Radnostix Inc 10-Q for FY2024 Q1
Radnostix Inc (INIS)
About this 10-Q
Radnostix Inc filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.9M
- down 6.0% from $3.09M a year earlier
- Net loss
- $154.05K
- compared with a net loss of $148.05K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from _____________ to _______________
Commission file number:
INTERNATIONAL ISOTOPES INC.
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of May 6, 2024, the number of shares of common stock, $0.01 par value, outstanding was
FORM 10-Q
For The Quarter Ended March 31, 2024
TABLE OF CONTENTS
| Page No. |
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| PART I – FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements |
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| Unaudited Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
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| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 4. |
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| PART II – OTHER INFORMATION |
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| Item 1. |
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| Item 1A. |
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| Item 2. |
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| Item 5. | Other Information | 25 |
| Item 6. |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaids and other current assets | ||||||||
| Total current assets | ||||||||
| Long-term assets | ||||||||
| Restricted cash | ||||||||
| Property, plant and equipment, net | ||||||||
| Capitalized lease disposal costs, net | ||||||||
| Financing lease right-of-use asset | ||||||||
| Operating lease right-of-use asset | ||||||||
| Goodwill | ||||||||
| Patents and other intangibles, net | ||||||||
| Total long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Unearned revenue | ||||||||
| Current portion of operating lease right-of-use liability | ||||||||
| Current portion of financing lease liability | ||||||||
| Current installments of notes payable | ||||||||
| Current portion of mandatorily redeemable preferred stock | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Accrued long-term liabilities | ||||||||
| Related party notes payable, net of current portion and debt discount | ||||||||
| Notes payable, net of current portion | ||||||||
| Asset retirement obligation | ||||||||
| Operating lease right-of-use liability, net of current portion | ||||||||
| Mandatorily redeemable convertible preferred stock | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
| Three months ended March 31, |
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| 2024 |
2023 |
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| Sale of product |
$ | $ | ||||||
| Cost of product |
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| Gross profit |
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| Operating costs and expenses: |
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| Salaries and contract labor |
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| General, administrative and consulting |
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| Research and development |
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| Total operating expenses |
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| Net operating loss |
( |
) | ( |
) | ||||
| Other income (expense): |
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| Other income |
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| Interest income |
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| Interest expense |
( |
) | ( |
) | ||||
| Total other income (expense) |
( |
) | ||||||
| Net Loss |
$ | ( |
) | $ | ( |
) | ||
| Net loss per common share - basic: |
$ | $ | ||||||
| Net loss per common share - diluted: |
$ | $ | ||||||
| Weighted average common shares outstanding - basic |
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| Weighted average common shares outstanding - diluted |
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See accompanying notes to condensed consolidated financial statements.
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
| Three months ended March 31, |
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| 2024 |
2023 |
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| Cash flows from operating activities |
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| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities |
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| Depreciation and amortization |
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| Accretion of obligation for lease disposal costs |
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| Equity based compensation |
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| Right-of-use asset amortization |
( |
) | ( |
) | ||||
| Changes in operating assets and liabilities: |
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| Accounts receivable |
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| Inventories |
( |
) | ||||||
| Prepaids and other current assets |
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| Accounts payable and accrued liabilities |
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| Unearned revenues |
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| Net cash provided by operating activities |
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| Cash flows from investing activities: |
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| Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
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| Proceeds from sale of stock and exercise of options and warrants |
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| Payments on financing lease |
( |
) | ( |
) | ||||
| Principal payments on notes payable |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Net increase in cash, cash equivalents, and restricted cash |
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| Cash, cash equivalents, and restricted cash at beginning of period |
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| Cash, cash equivalents, and restricted cash at end of period |
$ | $ | ||||||
| Supplemental disclosure of cash flow activities: |
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| Cash paid for interest |
$ | $ | ||||||
| Supplemental disclosure of noncash financing and investing transactions |
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| Decrease in accrued interest and increase in equity for conversion of dividends to stock |
$ | $ | ||||||
Reconciliation of cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows is presented in the table below:
| March 31, |
March 31, |
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| 2024 |
2023 |
|||||||
| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash included in long-term assets |
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| Total cash, cash equivalents, and restricted cash shown in statement of cash flows |
$ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' (Deficit) Equity
Three Months Ended
(Unaudited)
| Common stock |
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| Additional |
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| Shares |
Common |
Paid-in |
Accumulated |
Total |
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| Outstanding |
Stock |
Capital |
Deficit |
(Deficit) Equity |
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| Balance, January 1, 2024 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Shares issued under employee stock purchase plan |
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| Stock in lieu of dividends on convertible preferred C |
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| Shares issued for issuance of RSUs |
( |
) | ||||||||||||||||||
| Stock based compensation |
— | |||||||||||||||||||
| Net (loss) income |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Balance, March 31, 2024 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' (Deficit) Equity
Three Months Ended
(Unaudited)
| Common stock |
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| Additional |
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| Shares |
Common |
Paid-in |
Accumulated |
Total |
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| Outstanding |
Stock |
Capital |
Deficit |
(Deficit) Equity |
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| Balance, January 1, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Shares issued under employee stock purchase plan |
||||||||||||||||||||
| Stock grant |
( |
) | ||||||||||||||||||
| Stock in lieu of dividends on convertible preferred C |
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| Shares issued for issuance of RSUs |
( |
) | ||||||||||||||||||
| Stock based compensation |
— | |||||||||||||||||||
| Net (loss) income |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Balance, March 31, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
See accompanying notes to the condensed consolidated financial statements
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
(1) The Company and Basis of Presentation
International Isotopes Inc. (INIS) was incorporated in Texas in November 1995. The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and include all operations and balances of INIS and its wholly-owned subsidiaries, including RadQual, LLC (RadQual) and TI Services, LLC (TI Services). RadQual is a global supplier of molecular imaging quality control and calibration devices, and is based at INIS headquarters in Idaho Falls, Idaho. TI Services is headquartered in Boardman, Ohio and distributes products for nuclear medicine, nuclear cardiology, and Positron Emission Tomography (PET) imaging. INIS, and its wholly-owned subsidiaries are collectively referred to herein as the “Company,” “we,” “our” or “us.”
