March 8, 2006
By facsimile to (303) 796-2777 and U.S. Mail
Mr. James E. Alexander
President
Isonics Corporation
5906 McIntyre Street
Golden, CO 80403
Re: Isonics Corporation
Registration Statement on Form S-3
Filed February 23, 2006
File No. 333-132012
Annual Report on Form 10-KSB for the fiscal year ended April 30,
2005
and
Subsequent Quarterly Reports on Form 10-QSB
File No. 0-21607
Dear Mr. Alexander:
We limited our review of your filings to those issues that we
have addressed in our comments. Where indicated, we think that
you
should revise your filings in response to these comments. If you
disagree, we will consider your explanation why a comment is
inapplicable or a revision is unnecessary. Be as detailed as
necessary in your explanation. To understand better your
disclosure,
we may ask you in some comments to provide us information. We may
raise additional comments after reviewing this information.
Our review`s purpose is to assist you in your compliance
with
applicable disclosure requirements and to enhance the overall
disclosure in your filings. We look forward to working with you
to
achieve these objectives. We welcome any questions that you may
have
about comments or any other aspect of our review. You may call us
at
the telephone numbers listed at the end of this letter.
S-3
General
1. We intend to process concurrently the registration and the
pending
applications for confidential treatment. Before requesting
acceleration of the registration statement`s effectiveness, you
must
resolve any issue concerning the applications and file publicly
the
portions for which you are not requesting confidential treatment.
2. We are not making any determination whether the disclosure,
including, for example, cautionary language or the disclosure`s
placement, satisfies the sections` requirements if the
registration
statement states that it:
* Includes forward-looking statements within the meaning of
section
27A of the Securities Act and section 21E of the Exchange Act.
* Otherwise makes reference to those provisions.
* Makes reference to the Private Securities Litigation Reform Act
of
1995 generally.
Selling Shareholders and the Plan of Distribution, page 21
3. Other than Clayton Dunning Capital Partners, Inc. or Clayton
Dunning, confirm that none of the selling shareholders is a
broker-
dealer or a broker-dealer`s affiliate. We note the disclosure in
footnote (4) that Clayton Dunning is a broker-dealer.
4. Unless a selling shareholder who is a broker-dealer acquired
the
securities being offered for resale as compensation for
underwriting
activities, Isonics must identify the broker-dealer as an
underwriter
in the prospectus. Language such as "may be deemed to be" an
underwriter is unacceptable if the selling shareholder is a
broker-
dealer. Please revise for Clayton Dunning and any other selling
shareholder who is a broker-dealer.
5. For a selling shareholder that is a broker-dealer`s affiliate,
include disclosure that this broker-dealer`s affiliate:
* Purchased the securities to be resold in the ordinary course of
business.
* Had no agreements or understandings, directly or indirectly,
with
any person to distribute the securities at the time of their
purchase.
If Isonics is unable to make the representations in the two bullet
points above, Isonics must state in the prospectus that the
selling
shareholder is an underwriter. Language such as "may be deemed to
be" an underwriter is unacceptable if the selling shareholder is
an
affiliate of an underwriter that cannot make these
representations.
6. Expand the disclosure to include all compensation fees paid or
payable under financing agreements with selling shareholders.
7. Disclose that Isonics will file a prospectus supplement to name
successors to any named selling shareholders who are able to use
the
prospectus to resell the securities.
10-KSB
Item 8A. Controls and Procedures, page 50
8. Disclosure in the first paragraph states that you carried out
an
evaluation of the effectiveness of the design and operation of
your
disclosure controls and procedures within the 90 days before the
filing date of this report and that your principal executive
officer
and principal financial officer concluded that your disclosure
controls and procedures are effective. You must evaluate the
effectiveness of your disclosure controls and procedures as of the
end of the period covered by the report. See Rule 13a-15(c) under
the Exchange Act. See also Rule 13a-15(b) under the Exchange Act.
Please revise in future filings.
Closing
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us marked
copies
of the amendments to expedite our review. Please furnish a cover
letter with the amendment that keys your responses to our comments
and provides any requested information. Detailed cover letters
greatly facilitate our review. We may have additional comments
after
reviewing the amendment and the responses to the comments.
We urge all persons responsible for the accuracy and adequacy
of
the disclosure in the registration statement to be certain that
the
filing includes all information required under the Securities Act
and
that they have provided all information investors require for an
informed investment decision. Since Isonics and its management
are
in possession of all facts relating to the disclosure in the
registration statement, they are responsible for the adequacy and
accuracy of the disclosures that they have made.
Notwithstanding our comments, if Isonics requests
acceleration
of the registration statement`s effectiveness, Isonics should
furnish
a letter at the time of the request, acknowledging that:
* Should the Commission or the staff acting by delegated authority
declare the registration statement effective, it does not
foreclose
the Commission from taking any action on the filing.
* The action of the Commission or the staff acting by delegated
authority in declaring the registration statement effective does
not
relieve Isonics from its full responsibility for the adequacy and
accuracy of the disclosure in the filing.
* Isonics may not assert our comments and the declaration of the
registration statement`s effectiveness as a defense in any
proceeding
initiated by the Commission or any person under the United States`
federal securities laws.
The Commission`s Division of Enforcement has access to all
information that Isonics provides us in our review of the
registration statement or in response to our comments on the
registration statement.
We will consider a written request for acceleration of the
registration statement`s effectiveness as confirmation that those
requesting acceleration are aware of their responsibilities under
the
Securities Act and the Exchange Act as they relate to the proposed
public offering of the securities specified in the registration
statement. We will act on the request and by delegated authority
grant acceleration of the registration statement`s effectiveness.
We direct your attention to Rules 460 and 461 on requesting a
registration statement`s acceleration. Please allow adequate time
after the filing of any amendment for further review before
submitting a request for acceleration. Please provide this
request
at least two business days before the requested effective date.
You may direct questions on comments and other disclosure
issues
to Edward M. Kelly, Senior Counsel, at (202) 551-3728 or me at
(202)
551-3760.
Very truly yours,
Pamela A. Long
Assistant Director
cc: Herrick K. Lidstone, Jr., Esq.
Burns, Figa & Will, P.C.
6400 South Fiddlers Green Circle, Suite 1000
Greenwood Village, CO 80111
Mr. James E. Alexander
March 8, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE