Investor Center

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

 

 

Reconciliation of cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows is presented in the table below:                

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' (Deficit) Equity

Three and Six Months Ended June 30, 2023

(Unaudited)

 

 

 

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' (Deficit) Equity

Three and Six Months Ended June 30, 2022

(Unaudited)

 

 

 

 

See accompanying notes to the condensed consolidated financial statements

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

 

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, 2022 filed with the Securities and Exchange Commission (SEC) on April 6, 2023, as amended on May 3, 2023, 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 four business segments:

 

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.

 

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.

 

Radiochemical Products. Our Radiochemical Products segment includes production and distribution and 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.

 

 

Fluorine Products. We established the Fluorine Products segment in 2004 to support production and sale of the gases that we expected to produce using our Fluorine Extraction Process (FEP) in conjunction with the 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 on 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. In the meantime, the Company expects 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.

 

RESULTS OF OPERATIONS

 

Three Months Ended June 30, 2023,Compared to Three Months Ended June 30, 2022

 

Revenue for the three months ended June 30, 2023 was $3,112,165 as compared to $2,434,808 for the same period in 2022, an overall increase of $677,357, or approximately 28%. This increase in revenue was the result of increased revenue in our radiochemical and cobalt products segments offset by decreased revenues in our nuclear medicine standards segment, 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 June 30, 2023 and 2022: 

 

		For the three-				For the three-
		months ended				months ended
		June 30,				June 30,
Sale of Product		2023				2022				$ change				% change
Radiochemical Products		$	1,736,043			$	1,380,039			$	356,004				26	%
Cobalt Products			448,258				99,146				349,112				352	%
Nuclear Medicine Standards			927,864				955,623				(27,759	)			-3	%
Fluorine Products			—				—				—				—	%
Total Consolidated		$	3,112,165			$	2,434,808			$	677,357				28	%

 

Cost of sales increased to $1,269,552 for the three months ended June 30, 2023 from $1,034,278 for the same period in 2022. This is an increase of $235,274, or approximately 23%. The increase in cost of sales in the three-month comparison was primarily due to the increased sales activity in our radiochemical and cobalt products segments, as discussed in detail below. Gross profit for the three months ended June 30, 2023 was $1,842,613, compared to $1,400,530 for the same period in 2022. This represents an increase in gross profit of $442,083, or approximately 32%.

 

The following table presents cost of sales and gross profit data for each of our business segments for the three months ended June 30, 2023 and 2022:

 

		For the three-								For the three-
		months ended				% of				months ended				% of
		June 30,				Total Sales				June 30,				Total Sales
		2023				2023				2022				2022
Total Sales		$	3,112,165							$	2,434,808
Cost of Sales
Radiochemical Products		$	597,063				19	%		$	506,522				21	%
Cobalt Products			246,398				8	%			26,014				1	%
Nuclear Medicine Standards			426,091				14	%			501,742				21	%
Fluorine Products			—				—	%			—				—	%
Total Segments			1,269,552				41	%			1,034,278				42	%
Gross Profit		$	1,842,613							$	1,400,530
Gross Profit %			59	%							58	%

 

 

Operating expense increased approximately 18% to $2,071,073 for the three months ended June 30, 2023, from $1,752,639 for the same period in 2022. This increase of $318,434 is due to an 18% increase in Salaries and Contract Labor Expenses, 9% increase in General, Administrative, and Consulting Expenses and a 109% increase in Research and Development costs. The increase in Salaries and Contract Labor Expenses is primarily due to increased costs of salaries and benefits for employees. The increase in General, Administrative, and Consulting Expenses is primarily the result of increased legal and professional expenses during the three months ended June 30, 2023, as compared to the same period in 2022. The 109% increase in Research and Development cost is due to increased expenses related to product development during the three months ended June 30, 2023, as compared to the same period in 2022.

 

The following table presents a comparison of total operating expense for the three months ended June 30, 2023 and 2022:

 

 

		For the three-				For the three-
		months ended				months ended
		June 30,				June 30,
Operating Costs and Expenses:		2023				2022				% change				$ change
Salaries and Contract Labor		$	944,179			$	801,972				18	%		$	142,207
General, Administrative and Consulting			943,870				863,025				9	%			80,845
Research and Development			183,024				87,642				109	%			95,382
Total operating expenses		$	2,071,073			$	1,752,639				18	%		$	318,434

 

 

Other income was $37,518 for the three months ended June 30, 2023, as compared to $225,768 for the same period in 2022. This is a decrease of $188,250, or approximately 83%, primarily due to $200,000 in income from a sublease of our facility in the three months ended June 30, 2022. As part of this sublease agreement, we received $200,000 once relocation and build-out costs were completed.