Nature of Operations – The Company manufactures a full range of nuclear medicine calibration and reference standards, generic sodium iodide I-131 drug product, cobalt teletherapy sources, and a varied selection of radiochemicals for medical research, and clinical applications. For 2024, the Company’s business consists of
With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products is considered to be two to three years. Accordingly, preliminary payments received on cobalt contracts, where shipment will not take place for greater than one year, have been recorded as unearned revenue and, depending upon estimated ship dates, classified under either current or long-term liabilities on the Company’s condensed consolidated balance sheets. These unearned revenues are being recognized as revenue in the periods during which the cobalt shipments take place. All assets expected to be realized in cash or sold during the normal operating cycle of business are classified as current assets.
Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements are presented in conformity with GAAP and include all operations and balances of INIS and its wholly-owned subsidiaries including RadQual and TI Services. See Note 4 “Investment and Business Consolidation” for additional information. All significant intercompany accounts and transactions have been eliminated in consolidation.
Interim Financial Information – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any future periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024.
Recent Accounting Pronouncements – In August 2020, the Financial Accounting Standards Board issued ASU 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The update simplifies accounting related to convertible debt instruments. The standard is effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years. The Company is currently evaluating the effect this standard will have on its financial statements.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company in our annual reporting for fiscal 2024 and for interim period reporting beginning in fiscal 2025 on a retrospective basis, with all required disclosures to be made for all prior periods presented in the consolidated financial statements. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements.
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which enhances the disclosures required for income taxes in the Company’s annual consolidated financial statements. Notably, this ASU requires entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis. Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.
(2) Current Developments and Liquidity
Business Condition – Since inception, the Company has incurred substantial losses. During the three months ended March 31, 2024, the Company reported a net loss of $
During the three months ended March 31, 2024, the Company continued its focus on its strongest long-standing core business segments which consist of its Theranostics Products (previously called Radiochemical Products), Cobalt Products, and Nuclear Medicine Standards, and in particular, the pursuit of new business opportunities within those segments. Additionally, the Company has begun to focus on the start-up of its Medical Device segment which includes assets purchased from AMICI in 2023 and investing into an EasyFill Automated Iodine Capsule System.
The Company holds a Nuclear Regulatory Commission (NRC) construction and operating license for the depleted uranium facility in, as well as the property agreement with, Lea County, New Mexico, where the plant is intended to be constructed. The NRC license for the de-conversion facility is a forty (40) year operating license and is the first commercial license of this type issued in the United States. There are no other companies with a similar license application under review by the NRC. Therefore, the NRC license represents a significant competitive barrier, and the Company considers it a valuable asset.
The Company expects that cash from operations, equity or debt financing, and its current cash balance will be sufficient to fund operations for the next twelve months. Future liquidity and capital funding requirements will depend on numerous factors, including commercial relationships, technological developments, market factors, available credit, and management of redeemable convertible preferred stock. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.
(3) Net Income (Loss) Per Common Share - Basic and Diluted
For the three months ended March 31, 2024, the Company had
For the three months ended March 31, 2023, the Company had
The table below shows the calculation of diluted shares:
| 3 Months Ended |
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| March 31, |
March 31, |
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| 2024 |
2023 |
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| Weighted average common shares outstanding - basic |
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| Effects of dilutive shares |
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| Stock Options |
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| Series C Preferred Stock |
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| Weighted average common shares outstanding - diluted |
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The table below summarizes common stock equivalents outstanding at March 31, 2024 and 2023:
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Stock options | ||||||||
| Restricted Stock Units | ||||||||
| Shares of Series C Preferred Stock | ||||||||
(4) Investment and Business Consolidation
In 2021, the Company acquired all of the remaining membership interests of RadQual, making RadQual a wholly-owned subsidiary of the Company. As TI Services is a 50/50 joint venture between the Company and RadQual, TI Services is also a wholly-owned subsidiary of the Company.
In June 2023, the Company executed an agreement to buy medical devices and related assets and intellectual property rights from AMICI, Inc. The Company has been working on transfers of U.S. Food and Drug Administration (FDA) 510K device registrations and startup of manufacturing. These assets and expenses are included in the Medical Device Segment; launch of these products is expected later in 2024.
(5) Stockholders’ Equity, Options, and Warrants
Employee Stock Purchase Plan
The Company has an employee stock purchase plan pursuant to which employees of the Company may participate to purchase shares of common stock at a discount. During the three months ended March 31, 2024 and 2023, the Company issued
Stock-Based Compensation Plans
2015 Incentive Plan - In April 2015, the Company’s Board of Directors approved the International Isotopes Inc. 2015 Incentive Plan (as amended, the 2015 Plan), which was subsequently approved by the Company’s shareholders in July 2015. The 2015 Plan was amended and restated in July 2018 to increase the number of shares authorized for issuance under the 2015 Plan by an additional
Employee/Director Grants - The Company accounts for issuances of stock-based compensation to employees by recognizing, as compensation expense, the cost of employee services received in exchange for equity awards. The compensation expense is based on the grant date fair value of the award. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
Non-Employee Grants - The Company accounts for its issuances of stock-based compensation to non-employees by recognizing compensation expense based on the grant date fair value of the award. Stock option compensation expense is recognized over the vesting period for the award.
