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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 Nine Months Ended September 30, 2023

(Unaudited)

 

 

 

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' (Deficit) Equity

Three and Nine Months Ended September 30, 2022

(Unaudited)

 

 

 

 

See accompanying notes to the condensed consolidated financial statements

 

 

INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 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 the following four business segments:

 

Radiochemical Products. Our Radiochemical Products segment 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.

 

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.

 

New Business Segment:

 

Medical Devices. While we have not yet commercialized any medical devices, we have invested in this segment throughout 2023 and anticipate additional investments for the remainder of 2023 with commercialization of products starting 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 FDA 510k transfers, and start-up of manufacturing. For this report, these assets are included in our Nuclear Medicine Standards business segment. We anticipate the assets will be part of a fifth business segment of the Company called “Medical Devices” that we plan to start during 2024.

 

 

 

 

 

RESULTS OF OPERATIONS

 

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

 

Revenue for the three months ended September 30, 2023 was $2,918,556 as compared to $2,789,273 for the same period in 2022, an overall increase of $129,283, or approximately 5%. This increase in revenue was the result of increased revenue in our radiochemical segment offset by decreased revenues in our cobalt products and 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 September 30, 2023 and 2022: 

 

		For the three				For the three
		months ended				months ended
		September 30,				September 30,
Sale of Product		2023				2022				$ change				% change
Radiochemical Products		$	1,534,898			$	1,298,667			$	236,231				18	%
Cobalt Products			328,978				424,731				(95,753	)			-23	%
Nuclear Medicine Standards			1,054,680				1,065,875				(11,195	)			-1	%
Fluorine Products			—				—				—				—	%
Total Consolidated		$	2,918,556			$	2,789,273			$	129,283				5	%

 

Cost of sales decreased to $1,125,888 for the three months ended September 30, 2023 from $1,305,730 for the same period in 2022. This is a decrease of $179,842, or approximately 14%. The decrease in cost of sales in the three-month comparison was primarily due to the increased gross profit percentages in our segments, as discussed in detail below. Gross profit for the three months ended September 30, 2023 was $1,792,668, compared to $1,483,543 for the same period in 2022. This represents an increase in gross profit of $309,125, or approximately 21%.

 

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

 

		For the three								For the three
		months ended				% of				months ended				% of
		September 30,				Total Sales				September 30,				Total Sales
		2023				2023				2022				2022
Total Sales		$	2,918,556							$	2,789,273
Cost of Sales
Radiochemical Products		$	536,837				18	%		$	498,210				18	%
Cobalt Products			118,921				4	%			232,679				8	%
Nuclear Medicine Standards			470,130				16	%			574,841				21	%
Fluorine Products			—				—	%			—				—	%
Total Segments			1,125,888				39	%			1,305,730				47	%
Gross Profit		$	1,792,668							$	1,483,543
Gross Profit %			61	%							53	%

 

 

Operating expense increased approximately 7% to $2,102,128 for the three months ended September 30, 2023, from $1,957,096 for the same period in 2022. This increase of $145,032 is due to a 44% increase in Salaries and Contract Labor Expenses offset by a 16% decrease in General, Administrative, and Consulting Expenses and a 32% decrease 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 and additional officer compensation. The decrease in General, Administrative, and Consulting Expenses is primarily the result of periodic waste disposal costs that occurred during the three months ended September 30, 2022 with no comparable expense in the same period in 2023. The decrease in Research and Development cost is due to decreased expenses related to product development during the three months ended September 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 September 30, 2023 and 2022:

 

		For the three		For the three
		months ended		months ended
		September 30,		September 30,
Operating Costs and Expenses:		2023		2022		% change		$ change
Salaries and Contract Labor		$ 1,152,987		$ 800,550		44%		$ 352,437
General, Administrative and Consulting		848,597		1,008,219		(16%)		(159,622)
Research and Development		100,544		148,327		(32%)		(47,783)
Total operating expenses		$ 2,102,128		$ 1,957,096		7%		$ 145,032

 

 

 

Other income was $22,873 for the three months ended September 30, 2023 as compared to $49,151 for the same period in 2022. This is a decrease of $26,278, or approximately 53%, was due to a decrease in miscellaneous income.

 

Interest expense for the three months ended September 30, 2023 was $82,346, compared to $147,116 for the same period in 2022. This is a decrease of $64,770, 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 September 30, 2023 and 2022, we accrued dividends payable of $60,945 in both periods, 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 September 30, 2023, was $348,605 compared to net loss of $568,669 for the same period in 2022. This is a decrease in net loss of $220,064 that is largely the result of the increase in revenue in our radiochemical products and increased gross profit percentages for the three months ended September 30, 2023, as compared to the same period in 2022.

