural silicon 100mm and
150mm wafers for MEMS and IC applications, and we plan to extend the range to
200mm," he concluded.


     As consideration to SQI for entering into this alliance, Isonics issued SQI
a 3-year warrant (not exercisable for the first 12 months) to acquire 100,000
shares of Isonics common stock for an exercise price of $ 1.50.

     ABOUT ISONICS. Founded in 1992, Isonics is a specialty chemical and
advanced materials company that develops, commercializes and markets materials
which have been sub-atomically engineered to enhance performance. These
ultra-pure materials have commercial applications in several areas, including
semiconductor devices, medical diagnostics, imaging and therapy, drug
development and energy production. In addition to SOI wafers and Silicon-28,
Isonics also markets and sells stable isotopes for the health care industry such
as carbon-13 for diagnostic breath tests and drug design, and oxygen-18 for
positron emission tomography (PET) imaging. Stable isotopes can be thought of as
ultra pure materials. For additional information visit http://www.isonics.com.

     ABOUT SILICON QUEST INTERNATIONAL. SQI, a $15 million, profitable silicon
wafer organization with two in-house manufacturing facilities, maintains offices
and a primary manufacturing plant in Santa Clara, California, and a second
manufacturing facility in Sparks, Nevada. SQI has fully equipped
state-of-the-art clean rooms with high quality facilities for silicon wafer
lapping, polishing, cleaning, and oxidation -- essential functions for making
SOI wafers. Further information may be found at http://www.siliconquest.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, and which may
result in the parties being unable or unwilling to complete the transaction
described 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, 2001 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.

C.   ITEM 701 DISCLOSURE - RECENT SALES OF UNREGISTERED SECURITIES

1.   INVESTOR RELATIONS SERVICES

     Effective December 18, 2001, we paid 500,000 shares of our restricted
common stock as consideration for investor relations services to be provided by
Investor Relations Services, Inc.(Investor Relations Services), New Smyrna
Beach, Florida. The following sets forth the information required by Item 701 in
connection with that transaction:

     (a)  The transaction was completed effective December 18, 2001. We issued
          500,000 shares of our restricted common stock to Investor Relations
          Services.


     (b)  The transaction occurred without the use of any underwriters or
          finders. The only person who received securities from us in this
          transaction was Investor Relations Services.

     (c)  The restricted common stock was not sold for cash. As described above,
          we issued the common stock in consideration for investor relations
          services being provided by Investor Relations Services through
          December 31, 2002.

     (d)  We relied on the exemption from registration provided by Sections 4(2)
          and 4(6) under the Securities Act of 1933 for this transaction. We did
          not engage in any public advertising or general solicitation in
          connection with this transaction that was in negotiation for more than
          two months. We provided Investor Relations Services with disclosure of
          all aspects of our business, including providing Investor Relations
          Services and its management with our reports filed with the Securities
          and Exchange Commission, our press releases, access to our auditors,
          and other financial, business, and corporate information. Based on our
          investigation, we believe that the management and the board of
          directors of Investor Relations Services obtained all information
          regarding Isonics they requested, received answers to all questions
          they posed, and otherwise understood the risks of accepting our
          securities in exchange for the license agreement.

     (e)  There are no conversion rights or exchange rights associated with the
          common stock.

     (f)  We have not received any proceeds from the issuance of the restricted
          common stock to Investor Relations Services and, therefore, we have no
          use of proceeds.

2.   SILICON EVOLUTION, INC.

     Effective November 13, 2001, we issued 500,000 shares of our restricted
common stock to Silicon Evolution, Inc. (SEI) in conversion of 500,000 shares of
our Series B Convertible Preferred Stock (the "Series B Stock") previously
issued to SEI as reported in our Form 8-K reporting an event of September 14,
2001. The following sets forth the information required by Item 701 in
connection with that transaction:

     (a)  The transaction was completed effective November 13, 2001. We issued
          500,000 shares of our restricted common stock to SEI.

     (b)  The transaction occurred without the use of any underwriters or
          finders. The only person who received securities from us in this
          transaction was SEI.

     (c)  The restricted common stock was not sold for cash. As described above,
          we issued the common stock in conversion of the Series B Stock.

     (d)  We relied on the exemption from registration provided by Section
          3(a)(9) under the Securities Act of 1933 for this transaction.
          Furthermore, inasmuch as the conversion occurred automatically, with
          no discretion on the part of SEI, the transaction did not constitute a
          "sale" of securities as the term "sale" is defined in Section 2(a)(3)
          of the 1933 Act. We did not engage in any public advertising or
          general solicitation in connection with this transaction that was in
          negotiation for more than two months. We had previously provided SEI
          with disclosure of all aspects of our business, including providing
          SEI and its management with our reports filed with the Securities and
          Exchange Commission, our press releases, access to our auditors, and
          other financial, business, and corporate information. Based on our
          investigation, we believe that the management and the board of
          directors of SEI obtained all information regarding Isonics they
          requested, received answers to all questions they posed, and otherwise
          understood the risks of accepting our securities in exchange for the
          license agreement.


     (e)  There are no conversion rights or exchange rights associated with the
          common stock.

     (f)  We have not received any proceeds from the issuance of the restricted
          common stock to SEI and, therefore, we have no use of proceeds.

3.   SILICON QUEST INTERNATIONAL, INC.

     Effective December 19, 2001, we issued warrants to purchase 100,000 shares
of our restricted common stock as consideration for SQI entering into an
alliance with Isonics for the manufacturing, marketing and sales of SOI wafers
with SQI. The following sets forth the information required by Item 701 in
connection with that transaction:

     (a)  The transaction was effective December 19, 2001. Isonics issued
          100,000 common stock purchase warrants.

     (b)  No underwriters were involved in the transaction. The only person who
          received securities from us in this transaction was SQI.

     (c)  The securities were not sold for cash. The securities were issued to
          SQI as consideration for SQI entering into a letter of intent with
          Isonics to form an alliance for the manufacturing, marketing and sales
          of SOI wafers.

     (d)  The issuance of the warrants was accomplished pursuant to the
          exemptions from registration contained in Sections 4(2) and 4(6) of
          the Securities Act of 1933. We did not engage in any public
          advertising or general solicitation in connection with this
          transaction that was in negotiation for more than six weeks. We
          provided SQI with disclosure of all aspects of our business, including
          providing SQI and its management with our reports filed with the
          Securities and Exchange Commission, our press releases, access to our
          auditors, and other financial, business, and corporate information.
          Based on our investigation, we believe that the management and the
          board of directors of SQI obtained all information regarding Isonics
          they requested, received answers to all questions they posed, and
          otherwise understood the risks of accepting our securities in exchange
          for the license agreement.

     (e)  There are no conversion rights or exchange rights associated with the
          warrants. The warrants are exercisable one year after the issuance
          date to purchase shares of common stock of Isonics until December 19,
          2004 at $1.50 per share.

     (f)  Isonics received no proceeds from the issuance of these warrants and,
          therefore, we have no use of proceeds.

4.   BREAN MURRAY & CO.

     Effective December 11, 2001, we issued warrants to purchase 100,000 shares
of our restricted common stock as consideration for Brean Murray & Co. entering
into an agreement


with Isonics for investment banking and strategic advisory services. We
cancelled this agreement (including the 100,000 common stock purchase warrants)
in late January 2002. The following sets forth the information required by Item
701 in connection with that transaction:

     (a)  The transaction was effective December 11, 2001. Isonics issued and
          subsequently cancelled 100,000 common stock purchase warrants.

     (b)  No underwriters were involved in the transaction. The only person who
          received securities from us in this transaction was Brean Murray.

     (c)  The securities were not sold for cash. The securities were issued to
          Brean Murray as partial consideration for Brean Murray entering into
          an agreement to provide investment banking and strategic advisory
          services to Isonics.

