The warrant was issued contingent upon Eagle-Picher's delivery of 200 kilograms of isotopically pure silicon-28 to Isonics in 2000. Those deliveries are expected to begin in April, the company said.

Eagle-Picher chose to "net exercise" its warrant, which will give Eagle-Picher, of Joplin, MO, approximately 3.15 million shares of common stock representing18% ownership of Isonics on a fully diluted basis. Final terms are still being negotiated.

Isonics will receive no cash from this exercise. On a fully diluted basis, the 4 million share warrant represented approximately 22% of Isonics ownership.

"We are very pleased Eagle-Picher has chosen to exercise their warrant," said Jim Alexander, president and CEO of Isonics. "It is further validation that they strongly support our silicon-28 wafer development program, and Isonics' isotopically-engineered product development and commercialization capabilities in general."

Although Isonics will not receive any cash from the warrant exercise, the company's cash position is strong, Alexander said. As a result of the net exercise, approximately 4% fewer shares are currently outstanding on a fully diluted basis, "and we believe less dilution will have a positive impact on our capital structure and stock price," he said.

Wayne R. Wickens, Eagle-Picher senior vice president, stated, "Eagle-Picher is excited about the potential of the Isonics silicon-28 wafer program. Based on our many years of isotope separation experience, we are confident we can produce the highest quality silicon-28, meeting the exacting needs of the semiconductor industry."

Isonics is working on isotopically pure semiconductor materials, such as silicon-28, which have superior heat transfer properties compared to natural silicon. Advanced Micro Devices Inc. and Cypress Semiconductor Corp. are currently evaluating Isonics silicon-28 wafers.

Isonics intends to use the small quantity of Eagle-Picher isotope to produce bulk silicon-28 wafers for customer evaluation. Eagle-Picher's pilot plant is expected to reach production of three to five tons per year.

Wickens went on to say, "Based on the recent market price of Isonics common stock and the call feature of the warrant, Eagle-Picher Technologies decided that is was a prudent time to exercise its warrant."

Isonics reported a net profit for the third quarter, ended Jan. 31, of $3.3 million. ``Isonics has never been, including immediately after our IPO in 1997, in such a robust financial position," said Alexander. "The funds we obtained from the sale of our depleted zinc business have allowed us to eliminate essentially all of our debt and to have over $4 million available with which to pursue the expansion of our life sciences businesses and the commercialization of Silicon-28 as a semiconductor base material.''