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As filed with the Securities and Exchange Commission on January 8, 2002

Amendment No. 2

ISCO International, Inc.

451 Kingston Court

Dr. George Calhoun

Copies To:

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

     If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

     If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. þ

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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PRELIMINARY PROSPECTUS

Rights Offering of 40,000,000 Shares of Common Stock

          The actual proceeds will depend on the extent to which the subscription privilege and the oversubscription privilege are exercised. The above table does not include offering expenses. There is no minimum number of shares that we must sell in order to complete this offering.

Subscription Agent: LaSalle Bank N.A.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER THE “RISK FACTORS” BEGINNING ON PAGE 5 OF THIS PROSPECTUS BEFORE YOU DECIDE TO INVEST.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is January, 2002.

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      We have not authorized any person to give you information that differs from the information in this prospectus. You should rely solely on the information contained in this prospectus. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities, in any state where the offer or sale of these securities is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, even if the prospectus is delivered to you after the prospectus date, or you buy our common stock after the prospectus date.

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SUMMARY OF THE OFFERING

      This section answers in summary form some questions you may have about us and this rights offering. The information in this section is not complete and does not contain all of the information that you should consider before exercising your subscription rights. You should read the entire prospectus carefully, including the “Risk Factors” section and the documents listed under “Where You Can Find More Information.”

Questions and Answers About This Rights Offering

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RISK FACTORS

      You should carefully consider the risks described below, along with the other information contained or incorporated by reference in this prospectus, before making an investment decision. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.

      Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

      This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus.

RISKS RELATED TO OUR BUSINESS

Operational Risks

We have a limited operating history and expect to continue to encounter difficulties and net losses in the early stages of product commercialization.

      We were founded in October 1989 and through 1996 were engaged principally in research and development, product testing, manufacturing, marketing and sales activities. We have incurred net losses since our inception. As of September 30, 2001, our accumulated deficit was approximately $123 million including a net loss of $18.8 million for the year ended December 31, 2000 and a net loss of $21 million for the nine months ended September 30, 2001. We have only recently begun to generate revenues from the sale of our radio frequency, or RF, filter products. We do not expect revenues to increase dramatically until we ship a significantly larger amount of our RF products. Accordingly, we expect to continue to experience net losses, and we cannot be certain if or when we will become profitable. In addition, we may incur non-cash compensation charges related to our stock option repricing which may further decrease our earnings in the future.

      We have only a limited operating history upon which an evaluation of us and our prospects can be based. We must therefore be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of product commercialization.

We expect our operations, in the foreseeable future, to continue to produce a negative cash-flow, consequently, if we cannot raise additional capital, we may not be able to fund our continued operations.

      To date, we have financed our operations primarily through public and private equity and debt financings. We believe that we currently have sufficient funds to operate our business without the need for substantial future capital sources until February 2002. We hope to augment our existing capital position through the proceeds of this offering, strategic sources of capital and a proposed working capital line of credit. If the offering is fully subscribed, following repayment of existing debt, we believe that we would have the resources to fund our operations at the current level in excess of one year. However, there is no guarantee that this offering will be fully subscribed or that the funding mechanisms identified will allow to us to access necessary additional funds.

      The actual amount and timing of our future funding requirements may differ due to many factors, including:

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We have had to rely, and may continue to have to rely, upon our principal stockholders and their affiliates to provide debt and equity financing to support our business operations.

      Because of our history of losses and negative operating cash flow, we have been unable to obtain financing from banks or other traditional sources of funding to meet our working capital needs. As a result and in light of recent market conditions, we have relied upon infusions of capital from time to time by our principal stockholders and their affiliates through their purchase of our debt and equity securities.

      We cannot assure you that our principal stockholders and their affiliates will continue to provide such funding if financing from independent sources does not otherwise become available in the future. If, in the future, our principal stockholders and their affiliates are unwilling or unable to continue to finance our operations during periods of negative cash flows, we may be forced to seek adequate alternative sources of financing on less favorable terms. If we are unable to arrange alternative financing sources, we may be forced to curtail, suspend or cease our operations.

We must develop and expand our manufacturing and sales and marketing capabilities in order to sustain or grow our business.

      For us to be financially successful, we must either manufacture our products in substantial quantities, at acceptable costs and on a timely basis, or enter into an outsourcing arrangement with a qualified manufacturer that will provide us the same. In the event that we are unable to enter into a manufacturing arrangement on acceptable terms with a qualified manufacturer, we would have to produce our products in commercial quantities in our own facilities. We may not be able to manufacture such products in sufficient volume. We have limited experience in manufacturing, and substantial costs and expenses may be incurred in connection with attempts to manufacture substantially larger quantities of our products. In addition, we may not be able to make the transition to large-scale commercial production successfully.

      Our sales and marketing experience has been very limited both domestically and internationally. In international markets, we have also elected to enter into arrangements with third parties regarding the commercialization and marketing of our products. In July 2001, we entered into an agreement with PT InfoAsia Teknologi Global Tbk to become our exclusive distributor in the ASEAN region (southeast Asia) and in September we appointed Patrick Farfan Associates Limited as our exclusive distributor in the United Kingdom and Ireland. If we enter into other arrangements, we will be substantially dependent upon the efforts of others in deriving commercial benefits from our products in international markets. We may not be able to establish adequate sales and distribution capabilities. In addition, we may not be able to enter into marketing arrangements or relationships with third parties on financially acceptable terms and any such third party may not be successful in marketing our products. There is no guarantee that our sales and marketing experience will be successful.

Failure to manage our growth may seriously harm our ability to deliver products in a timely manner, fulfill existing customer commitments and attract and retain new customers.

      Our ability to manage growth effectively will require us to implement and improve our operational, financial, manufacturing and management information systems and expand, train, manage and motivate our employees. These demands may require us to add new management personnel and/or to cause our management to develop additional expertise. Any increase in resources devoted to product development and marketing and sales efforts could have an adverse effect on our financial performance in the next several fiscal quarters. The failure of our management team to effectively manage growth could have a material adverse effect on our business, operating results and financial condition.

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If we fail to raise at least $15 million, less expenses, in a rights offering by March 5, 2002, then an event of default is triggered under our outstanding secured notes which entitles the secured parties to certain rights.

      In the event that we fail to raise at least $15 million in a rights offering by March 5, 2002, an event of default is triggered under our secured notes and the principal and accrued interest on the notes may become immediately due. Currently, our existing cash is not sufficient to pay the principal and accrued interest due on the notes if they became due. If we cannot obtain sufficient additional cash to make the principal and accrued interest payment, then an event of default will occur under the notes which entitle the secured parties certain rights to our assets. If we are unable to obtain sufficient cash when needed to make this principal and accrued interest payment or to refinance our debt or obtain a waiver of such defaults, we may be forced to seek protection from creditors under the bankruptcy laws.

Technology and Market Risks

We are dependent on wireless telecommunications.

      Our principal target market for our products is wireless telecommunications. The devotion of substantial resources to the wireless telecommunications market makes us vulnerable to adverse changes in this market. Adverse developments in the wireless telecommunications market, which could come from a variety of sources, including future competition, new technologies or regulatory decisions, could affect the competitive position of wireless systems. Any adverse developments in the wireless telecommunications market during the foreseeable future would have a material adverse effect on our business, operating results and financial condition.

We are dependent on the enhancement of existing 2G and 2.5G networks and the build-out of 3G networks, and the capital spending patterns of wireless network operators.

      Increased sales of our products is dependent on a number of factors, one of which is the build-out of third generation, or 3G, enabled wireless communications networks as well as enhancements of existing infrastructure. Building wireless networks is capital intensive, as is the process of upgrading existing second generation, 2G, equipment. Further, the capital spending patterns of wireless network operators is beyond our control and depends on a variety of factors, including access to financing, the status of federal, local and foreign government regulation and deregulation, changing standards for wireless technology, the overall demand for wireless services, competitive pressures and general economic conditions. The build-out of 2.5G and 3G enabled networks may take years to complete and is dependent upon the level of capital spending by wireless network operators. The magnitude and timing of capital spending by these operators for constructing, rebuilding or upgrading their systems significantly impacts the demand for our products. Any decrease or delay in capital spending patterns in the wireless communication industry, whether because of a general business slowdown or a reevaluation of the prospective demand for 2.5G and 3G services, would delay the build-out of these networks and may significantly harm our business prospects.

Our success depends on the market’s acceptance of our RF filter products.