     (d)  The issuance of the warrants was accomplished pursuant to the
          exemptions from registration contained in Sections 4(2) and 4(6) of
          the Securities Act of 1933. We did not engage in any public
          advertising or general solicitation in connection with this
          transaction that was in negotiation for more than six weeks. We
          provided Brean Murray with disclosure of all aspects of our business,
          including providing Brean Murray and its management with our reports
          filed with the Securities and Exchange Commission, our press releases,
          access to our auditors, and other financial, business, and corporate
          information. Based on our investigation, we believe that the
          management and the board of directors of Brean Murray obtained all
          information regarding Isonics they requested, received answers to all
          questions they posed, and otherwise understood the risks of accepting
          our securities in exchange for the license agreement.

     (e)  There are no conversion rights or exchange rights associated with the
          warrants except for the "cashless exercise" provision described below.
          The warrants are exercisable to purchase shares of common stock of
          Isonics until December 2006 at $1.50 per share. The warrant agreement
          does provide for a "cashless exercise" of the warrants and, therefore,
          Isonics may not receive cash proceeds should the holder exercise the
          warrants pursuant to this cashless exercise provision. The warrants
          were subsequently cancelled in January 2002.

     (f)  Isonics received no proceeds from the issuance of these warrants and,
          therefore, we have no use of proceeds.

5.   WELLS INVESTMENT GROUP

     Effective October 15, 2001, we issued warrants to purchase 50,000 shares of
our restricted common stock as consideration for Wells Investment Group entering
into a consulting agreement with Isonics to perform certain due diligence and
other services in connection with possible third party investment. Wells
Investment Group is owned and controlled by Larry G. Wells, a director of
Isonics. The following sets forth the information required by Item 701 in
connection with that transaction:

     (a)  The transaction was effective October 15, 2001. Isonics issued 50,000
          common stock purchase warrants.

     (b)  No underwriters were involved in the transaction. The only person who
          received securities from us in this transaction was Wells Investment
          Group.


     (c)  The securities were not sold for cash. The securities were issued to
          Wells Investment Group as partial consideration for Wells Investment
          Group entering into a consulting agreement with Isonics to perform
          certain due diligence and other services in connection with possible
          third party investment.

     (d)  The issuance of the warrants was accomplished pursuant to the
          exemptions from registration contained in Sections 4(2) and 4(6) of
          the Securities Act of 1933. We did not engage in any public
          advertising or general solicitation in connection with this
          transaction that was in negotiation for more than six weeks. We
          provided Wells Investment Group with disclosure of all aspects of our
          business, including providing Wells Investment Group and its
          management with our reports filed with the Securities and Exchange
          Commission, our press releases, access to our auditors, and other
          financial, business, and corporate information. Based on our
          investigation, we believe that the management and the board of
          directors of Wells Investment Group obtained all information regarding
          Isonics they requested, received answers to all questions they posed,
          and otherwise understood the risks of accepting our securities in
          exchange for the license agreement. In addition, Wells Investment
          Group is controlled by Larry G. Wells, a director of Isonics.

     (e)  There are no conversion rights or exchange rights associated with the
          warrants except for the "cashless exercise" provision described below.
          The warrants are exercisable to purchase shares of common stock of
          Isonics until October 15, 2005 at $1.50 per share. The warrant
          agreement does provide for a "cashless exercise" of the warrants and,
          therefore, Isonics may not receive cash proceeds should the holder
          exercise the warrants pursuant to this cashless exercise provision.

     (f)  Isonics received no proceeds from the issuance of these warrants and,
          therefore, we have no use of proceeds.

6.   ISSUANCE IN EXCHANGE FOR PATENT RIGHTS

     During January and February 2001, we paid 75,000 shares of our restricted
common stock as consideration for patent rights from three non-U.S. persons. The
following sets forth the information required by Item 701 in connection with
that transaction:

     (a)  The transaction was completed during January and February 2001. We
          issued 75,000 shares of our restricted common stock to three persons
          who are not citizens or residents of the United States.

     (b)  The transaction occurred without the use of any underwriters or
          finders. The only person who received securities from us in this
          transaction were the three non-U.S. persons.

