SC 13G/A 1 d63702_sc13ga.txt AMENDMENT NO. 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment No. 2)* ISONICS CORPORATION (Name of Issuer) Common Stock (Title of Class of Securities) 464895101 (CUSIP Number) December 31, 2004 (Date of Event Which Requires Filing of this Statement) |_| Rule 13d-1(b) |x| Rule 13d-1(c) |_| Rule 13d-1(d) SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 2 of 15 Pages ------------------- ------------------- -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Mercator Momentum Fund, L.P. EIN:03-0021366 -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| -------------------------------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------------------- 4. CITIZENSHIP OR PLACE OF ORGANIZATION California -------------------------------------------------------------------------------- NUMBER OF 5. SOLE VOTING POWER SHARES 0 ----------------------------------------------------------------- BENEFICIALLY 6. SHARED VOTING POWER OWNED BY 103,364 ----------------------------------------------------------------- EACH 7. SOLE DISPOSITIVE POWER REPORTING 0 ----------------------------------------------------------------- PERSON 8. SHARED DISPOSITIVE POWER WITH 103,364 -------------------------------------------------------------------------------- 9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 103,364 -------------------------------------------------------------------------------- 10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* |_| -------------------------------------------------------------------------------- 11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 0.39% -------------------------------------------------------------------------------- 12. TYPE OF REPORTING PERSON* PN -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! -2- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 3 of 15 Pages ------------------- ------------------- -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Momentum Fund III, L.P. EIN:32-0056070 -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| -------------------------------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------------------- 4. CITIZENSHIP OR PLACE OF ORGANIZATION California -------------------------------------------------------------------------------- NUMBER OF 5. SOLE VOTING POWER SHARES 0 ----------------------------------------------------------------- BENEFICIALLY 6. SHARED VOTING POWER OWNED BY 160,272 ----------------------------------------------------------------- EACH 7. SOLE DISPOSITIVE POWER REPORTING 0 ----------------------------------------------------------------- PERSON 8. SHARED DISPOSITIVE POWER WITH 160,272 -------------------------------------------------------------------------------- 9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 160,272 -------------------------------------------------------------------------------- 10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* |_| -------------------------------------------------------------------------------- 11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 0.61% -------------------------------------------------------------------------------- 12. TYPE OF REPORTING PERSON* PN -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! -3- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 4 of 15 Pages ------------------- ------------------- -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Monarch Pointe Fund, Ltd. -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| -------------------------------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------------------- 4. CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands -------------------------------------------------------------------------------- NUMBER OF 5. SOLE VOTING POWER SHARES 0 ----------------------------------------------------------------- BENEFICIALLY 6. SHARED VOTING POWER OWNED BY 109,090 ----------------------------------------------------------------- EACH 7. SOLE DISPOSITIVE POWER REPORTING 0 ----------------------------------------------------------------- PERSON 8. SHARED DISPOSITIVE POWER WITH 109,090 -------------------------------------------------------------------------------- 9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 109,090 -------------------------------------------------------------------------------- 10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* |_| -------------------------------------------------------------------------------- 11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 0.41% -------------------------------------------------------------------------------- 12. TYPE OF REPORTING PERSON* PN -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! -4- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 5 of 15 Pages ------------------- ------------------- -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) M.A.G. Capital, LLC EIN: 300021359 -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| -------------------------------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------------------- 4. CITIZENSHIP OR PLACE OF ORGANIZATION California -------------------------------------------------------------------------------- NUMBER OF 5. SOLE VOTING POWER SHARES 0 ----------------------------------------------------------------- BENEFICIALLY 6. SHARED VOTING POWER 525,427, some of which are held by Mercator Momentum Fund OWNED BY and Mercator Momentum Fund III (together, the "Funds") and Monarch Pointe Fund, Ltd. ("MPF"). M.A.G. Capital, LLC EACH ("MAG") is the general partner of the