 

Interest expense for the three months ended June 30, 2023 was $82,216, compared to $146,387 for the same period in 2022. This is a decrease of $64,171, or approximately 44%. The decrease in interest expense is due to decreased accretion of beneficial conversion feature and discount and decreased interest due for outstanding debt. 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 June 30, 2023 and 2022, we accrued dividends payable of $61,695 and $60,945 respectively, 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 June 30, 2023, was $263,302, compared to net loss of $272,048, for the same period in 2022. This is a decrease in net loss of $8,746 that is largely the result of the increase in revenue in our radiochemical products and cobalt products segments partially offset by the decrease in operating expenses for the three months ended June 30, 2023, as compared to the same period in 2022.

 

Radiochemical Products. Revenue from the sale of radiochemical products for the three months ended June 30, 2023 was $1,736,043, compared to $1,380,039 for the same period in 2022. This is an increase of $356,004, or approximately 26% during the three months ended June 30, 2023. 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 Radiochemical products going forward, primarily from the sale of our generic sodium iodide I-131 drug product.

 

Gross profit of radiochemical products for the three months ended June 30, 2023 was $1,138,980, compared to $873,517, for the same period in 2022, and gross profit percentages were approximately 66% and 63% for the three months ended June 30, 2023 and 2022, respectively. Cost of sales for radiochemical products increased to $597,063 for the three months ended June 30, 2023, as compared to $506,522 for the same period in 2022. This is an increase of $90,541, or approximately 18%, and was primarily the result of increased sales of product. Operating expense for this segment increased to $421,525 for the three months ended June 30, 2023, compared to $367,887 for the same period in 2022. This increase in operating expense of $53,638, or approximately 15%, was primarily due to increased costs for research and development for this segment. This segment reported net income of $717,455 for the three months ended June 30, 2023, as compared to net income of $505,630 for the same period in 2022. The increase in net income of $211,825 is the result of increases in revenue and gross profit.

 

 

Cobalt Products. Revenue from the sale of cobalt products for the three months ended June 30, 2023 was $448,258, compared to $99,146, for the same period in 2022. This represents an increase of $349,112, or approximately 352%. 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 June 30, 2023, was $246,398, as compared to $26,014, for the same period in 2022. Gross profit for cobalt products for the three months ended June 30, 2023 was $201,860 compared to $73,132 for the same period in 2022. This is an increase of $128,728, or approximately 176% and is attributable to increased source manufacturing for the three months ended June 30, 2023. Operating expense in this segment increased to $148,220 for the three months ended June 30, 2023, from $115,464 for the same period in 2022. This is an increase of $32,756, or approximately 28%. This increase in operating expenses for the three months ended June 30, 2023 is due to increased equipment and labor expenses. Our net income for cobalt products was $53,640 for the three months ended June 30, 2023, as compared to a net loss of $42,332 for the same period in 2022. The increase in net income of $95,972, or approximately 227%, was attributable to the increased activity in cobalt sealed source manufacturing.

 

Nuclear Medicine Standards. Revenue from nuclear medicine products for the three months ended June 30, 2023, was $927,864, compared to $955,623 for the same period in 2022. This represents a decrease in revenue of $27,759, or approximately 3%.

 

Cost of sales for our nuclear medicine standards segment for the three months ended June 30, 2023, was $426,091, as compared to $501,742 for the same period in 2022. The decrease in cost of sales in the period-to-period comparison of $75,651, or 15%, was due to decreased sales and improved gross profit during the three-month period ended June 30, 2023, as compared to the same period in 2022. Gross profit for our nuclear medicine standards segment for the three months ended June 30, 2023 was $501,773 compared to $453,881 for the same period in 2022, and gross profit percentages were approximately 54% and 47% for the three months ended June 30, 2023 and 2022, respectively. This is an increase in gross profit of $47,892, or approximately 11%.