Option awards outstanding as of March 31, 2024, and changes during the three months ended March 31, 2024, were as follows:
| Weighted |
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| Weighted |
Average |
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| Average |
Remaining |
Aggregate |
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| Fixed Options |
Shares |
Exercise Price |
Contractual Life |
Intrinsic Value |
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| Outstanding at December 31, 2023 |
$ | $ | ||||||||||||||
| Granted |
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| Exercised |
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| Expired |
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| Forfeited |
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| Outstanding at March 31, 2024 |
$ | |||||||||||||||
| Exercisable at March 31, 2024 |
$ | $ | ||||||||||||||
The intrinsic value of outstanding and exercisable shares is based on the closing price of the Company’s common stock on the OTCQB of $
As of March 31, 2024, there was $
Total stock-based compensation expense for the three months ended March 31, 2024 and 2023 was $
During the three months ended March 31, 2024, the Company granted an aggregate of
Restricted Stock Units outstanding as of March 31, 2024, and changes during the three months ended March 31, 2024, were as follows:
| Non-Vested Restricted Stock Units | Number of restricted stock units | Weighted average grant-date fair value | ||
| Outstanding at December 31, 2023 | |
| ||
| Granted | — | |||
| Vested |
| | ||
| Forfeited / Cancelled | — | |||
| Outstanding at March 31, 2024 | |
|
Preferred Stock
At March 31, 2024, there were
During the three months ended March 31, 2024 and 2023, dividends paid to holders of the Series C Preferred Stock totaled $
(6) Debt
In December 2013, the Company entered into a promissory note agreement with its then Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $
In April 2018, the Company borrowed $
In December 2019 and February 2020, the Company borrowed an aggregate of $
In June 2023, the Company executed an asset purchase agreement with AMICI, Inc. for purchase of medical devices and related assets and intellectual property rights. As part of the asset purchase agreement, the Company entered a promissory agreement for $
(7) Commitments and Contingencies
Dependence on Third Parties
The production of High Specific Activity Cobalt is dependent upon the U.S. Department of Energy (DOE), and its prime operating contractor, which controls the Advanced Test Reactor (ATR) and laboratory operations at the ATR located outside of Idaho Falls, Idaho. In October 2014, the Company signed a -year contract with the DOE for the irradiation of cobalt targets for the production of cobalt-60. The Company will be able to purchase cobalt targets for a fixed price per target with an annual
Sales of our most predominant Theranostics products are dependent upon a few key suppliers. An interruption in production by any of these individual suppliers could have an immediate negative impact upon radiochemical sales until material could be purchased from alternate suppliers including obtaining regulatory approval to use material from alternative suppliers if necessary.
The Nuclear Medicine Reference and Calibration Standard products sold by the Company are dependent upon certain radioisotopes that are supplied to the Company through agreements with several suppliers. A loss of any of these suppliers could adversely affect operating results by causing a delay in production or a possible loss of sales. In three months ended March 31, 2024, there was a global shortage of Cobalt-57 isotopes, a key isotope for this business segment that resulted in lost sales. We have added a supplier in 2024 and continue to search for additional means to produce and procure certain critical isotopes. However, we anticipate periodic shortages to continue for the remainder of 2024.
Contingencies
Because all the Company’s business segments involve the handling or use of radioactive material, the Company is required to have an operating license from the NRC and specially trained staff to handle these materials. The Company has amended this operating license numerous times to increase the amount of material permitted within the Company’s facility. Although this license does not currently restrict the volume of business operations performed or projected to be performed in the upcoming year, additional processing capabilities and license amendments could be implemented that would permit processing of other reactor-produced radioisotopes by the Company. The financial assurance required by the NRC to support this license has been provided for with a surety bond held with North American Specialty Insurance Company which is supported by a restricted money market account held with Merrill Lynch. In the three months ended March 31, 2024 the Company funded an additional $
In August 2011, the Company received land from Lea County, New Mexico, pursuant to a Project Participation Agreement (PPA), whereby the land was deeded to the Company for no monetary consideration. In return, the Company committed to construct a uranium de-conversion and Fluorine Extraction Process facility on the land. In order to retain title to the property, the Company was to begin construction of the de-conversion facility no later than December 31, 2014, and complete Phase I of the project and have hired at least
(8) Revenue Recognition
Revenue from Product Sales
The following tables present the Company’s revenue disaggregated by business segment and geography, based on management’s assessment of available data:
| Three Months Ended March 31, 2024 |
Three Months Ended March 31, 2023 |
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| Outside |
Total |
% of Total |
Outside |
Total |
% of Total |
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| U.S. |
U.S. |
Revenues |
Revenues |
U.S. |
U.S. |
Revenues |
Revenues |
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| Theranostics Products |
$ | $ | $ | % | $ | $ | $ | % | ||||||||||||||||||||||||
| Cobalt Products |
% | % | ||||||||||||||||||||||||||||||
| Nuclear Medicine Products |
% | % | ||||||||||||||||||||||||||||||
| Medical Devices Products |
% | % | ||||||||||||||||||||||||||||||
| Fluorine Products |
% | % | ||||||||||||||||||||||||||||||
| $ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
The Company’s revenue consists primarily of distribution of theranostics including sodium iodide I-131 drug product, calibration and reference standards manufactured for use in the nuclear medicine industry, and cobalt source manufacturing. With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products is considered to be two to three years. Accordingly, preliminary payments received on cobalt contracts where shipment has not taken place have been recorded as unearned revenue on the Company’s condensed consolidated balance sheets and classified under current or long-term liabilities, depending upon estimated ship dates. For the three months ended March 31, 2024, the Company reported current unearned revenue of $
Contract Balances
The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. As of March 31, 2024, and December 31, 2023, accounts receivable totaled $
(9) Leases
The Company leases office and warehouse space under operating leases. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease, right-of-use assets, and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates with the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires judgement. The company determines its incremental borrowing rate for each lease using its then-current borrowing rate. Certain of the Company’s leases include options to extend or terminate the lease. The Company establishes the number of renewal options periods used in determining the operating lease term based upon its assessment at the inception of the operating lease. The option to renew the lease may be automatic, at the option of the Company, or mutually agreed to between the landlord and the Company. Once the facility lease term has begun, the present value of the aggregate future minimum lease payments is recorded as a right-of-use asset. Lease expense is recognized on a straight-line basis over the term of the lease.