 

Radiochemical Products. Revenue from the sale of radiochemical products for the three months ended September 30, 2023 was $1,534,898, compared to $1,298,667 for the same period in 2022. This is an increase of $236,231, or approximately 18% during the three months ended September 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 September 30, 2023 was $998,061, compared to $800,457 for the same period in 2022, and gross profit percentages were approximately 65% and 62% for the three months ended September 30, 2023 and 2022, respectively. Cost of sales for radiochemical products increased to $536,837 for the three months ended September 30, 2023, as compared to $498,210 for the same period in 2022. This is an increase of $38,627, or approximately 8%, and was primarily the result of increased sales of product. Operating expense for this segment decreased to $310,648 for the three months ended September 30, 2023, compared to $346,234 for the same period in 2022. This decrease in operating expense of $35,586, or approximately 10%, was primarily due to decreased costs for research and development for this segment. This segment reported net income of $687,413 for the three months ended September 30, 2023, as compared to net income of $454,223 for the same period in 2022. The increase in net income of $233,190 is the result of increases in revenue and gross profit.

 

 

Cobalt Products. Revenue from the sale of cobalt products for the three months ended September 30, 2023 was $328,978, compared to $424,731 for the same period in 2022. This represents a decrease of $95,753, or approximately 23%. The decrease 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 September 30, 2023, was $118,921, as compared to $232,679, for the same period in 2022. Gross profit for cobalt products for the three months ended September 30, 2023 was $210,057 compared to $192,052 for the same period in 2022. This is an increase of $18,005, or approximately 9% and is attributable to increased gross profit percentage for the sales the three months ended September 30, 2023. Operating expense in this segment decreased to $119,344 for the three months ended September 30, 2023, from $326,096 for the same period in 2022. This is an decrease of $206,752, or approximately 63%. This decrease in operating expenses for the three months ended September 30, 2023 is primarily the result of periodic waste disposal costs that occurred during the three months ended September 30, 2022 with no comparable expense in the same period in 2023. Our net income for cobalt products was $90,713 for the three months ended September 30, 2023, as compared to a net loss of $134,044 for the same period in 2022. The increase in net income of $224,757, or approximately 168%, was attributable to the decreased operating expenses.

 

Nuclear Medicine Standards. Revenue from nuclear medicine products for the three months ended September 30, 2023, was $1,054,680, compared to $1,065,875 for the same period in 2022. This represents a decrease in revenue of $11,195, or approximately 1%.

 

Cost of sales for our nuclear medicine standards segment for the three months ended September 30, 2023, was $470,130, as compared to $574,841 for the same period in 2022. The decrease in cost of sales in the period-to-period comparison of $104,711, or 18%, was due to improved gross profit percentages during the three-month period ended September 30, 2023, as compared to the same period in 2022. Gross profit for our nuclear medicine standards segment for the three months ended September 30, 2023 was $584,550 compared to $491,034 for the same period in 2022, and gross profit percentages were approximately 55% and 46% for the three months ended September 30, 2023 and 2022, respectively. This is an increase in gross profit of $93,516, or approximately 19%.

 

Operating expense for this segment for the three months ended September 30, 2023 increased to $509,834, from $425,863 for the same period in 2022. This is an increase of $83,971, or approximately 20%, and is the result of increased labor costs. Net income for this segment for the three months ended September 30, 2023 was $74,716, compared to a net loss of $65,171 for the same period in 2022. This is an increase in net income of $9,545, or approximately 15% and is the result of increased gross profit.

 

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

 

During the three months ended September 30, 2023, we incurred $27,870 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $37,204 for the same three-month period in 2022. The decrease in expenses is due to decreased professional costs during the three months ended September 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.

 

Nine Months Ended September 30, 2023, Compared to Nine Months Ended September 30, 2022

 

Revenue for the nine months ended September 30, 2023 was $9,120,256 as compared to $8,031,522 for the same period in 2022, an overall increase of $1,088,734, or approximately 14%. 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 nine months ended September 30, 2023 and 2022: 

 

		For the nine				For the nine
		months ended				months ended
		September 30,				September 30,
Sale of Product		2023				2022				$ change				% change
Radiochemical Products		$	5,033,337			$	4,304,629			$	728,708				17	%
Cobalt Products			935,544				695,783				239,761				34	%
Nuclear Medicine Standards			3,151,375				3,031,110				120,265				4	%
Fluorine Products			—				—				—				100	%
Total Consolidated		$	9,120,256			$	8,031,522			$	1,088,734				14	%

 

Cost of sales increased to $3,704,939 for the nine months ended September 30, 2023 from $3,470,706 for the same period in 2022. This is an increase of $234,233, or approximately 7%. The increase in cost of sales in the nine-month comparison was primarily due to the increased sales activity in all our business segments, as discussed in detail below. Gross profit for the nine months ended September 30, 2023 was $5,415,317, compared to $4,560,816 for the same period in 2022. This represents an increase in gross profit of $854,501, or approximately 19%.