Funds and controls the investment of MPF. REPORTING ----------------------------------------------------------------- PERSON 7. SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------------- 8. SHARED DISPOSITIVE POWER 525,427, some of which are held by the Funds and MPF. MAG is the general partner of each of the Funds and controls the investments of MPF. -------------------------------------------------------------------------------- 9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 525,427 -------------------------------------------------------------------------------- 10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* |_| -------------------------------------------------------------------------------- 11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 1.97% -------------------------------------------------------------------------------- 12. TYPE OF REPORTING PERSON* IA -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! -5- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 6 of 15 Pages ------------------- ------------------- -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) David F. Firestone -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| -------------------------------------------------------------------------------- 3. SEC USE ONLY -------------------------------------------------------------------------------- 4. CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 5. SOLE VOTING POWER SHARES 0 ----------------------------------------------------------------- BENEFICIALLY 6. SHARED VOTING POWER 525,427, all of which are held by the Funds, MPF and MAG. OWNED BY David F. Firestone is Managing Member of MAG. EACH ----------------------------------------------------------------- 7. SOLE DISPOSITIVE POWER REPORTING 0 PERSON ----------------------------------------------------------------- 8. SHARED DISPOSITIVE POWER WITH 525,427, all of which are held by the Funds, MPF and MAG. David F. Firestone is Managing Member of MAG. -------------------------------------------------------------------------------- 9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 525,427 -------------------------------------------------------------------------------- 10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* |_| -------------------------------------------------------------------------------- 11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 1.97% -------------------------------------------------------------------------------- 12. TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! -6- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 7 of 15 Pages ------------------- ------------------- Item 1. Issuer. (a) The name of the issuer is Isonics Corporation (the "Issuer"). (b) The address of the Issuer's principal executive office is 5906 McIntyre Street, Golden, Colorado 80403. Item 2. Reporting Person and Security. (a) Mercator Momentum Fund, L.P. ("Momentum Fund") and Mercator Momentum Fund III, L.P. ("Momentum Fund III" and, with Momentum Fund, the "Funds") are private investment limited partnerships organized under California law. The general partner of each of the Funds is M.A.G. Capital, LLC ("MAG"), a California limited liability company. Monarch Pointe Fund, Ltd. ("MPF") is a corporation organized under the laws of the British Virgin Islands. MAG acts as investment advisor to MPF and has full discretion to control its investments. David F. Firestone is the Managing Member of MAG. The Funds, MAG and David F. Firestone are referred to herein as the "Reporting Persons." (b) The business address of each of the Funds, MAG and David F. Firestone is 555 S. Flower Street, Suite 4200, Los Angeles, CA 90071. The business address of MPF is c/o Bank of Ireland Securities Services, Ltd., New Century House, International Financial Services Center, Mayor Street Lower, Dublin 1, Republic of Ireland. (c) Each of the Funds is a California limited partnership. MAG, their general partner, is a California limited liability company. MPF is a corporation organized under the laws of the British Virgin Islands. (d) The title of the class of securities to which this statement relates is the common stock of the Issuer (the "Common Stock"). (e) The CUSIP number is 464895101. Item 3. If This Statement is Filed Pursuant to Rule 13d-1(b) or 13d-2(b) or (c), Check Whether the Person Filing is a: (a) [ ] Broker or dealer registered under Section 15 of the Act (15 U.S.C. 78o). (b) [ ] Bank as defined in Section 3(a)(6) of the Act (15 U.S.C. 78c). (c) [ ] Insurance company as defined in Section 3(a)(19) of the Act (15 U.S.C. 78c). (d) [ ] Investment company registered under Section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8). (e) [ ] An investment adviser in accordance with ss. 240.13d-1(b)(1)(ii)(E). -7- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 8 of 15 Pages ------------------- ------------------- (f) [ ] An employee benefit plan or endowment fund in accordance with ss. 240.13d-1(b)(1)(ii)(F). (g) [ ] A parent holding company or control person in accordance with ss. 240.13d-1(b)(1)(ii)(G). (h) [ ] A savings association as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813). (i) [ ] A church plan that is excluded from the definition of an investment company under Section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3). (j) [ ] Group, in accordance with ss. 240.13d-1(b)(1)(ii)(J). Not Applicable. Item 4. Ownership. Momentum Fund, Momentum Fund III and MAG each own warrants to purchase shares of Common Stock. Momentum Fund, Momentum Fund III and MPF each own shares of the