      Our RF filter products, some of which are based on our high-temperature superconductor, or HTS, technology, and our adaptive notch filtering, or ANF, technology, have not been sold in very large quantities and a sufficient market may not develop for our products. Our customers establish demanding specifications for performance and reliability, and although we believe we have met or exceeded these specifications to date, there is no guarantee that the wireless service providers will elect to use our HTS or ANF solutions to solve their interference problems. Although we have received several orders from domestic wireless operators for our products over the past year, there is no assurance that these customers will continue to order products from us.

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Rapid technological change and future competitive technologies could negatively affect our operations.

      The field of superconductivity is characterized by rapidly advancing technology. Our success will depend in large part upon our ability to keep pace with advancing superconducting technology, high performance RF filter design and efficient, low cost cryogenic technologies. Rapid changes have occurred, and are likely to continue to occur, in the development of superconducting materials and processes. Our development efforts may be rendered obsolete by the adoption of alternative solutions to current wireless operator problems or by technological advances made by others such as smart antennas. In addition, other materials or processes, including other superconducting materials or fabrication processes, may prove more advantageous for the commercialization of high performance wireless products than the materials and processes selected by us.

Business Risks

Our customers are concentrated and the loss of one of our largest customers could cause our revenues to drop quickly and unexpectedly.

      Sales to three of our customers accounted for over 80% and 65% of our total revenues for 2000 and 1999, respectively and 73% for the nine months ended September 30, 2001. In addition, we have focused a significant amount of our technical and managerial resources to working with the limited number of 3G license holders in Japan and Korea, as well as, established original equipment manufacturers, or OEMs, who may provide telecommunications equipment to wireless operators in these markets.

      We expect that if our RF filter products achieve market acceptance, a limited number of wireless service providers and OEMs will account for a substantial portion of our revenue during any period. Sales of many of our RF filter products depend in significant part upon the decision of prospective customers and current customers to adopt and expand their use of our products. Wireless service providers, wireless equipment OEMs and our other customers are significantly larger than, and are able to exert a high degree of influence over, us. Customers’ orders are affected by a variety of factors such as new product introductions, regulatory approvals, end user demand for wireless services, customer budgeting cycles, inventory levels, customer integration requirements, competitive conditions and general economic conditions. The failure to attract new customers would have a material adverse effect on our business, operating results and financial condition.

The lengthy and variable sales cycles of our products could cause significant fluctuation in our results.

      Prior to selling products to several of our customers, we may be required to undergo lengthy approval and purchase processes. Technical and business evaluation by potential customers can take up to a year or more for products based on new technologies such as high-temperature superconductors. The length of the approval process is affected by a number of factors, including, among others, the complexity of the product involved, priorities of the customers and budget and regulatory issues affecting customers. We may not obtain the necessary approvals or sales of such products may not occur. The length of our customers’ approval process or delays in their process could make our quarterly revenues and earnings inconsistent and difficult to trend.

Our ability to deliver our products is dependent on a limited number of suppliers.

      Certain parts and components used in our RF filter products, including substrates, vacuum components, and cryogenic coolers, are only available from a limited number of sources. Our reliance on these limited source suppliers exposes us to certain risks and uncertainties, including the possibility of a shortage or discontinuation of certain key components and reduced control over delivery schedules, manufacturing capabilities, quality and costs. Any reduced availability of such parts or components when required could materially impair our ability to manufacture and deliver our products on a timely basis and result in the cancellation of orders, which could have a material adverse effect on our business, operating results and financial condition.

      In addition, the purchase of certain key components involves long lead times and, in the event of unanticipated increases in demand for our products, we may be unable to manufacture products in quantities sufficient to meet our customers’ demand in any particular period. We have no guaranteed supply

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      To satisfy customer requirements, we may be required to stock certain long lead time parts in anticipation of future orders. The failure of such orders to materialize as forecasted could limit resources available for other important purposes or accelerate our requirement for additional funds. In addition, such excess inventory could become obsolete in which case it would be written down to scrap value. Business disruption, production shortfalls or financial difficulties of a limited source supplier could materially and adversely affect us by increasing product costs or reducing or eliminating the availability of such parts or components. In such events, our inability to develop alternative sources of supply quickly and on a cost-effective basis could materially impair our ability to manufacture and deliver our products on a timely basis and could have a material adverse effect on our business, operating results and financial condition.

If we lose our key personnel, or fail to attract and retain additional personnel, the success and growth of our business may suffer.

      Our success will depend in large part upon our ability to attract and retain highly qualified management, engineering, manufacturing, marketing, sales and research and development personnel. Due to the specialized nature of our business, it may be difficult to locate and hire qualified personnel. The loss of services of one of our executive officers or other key personnel, or the failure to attract and retain other executive officers or key personnel, could have a material adverse effect on our business, operating results and financial condition.

Failure of our products to perform properly might subject us to significant warranty expenses.

      Although we believe our products have not experienced any significant reliability problems to date, our products may develop reliability problems in the future. In general, our products carry a one year warranty, except in the case of superconducting materials which carry a five year warranty, limited to replacement of the product or refund of the cost of the product. In addition, we offer our customers extended warranties. Repeated or widespread quality problems could result in significant warranty expenses and/or the loss of customer confidence. The occurrence of such quality problems could have a material adverse effect on our business, operating results and financial condition.

Intense competition, and increasing consolidation in our industry, could create stronger competitors and harm our business.

      The wireless telecommunications equipment market is very competitive. Many of these companies have substantially greater financial resources, larger research and development staffs and greater manufacturing and marketing capabilities than we do. Our products compete directly with products which embody existing and future competing commercial technologies. Other emerging wireless technologies, including “smart antennas”, may also provide protection from RF interference and offer enhanced range to wireless communication service providers, potentially at lower prices and/or superior performance, and may therefore compete with our products. High performance HTS RF filters may not become a preferred technology to address the needs of wireless communication service providers. Failure of our products to improve performance sufficiently, reliably, or at an acceptable price or to achieve commercial acceptance or otherwise compete with conventional and new technologies, will have a material adverse effect on the our business, operating results and financial condition.

      Although the market for superconductive electronics currently is small, we believe it will become intensely competitive, especially if products with significant market potential are successfully developed. In addition, if the superconducting industry develops, additional competitors with significantly greater resources are likely to enter the field. In order to compete successfully, we must continue to develop and maintain technologically advanced products, reduce production costs, attract and retain highly qualified personnel, obtain additional patent or other protection for our technology and products and manufacture and market our

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If the worldwide economic slowdown continues, significant commercialization may be delayed.

      Industry analysts predict that the softness within the telecommunications industry will continue through 2002. If the world-wide economic slowdown continues, the telecommunications industry will most likely continue to be adversely affected, which may cause our product commercialization to be delayed.

Our restructuring plans may result in additional costs.

      We recently announced an initiative to focus our business on core operations and improve our operating performance by restructuring and streamlining operations. We cannot predict whether we will realize expected synergies and improved operating performance as a result of the restructuring and streamlining operations. We also cannot predict whether our announced restructuring and streamlining of operations will adversely affect our ability to retain key employees, which, in turn, would adversely affect our operating results. In addition, in connection with this restructuring, we expect to record during the fourth quarter of 2001 a restructuring charge between $1 million and $2 million representing employee costs and other costs to transfer assets and personnel in our Canada and Colorado facilities to our headquarters in Illinois. We are in the early stages of implementing the various steps contained in the restructuring activities, and the final cost of fully implementing the activities may ultimately exceed this amount.

There are risks associated with future potential acquisitions.

      In the future, we may pursue acquisitions to obtain products, services and technologies that we believe will complement or enhance our current product or services offerings. At present, we have no agreements or other arrangements with respect to any acquisition. An acquisition may not produce the revenue, earnings or business synergies that we anticipated and may cause us to assume significant unforeseen liabilities, and an acquired product, service or technology might not perform as we expected. If we pursue any acquisition, our management could spend a significant amount of time and effort in identifying and completing the acquisition and may be distracted from the operations of our business. If we complete an acquisition, we would probably have to devote a significant amount of management resources to integrating the acquired business with our existing business, and that integration may not be successful.

The development of international operations will cause us to face additional risks.

      We are in discussions with several companies in non-U.S. markets, in particular in Japan and other parts of Asia, to form manufacturing, product development joint ventures and other marketing or consulting arrangements.

      We believe that non-U.S. markets could provide a substantial source of revenue in the future. However, there are certain risks applicable to doing business in foreign markets that are not applicable to companies doing business solely in the U.S. For example, we will be subject to risks related to fluctuations in the exchange rate between the U.S. dollar and foreign currencies in countries in which we do business. In addition, we will be subject to the additional laws and regulations of these foreign jurisdictions, some of which might be substantially more restrictive than similar U.S. ones. Foreign jurisdictions may also provide less patent protection than is available in the U.S., and we may be less able to protect our intellectual property from misappropriation and infringement in these foreign markets.

Legal Risks

Our limited ability to protect our intellectual property rights could impair our ability to compete effectively.

      Our success will depend in part on our ability to obtain patent protection for our products and processes, to preserve our trade secrets to prevent others from infringing on our patents or property rights and to operate without infringing upon the patent or other proprietary rights of others and without breaching or otherwise

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      Participation in litigation or patent office proceedings in the U.S. or other countries, which could result in substantial cost to and diversion of effort by us, may be necessary to enforce patents issued or licensed to us, to defend us against infringement claims made by others or to determine the ownership, scope or validity of the proprietary rights of our company and others. The parties to such litigation may be larger, better capitalized than us and better able to support the cost of litigation. An adverse outcome in any such proceedings could subject us to significant liabilities to third parties, require us to seek licenses from third parties and/or require us to cease using certain technologies, any of which could have a material adverse effect on our business, operating results and financial condition.

We filed suit against two of our competitors for infringement of one of our patents which will continue to be costly and may divert management.

      In July 2001, we filed suit against Conductus, Inc. and Superconductor Technologies, Inc. for infringement of our recently issued U.S. Patent No. 6,263,215, entitled “Cryoelectronically Cooled Receiver Front End for Mobile Radio Systems”. This suit alleges that all of Conductus’ and Superconductor Technologies’ base station front-end systems containing cryogenically cooled superconducting filters infringe our patent. We are seeking a permanent injunction restraining Conductus and Superconductor Technologies from marketing, selling or manufacturing these products, as well as triple damages and attorneys’ fees. Conductus and Superconductor Technologies initially denied our allegations and asked the court to declare our patent invalid and not infringed. On October 3, 2001, Conductus and Superconductor Technologies each filed motions to amend their respective answers and counterclaims to our complaint in order to seek to add a defense of inequitable conduct and a counterclaim for a declaration of unenforceability of our patent due to inequitable conduct. Conductus and Superconductor Technologies also filed to add additional federal and state law counterclaims of unfair competition. Conductus and Superconductor Technologies are seeking both compensatory and punitive damages as well as attorneys’ fees and costs. On November 15, 2001, we also filed suit in the United States District Court for the Western District of Oklahoma against Dobson Communications Corporation, Dobson Operating Co., L.L.C. and Dobson Cellular Systems, Inc. for infringement of our patent. We intend to continue to prosecute our claims vigorously against Conductus, Superconductor Technologies and Dobson and defend against counterclaims in this litigation. Although we believe the claims are without merit, there is no assurance that we will prevail. In addition, this case, regardless of its outcome, will continue to result in significant expenses in prosecuting the lawsuit. Moreover, although we believe this lawsuit is in the business interests of the company and its stockholders, this lawsuit may divert the efforts and attention of our management team from normal business operations.

We depend on certain intellectual property rights associated with HTS materials and RF filter products for our business.

      One of our patents is jointly owned with Lucent Technologies, Inc. We believe that, since the discovery of HTS materials in 1986, a large number of patent applications have been filed worldwide, and many patents have been granted in the U.S. relating to HTS materials. The claims in those patents often appear to overlap and there have been interference proceedings pending in the United States Patent and Trademark Office (not currently involving us) regarding rights to inventions claimed in some of the HTS materials patent applications. We also believe there are a large number of patents and patent applications covering RF filter products and other products and technologies that we are pursuing. Accordingly, the patent positions of

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      Older patent applications in the U.S. are currently maintained in secrecy until patents are issued. In foreign countries and for newer U.S. patent applications, this secrecy is maintained for a period of time after filing. Accordingly, publication of discoveries in the scientific literature or of patents themselves or laying open of patent applications in foreign countries or for newer U.S. patent applications tends to lag behind actual discoveries and filing of related patent applications. Due to this factor and the large number of patents and patent applications related to HTS materials, RF technologies and other products and technologies that we are pursuing, comprehensive patent searches and analyses associated with HTS materials, RF technologies and other products and technologies that we are pursuing are often impractical or not cost-effective. As a result, our patent and literature searches cannot fully evaluate the patentability of the claims in our patent applications or whether materials or processes used by us for our planned products infringe or will infringe upon existing technologies described in U.S. patents or may infringe upon claims in patent applications made available in the future. Because of the volume of patents issued and patent applications filed relating to HTS materials, RF technologies and other products and technologies that we are pursuing, we believe there is a significant risk that current and potential competitors and other third parties have filed or will file patent applications for, or have obtained or will obtain, patents or other proprietary rights relating to materials, products or processes used or proposed to be used by us. In any such case, to avoid infringement, we would have to either license such technologies or design around any such patents. We may be unable to obtain licenses to such technologies or, if obtainable, such licenses may not be available on terms acceptable to us or we may be unable to successfully design around these third party patents.

      We believe that a number of patent applications, including applications filed by International Business Machines Corporation, Lucent Technologies, Inc., and other potential competitors of us are pending that may cover the useful compositions and uses of certain HTS materials including yttrium barium copper oxide, the principal HTS material used by us in some of our present and currently proposed products. Therefore, there is a substantial risk that one or more third parties may be granted patents covering yttrium barium copper oxide and other HTS materials and their uses, in which case we could not use these materials without an appropriate license. As with other patents, we have no assurance that we will be able to obtain licenses to any such patents for yttrium barium copper oxide or other HTS materials, processes for manufacturing those materials, or their uses or that such licenses would be available on commercially reasonable terms. Any of these problems would have a material adverse effect on our business, operating results and financial condition.

Government regulation could adversely affect our business.

      Although we believe that our wireless telecommunications products themselves would not be subject to licensing by, or approval requirements of, the Federal Communications Commission, the operation of base stations is subject to FCC licensing and the radio equipment into which our products would be incorporated is subject to FCC approval. Base stations and the equipment marketed for use therein must meet specified technical standards. Our ability to sell our wireless telecommunications products is dependent on the ability of wireless base station equipment manufacturers and wireless base station operators to obtain and retain the necessary FCC approvals and licenses. In order for them to be acceptable to base station equipment manufacturers and to base station operators, the characteristics, quality and reliability of our base station products must enable them to meet FCC technical standards. We may be subject to similar regulations of the Canadian federal and provincial governments. Any failure to meet such standards or delays by base station equipment manufacturers and wireless base station operators in obtaining the necessary approvals or licenses

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      We are subject to governmental labor, safety and discrimination laws and regulations with substantial penalties for violations. In addition, employees and others may bring suit against us for perceived violations of such laws and regulations. Defense against such complaints could result in significant legal costs for us. Although we endeavor to comply with all applicable laws and regulations, we may be the subject of complaints in the future, which could have a material adverse effect on our business, operating results and financial condition.

We are subject to state and federal environmental regulations for treatment of hazardous waste.

      We use certain hazardous materials in our research, development and manufacturing operations. As a result, we are subject to stringent federal, state and local regulations governing the storage, use and disposal of such materials. It is possible that current or future laws and regulations could require us to make substantial expenditures for preventive or remedial action, reduction of chemical exposure, or waste treatment or disposal. We believe we are in material compliance with all environmental regulations and to date we have not had to incur significant expenditures for preventive or remedial action with respect to the use of hazardous materials. However, our operations, business or assets could be materially and adversely affected by the interpretation and enforcement of current or future environmental laws and regulations. In addition, although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, there is the risk of accidental contamination or injury from these materials. In the event of an accident, we could be held liable for any damages that result. Furthermore, the use and disposal of hazardous materials involves the risk that we could incur substantial expenditures for such preventive or remedial actions. The liability in the event of an accident or the costs of such actions could exceed our resources or otherwise have a material adverse effect on our business, results of operations and financial condition. We carry property and workman’s compensation insurances in full force and effect through nationally known carriers which include pollution cleanup or removal and medical claims for industrial incidents.

RISKS RELATED TO THIS OFFERING

We may raise less than the entire $20 million in this rights offering which may restrict our use of the net proceeds.

