[October 06, 2004]

Isonics Corporation Completes $3.3 Million Financing Round

GOLDEN, Colo. --(Business Wire)-- Oct. 6, 2004 -- Funding Will Support Company's Further Expansion into Homeland Security Sector as Well as Activities in Other Divisions

Isonics Corporation (NASDAQ:ISON), committed to the development of next-generation technology for the homeland security and semiconductor markets, has announced the completion of a $3.3 million financing. The announcement was made by James E. Alexander, Chairman and CEO of Isonics.


A single offshore accredited investor purchased 33,000 shares of newly created Series E Convertible Preferred Stock at $100 per share which carries an 8% coupon for the first year, payable monthly, unless earlier converted. The Company also issued to the investor common stock purchase warrants (exercisable for cash only) for 307,000 shares at $1.24 per share and for 307,000 shares at $1.35 per share. One share of Series E Preferred Stock can be converted into at least 81 and no more than 100 shares of Isonics common stock depending on the market price prior to conversion. The Company has received $3.0 million in net proceeds.

"We are pleased to have completed this round of financing as it will assist us in the further development of our next generation products for the homeland security sector," said Mr. Alexander. "The prototype of our neutron-based explosive detection product, NeutroTest, is proceeding on schedule. Functional tests performed over the past 10 days have met our expectations. In addition to supporting this development, the proceeds of the offering will be used to introduce new products in the semiconductor and life sciences segments which products are expected to begin contributing to revenue in our next fiscal quarter."

The securities offered to the accredited investor in the private placement were sold in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The securities have not been registered under the Securities Act or any state securities laws, and the securities may not be offered or sold absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. In connection with the offering, Isonics has agreed to file a registration statement under the Securities Act covering the resale of the shares purchased. This press release does not and will not constitute an offer to sell or the solicitation of an offer to buy shares and is being issued under Rule 135c under the Securities Act.

About Isonics Corp.

Isonics Corporation has three business divisions: (1) Isonics Semiconductor, (2) Isonics Life Sciences, and (3) Homeland Defense. Isonics is a world leader in isotopically engineered materials and through its semiconductor division produces isotopically pure silicon-28 chemicals and wafers for the semiconductor industry. Through advances in nanotechnology, the Company is also focused on research and development opportunities for further, value-added product and application development. Isonics' Life Sciences division markets and sells stable isotopes for the health care industry such as carbon-13 for diagnostic breath tests and drug design, and radioisotopes and stable isotopes, such as oxygen-18 for positron emission tomography (PET) imaging. Stable isotopes can be thought of as ultra pure materials. This high degree of purification provides enhanced properties as compared to natural materials. Our efforts in the Homeland Security segment are nascent at the present time as we proceed to develop further our neutron-based and other detection technologies. Additional information may be obtained at the Company's Web site at http://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 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, 2004, and its quarterly report on Form 10-QSB for the nine months ended July 31, 2004, both as filed with the Securities and Exchange Commission, which include the Company's 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 the Company's filings with the Securities and Exchange Commission.

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