Issuer's preferred stock which is convertible into Common Stock. The documentation governing the terms of the warrants and the preferred stock contains provisions prohibiting any exercise of the warrants or conversion of preferred stock that would result in the Reporting Persons owning beneficially more than 9.99% of the outstanding shares of Common Stock as determined under Section 13(d) of the Securities Exchange Act of 1934. As a result of these clauses, the Reporting Persons have never had beneficial ownership of more than 9.99% of the outstanding shares of Common Stock. As of December 31, 2004, the Funds, MPF and MAG owned the following securities of the Issuer: Momentum Fund owned 660 shares of the Issuer's Series D Preferred Stock ("Series D Stock") and warrants to purchase up to 43,364 additional shares of Common Stock. Momentum Fund III owned 1,140 shares of the Series D Stock and warrants to purchase up to 56,636 additional shares of Common Stock.. MPF owned 1,200 shares of the Series D Stock and warrants to purchase up to 109,090 additional shares of Common Stock. MAG owned warrants to purchase up to 152,701 shares of Common Stock. David F. Firestone owned no securities of the Issuer directly. The right to vote and the right to dispose of the shares beneficially owned by Momentum Fund, Momentum Fund III and MPF are, in each case, shared among either Momentum Fund, Momentum Fund III or MPF, as applicable, and both MAG and David F. Firestone. The right to -8- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 9 of 15 Pages ------------------- ------------------- vote and the right to dispose of the shares beneficially owned by MAG are shared by MAG and David F. Firestone. Assuming that the Issuer had 26,183,496 shares of Common Stock outstanding as of December 31, 2004, which is the number reported by the Issuer as outstanding as of December 7, 2004 in its Prospectus Supplement No. 1 to Prospectus dated April 23, 2004, filed on January 6, 2005, the individual Reporting Persons had beneficial ownership of the following numbers of shares of Common Stock which represented the following percentages of the Common Stock outstanding: Shares Owned Percentage ------------ ---------- Momentum Fund 103,364 0.39% Momentum Fund III 160,272 0.61% MPF 109,090 0.41% MAG 525,427 1.97% David F. Firestone 525,427 1.97% The conversion price of the preferred stock for purposes of the above calculations was $1.10. -9- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 10 of 15 Pages ------------------- ------------------- Item 5. Ownership of Five Percent or Less of a Class. If this Schedule is being filed to report the fact that as of the date hereof the Reporting Person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following [__] Not Applicable. Item 6. Ownership of More than Five Percent on Behalf of Another Person. Not Applicable. Item 7. Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person. Not Applicable. Item 8. Identification and Classification of Members of the Group. Not Applicable. Item 9. Notice of Dissolution of Group. Not Applicable. Item 10. Certifications. By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. -10- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 11 of 15 Pages ------------------- ------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 28, 2005 MERCATOR MOMENTUM FUND, L.P. By: M.A.G. CAPITAL, LLC, its general partner By: /s/ Harry Aharonian -------------------------------------- Harry Aharonian, Portfolio Manager Dated: February 28, 2005 MERCATOR MOMENTUM FUND III, L.P. By: M.A.G. CAPITAL, LLC, its general partner By: /s/ Harry Aharonian -------------------------------------- Harry Aharonian, Portfolio Manager Dated: February 28, 2005 MONARCH POINTE FUND, LTD. By: /s/ Harry Aharonian -------------------------------------- Harry Aharonian, Director Dated: February 28, 2005 M.A.G. CAPITAL, LLC By: /s/ Harry Aharonian -------------------------------------- Harry Aharonian, Portfolio Manager Dated: February 28, 2005 /s/ David F. Firestone -------------------------------------- David F. Firestone -11- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 12 of 15 Pages ------------------- ------------------- EXHIBIT INDEX Exhibit A Agreement of Joint Filing -12- SCHEDULE 13G ------------------- ------------------- CUSIP No. 464895101 Page 13 of 15 Pages ------------------- ------------------- EXHIBIT A AGREEMENT OF JOINT FILING The undersigned hereby agree that they are filing jointly pursuant to Rule 13d-1 of the Securities Exchange Act of 1934 the Amendment No. 1 to Schedule 13G, dated April 26, 2004, containing the information required by Schedule 13G, for shares of the common stock of Isonics Corporation beneficially owned by Mercator Momentum Fund, L.P., Mercator Momentum Fund III, L.P., Monarch Pointe Fund, Ltd., M.A.G. Capital, LLC, David F. Firestone, and such other holdings as may be reported therein. Dated: February 28, 2005 MERCATOR MOMENTUM FUND, L.P. By: M.A.G. CAPITAL, LLC, its general partner By: /s/ Harry Aharonian --------------------------------------- Harry Aharonian, Portfolio Manager MERCATOR MOMENTUM FUND III, L.P. By: M.A.G. CAPITAL, LLC, its general partner By: /s/ Harry Aharonian --------------------------------------- Harry Aharonian, Portfolio Manager MONARCH POINTE FUND, LTD. By: /s/ Harry Aharonian --------------------------------------- Harry Aharonian, Director M.A.G. CAPITAL, LLC By: /s/ Harry Aharonian --------------------------------------- Harry Aharonian, Portfolio Manager /s/ David F. Firestone --------------------------------------- David F. Firestone -13-