     (c)  The restricted common stock was not sold for cash. As described above,
          we issued the common stock in consideration for certain patent rights
          for processes for the recovery and recycling of zinc. The patent
          rights were valued at $131,000.


     (d)  We relied on the exemption from registration provided by Sections 4(2)
          under the Securities Act of 1933 for this transaction, as well as
          Regulation S for offshore transactions. We did not engage in any
          public advertising or general solicitation in connection with this
          transaction that was in negotiation for more than six months with each
          of the three non-U.S. persons. We provided each of the vendors of the
          patent rights with disclosure of all aspects of our business,
          including providing them with our reports filed with the Securities
          and Exchange Commission, our press releases, access to our auditors,
          and other financial, business, and corporate information. Based on our
          investigation, we believe that the vendors of the patent rights
          obtained all information regarding Isonics they requested, received
          answers to all questions they posed, and otherwise understood the
          risks of accepting our securities in exchange for the license
          agreement.

     (e)  There are no conversion rights or exchange rights associated with the
          common stock.

     (f)  We did not receive any proceeds from the issuance of the restricted
          common stock to the vendors and, therefore, we have no use of
          proceeds.

ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS

(a)  Financial Statements of Businesses Acquired.

     Not applicable.

(b)  PRO FORMA financial information.

     Not applicable.

(c)  Exhibits

The following exhibits are attached to this Current Report on Form 8-K:

     1.   Consulting Agreement dated October 15, 2001, with Wells Investment
          Group.

     2.   Certificate of Amendment to the Articles of Incorporation of Isonics
          Corporation, filed with the California Secretary of State on November
          13, 2001.


                                   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 31st day of January 2002.


                                       ISONICS CORPORATION

                                       By: /s/ James E. Alexander
                                           --------------------------------
                                           James E. Alexander
                                           President and Chief Executive Officer

EX-1

                              CONSULTING AGREEMENT

     This agreement ("Agreement") is made and entered into this 15th day of
October, 2001 between Isonics Corporation, a California corporation (the
"Company"), and Wells Investment Group ("WIG"). For good and valuable
consideration (the sufficiency and receipt of which is hereby acknowledged) the
Company and WIG hereto mutually agree and intend to be legally bound for
themselves and their respective heirs, legal representatives, successors and
assigns to the terms of this Agreement.

     1.   PURPOSE. The Company hereby retains WIG on a non-exclusive basis
during the term specified to render consulting advice to the Company relating to
financial and similar matters, upon the terms and conditions as set forth
herein.

     2.   ENGAGEMENT PERIOD. This Agreement shall be effective for a period of
four years commencing on the date first written above (the "Engagement Period"),
provided however, that WIG may terminate this Agreement in accordance with
Section 8 herein.

COMPENSATION. The Company shall pay to WIG a fee of $15,00 plus 50,000 warrants
exercisable at $1.50 per share. These warrants shall be issued and considered
earned immediately upon acceptance of this contract. The warrants will have a
cashless exercise provision, be non-cancelable and have a four year life. The
first payment of $7,500 will be due immediately upon acceptance of this
contract, and a second payment of $7,500 will be owed, but not due until three
months from the date of this agreement or ten (10) days after Isonic's receives
proceeds from a financing of at least $500,000. WIG may, in its discretion,
distribute the warrants to its employees and/or consultants.

     The company grants piggy-back registration rights for the underlying
shares and agrees to include the shares in an S-3 or other suitable form at
the earliest possible time.

     3.   DUTIES OF WIG. During the term of this Agreement, WIG will provide the
Company with:

     A thorough analysis of the Company from the standpoint of a significant
     investor with particular attention to the future of the Company's SOI wafer
     and Si-28 product lines, the expected revenue and profit for the Company
     over a three year horizon, and the resource requirements to achieve these
     targets. It is the intent that such analysis shall become the basis of a
     due diligence study to be useful to a potential investor and a research
     report that could be issued by a brokerage firm;

     In connection with WIG providing the Consulting service to the Company, the
Company shall provide WIG with any available information that WIG deems
appropriate. The Company hereby acknowledges that WIG will be using and relying
on some of said information without independent verification and that WIG
assumes no responsibility for the accuracy and completeness of any information
provided to it by the Company. Should the Company desire WIG to provide any
further financial advisory services beyond what is contemplated hereby, the
Company and WIG shall enter into an additional engagement letter to be executed
by the parties hereto at the commencement of the additional financial advisory
services to be rendered by WIG and WIG's compensation for such services shall be
set forth therein.

