**Exhibit10.16**

**CANCELLATIONAGREEMENT and ASSIGNMENT**

THIS CANCELLATIONAGREEMENT and ASSIGNMENT is made as of the 27th day of April 2006 between **Isonics Corporation**(“Isonics”), a California corporationwhose principal place of business is 5906 McIntyre Street, Golden, CO 80403, **IUT Detection Technologies, Inc.** (“IUTDT”), a Coloradocorporation whose address is identical to Isonics, and **Institut fürUmwelttechnologien GmbH**(“IUT”), a company duly organized andexisting under the laws of the Federal Republic of Germany and having itsoffice at Volmerstrasse 9 B, D-12489 Berlin-Adlershof, Federal Republic ofGermany.

RECITALS

A.             Isonics and IUT entered into anAgreement dated December 4, 2002 for research and development activities (the “2002Agreement”), which agreement Isonics intended to and did assign to IUTDT; and

B.             IUTDT and IUT entered into aConfidential Research and Development Agreement dated June 8, 2004 (the “2004Agreement”).

C.             The parties desire to cancel andterminate both the 2002 Agreement and the 2004 Agreement, and to replace suchagreements with a new agreement being entered into simultaneously herewithbetween IUT and Isonics Homeland Security & Defense Corporation, a Delawarecorporation (the “2005 Agreement”).

**NOW THEREFORE**, itis hereby agreed that, subject to IUT and Isonics Homeland Security &Defense Corporation entering into the 2005 Agreement:

1.             Isonicsand IUTDT each hereby assign all of their rights, interest, assets, and otherthings of value owned, received or that may be received under the 2002Agreement and the 2004 Agreement to Isonics Homeland Security & DefenseCorporation; and

2.             Isonics,IUTDT, and IUT each further agree that:

(i)                                     The2002 Agreement be and hereby is cancelled and terminated and is of no furtherforce or effect;

(ii)                                  The2004 Agreement be and hereby is cancelled and terminated and is of no furtherforce or effect; and

(iii)                               Each of the undersignedreleases each other from any obligations remaining due under either the 2002Agreement or the 2004 Agreement.

(Signatures on the following page)

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(Signatures to Cancellation Agreement and Assignment)

 
| **Isonics Corporation**              |       | **Institut für Umwelttechnologien GmbH** |
|--------------------------------------|------------|-----------------------------------------------|
|                                 | ** ** |                                          |   |   |
|                                 |       |                                          |
| Boris Rubizhevsky, Senior            |       | Prof. Dr. Jurgen Leonhardt, Managing Director |
| Vice President                       |       |                                          |
|                                 |       |                                          |
| **IUT Detection Technologies, Inc.** |       |                                          |
| ** **                           |       |                                          |
|                                 |       |                                          |
| Boris Rubizhevsky, Vice President    |       |                                          |
|                                      |            |                                               |  |  |

 

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