| Three Months Ended March 31, |
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| 2024 |
2023 |
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| Operating lease costs |
$ | $ | ||||||
| Short-term operating lease costs |
||||||||
| Financing lease expense: |
||||||||
| Amortization of right-of-use assets |
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| Interest on lease liabilities |
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| Total financing lease expense |
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| Total lease expense |
$ | $ | ||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities |
$ | $ | ||||||
| Right-of-use assets obtained in exchange for new financing lease liabilities |
$ | $ | ||||||
| Weighted-average remaining lease term (years) - operating leases |
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| Weighted-average remaining lease term (years) - financing leases |
||||||||
| Weighted-average discount rate - operating leases |
% | % | ||||||
| Weighted-average discount rate - financing leases |
% | % | ||||||
The future minimum payments under these operating lease agreements are as follows:
| Operating Leases |
Financing Leases |
|||||||
| 2024 (excluding the three-months ended March 31, 2024) |
$ | $ | ||||||
| 2025 |
||||||||
| 2026 |
||||||||
| 2027 |
||||||||
| 2028 |
||||||||
| Thereafter |
||||||||
| Total minimum lease obligations |
||||||||
| Less-amounts representing interest |
( |
) | ( |
) | ||||
| Present value of minimum lease obligations |
||||||||
| Current maturities |
( |
) | ( |
) | ||||
| Lease obligations, net of current maturities |
$ | $ | ||||||
(10) Segment Information
In 2024, the Company has
Information regarding the operations and assets of these reportable business segments is contained in the following table:
| Three months ended March 31, |
||||||||
| Sale of Product |
2024 |
2023 |
||||||
| Theranostics Products |
$ | $ | ||||||
| Cobalt Products |
||||||||
| Nuclear Medicine Standards |
||||||||
| Medical Device Products |
||||||||
| Fluorine Products |
||||||||
| Total Segments |
||||||||
| Corporate revenue |
||||||||
| Total Consolidated |
$ | $ | ||||||
| Three months ended March 31, |
||||||||
| Depreciation and Amortization |
2024 |
2023 |
||||||
| Theranostics Products |
$ | $ | ||||||
| Cobalt Products |
||||||||
| Nuclear Medicine Standards |
||||||||
| Medical Device Products |
||||||||
| Fluorine Products |
||||||||
| Total Segments |
||||||||
| Corporate depreciation and amortization |
||||||||
| Total Consolidated |
$ | $ | ||||||
| Three months ended March 31, | ||||||||
| Segment Income (Loss) | 2024 | 2023 | ||||||
| Theranostics Products |
|
| ||||||
| Cobalt Products |
|
| ||||||
| Nuclear Medicine Standards |
|
| ||||||
| Medical Device Products |
| — | ||||||
| Fluorine Products |
|
| ||||||
| Total Segments |
|
| ||||||
| Corporate loss |
|
| ||||||
| Net Income |
|
| ||||||
| Three months ended March 31, |
||||||||
| Expenditures for Segment Assets |
2024 |
2023 |
||||||
| Theranostics Products |
$ | $ | ||||||
| Cobalt Products |
||||||||
| Nuclear Medicine Standards |
||||||||
| Medical Device Products |
||||||||
| Fluorine Products |
||||||||
| Total Segments |
||||||||
| Corporate purchases |
||||||||
| Total Consolidated |
$ | $ | ||||||
| March 31, |
December 31, |
|||||||
| Segment Assets |
2024 |
2023 |
||||||
| Theranostics Products |
$ | $ | ||||||
| Cobalt Products |
||||||||
| Nuclear Medicine Standards |
||||||||
| Medical Device Products |
||||||||
| Fluorine Products |
||||||||
| Total Segments |
||||||||
| Corporate assets |
||||||||
| Total Consolidated |
$ | $ | ||||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Quarterly Report are forward-looking statements. Words such as “anticipates,” “believes,” “should,” “expects,” “future,” “intends” and similar expressions identify forward-looking statements. Forward-looking statements reflect management’s current expectations, plans or projections, and are inherently uncertain. Actual results could differ materially from management's expectations, plans or projections. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. Certain risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (SEC) on March 29, 2024 and in the other reports we file with the SEC. These factors describe some but not all of the factors that could cause actual results to differ significantly from management’s expectations. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are urged, however, to review the risks and other factors set forth in the reports that we file from time to time with the SEC.
BUSINESS OVERVIEW
International Isotopes Inc., its wholly-owned subsidiaries (including RadQual, LLC and TI Services, LLC) (collectively, the "Company", "we", "our", or "us") manufacture a full range of nuclear medicine calibration and reference standards, manufacture a range of cobalt products, and distribute sodium iodide I-131 as a generic drug. We own 100% interest of RadQual, LLC (RadQual), a global supplier of molecular imaging quality control and calibration devices. As TI Services, LLC is a 50/50 joint venture between the Company and RadQual, TI Services, LLC is also a wholly-owned subsidiary of the Company.