     5.   WIG'S RELATIONSHIPS WITH OTHERS. The Company acknowledges that WIG and
its affiliates are

                                  Page 1 of 6


in the business of providing financial services and consulting advice (of all
types contemplated by this Agreement) to others. Nothing contained herein shall
be construed to limit or restrict WIG in conducting such business with respect
to others, or in rendering such advise to others.

     6.   CONFIDENTIAL MATERIAL. In connection with the rendering of services
hereunder, WIG has been or will be furnished with confidential information
concerning the Company including, but not limited to, financial statements and
information, cost and expense data, production data, trade secrets, marketing
and customer data, and such other information not generally obtained from public
or published information or trade sources. Such information shall be deemed
"Confidential Material" and, except as specifically provided herein, shall not
be disclosed by WIG without prior written consent of the Company. In the event
WIG is required by applicable law or legal process to disclose any of the
Confidential Material, it is agreed that WIG will deliver to the Company prompt
notice of such requirement prior to disclosure of same to permit the Company to
seek an appropriate protective order and/or waive compliance of this provision.
If, in the absence of a protective order or receipt of written waiver, WIG is
nonetheless, in the written opinion of its counsel, compelled to disclose any
Confidential Material, WIG may do so without liability hereunder provided that
notice of such prospective disclosure is delivered to the Company prior to
actual disclosure. Following the termination of this Agreement and a written
request by the Company, WIG shall deliver to the Company all Confidential
Material.

     7.   WIG'S LIABILITY & INDEMNIFICATION OF WIG BY COMPANY. In the absence of
gross negligence or willful misconduct on the part of WIG or WIG's material
breach of this Agreement, WIG shall not be liable to the Company or to any
officer, director, employee, agent, representative, stockholder or creditor of
the Company for any action or omission of WIG or any of its officers, directors,
employees, agents, representatives or stockholders in the course of, or in
connection with, rendering or performing any services hereunder. Any such
liability of WIG shall be limited to the aggregate fees received by WIG
hereunder, which shall not include any liability for incidental, consequential
or punitive damages. The Company agrees to indemnify WIG in accordance with the
provisions of Annex A hereto, which is incorporated by reference in its entirety
and made a part hereof.

     8.   TERMINATION. This Agreement may be terminated at any time during the
Engagement Period by WIG upon five (5) days prior written notice to the Company,
in the event that WIG becomes aware of (i) any change in the business or
operations of the Company which WIG reasonably believes may adversely affect
WIG's ability to render the services contemplated hereunder, (ii) any
misrepresentation by the Company with respect to the business operations,
assets, condition (financial or otherwise), results of operations or prospects
of the Company, or (iii) any breach by the Company of its obligations under this
Agreement.

     This Agreement may be terminated by the Company for any reason upon five
(5) days prior written notice to WIG.

     In the event of termination, this Agreement shall become void, without
liability on the part of WIG or its affiliates, directors, officers or
stockholders and WIG shall be entitled to retain or receive compensation for
services it has rendered, including payment for expenses it has incurred up to
the date of such termination.

     9.   EXPENSES. The Company shall reimburse WIG for any and all reasonable
out-of-pocket expenses incurred in connection with services provided to the
Company under this Agreement including, but not limited to travel, legal fees,
printing, and other expenses, incurred in connection with WIG's

                                  Page 2 of 6


providing the services stated or contemplated hereby. With the exception of out
of pocket expenses, WIG will obtain the prior approval of the Company for
expenses in excess of $1,000. WIG shall invoice Company on a monthly basis for
all expenses but the Company shall not be obligated to pay WIG until ten (10)
days after receipt of the proceeds from a financing of at least $500,000.