 

Operating expense for this segment for the three months ended June 30, 2023 increased to $492,045, from $480,025 for the same period in 2022. This is an increase of $12,020, or approximately 3%, and is the result of increased labor costs. Net income for this segment for the three months ended June 30, 2023 was $9,728, compared to a net loss of $26,144 for the same period in 2022. This is an increase in net income of $35,872, or approximately 137% and is the result of increased gross profit.

 

Fluorine Products. For the three months ended June 30, 2023 and June 30, 2022, we had no revenue for our fluorine products segment.

 

During the three months ended June 30, 2023, we incurred $21,895 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $42,343 for the same three-month period in 2022. The decrease in expenses is due to decreased professional costs during the three months ended June 30, 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.

 

Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022

 

Revenue for the six months ended June 30, 2023 was $6,201,700 as compared to $5,242,249 for the same period in 2022, an overall increase of $959,451, or approximately 18%. This increase in revenue was the result of increased revenue in all business segments as discussed in more detail below.

 

The following table presents a period-to-period comparison of total revenue by segment for the six months ended June 30, 2023 and 2022: 

 

		For the six-				For the six-
		months ended				months ended
		June 30,				June 30,
Sale of Product		2023				2022				$ change				% change
Radiochemical Products		$	3,498,439			$	3,005,962			$	492,477				16	%
Cobalt Products			606,566				271,052				335,514				124	%
Nuclear Medicine Standards			2,096,695				1,965,235				131,460				7	%
Fluorine Products			—				—				—				100	%
Total Consolidated		$	6,201,700			$	5,242,249			$	959,451				18	%

 

Cost of sales increased to $2,579,051 for the six months ended June 30, 2023 from $2,164,976 for the same period in 2022. This is an increase of $414,075, or approximately 19%. The increase in cost of sales in the six-month comparison was primarily due to the increased sales activity in all our business segments, as discussed in detail below. Gross profit for the six months ended June 30, 2023 was $3,622,649, compared to $3,077,273 for the same period in 2022. This represents an increase in gross profit of $545,376, or approximately 18%.

 

 

The following table presents cost of sales and gross profit data for each of our business segments for the six months ended June 30, 2023 and 2022:

 

		For the six-								For the six-
		months ended				% of				months ended				% of
		June 30,				Total Sales				June 30,				Total Sales
		2023				2023				2022				2022
Total Sales		$	6,201,700							$	5,242,249
Cost of Sales
Radiochemical Products		$	1,227,401				20	%		$	1,068,887				20	%
Cobalt Products			337,359				5	%			82,525				2	%
Nuclear Medicine Standards			1,014,291				16	%			1,013,564				19	%
Fluorine Products			—				—	%			—				—	%
Total Segments			2,579,051				42	%			2,164,976				41	%
Gross Profit		$	3,622,649							$	3,077,273
Gross Profit %			58	%							59	%

 

Operating expense increased approximately 5% to $3,998,681 for the six months ended June 30, 2023, from $3,805,425 for the same period in 2022. This increase of $193,256 is primarily due to an approximate 11% increase in Salaries and Contract Labor Expenses and a 5% increase in Research and Development costs. The increase in Salaries and Contract Labor Expenses is primarily the result of increased costs of salaries and benefits for employees during the six months ended June 30, 2023, as compared to the same period in 2022. The 5% increase in Research and Development cost is due to increased expenses related to product development during the six months ended June 30, 2023, as compared to the same period in 2022.

 

The following table presents a comparison of total operating expense for the six months ended June 30, 2023 and 2022:

 

		For the six-				For the six-
		months ended				months ended
		June 30,				June 30,
Operating Costs and Expenses:		2023				2022				% change				$ change
Salaries and Contract Labor		$	1,919,361			$	1,735,221				11	%		$	184,140
General, Administrative and Consulting			1,771,852				1,776,148				0	%			(4,296	)
Research and Development			307,468				294,056				5	%			13,412
Total operating expenses		$	3,998,681			$	3,805,425				5	%		$	193,256

 

 

 

Other income was $100,930 for the six months ended June 30, 2023, as compared to $2,028,568 for the same period in 2022. This is a decrease of $1,927,638, or approximately 95%, primarily due to a $1,797,978 gain on sale of assets to Pharmalogic Idaho, LLC in the six months ended June 30, 2022. In February 2022, we entered into an asset purchase agreement with Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4.0 million in cash. The sold assets consisted primarily of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company.