      There is no minimum amount required for the closing of this rights offering. Net proceeds will be available to us even if only a fraction of our stockholders exercise their basic subscription and oversubscription rights. If substantially less than all basic subscription and/or oversubscription rights are exercised, we may have to repay our existing notes in the aggregate amount of $9.425 million in order to prevent an event of default, which may eliminate or severely limit the availability of the net proceeds for the operation of our business.

Exercising your subscription rights may obligate you to purchase shares at a price higher than the market price of our common stock.

      The public trading market price of our common stock may decline before the subscription rights expire. If you exercise your subscription rights and the then-public trading price of the common stock is already, or decreases, below $0.50, then you will have committed to buy shares of common stock at a price above the prevailing market price. Following the exercise of your subscription rights, you may not be able to sell your shares of common stock at a price equal to or greater than the subscription price. In addition, you may not be able to sell the shares of our common stock that you purchase in this rights offering until the certificates representing the shares of our common stock you purchased are delivered, which will generally be as soon as

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You may not revoke your exercise of rights; we may cancel the rights offering.

      Once you exercise your subscription rights, you may not revoke the exercise, even if less than all of the shares that we are offering are actually purchased. We may withdraw or terminate this rights offering in our discretion for any reason. If we elect to withdraw or terminate the rights offering, neither we nor the subscription agent will have any obligation with respect to the subscription rights except to return, without interest or penalty, any subscription payments.

If you do not exercise your rights, your relative ownership interest in us will be diluted.

      If you choose not to exercise your subscription rights in full, your relative ownership interest in our company will be diluted. In addition, because the subscription price represents a discount from the prevailing market price of our common stock, stockholders who choose not to exercise their subscription rights could experience dilution of their economic interest in our company.

Participation in the rights offering by our significant stockholders.

      Certain of our principal stockholders have separately indicated to us that they are supportive of this rights offering and that they currently intend to fully participate in the offering, including their oversubscription privilege, if available. We have received such indication from stockholders that beneficially own approximately [66%] of the outstanding common stock. The intention to participate of each of these stockholders depends in part on the general reception that this rights offering receives and they may choose to reduce or eliminate their participation if the rights offering is not generally well received. Moreover, these stockholders are under no legal obligation to participate in this rights offering, and they could determine not to participate or to exercise their basic subscription privilege only or their basic subscription privilege only in part. If these stockholders do not participate by exercising their basic and oversubscription privileges in full, we may not raise the funds that we expect from this rights offering, and the funds that we raise may be insufficient to satisfy the cash needs that we identified in this prospectus.

      We issued notes to two of our principal stockholders Elliott Associates, L.P. and Alexander Finance, L.P., in November 2001. In the event that either of these principal stockholder provides financing to us in an equity or equity-linked offering, we are obligated to repay their respective note(s) in an amount equal to their participation in such equity or equity-linked offering not to exceed the principal and accrued interest then due under the note. In addition, it is an “Event of Default” under the notes if we do not raise at least $15 million in a rights offering before March 5, 2002. We will ensure that our stockholders rights agreement allows each of our principal stockholders to participate in this offering without becoming an “Acquiring Person” as defined by the agreement and triggering our “poison pill” provisions.

      We have filed registration statements to register the resale of the shares currently held by each of the principal stockholders. In addition, we have agreed to register the resale of any additional shares of common stock purchased by our affiliates, including each of our principal stockholders, in connection with this rights offering.

The subscription price is not an indication of the value of our company.

      The $0.50 subscription price was set by our Board after considering a variety of factors discussed at page 26, “Determination of the Subscription Price,” one of which is to encourage all current stockholders to exercise their subscription rights, thereby raising capital without diluting the ownership interests of current stockholders. The price, however, does not necessarily bear any relationship to the book value of our assets, past operations, cash flows, earnings, financial condition or any other established criteria for value. As a result, you should not consider the $0.50 per share subscription price as an indication of the current value of us or our common stock.

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You will incur immediate and substantial net tangible asset dilution.

      If you exercise your rights to purchase shares of our common stock, you will incur immediate and substantial dilution between the net tangible book value per share of common stock after the offering and the $0.50 subscription price.

RISKS RELATED TO OUR COMMON STOCK

Our common stock was de-listed from the NASDAQ National Market in June 1999 which may make it more difficult for you to sell your shares and may cause the market price of our common stock to decrease.

      Our common stock was de-listed from trading on the NASDAQ National Market in June 1999 due to our inability, at that time, to meet the net tangible assets requirement for continued listing. Our common stock is now traded in the over-the-counter market and quoted on the over-the-counter bulletin board. There is no guarantee that the bulletin board will provide the same liquidity for the trading of securities as the NASDAQ National Market in the future. We intend to apply for listing on The American Stock Exchange when we are reasonably confident that our application would be approved. However, there is no guarantee that our application for listing will be approved.

Our stock price may be volatile and your investment in our common stock could suffer a decline in value.

      The market price of our common stock, like that of many other high-technology companies, has fluctuated significantly and is likely to continue to fluctuate in the future. Since January 1, 1999 and through December 31, 2001, the price of our common stock has ranged from a low of $0.34 per share to a high of $39.00 per share. Announcements by us or others regarding the receipt of customer orders, quarterly variations in operating results, acquisitions or divestitures, additional equity or debt financings, results of customer field trials, scientific discoveries, technological innovations, litigation, product developments, patent or proprietary rights, government regulation and general market conditions may have a significant impact on the market price of our common stock. In addition, fluctuations in the price of our common stock could affect our ability to have our common stock accepted for listing on a securities market or exchange.

Exercise of outstanding options and sales by us of additional shares pursuant to currently filed registration statements will dilute existing stockholders and could decrease the market price of our common stock.

      As of September 30, 2001, we had outstanding options to purchase 7,610,697 shares of our common stock at a weighted average exercise price of $1.81 per share (5,487,938 of which have not yet vested) issued to employees, directors and consultants pursuant to our 1993 Stock Option Plan, the merger agreement with Spectral Solutions, and individual agreements with our management and directors. In order to attract and retain key personnel, we may issue additional securities, including stock options, in connection with our employee benefit plans, or may lower the price of existing stock options.

      On January 12, 2001, we filed a registration statement on Form S-3 for the sale of up to $50 million shares of our common stock, preferred stock or warrants in a “universal shelf” offering. During March 2001, we entered into an agreement with Paul Revere Capital Partners, Ltd., and amended such agreement in May 2001, whereby Paul Revere Capital commits to acquire up to $20 million in shares of our common stock over the next 24 months upon demand by us, subject to the conditions contained in the agreement. Pursuant to this facility, we may, at our discretion, sell shares of our common stock to Paul Revere Capital Partners at a discount to the market price of 94% of the average weighted volume price over a 22 day measurement period. Each draw down is limited to the lesser of $4 million or 20% of the trading volume over a specified period of time. We will also issue a warrant to Paul Revere Capital Partners to purchase a number of shares equal to 0.5% of the shares issued in each draw down. We have also agreed to pay a placement agent a fee equal to 4% of each draw down and issue a warrant to the placement agent to purchase a number of shares equal to 0.5% of the shares issued in each draw down. Subsequent to entering into this agreement, the SEC issued an interpretive release that requires us to amend the registration statement to include the purchase agreement

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      The exercise of options for common stock and the issuance of additional shares of our common stock and/or rights to purchase common stock at prices below market value will be dilutive to existing stockholders and may have an adverse effect on the market price of our common stock.

The concentration of ownership of our stock could limit the ability of stockholders to influence the outcome of director elections and other transactions submitted for a vote of our stockholders

      Our officers and directors and their affiliates together control approximately 67% of our outstanding voting power. Consequently, these stockholders, if they act together, would be able to exert significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change of control of our company, even when a change may be in the best interests of our stockholders. The interests of these stockholders may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into transactions or agreements that we would not otherwise consider.

We have in place several anti-takeover measures that could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.

      We have certain arrangements which may be deemed to have a potential “anti-takeover” effect in that such provisions may delay, defer or prevent a change of control of our company. In February 1996, our Board of Directors adopted a stockholders rights plan which we will ensure allows each of our principal stockholders to participate in this offering without becoming an “Acquiring Person” as defined by the rights plan and triggering the “poison pill” provisions. In addition, our Certificate of Incorporation and By-Laws provide that (i) stockholder action may be taken only at stockholders meetings; (ii) the Board of Directors has authority to issue series of our preferred stock with such voting rights and other powers as the Board of Directors may determine; (iii) prior specified notice must be given by a stockholder making nominations to the Board of Directors or raising business matters at stockholders meetings; and (iv) the Board of Directors is divided into three classes, each serving for staggered three-year terms. The effect of the rights plan and the anti-takeover provisions in our charter documents may be to deter business combination transactions not approved by our Board of Directors, including acquisitions that may offer a premium over market price to some or all of our stockholders.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Because we want to provide you with more meaningful and useful information, this prospectus contains, and incorporates by reference, certain forward-looking statements that reflect our current expectations regarding our future results of operations, performance and achievements. We have tried, wherever possible, to identify these forward-looking statements by using words such as “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends” and similar expressions. These statements reflect our current beliefs and are based on information currently available to us. Accordingly, these statements are subject to certain risks, uncertainties and contingencies, including the factors set forth under the caption “Risk Factors,” which could cause our actual results, performance or achievements for 2001 and beyond to differ materially from those expressed in, or implied by, any of these statements. You should not place undue reliance on any forward-looking statements. Except as otherwise required by federal securities laws, we undertake no obligation to release publicly the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.

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WHO WE ARE

      We provide a broad range of interference-control solutions for the wireless telecommunications industry. We develop, manufacture and market radio frequency “front-end” systems for wireless networks using patented and proprietary high-temperature superconductor filters, cryogenic low-noise amplifiers and adaptive notch filter technologies to monitor, suppress and eliminate out-of-band and in-band interference in wireless base stations. We believe we are the only company in the world that has proprietary products to address the wireless operator’s need to reduce or eliminate interference that come from in-band and out-of-band interference.

      We were founded in 1989 by ARCH Development Corporation, an affiliate of the University of Chicago, to commercialize superconductor technologies initially developed by Argonne National Laboratory. We were incorporated in Illinois on October 18, 1989 and reincorporated in Delaware on September 23, 1993. During 2000, we acquired Spectral Solutions, Inc. and the Adaptive Notch Filtering business of Lockheed Martin Canada Inc. On June 25, 2001, we changed our name from Illinois Superconductor Corporation to ISCO International, Inc. Our principal offices are located at 451 Kingston Court, Mount Prospect, IL 60056 and telephone number is (847) 391-9400.

RECENT DEVELOPMENTS

Siegler Litigation

      On November 6, 2001, we entered into a settlement agreement with Craig Siegler which resolved our ongoing litigation. A judgment in the amount of $6,541,254.27 was entered against us on October 4, 2001. Pursuant to the terms of the settlement agreement, we agreed to pay Mr. Siegler the reduced amount of $4.925 million in full satisfaction of the judgment and Mr. Siegler agreed to execute a general release in favor of us relating to the case. The court approved the settlement and dismissed the litigation and judgment on November 6, 2001.

Loan Financing

      On November 6, 2001, we entered into a loan agreement to borrow an aggregate original principal amount of $9.425 million from Elliott Associates, L.P. and Alexander Finance, L.P., who, together with their respective affiliates, beneficially own approximately 37% and 29% of our outstanding common stock, respectively. We used $4.925 million of the proceeds to pay the settlement to Mr. Siegler as discussed above and the remainder of the proceeds are being used for working capital and other general corporate purposes. The loans are secured by substantially all of our assets and are guaranteed by both of our wholly-owned subsidiaries, Illinois Superconductor Canada Corporation and Spectral Solutions, Inc. The loans bear interest at 14% per annum, compounded annually and are due on March 31, 2003. Each of the notes provide that the maturity date of the respective note is automatically extended to March 31, 2005 if, among other things, at least one entity participates in an equity offering we conduct and such entity purchases more than the full amount of the principal and accrued interest on its respective note.

      In addition, if a holder purchases any amount of stock in this offering an amount under the note equal to the lesser of (i) the full amount of the principal and accrued interest then outstanding or (ii) the amount paid for the stock purchased in this offering, shall become due and payable. In such a case, we will use a portion of the net proceeds to repay that amount. These notes also contain an “Event of Default” that is triggered if we do not raise at least $15 million in a rights offering before March 5, 2002. See “Use of Proceeds.”

Restructuring

      In November of 2001, we announced the consolidation of our research and development facilities in Canada and Colorado. As part of our strategic plan to streamline the company, to reduce our monthly cash burn rate and to facilitate communication and development activities, we announced that those research and development activities will be integrated into our Illinois headquarters. The Toronto facility has been responsible for the research and development of our patented ANF products. The Colorado facility had been

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Follow-On Order

      In November 2001, we announced that we received a $1.1 million follow-on order from Verizon Wireless for our ANF and HTS products for delivery during the first quarter of 2002.

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SUMMARY HISTORICAL FINANCIAL DATA

      The summary historical financial data set forth below for the nine months ended September 30, 2001 and 2000, and the related balance sheet data as of September 30, 2001, are derived from the unaudited consolidated financial statements and notes contained in our quarterly report on Form 10-Q filed November 14, 2001, which are incorporated herein by reference and, in the opinion of our management, include all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation. The summary historical financial data set forth below for each of the years in the five-year period ended December 31, 2000 are derived from our consolidated financial statements and notes for the relevant periods.

[Additional columns below]

[Continued from above table, first column(s) repeated]

Balance Sheet Data

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THE RIGHTS OFFERING

      Before exercising any subscription rights, you should read carefully the information set forth under “Risk Factors” beginning on page 5 of this prospectus.

     The Rights

      As soon as practicable after the date of this prospectus, we are distributing, at no charge, to holders of our common stock as of 5:00 p.m. (New York City time) on the record date of January 7, 2002, 0.37 of a subscription right for every share of common stock owned at that time to purchase additional shares of common stock. Each whole right entitles you to purchase one share of our common stock for the subscription price. On January 4, 2002, the last reported sales price for our common stock on the over-the-counter bulletin board was $0.74 per share.

      We will not issue fractional rights. If the number of shares of common stock you held on the record date would have resulted in your receipt of fractional rights, the number of rights issued to you will be rounded down to the nearest whole right. As a result, our stockholders that hold of record fewer than three shares as of January 7, 2002 will not be receiving rights.

     Subscription Price

      The subscription price for the basic subscription privilege is $0.50 per share, and the subscription price for the oversubscription privilege is $0.50 per share, payable in cash. All payments must be cleared on or before the expiration date.

     Basic and Oversubscription Privileges

      Basic Subscription Privilege. You are entitled to purchase one share of common stock at the subscription price for every right exercised.

      Oversubscription Privilege. If you exercise your basic subscription privilege in full, you may also subscribe for additional shares that other stockholders have not purchased under their basic subscription privilege up to a maximum number of shares equal to twice the number of shares purchased under the basic subscription privilege. If there are not enough shares available to fill all such subscriptions for additional shares, the available shares will be allocated pro rata based on the number of shares each subscriber for additional shares has purchased under the basic subscription privilege. We will not allocate to you more than the number of shares you have actually subscribed and paid for.

      You are not entitled to exercise the oversubscription privilege unless you elect to fully exercise your basic subscription privilege. For this purpose, you would only count the shares you own in your own name, and not other shares that might, for example, be jointly held with a spouse, held as a custodian for someone else, or held in an individual retirement account.

      You can elect to exercise the oversubscription privilege only at the same time you exercise your basic subscription privilege in full.

      In exercising the oversubscription privilege, you must pay the full subscription price for all the shares you are electing to purchase. If we do not allocate to you all of the shares you have subscribed for under the oversubscription privilege, we will refund by mail to you any payment you have made for shares which are not available to issue to you, as soon as practicable after completion of this rights offering. Interest will not be payable on amounts refunded.

      Banks, brokers and other nominees who exercise the oversubscription privilege on behalf of beneficial owners of shares must report certain information to LaSalle Bank and us and record certain other information received from each beneficial owner exercising rights. Generally, banks, brokers and other nominees must report (1) the number of shares held on the record date on behalf of each beneficial owner, (2) the number of rights as to which the basic subscription privilege has been exercised on behalf of each beneficial owner, (3) that each beneficial owner’s basic subscription privilege held in the same capacity has been exercised in

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      If you complete the portion of the subscription warrant to exercise the oversubscription privilege, you will be representing and certifying that you have fully exercised your basic subscription privilege as described above. You must exercise your oversubscription privilege at the same time you exercise your basic subscription privilege.