     12.  LIMITATION UPON THE USE OF ADVICE AND SERVICES.

     (a)  No person or entity, other than the Company or any of its subsidiaries
          or directors or officers of each of the foregoing, shall be entitled
          to make use of or rely upon the advice of WIG to be given hereunder,
          and the Company shall not transmit such advice to, or encourage or
          facilitate the use or reliance upon such advice by others without the
          prior consent of WIG.

     (b)  Use of the WIG's name in annual reports or any other report of the
          Company or releases by the Company require the prior written approval
          of WIG unless the Company is required by law to include WIG's name in
          such annual reports, other report or release of the Company, in which
          event the Company shall furnish WIG with copies of such annual reports
          or other reports or releases using WIG's name in advance of
          publication by the Company, its affiliates or assigns.

     13.  DISCRETION. Nothing contained herein shall require the Company to
enter into any transaction presented to it by WIG, which decision shall be at
the Company's sole discretion.

     14.  SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.

     15.  MISCELLANEOUS.

     (a)  Any notice or other communication between parties hereto shall be
          sufficiently given if sent by certified or registered mail, postage
          prepaid, or faxed and confirmed if to the Company, addressed to it at
          Isonics Corporation, 5906 McIntyre Street Golden, Colorado 80403, or
          if to WIG, addressed to it at Wells Investment Group, 100 Clocktower
          Place #130, Carmel, CA 93923. Such notice or other communication shall
          be deemed to be given on the date of receipt.

     (b)  If WIG shall cease to do business, the provisions hereof relating to
          duties of WIG and compensation by the Company as it applies to WIG
          shall thereupon cease to be in effect, except for the Company's
          obligation of payment for services rendered prior thereto. This
          Agreement shall survive any merger of, acquisition of, or acquisition
          by WIG and after any such merger or acquisition shall be binding upon
          the Company and the corporation surviving such merger or acquisition.

                                  Page 3 of 6


     (c)  This Agreement embodies the entire agreement and understanding between
          the Company and WIG and supersedes any and all negotiations, prior
          discussions and preliminary and prior agreements and understandings
          related to the subject matter hereof, and may be modified only by a
          written instrument duly executed by each party.

     (d)  This Agreement has been duly authorized, executed and delivered by and
          on behalf of the Company and WIG.

     (e)  This Agreement shall be construed and interpreted in accordance with
          the laws of the State of Washington, without giving effect to its
          conflict of laws provisions.

     (f)  There is no relationship of partnership, agency, employment, franchise
          or joint venture between the parties. Neither party has the authority
          to bind the other or incur any obligation on its behalf.

     (g)  The Company hereby acknowledges that WIG is not a fiduciary of the
          Company and that WIG makes no representations or warranties regarding
          Company's ability to consummate a transaction with Target or to secure
          financing, whether now or in the future.

     (h)  This Agreement and the rights hereunder may not be assigned by either
          party (except by operation of law) and shall be binding upon and inure
          to the benefit of the parties and their respective permitted
          successors, assigns and legal representatives.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date hereof.


                                        ISONICS CORPORATION


                                        By: /s/ James Alexander
                                           ----------------------------------
                                        Name: James Alexander
                                        Title: President


                                        WELLS INVESTMENT GROUP


                                        By: /s/ Larry J. Wells
                                           ----------------------------------
                                        Name: Larry J. Wells
                                        Title: President