Our business consists of the following five business segments:
Theranostics Products. Our Theranostics Products segment (formerly called Radiochemical Products) includes production and distribution of our FDA approved generic sodium iodide I-131 drug product for the treatment of hyperthyroidism and carcinoma of the thyroid. We are the only U.S. Company distributing this generic drug product. This segment also includes distribution of certain other radiochemical products and contract manufacturing of radiopharmaceutical products for our customers.
Cobalt Products. Our Cobalt Products segment includes the production of bulk cobalt (cobalt-60), fabrication of cobalt capsules for radiation therapy and various industrial applications, and recycling of expended cobalt sources. We are the only company in the U.S. that can provide all these unique services. There has been a significant increase in regulation by the Nuclear Regulatory Commission (NRC) in recent years that has created a significant barrier to new entrants into this market. The Company has a contract in place with the U.S. Department of Energy (DOE) for the production of high specific activity cobalt in the Advanced Test Reactor (ATR) in Idaho. This agreement will be in effect until October 2024.
Nuclear Medicine Standards. Our Nuclear Medicine Standards segment consists of the manufacture of sources and standards associated with Single Photon Emission Computed Tomography (SPECT) and Positron Emission Tomography (PET) imaging. These sources are used for indication of patient positioning for SPECT imaging, SPECT camera operational testing, and calibration of dose measurement equipment. Revenue from nuclear medicine products includes consolidated sales from TI Services, LLC (TI Services), a 50/50 joint venture that we formed with RadQual in December 2010 to distribute our products, as well as consolidated sales from RadQual. Our nuclear medicine standards products include a host of specially designed items used in the nuclear medicine industry. In addition to the manufacture of these products, we have developed a complete line of specialty packaging for the safe transport and handling of these products.
Medical Devices. A new reportable business segment starting in 2024. While we have not yet commercialized any medical devices, we have invested in this segment throughout 2023 and 2024 and anticipate additional investments for the remainder of 2024 with commercialization of products starting later in 2024. In June 2023, we acquired several medical devices with related assets and intellectual property rights from AMICI, Inc. We have been working on start-up of manufacturing. Additionally, the Company has investments in a joint venture arrangement for the startup of our EasyFill Automated Iodine Capsule System.
Fluorine Products. We established the Fluorine Products segment in 2004 in conjunction with the development and operation of the proposed depleted uranium de-conversion facility in Lea County, New Mexico. Near the end of 2013, due to changes in the nuclear industry, we placed further engineering work for this project on hold. We continue to hold discussions with potential future customers seeking this type of service, however, further development activity within this segment will be deferred until market and industry conditions change to justify resuming design and construction of the facility. We have been in discussions with commercial companies possibly interested in purchasing rights to this project. In the meantime, we expect to continue to incur some costs associated with the maintenance of licenses and other necessary project investments, and to continue to keep certain agreements in place that will support resumption of project activities at the appropriate time. On February 8, 2024, we entered into a definitive agreement to sell all of our assets related to the Fluorine Products segment and the Planned Uranium De-Conversion Facility ("DUF6 Asset Sale"). We expect to close the agreement within 12 to 24 months of signing. Closing is contingent on various conditions being met, including approvals and agreements by the NRC and other third parties.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Revenue for the three months ended March 31, 2024 was $2,904,458 as compared to $3,089,535 for the same period in 2023, an overall decrease of $185,077, or approximately 6%. This decrease in revenue was the result of decreased revenue in our Nuclear Medicine Standards segment due to a global shortage of Cobalt-57 isotope partially offset by increased revenues in our Theranostics Products and Cobalt Products, as discussed in more detail below.
The following table presents a period-to-period comparison of total revenue by segment for the three months ended March 31, 2024 and 2023:
| For the three |
For the three |
|||||||||||||||
| months ended |
months ended |
|||||||||||||||
| March 31, |
March 31, |
|||||||||||||||
| Sale of Product |
2024 |
2023 |
$ change |
% change |
||||||||||||
| Theranostics Products |
$ | 1,905,082 | $ | 1,762,396 | $ | 142,686 | 8 | % | ||||||||
| Cobalt Products |
233,968 | 158,308 | 75,660 | 48 | % | |||||||||||
| Nuclear Medicine Standards |
765,408 | 1,168,831 | (403,423 | ) | -35 | % | ||||||||||
| Medical Device Products |
— | — | — | — | % | |||||||||||
| Fluorine Products |
— | — | — | — | % | |||||||||||
| Total Consolidated |
$ | 2,904,458 | $ | 3,089,535 | $ | (185,077 | ) | -6 | % | |||||||
Cost of sales decreased to $1,038,347 for the three months ended March 31, 2024 from $1,309,499 for the same period in 2023. This is a decrease of $271,152, or approximately 21%. The decrease in cost of sales in the three-month comparison was primarily due to the decreased revenues and increased gross profit percentages in our segments, as discussed in detail below. Gross profit for the three months ended March 31, 2024 was $1,866,111, compared to $1,780,036 for the same period in 2023. This represents an increase in gross profit of $86,075, or approximately 5%.