     Reason for this Rights Offering

      We are conducting this offering after exploring various alternatives for raising funds to meet our capitalization needs. We have concluded that certain other alternatives would likely not be successful in raising the desired funds on a timely enough basis. Additionally, we chose to do this rights offering over other financing alternatives in order to provide all of our stockholders with an opportunity to participate in the issue of shares of common stock on a pro rata basis. We are also conducting this offering in order to prevent triggering an “Event of Default” under three secured promissory notes in the aggregate principal amount of $9.425 million. The notes will be in default if we do not raise at least $15 million in a rights offering before March 5, 2002. We will use the net proceeds of this offering to repay these notes and for general corporate purposes, including working capital. See “Use of Proceeds.”

     No Board Recommendation to Stockholders

      Our Board of Directors does not make any recommendation to you about whether you should exercise any rights. In making the decision to exercise or not exercise your rights, you must consider your own best interests and tax consequences.

      If you choose not to exercise your subscription rights in full, your relative ownership interest of our company will be diluted. If you exercise rights, you risk investment loss on new money invested. The trading price of our common stock may decline below the subscription price. We cannot assure you that the subscription price will remain below any trading price for our common stock or that its trading price will not decline to below the subscription price during or after this rights offering. For a summary of some of the risks a new investment would entail, see “Risk Factors” beginning on page 5.

     Expiration Time and Date

      The rights may be exercised beginning as of the date of this prospectus and expire on February 8, 2002, at 5:00 p.m., New York City time. We have the option of extending the expiration date for any reason, although presently we do not intend to do so. Rights not exercised by the expiration date will be null and void.

      In order to exercise rights in a timely manner, you must assure that LaSalle Bank actually receives, prior to expiration of the rights, the properly executed and completed subscription warrant (or Form of Notice of Guaranteed Delivery), together with full payment for all shares you wish to purchase.

     No Revocation

      You are not allowed to revoke or change your exercise of rights after you send in your subscription forms and payment.

     Transferability of Rights

      The rights are not transferable and may be exercised only by the persons to whom they are issued.

     Extension, Withdrawal and Amendment

      We have the option of extending the period for exercising your rights, although we presently do not intend to do so.

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      We also reserve the right to withdraw or terminate this rights offering at any time for any reason. In the event that this offering is withdrawn or terminated, all funds received from subscriptions by rights holders will be returned. Interest will not be payable on any returned funds.

      We reserve the right to amend the terms of this rights offering. If we make an amendment that we consider significant, we will (1) mail notice of the amendment to all stockholders of record as of the record date, (2) extend the expiration date by at least ten days and (3) offer all subscribers no less than ten days to revoke any subscription already submitted. The extension of the expiration date will not, in and of itself, be treated as a significant amendment for these purposes.

     Exercise Only by Record Holders

      We are sending a subscription warrant to each record holder along with this prospectus and related instructions to evidence the rights. In order to exercise rights, you must fill out and sign the subscription warrant and timely deliver it with full payment for the shares to be purchased. Only the holders of record of our common stock as of the close of business as of the record date may exercise rights. You are a record holder for this purpose only if your name is registered as a stockholder with our transfer agent, LaSalle Bank, as of the record date.

      A depository bank, trust company or securities broker or dealer which is a record holder for more than one beneficial owner of shares may divide or consolidate subscription warrants to represent shares held as of the record date by their beneficial owners, upon proper showing to LaSalle Bank.

      If you own shares held in a brokerage, bank or other custodial or nominee account, in order to exercise your rights you must promptly send the proper instruction form to the person holding your shares. Your broker, dealer, depository or custodian bank or other person holding your shares is the record holder of your shares and will have to act on your behalf in order for you to exercise your rights. We have asked your broker, dealer or other nominee holders of our stock to contact the beneficial owners to obtain instructions concerning rights the beneficial owners it represents are entitled to exercise.

     Foreign and Unknown Addresses

      We are not mailing subscription warrants to stockholders whose addresses are outside the United States or who have an APO or FPO address. In those cases, the subscription warrants will be held by LaSalle Bank for those stockholders. To exercise their rights, these stockholders must notify LaSalle Bank prior to 11:00 a.m., New York City time, on the third trading day prior to the expiration date.

     Right to Block Exercise Due to Regulatory Issues

      We reserve the right to refuse the exercise of rights by any holder of rights who would, in our opinion, be required to obtain prior clearance or approval from any state, federal or foreign regulatory authorities for the exercise of rights or ownership of additional shares if, at the expiration date, this clearance or approval has not been obtained. We are not undertaking to pay any expenses incurred in seeking such clearance or approval.

      We are not offering or selling, or soliciting any purchase of, shares in any state or other jurisdiction in which this rights offering is not permitted. We reserve the right to delay the commencement of this rights offering in certain states or other jurisdictions if necessary to comply with local laws. However, we may elect not to offer rights to residents of any state or other jurisdiction whose law would require a change in this rights offering in order to carry out this rights offering in such state or jurisdiction.

     Procedures to Exercise Rights

      Please do not send subscription warrants or related forms to us. Please send the properly completed and executed form of subscription warrant with full payment to LaSalle Bank, the subscription agent for this rights offering.

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      You should read carefully the subscription warrant and related instructions and forms which accompany this prospectus. You should call MacKenzie Partners, the information agent for this rights offering, at the address and telephone number listed below under the caption “The Rights Offering — Questions and Assistance Concerning the Rights” promptly with any questions you may have.

      You may exercise your rights by delivering to LaSalle Bank at the address specified below and in the instructions accompanying this prospectus, on or prior to the expiration date:

  Required Forms of Payment of Subscription Price

      The subscription price for the basic subscription privilege is $0.50 per share subscribed for, and the subscription price for the oversubscription privilege is $0.50 per share, payable in cash. All payments must be cleared on or before the expiration date.

      If you exercise any rights, you must deliver to LaSalle Bank full payment in the form of:

      In order for you to timely exercise your rights, LaSalle Bank must actually receive the subscription price before the expiration date.

      Funds paid by uncertified personal check may take at least five business days to clear. Accordingly, if you pay the subscription price by means of uncertified personal check, you should make payment sufficiently in advance of the expiration date to ensure that your check actually clears and the payment is received before such date. We are not responsible for any delay in payment by you and suggest that you consider payment by means of certified or cashier’s check, money order or wire transfer of funds.

  Delivery of Subscription Warrant and Other Documents

      All subscription warrants, payments of the subscription price, nominee holder certifications, notices of guaranteed delivery and DTC participant oversubscription exercise forms, to the extent applicable to your exercise of rights, must be delivered to LaSalle Bank as follows:

      Eligible institutions may deliver “Notice of Guaranteed Delivery” forms by facsimile transmission. LaSalle Bank’s facsimile number is (312) 904-2236. You should confirm receipt of all facsimiles by calling (312) 904-2458.

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  Special Procedure under “Notice of Guaranteed Delivery” Form

      If you wish to exercise rights but cannot ensure that LaSalle Bank will actually receive the executed subscription warrant before the expiration date, you may alternatively exercise rights by causing all of the following to occur within the time prescribed:

      A Notice of Guaranteed Delivery may be delivered to LaSalle Bank in the same manner as subscription warrants at the addresses set forth above under the caption “The Rights Offering — Delivery of Subscription Warrant” or by telegram or facsimile transmission.

      Additional copies of the form of Notice of Guaranteed Delivery are available upon request from MacKenzie Partners, whose address and telephone number are set forth below under the caption “Questions and Assistance Concerning the Rights.”

  Incomplete Forms; Insufficient Payment

      If you do not indicate on your subscription warrant the number of rights being exercised, or do not forward sufficient payment for the number of rights that you indicate are being exercised, then we will accept the subscription forms and payment only for the maximum number of rights that may be exercised based on the actual payment delivered. We will make this determination as follows: (1) you will be deemed to have exercised your basic subscription privilege to the full extent of the payment received, and (2) if any funds remain, you will be deemed to have exercised your oversubscription privilege to the extent of the remaining funds. We will return any payment not applied to the purchase of shares under this rights offering as soon as practicable by mail. Interest will not be payable on amounts refunded.

  Prohibition on Fractional Shares

      Each whole right entitles you to purchase one share of common stock at the subscription price per share. We will accept any inadvertent subscription indicating a purchase of fractional shares by rounding down to the nearest whole share and, as soon as practicable, refunding without interest any payment received for a fractional share.

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  Instructions to Nominee Holders

      If you are a broker, trustee or depository for securities or other nominee holder for beneficial owners of our common stock, we are requesting that you contact such beneficial owners as soon as possible to obtain instructions and related certifications concerning their rights. Our request to you is further explained in the suggested form of letter of instructions from nominee holders to beneficial owners accompanying this prospectus.

      To the extent so instructed, nominee holders should complete appropriate subscription warrants on behalf of beneficial owners and, in the case of any exercise of the oversubscription privilege, the related form of “Nominee Holder Certification,” and submit them on a timely basis to LaSalle Bank with the proper payment.

  Risk of Loss on Delivery of Subscription Warrant Forms and Payments

      Each holder of rights bears all risk of the method of delivery to LaSalle Bank of subscription warrants and payments of the subscription price.

      If subscription warrants and payments are sent by mail, you are urged to send these by registered mail, properly insured, with return receipt requested, and to allow a sufficient number of days to ensure delivery to LaSalle Bank and clearance of payment prior to the expiration date.

      Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier’s check, money order or wire transfer of funds.

  Procedures for DTC Participants

      We expect that your exercise of your basic subscription privilege and oversubscription privilege may be made through the facilities of the Depository Trust Company (referred to herein as DTC). If your rights are held of record through DTC, you may exercise your subscription privileges by instructing DTC to transfer your rights from the broker’s account to the account of the subscription agent, together with certification as to the aggregate number of rights you are exercising and the number of shares of our common stock you are subscribing for under each of the basic subscription privilege and oversubscription privilege, and your subscription price payment for each share you subscribed for pursuant to your rights.

  How Procedural and Other Questions Are Resolved

      We are entitled to resolve all questions concerning the timeliness, validity, form and eligibility of any exercise of rights. Our determination of such questions will be final and binding. We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right because of any defect or irregularity.

      Subscription warrants will not be considered received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. Neither we nor LaSalle Bank have any duty to give notification of any defect or irregularity in connection with the submission of subscription warrants or any other required document. Neither we nor LaSalle Bank will incur any liability for failure to give such notification.

      We reserve the right to reject any exercise of rights if the exercise does not comply with the terms of this rights offering or is not in proper form or if the exercise of rights would be unlawful or materially burdensome.

  Issuance of Stock Certificates

      Stock certificates for shares purchased in this rights offering will be issued as soon as practicable after the expiration date. LaSalle Bank will deliver subscription payments to us only after consummation of this rights offering and the issuance of stock certificates to our stockholders that exercised rights. Unless you instruct otherwise in your subscription warrant form, shares purchased by the exercise of rights will be registered in the name of the person exercising the rights.

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     Questions and Assistance Concerning the Rights

      You should direct any questions, requests for assistance concerning the rights or requests for additional copies of this prospectus, forms of instructions or the Notice of Guaranteed Delivery to:

MacKenzie Partners, Inc.

USE OF PROCEEDS

      Our gross proceeds from the rights offering will depend on the number of shares that are purchased. If we sell all 40,000,000 shares which may be purchased upon exercise of the rights offered by this prospectus, then we will receive proceeds of $20,000,000, before deducting expenses payable by us, estimated to be $150,000. Elliott Associates and Alexander Finance have each separately indicated that they support the offering and, subject in part on the general reception that this offering receives, that they each intend to fully participate in the offering including their oversubscription privilege, if available. If Elliott Associates or Alexander Finance participate in the rights offering, we are obligated under their respective promissory notes to repay their notes in an amount equal to the lesser of (i) the full amount of principal and accrued interest then outstanding or (ii) the amount in which Elliott Associates or Alexander Finance exercises its subscription rights in this rights offering. For example, if only Elliott Associates participates in the rights offering and purchases $2,000,000 (less than their full subscription right of approximately $3.52 million), then we are required to repay Elliott Associates’ note in the amount of $2,000,000. If both Elliott Associates and Alexander Finance participate in the rights offering and purchase at least $9.425 million, then we are required to repay their notes in full. In addition, under the notes, if we do not raise at least $15 million in net proceeds from a rights offering by March 5, 2002, then the notes will be in default.

      We will use the net proceeds in this offering to repay the Elliott Associates and Alexander Finance notes, to the extent we are so obligated. The notes were issued in part to provide funds to settle certain litigation. Any proceeds remaining after making these prepayments will be added to our general funds and used for general corporate purposes, which may include, but are not limited to, capital contributions to our subsidiaries to support such subsidiaries’ continuing operations, working capital, capital expenditures, debt repayment and acquisitions.

DETERMINATION OF SUBSCRIPTION PRICE

      Our Board of Directors determined the offering price of the basic subscription privilege and the oversubscription privilege after considering a variety of factors, including:

      The $0.50 per share price should not be considered an indication of the actual value of us or of our common stock. This discount is offered as an incentive for our current stockholders to participate in this

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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

      Our common stock is traded on the over-the-counter bulletin board under the symbol “ISCO.OB.” On January 4, 2002, there were approximately 338 record holders of the common stock and the price of our common stock on the over-the-counter bulletin board was $0.74. The following table sets forth the high and low closing prices of our common stock on the over-the-counter bulletin board for the periods indicated.

      We have never paid cash dividends on our common stock and we do not expect to pay any dividends on our common stock in the foreseeable future. We intend to retain earnings for use in the operation and expansion of our business.

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CAPITALIZATION

      The following table sets forth our capitalization:

      The table excludes the following shares:

      You should read this table together with the financial statements and the notes thereto incorporated by reference in the accompanying prospectus.

DILUTION

      Purchasers of the common stock offered by hereby will experience an immediate dilution in the net tangible book value of their common stock from the basic subscription and oversubscription offering price. The net tangible book value of our common stock as of September 30, 2001 was $486,000 or $0.005 per share. Net tangible book value per share of our common stock is equal to our net tangible assets (tangible assets less total liabilities) divided by the number of shares of common stock issued and outstanding as of September 30, 2001.

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      Dilution per share represents the difference between the subscription offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after giving effect to this offering. After reflecting the assumed sale of 40,000,000 shares of common stock offered by us hereby at the subscription price of $0.50 per share, less estimated offering expenses, our pro forma net tangible book value per share of our common stock as of September 30, 2001 would have been $20.3 million or $0.137 per share. The change represents an immediate increase in net tangible book value per share of our common stock of $0.132 per share to existing stockholders and an immediate dilution of $0.363 per share to new investors purchasing the shares of common stock in this offering. The following table illustrates this per share dilution:

      The table above assumes no further exercise of outstanding stock options or warrants or conversion of outstanding convertible subordinated notes and excludes:

     General

      Our authorized capital stock consists of 250,000,000 shares of common stock and 300,000 shares of preferred stock. As of November 30, 2001, there were 107,905,231 shares of our common stock and no shares of our preferred stock outstanding.

     Common Stock

      Holders of our common stock are entitled to one vote per share on all matters submitted to a vote of stockholders.

      Subject to the rights of holders of any outstanding shares of our preferred stock, the holders of outstanding shares of our common stock will be entitled to the dividends and other distributions as may be declared from time to time by our Board of Directors from legally available funds. Holders of our common stock do not have preemptive, subscription, redemption or conversion rights. Subject to the rights of holders of any shares of our outstanding preferred stock, upon our liquidation, dissolution or winding up and after payment of all prior claims, the holders of shares of our common stock outstanding at that time will be entitled to receive pro rata all of our assets. All shares of our common stock currently outstanding are, and all shares of our common stock offered in this offering will be, fully paid and nonassessable.

     Preferred Stock

      Our Board of Directors, without further stockholder approval, may issue our preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of our preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our Board of Directors may authorize the issuance of our preferred stock which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations and restrictions, if any, upon the payment of dividends on our common stock to be effective while any shares of our preferred stock are outstanding. Our Board of Directors, without stockholder approval, can also issue our preferred stock with voting and conversion rights which could adversely affect the voting power of the

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     Stockholders Rights Plan

      In February 1996, our Board of Directors adopted a stockholders rights plan. In connection with the adoption of the rights plan, our Board of Directors created one series of preferred stock, consisting of 10,000 shares of series A junior participating preferred stock. Each share of the series A preferred, when and if issued, entitles the holder thereof to receive dividends equal to 1,000 times the dividends per share declared with respect to our common stock. Holders of the series A preferred are entitled to exercise 1,000 votes per share on all matters submitted to a vote of stockholders and, except as otherwise required by law, vote together with the holders of our common stock as a single class. In the event of liquidation, such holders would receive a preference of 1,000 times the aggregate amount to be distributed per share to the holders of our common stock. In general, each share of the series A preferred is intended to have a value and voting rights equal to 1,000 shares of our common stock, and appropriate anti-dilutive adjustments will be made in accordance with the terms of such Series A Preferred in the event of certain changes in our common stock.