                                  Page 4 of 6


                                     ANNEX A
                                 INDEMNIFICATION

     Recognizing that transactions of the type contemplated in this engagement
sometimes result in litigation and that Wells Investment Group's ("WIG") role is
advisory, (the "Company") agrees to indemnify and hold harmless WIG, its
affiliates and their respective officers, directors, employees, agents and
controlling persons (collectively, the "Indemnified Parties"), from and against
any losses, claims, damages and liabilities, joint or several, related to or
arising in any manner out of any transaction, proposal or any other matter
(collectively, the "Matters") contemplated by the engagement of WIG hereunder,
and will promptly reimburse the Indemnified Parties for all expenses (including
reasonable fees and expenses of legal counsel) as incurred in connection with
the investigation of, preparation for, or defense of any pending or threatened
claim related to or arising in any manner out of any Matter contemplated by the
engagement of WIG hereunder, or any action or proceeding arising therefrom
(collectively, "Proceedings"), whether or not such Indemnified Party is a formal
party to any such Proceeding. Notwithstanding the foregoing, the Company shall
not be liable in respect of any losses, claims, damages, liabilities or expenses
that a court of competent jurisdiction shall have determined by final judgment
resulted from the gross negligence or willful misconduct of an Indemnified
Party. The Company further agrees that it will not, without the prior written
consent of WIG, settle compromise or consent to the entry of any judgment in any
pending or threatened Proceeding in respect of which indemnification may be
sought hereunder (whether or not WIG or any Indemnified Party is an actual or
potential party to such Proceeding), unless such settlement, compromise or
consent includes an unconditional release of WIG and each other Indemnified
Party hereunder from all liability arising out of such Proceeding.

     The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims,
damages and liabilities in such proportion as is appropriate to reflect the
relative benefits to the Company and its stockholders on the one hand, and
WIG on the other, in connection with the Matters to which such
indemnification or reimbursement relates or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of such parties as well as any other equitable
considerations. It is hereby agreed that the relative benefits to the Company
and/or its stockholders and to WIG with respect to WIG's engagement shall be
deemed to be in the same proportion as (i) the total value paid or received
or to be paid or received by the Company and/or its stockholders pursuant to
the Matters (whether or not consummated) for which WIG is engaged to render
services bears to (ii) the fees paid to WIG in connection with such
engagement. In no event shall the Indemnified Parties contribute or otherwise
be liable for an amount in excess of the aggregate amount of fees actually
received by WIG pursuant to such engagement (excluding amounts received by
WIG as reimbursement of the expenses).

                                  Page 5 of 6


     The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with WIG's engagement hereunder except for losses,
claims, damages, liabilities or expenses that a court of competent jurisdiction
shall have determined by final judgment resulted solely from the gross
negligence or willful misconduct of such Indemnified Party. The indemnity,
reimbursement and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company or an Indemnified Party.

     The indemnity, reimbursement and contribution provisions set forth herein
shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities Act of 1933 as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this letter of WIG's engagement and (iv) whether or
not WIG shall, or shall not be called upon to, render any formal or informal
advice in the course of such engagement.



                                  Page 6 of 6

EX-2

                            CERTIFICATE OF AMENDMENT
                            ARTICLES OF INCORPORATION
                                       OF
                               ISONICS CORPORATION

     James E. Alexander and John V. Sakys certify that:

1.   They are the President and the Secretary respectively, of Isonics
     Corporation, a California corporation ("Isonics").

2.   Article III of the Articles of Incorporation of Isonics is amended to read
     as follows:

     The aggregate number of shares of capital stock which this corporation
     shall be authorized to issue is Fifty Million (50,000,000), which shall
     consist of:

     (a)  Forty Million (40,000,000) shares which shall be designated as Common
          Stock; and

     (b)  Ten Million (10,000,000) shares which shall be designated as Preferred
          Stock.

3.   The foregoing amendment of the Articles of Incorporation has been duly
     approved by the board of directors of Isonics.

4.   The foregoing amendment of the Articles of Incorporation of Isonics has
     been duly approved by the required vote of shareholders in accordance with
     Section 902 of the California Corporations Code. The total number of
     outstanding shares of Common Stock is 9,311,475 and the total number of
     outstanding shares of Series A Convertible Preferred Stock is 963,666. The
     number of shares voting in favor of the amendment exceeded the vote
     required. The percentage vote required was more than 50%.

     We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.

November 13, 2001                       /s/ James E. Alexander
                                        ------------------------------
                                        James E. Alexander, President

                                        /s/ John V. Sakys
                                        ------------------------------
                                        John V. Sakys, Secretary