The following table presents cost of sales and gross profit data for each of our business segments for the three months ended March 31, 2024 and 2023:
| For the three |
For the three |
|||||||||||||||
| months ended |
% of |
months ended |
% of |
|||||||||||||
| March 31, |
Total Sales |
March 31, |
Total Sales |
|||||||||||||
| 2024 |
2024 |
2023 |
2023 |
|||||||||||||
| Total Sales |
$ | 2,904,458 | $ | 3,089,535 | ||||||||||||
| Cost of Sales |
||||||||||||||||
| Theranostics Products |
$ | 576,411 | 20 | % | $ | 630,338 | 20 | % | ||||||||
| Cobalt Products |
109,036 | 4 | % | 90,961 | 3 | % | ||||||||||
| Nuclear Medicine Standards |
352,900 | 12 | % | 588,200 | 19 | % | ||||||||||
| Medical Device Products |
— | — | % | |||||||||||||
| Fluorine Products |
— | — | % | — | — | % | ||||||||||
| Total Segments |
1,038,347 | 36 | % | 1,309,499 | 42 | % | ||||||||||
| Gross Profit |
$ | 1,866,111 | $ | 1,780,036 | ||||||||||||
| Gross Profit % |
64 | % | 58 | % | ||||||||||||
Operating expense increased approximately 11% to $2,132,307 for the three months ended March 31, 2024, from $1,927,608 for the same period in 2023. This increase of $204,699 is due to a 21% increase in General, Administrative, and Consulting Expenses and a 51% increase in Research and Development costs offset by a 4% decrease in Salaries and Contract Labor Expenses. The increase in General, Administrative, and Consulting Expenses is primarily the result of increased professional expenses that occurred during the three months ended March 31, 2024, as compared to the same period in 2023. The increase in Research and Development cost is due to increased expenses related to product development during the three months ended March 31, 2024, as compared to the same period in 2023. The decrease in Salaries and Contract Labor Expenses is primarily due to decreased officer compensation.
The following table presents a comparison of total operating expense for the three months ended March 31, 2024 and 2023:
| For the three |
For the three |
|||||||
| months ended |
months ended |
|||||||
| March 31, |
March 31, |
|||||||
| Operating Costs and Expenses: |
2024 |
2023 |
% change |
$ change |
||||
| Salaries and Contract Labor |
$ 940,503 |
$ 975,183 |
(4%) |
$ (34,680) |
||||
| General, Administrative and Consulting |
1,003,557 |
827,983 |
21% |
175,574 |
||||
| Research and Development |
188,247 |
124,442 |
51% |
63,805 |
||||
| Total operating expenses |
$ 2,132,307 |
$ 1,927,608 |
11% |
$ 204,699 |
Other income was $160,720 for the three months ended March 31, 2024 as compared to $63,412 for the same period in 2023. This is an increase of $97,308, or approximately 153%, was due to an increase in miscellaneous income.
Interest expense for the three months ended March 31, 2024 was $81,303, compared to $82,980 for the same period in 2023. This is a decrease of $1,677, or approximately 2%. Interest expense includes dividends accrued on our Series C Preferred Stock. As discussed below, we issued Series C Preferred Stock in February 2017 and May 2017. For the three months ended March 31, 2024 and 2023, we accrued dividends payable of $59,445 for the three months ended March 31, 2024 and $60,945 for the same period in 2023, which have been recorded as interest expense. See Note 7 “Debt” to our unaudited consolidated financial statements in this Quarterly Report for additional information about our indebtedness and the associated interest expense.
Our net loss for the three months ended March 31, 2024, was $154,051 compared to net loss of $148,054 for the same period in 2023. This is an increase in net loss of $5,997 that is largely the result of the decrease in revenue in our Nuclear Medicine Standards Products segment partially offset by increased revenue in our Theranostics Products and Cobalt Products segments and increased gross profit percentages for the three months ended March 31, 2024, as compared to the same period in 2023.
Theranostics Products. Revenue from the sale of theranostics products for the three months ended March 31, 2024 was $1,905,082, compared to $1,762,396 for the same period in 2023. This is an increase of $142,686, or approximately 8% during the three months ended March 31, 2024. The increase is the result of continued increased sales of our generic sodium iodide I-131 drug product. We expect continued sales growth for our Theranostics products going forward, primarily from the sale of our generic sodium iodide I-131 drug product.
Gross profit of theranostics products for the three months ended March 31, 2024 was $1,328,671, compared to $1,132,058 for the same period in 2023, and gross profit percentages were approximately 70% and 64% for the three months ended March 31, 2024 and 2023, respectively. Cost of sales for theranostics products decreased to $576,411 for the three months ended March 31, 2024, as compared to $630,338 for the same period in 2023. This is a decrease of $53,927, or approximately 9%, and was primarily the result of increased utilization and pricing for our raw material isotope. Operating expense for this segment decreased to $315,207 for the three months ended March 31, 2024, compared to $364,946 for the same period in 2023. This decrease in operating expense of $49,739, or approximately 14%. This segment reported net income of $1,013,464 for the three months ended March 31, 2024, as compared to net income of $767,112 for the same period in 2023. The increase in net income of $246,352 is the result of increases in revenue, increased gross profit percentage, and decreased expenses.
Cobalt Products. Revenue from the sale of cobalt products for the three months ended March 31, 2024 was $233,968, compared to $158,308 for the same period in 2023. This represents an increase of $75,660, or approximately 48%. The increase was primarily due to the timing of cobalt sealed source manufacturing sales. Large value sales of high activity cobalt sources occur at various times throughout the year. Frequently the timing of these sales can have a significant impact on period comparisons.