 

Interest expense for the six months ended June 30, 2023 was $165,196, compared to $318,144 for the same period in 2022. This is a decrease of $152,948, or approximately 48%. The decrease in interest expense is due to decreased accretion of beneficial conversion feature and discount and decreased interest due for outstanding debt. 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 six months ended June 30, 2023 and 2022, we accrued dividends payable of $122,640 and $121,890 respectively, 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 six months ended June 30, 2023, was $411,356, compared to net income of $982,997, for the same period in 2022. This is a decrease in net income of $1,394,353 that is largely the result of the approximate $1.8 million gain on sale of assets for the six months ended June 30, 2022. This decrease in gain on sale of assets is partially offset by the increase in income as a result of the increase in revenue in all our businesses segments for the six months ended June 30, 2023, as compared to the same period in 2022.

 

 

Radiochemical Products. Revenue from the sale of radiochemical products for the six months ended June 30, 2023 was $3,498,439, compared to $3,005,962 for the same period in 2022. This is an increase of $492,477, or approximately 16% during the six months ended June 30, 2023. 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 Radiochemical products going forward, primarily from the sale of our generic sodium iodide I-131 drug product.

 

Gross profit of radiochemical products for the six months ended June 30, 2023 was $2,271,038, compared to $1,937,075, for the same period in 2022, and gross profit percentages were approximately 65% and 64% for the six months ended June 30, 2023 and 2022, respectively. Cost of sales for radiochemical products increased to $1,227,401 for the six months ended June 30, 2023, as compared to $1,068,887 for the same period in 2022. This is an increase of $158,514, or approximately 15%, and was primarily the result of increased sales of product. Operating expense for this segment increased to $786,471 for the six months ended June 30, 2023, compared to $758,760 for the same period in 2022. This increase in operating expense of $27,711, or approximately 4%, was primarily due to increased costs for research and development costs within the segment. As discussed above, other income from the radiochemical products segment in the six months ended June 30, 2022 included a $1,797,978 gain on sale of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company. This segment reported net income of $1,484,567 for the six months ended June 30, 2023, as compared to net income of $2,976,293 for the same period in 2022. The decrease in net income of $1,491,726 is the result of the difference in the gain on sale of assets but somewhat offset by the increases in revenue and gross profit.

 

Cobalt Products. Revenue from the sale of cobalt products for the six months ended June 30, 2023 was $606,566, compared to $271,052, for the same period in 2022. This represents an increase of $335,514, or approximately 124%. 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 six months ended June 30, 2023, was $337,359, as compared to $82,525, for the same period in 2022. Gross profit for cobalt products for the six months ended June 30, 2023 was $269,207 compared to $188,527 for the same period in 2022. This is an increase of $80,680, or approximately 43% and is attributable to increased source manufacturing for the six months ended June 30, 2023. Operating expense in this segment decreased to $241,812 for the six months ended June 30, 2023, from $243,934 for the same period in 2022. This is a decrease of $2,122, or approximately 1%. This decrease in operating expenses for the six months ended June 30, 2023 is due to decreased expenses for supplies. Our net income for cobalt products was $27,395 for the six months ended June 30, 2023, as compared to a net loss of $55,407 for the same period in 2022. The increase in net income of $82,802, or approximately 149%, was attributable to the increased activity in cobalt sealed source manufacturing. 

 

Nuclear Medicine Standards. Revenue from nuclear medicine products for the six months ended June 30, 2023, was $2,096,695, compared to $1,965,235 for the same period in 2022. This represents an increase in revenue of $131,460, or approximately 7%.

 

Cost of sales for our nuclear medicine standards segment for the six months ended June 30, 2023, was $1,014,291, as compared to $1,013,564 for the same period in 2022. The increase in cost of sales in the period-to-period comparison of $727 was less than 1%. Gross profit for our nuclear medicine standards segment for the six months ended June 30, 2023 was $1,082,404 compared to $951,671 for the same period in 2022, and gross profit percentages were approximately 52% and 48% for the six months ended June 30, 2023 and 2022, respectively. This is an increase in gross profit of $130,733, or approximately 14%.

 

Operating expense for this segment for the six months ended June 30, 2023 increased to $943,891, from $940,099 for the same period in 2022. This is an increase of $3,792, or less than 1%. Net income for this segment for the six months ended June 30, 2023 was $138,513, compared to $11,572 for the same period in 2022. This is an increase in net income of $126,941, or approximately 1,097% and is the direct result of increased gross profit in the six months ended June 30, 2023.