 

 

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

 

		For the nine								For the nine
		months ended				% of				months ended				% of
		September 30,				Total Sales				September 30,				Total Sales
		2023				2023				2022				2022
Total Sales		$	9,120,256							$	8,031,522
Cost of Sales
Radiochemical Products		$	1,764,237				19	%		$	1,567,097				19	%
Cobalt Products			456,280				5	%			315,204				4	%
Nuclear Medicine Standards			1,484,422				16	%			1,588,405				20	%
Fluorine Products			—				—	%			—				—	%
Total Segments			3,704,939				41	%			3,470,706				43	%
Gross Profit		$	5,415,317							$	4,560,816
Gross Profit %			59	%							57	%

 

Operating expense increased approximately 6% to $6,100,809 for the nine months ended September 30, 2023, from $5,762,521 for the same period in 2022. This increase of $338,288 is primarily due to an approximate 21% increase in Salaries and Contract Labor Expenses partially offset by an 8% decrease in General, Administrative and Consulting Expenses and 8% 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 and additional officer compensation during the nine months ended September 30, 2023, as compared to the same period in 2022. The decrease in General, Administrative, and Consulting Expenses is primarily the result of periodic waste disposal costs that occurred during the nine months ended September 30, 2022 with no comparable expense in 2023. The decrease in Research and Development cost is due to decreased expenses related to product development during the nine months ended September 30, 2023, as compared to the same period in 2022.

 

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

 

 

		For the nine		For the nine
		months ended		months ended
		September 30,		September 30,
Operating Costs and Expenses:		2023		2022		% change		$ change
Salaries and Contract Labor		$ 3,072,348		$ 2,535,771		21%		$ 536,577
General, Administrative and Consulting		2,620,449		2,784,367		(6%)		(163,918)
Research and Development		408,012		442,383		(8%)		(34,371)
Total operating expenses		$ 6,100,809		$ 5,762,521		6%		$ 338,288

 

 

Other income was $123,803 for the nine months ended September 30, 2023, as compared to $2,077,719 for the same period in 2022. This is a decrease of $1,953,916, or approximately 94%, primarily due to a $1,797,978 gain on sale of assets to Pharmalogic Idaho, LLC in the nine months ended September 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 nine months ended September 30, 2023 was $247,542, compared to $465,260 for the same period in 2022. This is a decrease of $217,718, or approximately 47%. 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 nine months ended September 30, 2023 and 2022, we accrued dividends payable of $183,585 and $182,835 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 nine months ended September 30, 2023, was $759,961, compared to net income of $414,328, for the same period in 2022. This is a decrease in net income of $1,174,289 that is largely the result of the approximate $1.8 million gain on sale of assets for the nine months ended September 30, 2022. This decrease in gain on sale of assets is partially offset by a decrease of $666,213 in operating loss during the nine months ended September 30, 2023, as compared to the same period in 2022.

 

 

Radiochemical Products. Revenue from the sale of radiochemical products for the nine months ended September 30, 2023 was $5,033,337, compared to $4,304,629 for the same period in 2022. This is an increase of $728,708, or approximately 17%. 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 nine months ended September 30, 2023 was $3,269,100, compared to $2,737,532, for the same period in 2022, and gross profit percentages were approximately 65% and 64% for the nine months ended September 30, 2023 and 2022, respectively. Cost of sales for radiochemical products increased to $1,764,237 for the nine months ended September 30, 2023, as compared to $1,567,097 for the same period in 2022. This is an increase of $197,140, or approximately 13%, and was the result of increased sales of product. Operating expense for this segment decreased to $1,097,120 for the nine months ended September 30, 2023, compared to $1,104,994 for the same period in 2022. This decrease in operating expense of $7,874, or approximately 1%, was partially due to decreased costs for professional services within the segment. As discussed above, other income from the radiochemical products segment in the nine months ended September 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 $2,171,980 for the nine months ended September 30, 2023, as compared to net income of $3,430,516 for the same period in 2022. The decrease in net income of $1,258,536 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 nine months ended September 30, 2023 was $935,544, compared to $695,783, for the same period in 2022. This represents an increase of $239,761, or approximately 34%. 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 nine months ended September 30, 2023, was $456,280, as compared to $315,204, for the same period in 2022. Gross profit for cobalt products for the nine months ended September 30, 2023 was $479,264 compared to $380,579 for the same period in 2022. This is an increase of $98,685, or approximately 26% and is attributable to increased source manufacturing for the nine months ended September 30, 2023. Operating expenses in this segment decreased to $361,156 for the nine months ended September 30, 2023, from $570,030 for the same period in 2022. This is a decrease of $208,874, or approximately 37%. This decrease in operating expenses is due to periodic waste disposal costs of approximately $215,000 that occurred during the nine months ended September 30, 2022 with no comparable expense in 2023. Our net income for cobalt products was $118,108 for the nine months ended September 30, 2023, as compared to a net loss of $189,451 for the same period in 2022. The increase in net income of $307,559, or approximately 162%, was attributable to the increased activity in cobalt sealed source manufacturing and decreased operating expenses. 