Cost of sales for the three months ended March 31, 2024, was $109,036, as compared to $90,961, for the same period in 2023. Gross profit for cobalt products for the three months ended March 31, 2024 was $124,932 compared to $67,347 for the same period in 2023. This is an increase of $57,585, or approximately 86% and is attributable to increased gross profit percentage for the sales the three months ended March 31, 2024. Operating expense in this segment increased to $191,257 for the three months ended March 31, 2024, from $93,592 for the same period in 2023. This is an increase of $97,665, or approximately 104%. This increase in operating expenses for the three months ended March 31, 2024 is primarily the result of increased waste disposal costs that occurred during the three months ended March 31, 2024 as compared to the same period in 2023. Our net loss for cobalt products was $66,325 for the three months ended March 31, 2024, as compared to a net loss of $26,245 for the same period in 2023. The increase in net loss of $40,080, or approximately 153%, was attributable to the increased operating expenses.
Nuclear Medicine Standards. Revenue from nuclear medicine products for the three months ended March 31, 2024, was $765,408, compared to $1,168,831 for the same period in 2023. This represents a decrease in revenue of $403,423, or approximately 35%. The decrease is due to a global shortage of Cobalt-57 isotopes during the three months ended March 31, 2024. We continue to maintain a growing backlog of orders and we expect a revenue catch-up upon normalization of the global isotope supply chain.
Cost of sales for our nuclear medicine standards segment for the three months ended March 31, 2024, was $352,900, as compared to $588,200 for the same period in 2023. The decrease in cost of sales in the period-to-period comparison of $235,300, or 40%, was due to decreased revenue during the three-month period ended March 31, 2024, as compared to the same period in 2023. Gross profit for our nuclear medicine standards segment for the three months ended March 31, 2024 was $412,508 compared to $580,631 for the same period in 2023, and gross profit percentages were approximately 54% and 50% for the three months ended March 31, 2024 and 2023, respectively. This is a decrease in gross profit of $168,123, or approximately 29%.
Operating expense for this segment for the three months ended March 31, 2024 decreased to $403,011, from $451,846 for the same period in 2023. This is an decrease of $48,835, or approximately 11%, and is the result of decreased activity in the segment. Net income for this segment for the three months ended March 31, 2024 was $9,497, compared to a net income of $128,785 for the same period in 2023. This is a decrease in net income of $119,288, or approximately 93% and is the result of decreased revenue.
Medical Device Products. For the three months ended March 31, 2024 and March 31, 2023, we had no revenue for our Medical Device Products segment.
Operating expense for this segment for the three months ended March 31, 2024 was $28,511 with no operating expenses in the same period in 2023. Expenses include costs for professional services and research and development related to the startup of this new business segment.
Fluorine Products. For the three months ended March 31, 2024 and March 31, 2023, we had no revenue for our fluorine products segment.
During the three months ended March 31, 2024, we incurred $28,751 of expenses related to items in support of future planning and design for the proposed de-conversion facility, as compared to $29,239 for the same three-month period in 2023.
We established the Fluorine Products segment in 2004 to support production and sale of the gases produced using our FEP. The project has been placed on hold since 2013 and we will continue to limit our expenditures to essential items such as maintenance of the NRC license, land use agreements, communication with our prospective FEP product customers, and interface with the State of New Mexico and Lea County officials until such time that we decide to resume the project.
On February 8, 2024, we entered into a definitive agreement to sell all of our assets related to the Fluorine Products segment and the Planned Uranium De-Conversion Facility ("DUF6 Asset Sale"). We expect to close the agreement within 12 to 24 months of signing. Closing is contingent on various conditions being met, including approvals and agreements by the NRC and other third parties.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2024, we had cash and cash equivalents of $2,368,496 as compared to $2,688,141 at December 31, 2023. This is an decrease of $319,645 or approximately 12%. For the three months ended March 31, 2024, net cash provided by operating activities was $412,444 and for the three months ended March 31, 2023, net cash provided in operating activities was $981,311. The decrease in cash provided by operating activities was a result of a one-time receipt of other current assets in 2023.
This decrease in cash and cash equivalents at period end is mainly due to a $484,000 transfer from cash and cash equivalents to restricted cash to fund an increase to our decommissioning funding plan. Total cash, cash equivalents, and restricted cash increased by $177,882 for the three months ended March 31, 2024.
Inventories at March 31, 2024 totaled $934,186, and inventories at December 31, 2023 totaled $927,111. Our inventory consists of work in process material for our Theranostics Products, Cobalt Products, Nuclear Medicine Products, and Medical Device Products segments.
Cash used in investing activities was $170,921 for the three months ended March 31, 2024, and cash used in investing activities was $52,202 for the same period in 2023. The cash used in both periods was for the purchase of equipment.
Cash used in financing activities was $63,641 during the three months ended March 31, 2024, and cash used in financing activities for the same period in 2023 was $15,363. During the three months ended March 31, 2024, cash paid for interest was $155,168 and during the same three-month period in 2023, cash paid for interest was $113,855. Additionally, during the three months ended March 31, 2024, we received $1,479 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan, as compared to $2,622 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan in 2023. During the three months ended March 31, 2024, principal payments on notes payable were $64,365, as compared to $15,723 for the same period in 2023.
In February March 31, 2024, we paid our annual dividend on the Series C Preferred Stock. Dividends payable totaled $243,780 at that time. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. The Company issued 1,808,400 shares of common stock in lieu of a dividend payment of $90,420. The remaining $153,360 of dividend payable was settled with cash.
Total increase in cash for the three months ended March 31, 2024, was $177,882 compared to a cash increase of $913,746 for the same period in 2023.
We expect that cash from operations, cash raised via equity financing, and our current cash balance will be sufficient to fund operations for the next twelve months. Our future liquidity and capital funding requirements will depend on numerous factors, including commercial relationships, technological developments, market factors, available credit, and preferred stock shareholders. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.
