Isonics Corporation Closes $16 Million Financing; Portion of Proceeds to Repay Existing Indebtedness and to Grow Semiconductor and Homeland Security Businesses.

GOLDEN, Colo. -- Isonics Corporation (NASDAQ: ISON), a provider of innovative solutions for the homeland security and semiconductor markets, announced today that it has closed a $16 million convertible debenture and warrant financing with an accredited investor.

"We believe that this transaction significantly strengthens our financial position and allows us to continue to invest in our rapidly growing homeland security and semiconductor businesses," said James E. Alexander Isonics' Chairman & CEO. "The additional funds will allow us to support ongoing development activities, to make cash flow positive acquisitions and strategic investments, and to provide general working capital. We have worked diligently and invested over the past 18 months to increase the fundamental value underlying our business and to position the Company for achieving positive operating cash flow leading to profitability. The proceeds from this transaction are key to reaching that objective."

Isonics will receive net cash proceeds of $15.1 million from the transaction in three investment tranches, with the first tranche of $9.4 million to be received today. Isonics will issue $16 million in 3-year 6% convertible debentures that are convertible into common stock at a fixed price of $1.25 per common share. Beginning no earlier than 4 months from closing and subject to volume limitations, the debentures may be converted into common stock at the election of the holder at the lower of $1.25 or 80% of a VWAP-based calculation. The Company issued 2 million three-year warrants exercisable at $1.25, 3 million three-year warrants exercisable at $1.75, 3 million three-year warrants exercisable at $2.00 and 660,000 common shares as part of the transaction.

As previously announced, $4.1 million of the proceeds from this transaction will be used to pay the holders of the existing 8% debentures.

About Isonics Corporation

Isonics Corporation has three business divisions: (1) Homeland Security and Defense (2) Semiconductor, and (3) Life Sciences. Isonics is a world leader in isotopically engineered materials and through its semiconductor division produces isotopically pure silicon-28 chemicals, silicon-on-insulator wafers, wafer reclaim services and test wafers, including 300mm, for the semiconductor industry. Isonics' Life Sciences division markets and sells isotopes to the health care industry for the imaging and treatment of cancer. Stable isotopes can be thought of as ultra pure materials. This high degree of purification provides enhanced properties as compared to natural materials. Additional information may be obtained at the Company's Web site at www.isonics.com.

Cautionary Statement

Except for historical information contained herein, this document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve estimates, assumptions, known and unknown risks and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. Further, the Company operates in industries where securities values may be volatile and may be influenced by regulatory and other factors beyond the Company's control. Other important factors that the Company believes might cause such differences are discussed in the risk factors detailed in the Company's 10-KSB for the year ended April 30, 2005 and reports subsequently filed with the Securities and Exchange Commission, which include the Company's historical cash flow difficulties, dependence on significant customers, and rapid development of technology, among other risks. In assessing forward-looking statements contained herein, readers are urged to carefully read all cautionary statements contained in these filings with the Securities and Exchange Commission.