      Pursuant to the rights plan, a series A right is associated with, and trades with, each share of our common stock outstanding. The record date for distribution of such series A rights was February 22, 1996 and, for so long as the series A rights are associated with our common stock, each new share of common stock issued by us will include one series A right.

      Each series A right will entitle its holder to purchase one-thousandth of a share of series A preferred for $200 (subject to adjustment). The series A rights are not exercisable until the earlier of (i) ten days after any person or group becomes the beneficial owner of 15% or more of our outstanding common stock or (ii) 10 business days (unless extended by our Board of Directors) after the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of our common stock. This person who acquires 15% or more of our common stock is referred to as an acquiring person in the rights plan. We will ensure that the definition of an acquiring person in the rights agreement allows each of the principal stockholders to invest in this rights offering and prevent each of the principal stockholders from becoming, in certain limited circumstances, an acquiring person on account of common stock acquired directly from the Company.

      If any person or group acquires 15% or more of our common stock outstanding, each holder of a series A right (except the acquiring party) has the right to receive, upon exercise, (i) shares of our common stock having a market value of two times the exercise price of the series A right and (ii) one series B right. Our Board of Directors has the option, after the date upon which a person acquires 15% or more of our common stock but before there has been a 50% acquisition of us, to exchange both (i) one share of our common stock (or one-thousandth of a share of preferred stock) and (ii) one series B right, for each series A right (other than series A rights held by an acquiring party). If, after the series A rights become exercisable, we are involved in a merger or other business combination, or if we sell or transfer more than 50% of our assets or earning power, or if an acquiring party engages in certain “self-dealing” transactions with us, each series A right and series B right then outstanding (other than rights held by an acquiring party) will be exercisable for common stock of the other party to such transaction having a market value of two times the exercise price of the right. We have the right to redeem the series A rights for $.01 per series A right prior to the date upon which a person acquires 15% or more of our common stock. The series B rights, once issued, are not redeemable. The rights expire on February 9, 2006.

      The rights have certain anti-takeover effects. The rights should not interfere with any merger or business combination approved by our Board of Directors since the series A rights may be redeemed by us prior to the time that a person or group has acquired beneficial ownership of 15% or more of our common stock. However, by causing substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors, the rights may interfere with certain acquisitions, including acquisitions that may offer a premium over market price to some or all of our stockholders. The rights are not intended to prevent an acquisition of us on terms that are favorable and fair to all stockholders.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

      The following is a summary of the material United States federal income tax consequences of this offering to the holders of our common stock upon the distribution of rights and to the holders of the rights upon their exercise. This summary is based on provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis.

      This summary is limited to our stockholders who have held our common stock, and will hold the rights and any shares acquired upon the exercise of rights, as “capital assets” within the meaning of section 1221 of the Code. This summary does not address all of the tax consequences that may be relevant to particular holders in light of their personal circumstances, or to holders who are subject to special rules (such as banks and other financial institutions, broker-dealers, real estate investment trusts, regulated investment companies, insurance companies, tax-exempt organizations and non-U.S. individuals or entities). In addition, this summary does not include any description of the tax laws of any state, local or non-U.S. government that may be applicable to a particular holder.

      Holders are urged to consult their own tax advisors with respect to the particular U.S. federal income and estate tax consequences to them of this offering, as well as the tax consequences under state, local, non-U.S. and other tax laws and the possible effects of changes in tax laws.

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PLAN OF DISTRIBUTION

      We are offering shares of our common stock directly to you pursuant to this rights offering. We have not employed any brokers, dealers or underwriters in connection with the solicitation or exercise of subscription privileges in this rights offering and no commissions, fees or discounts will be paid in connection with it. Certain of our officers and other employees may solicit responses from you, but such officers and other employees will not receive any commissions or compensation for such services other than their normal employment compensation.

      We will pay the fees and expenses of LaSalle Bank, as subscription agent, and MacKenzie Partners, as information agent, and also have agreed to indemnify the subscription agent and the information agent from any liability they may incur in connection with this rights offering.

      On or about January 11, 2002, we will distribute the rights and copies of this prospectus to the holder of record of our common stock on the record date. If you wish to exercise your rights and subscribe for shares of our common stock, you should follow the procedures described under “The Rights Offering — Procedures to Exercise Rights.” The subscription rights are non-transferable.

      Shares of our common stock received through the exercise of subscription rights will be traded on the over-the-counter market under the symbol “ISCO” as our currently outstanding shares of common stock now trade.

LEGAL MATTERS

      The validity of the issuance of the shares of our common stock offered by this prospectus will be passed upon for us by Pepper Hamilton LLP, Philadelphia, Pennsylvania.

EXPERTS

      Our annual financial statements incorporated into this prospectus by reference to our annual report on Form 10-K/ A for the fiscal year ended December 31, 2000 have been audited by Grant Thornton LLP, independent auditors, and at December 31, 1999, and for each of the two years in the period ended December 31, 1999, by Ernst & Young LLP, independent auditors, as set forth in their respective reports included therein and incorporated herein by reference. Such financial statements are incorporated by reference herein in reliance upon such reports given on the authority of such firms as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

      We are subject to the information requirements of the Securities Exchange Act of 1934, as amended and file reports, proxy statements and other information with the SEC. You may read and copy such reports, proxy statements and other information, including the registration statements and all of their exhibits, at the following SEC public reference rooms:

      You may obtain information on the operation of the SEC public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. Our SEC filings, including the registration statement of which this prospectus forms a part and the documents incorporated by reference that are listed below, are also available from the SEC’s Web site at http://www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically.

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      The SEC allows us to “incorporate by reference” into this prospectus certain information that we file with it. This means that we can disclose important information to you by referring you to another document that we filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information in this prospectus. You should read the information incorporated by reference because it is an important part of this prospectus.

      We incorporate by reference the following documents that we previously filed with the SEC pursuant to the Exchange Act and any future filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act:

      The documents incorporated by reference in this prospectus that are not delivered with this prospectus may be obtained from us without charge. You may obtain these documents incorporated by reference in this prospectus by telephoning us at (847) 391-9400 or writing us at the following address:

Corporate Secretary

Our Web site is located at http://www.iscointl.com. Information contained in our Web site is not a part of this prospectus.

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$20,000,000

Rights Offering of 40,000,000 Shares

January, 2002

      This prospectus only provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that contains specific information about the terms of those securities. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information.”

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  Other Expenses of Issuance and Distribution

      The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities offered hereby. All amounts are estimated except the SEC registration fee.

Item 15.  Indemnification of Directors and Officers

      Article 9 of our Certificate of Incorporation provides that we shall indemnify our directors to the full extent permitted by the General Corporation Law of the State of Delaware and may indemnify our officers and employees to such extent, except that we shall not be obligated to indemnify any such person (1) with respect to proceedings, claims or actions initiated or brought voluntarily by any such person and not by way of defense, or (2) for any amounts paid in settlement of an action indemnified against by us without our prior written consent. We have entered into indemnity agreements with each of our directors and officers. These agreements may require us, among other things, to indemnify such directors and officers against certain liabilities that may arise by reason of their status or service as directors or officers, as the case may be, to advance expenses to them as they are incurred, provided that they undertake to repay the amount advanced if it is ultimately determined by a court that they are not entitled to indemnification and to obtain directors’ and officers’ liability insurance if available on reasonable terms.

      In addition, Article 8 of our Certificate of Incorporation provides that a director of ours shall not be personally liable to us or our stockholders for monetary damages for breach of his or her fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to us or our stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for willful or negligent conduct in paying dividends or repurchasing stock out of other than lawfully available funds or (iv) for any transaction from which the director derives an improper personal benefit.

      Reference is made to Section 145 of the General Corporation Law of the State of Delaware which provides for indemnification of directors and officers in certain circumstances.

      We have obtained a directors’ and officers’ liability insurance policy which entitles us to be reimbursed for certain indemnity payments we are required or permitted to make to our directors and officers.

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Item 16.     List of Exhibits

      The exhibits filed as part of this registration statement are as follows:

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      The undersigned registrant hereby undertakes:

      The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, ISCO International, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Mt. Prospect, Illinois on January 7, 2002.

      Pursuant to the requirements of the Securities Exchange Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities listed.

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EXHIBIT INDEX