 

Nuclear Medicine Standards. Revenue from nuclear medicine products for the nine months ended September 30, 2023, was $3,151,375, compared to $3,031,110 for the same period in 2022. This represents an increase in revenue of $120,265, or approximately 4%.

 

Cost of sales for our nuclear medicine standards segment for the nine months ended September 30, 2023, was $1,484,422, as compared to $1,588,405 for the same period in 2022. The decrease in cost of sales in the period-to-period comparison of $103,983 or approximately 7%. Gross profit for our nuclear medicine standards segment for the nine months ended September 30, 2023 was $1,666,953 compared to $1,442,705 for the same period in 2022, and gross profit percentages were approximately 53% and 48% for the nine months ended September 30, 2023 and 2022, respectively. This is an increase in gross profit of $224,248, or approximately 16%.

 

Operating expense for this segment for the nine months ended September 30, 2023 increased to $1,453,724, from $1,365,962 for the same period in 2022. This is an increase of $87,762 or approximately 6% primarily due to increased cost of labor. Net income for this segment for the nine months ended September 30, 2023 was $213,229, compared to $76,743 for the same period in 2022. This is an increase in net income of $136,486, or approximately 178% and is the direct result of increased revenue and gross profit percentage in the nine months ended September 30, 2023 partially offset by increased operating expenses.

 

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

 

During the nine months ended September 30, 2023, we incurred $79,004 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $111,377 for the same nine-month period in 2022. The decrease in expenses is due to decreased professional costs during the nine months ended September 30, 2023.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At September 30, 2023, we had cash and cash equivalents of $2,897,208 as compared to $2,375,817 at December 31, 2022. This is an increase of $521,391 or approximately 22%. For the nine months ended September 30, 2023, net cash provided by operating activities was $697,645 and for the nine months ended September 30, 2022, net cash used in operating activities was $957,163. 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 September 30, 2023 totaled $740,803, 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 $550,629 for the nine months ended September 30, 2023, and cash provided by investing activities was $3,931,725 for the same period in 2022. The cash used in the nine months ended September 30, 2023 was for the purchase of equipment. The cash provided by investing activities in the nine months ended September 30, 2022 was for the sale of assets for $4,000,000 partially offset by purchases of equipment.

 

Cash provided by financing activities was $403,665 during the nine months ended September 30, 2023, and cash used in financing activities for the same period in 2022 was $456,759. During the nine months ended September 30, 2023, cash paid for interest was $159,926 and during the same nine-month period in 2022, cash paid for interest was $49,699. Additionally, during the nine months ended September 30, 2023, we received $7,127 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan, as compared to $12,305 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 nine months ended September 30, 2023, principal payments on notes payable were $50,792, as compared to $524,532 for the same period in 2022, primarily as a result of debt repayments in the nine months ended September 30, 2022.

 

In February 2023, the Company paid its 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 nine months ended September 30, 2023, was $550,681 compared to a cash increase of $2,517,803 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 September 30, 2023, accrued interest payable on the 2013 Promissory Note totaled $294,234.

 

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. At September 30, 2023, accrued interest on the 2018 Promissory Note totaled $39,170.

 

 

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 September 30, 2023, accrued interest on the 2019 Promissory Note totaled $149,131.

 

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. 

 

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 September 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 September 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 September 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, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

 

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)).

 

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.

 

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: November 13, 2023	International Isotopes Inc.
	By:	/s/ Shahe Bagerdjian
		Shahe Bagerdjian
		Chief Executive Officer
	By:	/s/ W. Matthew Cox
		W. Matthew Cox
		Chief Financial Officer