ISOT Isotec (MM)

Item 2.03		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant .

     As previously reported, on May 29, 2007, IsoTis, Inc., a Delaware corporation (the “ Company ”), IsoTis OrthoBiologics, Inc., a Washington corporation and wholly-owned subsidiary of the Company (together with the Company, the “ Borrowers ”), Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., individually as a Lender, and as Administrative Agent, Sole Lead Arranger and Sole Bookrunner (“ Merrill Lynch ”) and Silicon Valley Bank, as Lender (“ SVB ,” and together with the Borrowers and Merrill Lynch, the “ Parties ”) entered into a Credit and Security Agreement (the “ Credit Agreement ”), which provided for an aggregate $20.0 million commitment to the Borrowers. The Credit Agreement was first amended by a letter agreement dated as of August 30, 2007.

     On October 19, 2007, the Parties executed a second letter agreement amending the Credit Agreement (the “ Second Amendment ”) pursuant to which the deadline by which the Borrowers were required to raise an additional $20.0 million in funding was extended from October 31, 2007 to November 30, 2007. The Borrowers agreed to pay Merrill Lynch (on behalf of all the lenders) $50,000 as consideration for its agreement to extend the deadline.

     A copy of the Second Amendment is attached hereto as Exhibit 10.1 and the foregoing summary is qualified in its entirety by reference to the Second Amendment.

Item 9.01		Financial Statements and Exhibits .

(d) Exhibits .