Debt
In December 2013, we entered into a promissory note agreement with our then Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $500,000 (the 2013 Promissory Note). The 2013 Promissory Note is secured and bears interest at 6% per annum and was originally due June 30, 2014. According to the terms of the 2013 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of our common stock. In June 2014, pursuant to a modification, the maturity date was extended to December 31, 2017. In February 2017, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2020, with all remaining terms unchanged. In December 2019, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2021, with all remaining terms unchanged. In January 2022, the 2013 Promissory Note was modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged. In February 2024, the 2013 Promissory Note was modified to extend the maturity date to March 31, 2026, with all remaining terms unchanged. At March 31, 2024, accrued interest payable on the 2013 Promissory Note was $309,234.
In April 2018, we borrowed $120,000 from our Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2018 Promissory Note). The 2018 Promissory Note accrues interest at 6% per annum, which is payable upon maturity of the 2018 Promissory Note. The 2018 Promissory Note was originally unsecured and originally matured on August 1, 2018. At any time, the holder of the 2018 Promissory Note may elect to have any or all of the principal and accrued interest settled with shares of our common stock based on the average price of the shares over the previous 20 trading days. Pursuant to an amendment to the 2018 Promissory Note in June 2018, the maturity date was extended to March 31, 2019 with all other provisions remaining unchanged. Pursuant to a second amendment to the 2018 Promissory Note in February 2019, the maturity date was extended to July 31, 2019 with all other provisions remaining unchanged. Pursuant to a third amendment to the 2018 Promissory Note in July 2019, the maturity date was extended to January 31, 2020 with all other provisions remaining unchanged. Pursuant to a fourth amendment to the 2018 Promissory Note in December 2019, the maturity date was extended to December 31, 2021, the note was modified to become secured by company assets, with all other provisions remaining unchanged. In December 2021, the 2018 Promissory Note was modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged. In December 2023, the 2018 Promissory Note was modified to extend the maturity date to January 31, 2025, with all remaining terms unchanged. In February 2024, the 2018 Promissory Note was modified to extend the maturity date to March 31, 2026, with all remaining terms unchanged. At March 31, 2024, accrued interest on the 2018 Promissory Note totaled $42,770.
In December 2019 and February 2020, we borrowed an aggregate of $1,000,000 from our Chief Executive Officer, Chairman of the Board, former Chairman of the Board, and one of our major shareholders pursuant to a promissory note (the 2019 Promissory Note). The 2019 Promissory Note bears an interest rate of 4% annually and was originally due December 31, 2022. According to the terms of the 2019 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of the Company’s common stock based on the average closing price of the Company’s common stock for the 20 days preceding the payment. In December 2022, the 2019 Promissory Note was modified to extend the maturity date to December 31, 2024, with all remaining terms unchanged. In February 2024, the 2019 Promissory Note was modified to extend the maturity date to March 31, 2026, with all remaining terms unchanged. At March 31, 2024, the accrued interest on the 2019 Promissory Note totaled $169,131.
In June 2023, we executed an asset purchase agreement with AMICI, Inc. for purchase of medical devices and related assets and intellectual property rights. As part of the asset purchase agreement, we entered a promissory agreement for $427,100. According to the terms of the agreement, we are to pay the seller a minimum of $10,000 per month for a period of 45 months. The amount due is not subject to interest until the 25th month after the anniversary of the closing of the agreement. At March 31, 2024, the balance of this agreement was $362,100.
CRITICAL ACCOUNTING POLICIES
From time-to-time, management reviews and evaluates certain accounting policies that are considered to be significant in determining our results of operations and financial position.
A description of the Company’s critical accounting policies that affect the preparation of the Company’s financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness, as of March 31, 2024, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2024.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
A discussion of legal matters is found in Note 7, “Commitments and Contingencies”, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report.
There have been no material changes or updates to the risk factors previously disclosed in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
During the quarter ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
| Exhibit No. |
Description |
| 3.1 |
| 3.2 |
| 3.3 |
| 3.4 |
|
| 3.5 |
| 31.1* |
Certification by the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* |
Certification by the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1** |
| 32.2** |
| 101.INS* |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
# Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and is the type of information that the registrant treats as private or confidential.
† Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits or schedules upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 15, 2024 |
International Isotopes Inc. |
|
| By: |
/s/ Shahe Bagerdjian |
|
| Shahe Bagerdjian |
||
| Chief Executive Officer |
||
| By: |
/s/ W. Matthew Cox |
|
| W. Matthew Cox |
||
| Chief Financial Officer |
||
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, Shahe Bagerdjian, certify that:
1. I have reviewed this quarterly report on Form 10-Q of International Isotopes Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2024
/s/ Shahe Bagerdjian
Shahe Bagerdjian, Chief Executive Officer
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
I, W. Matthew Cox, certify that:
1. I have reviewed this quarterly report on Form 10-Q of International Isotopes Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2024
/s/ W. Matthew Cox
W. Matthew Cox, Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of International Isotopes Inc. and subsidiaries (the “Company”) for the period ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Form 10-Q”), I, Shahe Bagerdjian, Chief Executive Officer of the Company, in my capacity as such, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
|
(1) |
The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)); and |
|
(2) |
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
/s/ Shahe Bagerdjian |
|
|
Shahe Bagerdjian |
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of International Isotopes Inc. and subsidiaries (the “Company”) for the period ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Form 10-Q”), I, W. Matthew Cox, Chief Financial Officer of the Company, in my capacity as such, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
|
(1) |
The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)); and |
|
(2) |
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
/s/ W. Matthew Cox |
|
|
W. Matthew Cox |
|
|
Chief Financial Officer |