 

Fluorine Products. For the six months ended June 30, 2023 and 2022, we had no revenue for our fluorine products segment.

 

During the six months ended June 30, 2023, we incurred $51,134 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $74,173 for the same six-month period in 2022. The decrease in expenses is due to decreased professional costs during the six months ended June 30, 2023.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At June 30, 2023, we had cash and cash equivalents of $3,274,125 as compared to $2,375,817 at December 31, 2022. This is an increase of $898,308 or approximately 38%. For the six months ended June 30, 2023, net cash provided by operating activities was $1,000,448 and for the six months ended June 30, 2022, net cash used in operating activities was $951,052. The increase in cash provided by operating activities was a result of cash from operations and the receipt of other current assets. The increase in cash and cash equivalents at period end in the period-to-period comparison is the result of cash provided by operating activities.

 

 

Inventories at June 30, 2023 totaled $701,411, and inventories at December 31, 2022 totaled $744,793. Our inventory consists of work in process material for our Radiochemical Products, Cobalt Products, and Nuclear Medicine Products segments.

 

Cash used in investing activities was $66,522 for the six months ended June 30, 2023, and cash provided by investing activities was $3,944,800 for the same period in 2022. The cash used in the six months ended June 30, 2023 was for the purchase of equipment. The cash provided by investing activities in the six months ended June 30, 2022 was for the sale of assets for $4,000,000 somewhat offset by purchases of equipment.

 

Financing activities used cash of $17,399, during the six months ended June 30, 2023, and cash used by financing activities for the same period in 2022 was $442,456. During the six months ended June 30, 2023, cash paid for interest was $157,826 and during the same six-month period in 2022, cash paid for interest was $46,894. Additionally, during the six months ended June 30, 2023, we received $4,880 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan, as compared to $9,805 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan and $61,168 for exercise of warrants for the same period in 2022. During the six months ended June 30, 2023, principal payments on notes payable were $18,239, as compared to $509,257 for the same period in 2022, primarily as a result of debt repayments in the six months ended June 30, 2022.

 

In February 2023, the Company paid its sixth 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 2,266,500 shares of common stock in lieu of a dividend payment of $90,660. The remaining $153,120 of dividend payable was settled with cash.

 

Total increase in cash for the six-month period ended June 30, 2023, was $916,527 compared to a cash increase of $2,551,292 for the same period in 2022.

 

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. At June 30, 2023, accrued interest payable on the 2013 Promissory Note totaled $286,734.

 

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. At June 30, 2023, accrued interest on the 2018 Promissory Note totaled $37,370.

 

 

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. At June 30, 2023, accrued interest on the 2019 Promissory Note totaled $139,131.

 

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, 2022, filed with the SEC on April 6, 2023, as amended on May 3, 2023.

 

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 June 30, 2023, 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 June 30, 2023.

 

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 June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

A discussion of legal matters is found in Note 8, “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.

 

ITEM 1A. RISK FACTORS

 

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, 2022.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit No.

Description

 

3.1	Restated Certificate of Formation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for quarter ended June 30, 2010).

 

3.2	Statement of Designation of the Series C Convertible Redeemable Preferred Stock of International Isotopes Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on February 24, 2017).

 

3.3	Certificate of Amendment to Statement of Designation of the Series C Convertible Redeemable Preferred Stock International Isotopes Inc., dated February 16, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on February 22, 2022).

 

3.4	Certificate of Amendment to Statement of Designation of the Series C Convertible Redeemable Preferred Stock International Isotopes Inc., dated December 28, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed December 28, 2022).
3.5	Bylaws (incorporated by reference to Exhibit 3.2 of the Company's Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 333-26269)).

 

10.1 †	Executive Employment Agreement, dated December 23, 2022, between the Company and Shahe Bagerdjian (as amended) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed May 10, 2023).
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**

Certification by the Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2**

Certification by the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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.

† Constitutes a management contract or compensatory plan or arrangement.

 

SIGNATURES

 

 

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: August 11, 2023	International Isotopes Inc.
	By:	/s/ Steve T. Laflin
		Steve T. Laflin
		Chief Executive Officer
	By:	/s/ W. Matthew Cox
		W. Matthew Cox
		Chief Financial Officer