Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES  Yes o    NO  Nox

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity at June 30, 2017,2022, the last business day of ourthe registrant’s second fiscal quarter, was approximately $23.7$50 million. For purposes of this calculation, all directors and executive officers of the registrant and holders of 10% or more of the registrant’s common stock are assumed to be affiliates. This determination of affiliate status is not necessarily conclusive for any other purpose.

As of March 16, 2018,3, 2023, the number of shares outstanding of the registrant’s common stock, $.01 par value, was 407,633,450514,992,771 shares.

Documents Incorporated by ReferenceDOCUMENTS INCORPORATED BY REFERENCE

Certain information called for in Part III of this Annual Report on Form 10-K is incorporated by reference tofrom the registrant’s definitive proxy statement for the 20182023 annual meeting of shareholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2017.2022.

ii

INTERNATIONAL ISOTOPES INC.

FORM 10-K

TABLE OF CONTENTS

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iii

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (the “Annual 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 Annual Report are forward-looking. Words such as: “anticipates,” “believes,” “should,” “expects,” “future” and “intends” and similar expressions identify forward-looking statements. In particular, statements regarding: financial condition, operating results and liquidity, future cash flow from operations, our ability to achieve profitability, the expected growth in business segment revenues, our expansion into new markets, the ability of our products to compete with several larger companies and products, the results of market studies used to support our business model, our anticipated improvement in economic conditions, the expected increased revenue by gaining approvalresulting from sales of new generic drug products,our U.S. Food and Drug Administration (FDA)-approved sodium iodide product, our ability to continue cobalt-60 production, and manage costs, the commercial opportunitystatus of theour proposed depleted uranium and fluorine extraction processingde-conversion facility, and the sufficiency of our available cash and revenues from operations to meet our operating needs, are forward-looking. 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 Annual Report. Certain risks and uncertainties that could cause actual results to differ significantly from management’s expectations are described in the section entitled “Risk Factors” in this Annual Report. That section, along with other sections of this Annual Report, describes some, but not all, of the factors that could cause actual results to differ significantly from management’s expectations. We do not intend to publicly release any revisions to these forward-looking statements that may be made 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 other reports that we file from time to time with the Securities and Exchange Commission (the “SEC”).

PART I

Item 1.      BUSINESS

BUSINESS

General Business and Products Description

International Isotopes Inc. (the “Company”, “we”, “us” and “our”) wasproduces an FDA approved generic sodium iodide I-131 drug product, manufactures a wide range of nuclear medicine calibration and reference standards, provides radiochemicals for clinical research and life sciences, and produces a variety of cobalt-60 products for medical, research, and industrial applications.

We were formed as a Texas corporation in 1995. Our wholly-owned subsidiaries are International Isotopes Idaho Inc., a Texas corporation; International Isotopes Fluorine Products, Inc., an Idaho corporation; and International Isotopes Transportation Services, Inc., an Idaho corporation.corporation; RadQual, LLC, a limited liability company (RadQual); and TI Services, LLC, a limited liability company (TI Services). Our core business consists of sixfour reportable segments which include: Radiochemical Products, Cobalt Products, Nuclear Medicine Standards, Cobalt Products, Radiochemical Products,and Fluorine Products, Radiological Services, and Transportation.Products.

During 2017,2022, we focused our efforts on achieving profitability in each of our core business segments and reached several significant goals. During 2017,2022, we:

·

Continued research into

• Increased company revenues by 16%.
• Reached $11.2 million in total revenues which was the expansionlargest single year in company history.
• Increased sales in the Radiochemical segment by 41% primarily through increases in sales of radiochemical products and performed follow-up work with regard to the 2016 submission of an abbreviated New Drug Application (aNDA) to the U.S. Food and Drug Administration (“FDA”) for a newour FDA approved generic sodium iodide drug;

  
  

  ·

  Maintained improved production methodsI-131 drug product.

• Completed the sale of unused assets for $4.0 million in cash and for a gain of $1.8 million.
• Developed several new products for our Nuclear Medicine products segment and expanded our range of products in this segment into Positron Emission Tomography (PET) imaging standards.
• Expanded sales of our nuclear medicine segment and achieved continued and significant reduction in waste and scrapped material as a result of these efforts;

  
  

  ·

  Became a managing member ofproducts through exercising our management opportunity with RadQual, LLC (“RadQual”), as a result of a change in ownership of RadQual(RadQual). In particular, we increased our international sales by affiliates ofutilizing the Company, which we believe will strengthen our ability to developmarketing and market our nuclear medicine products;

  
  

  ·

  Contracted with an alternate supplier of cobalt-60 for the purchase of cobalt material to meet near term customer contract obligations;

  
  

  ·

  Awarded several radiological services jobs through the U.S. Department of Energy’s (DOE) Orphan Source Recovery Program (“OSRP”) and through the International Atomic Energy Agency (“IAEA”) in which we were able to use our mobile hot cell both domestically and abroad; and

  
  

  ·

  Maintained our relationships in Lea County, New Mexico (locationdistribution expertise of our proposed de-conversion facility)wholly owned subsidiary TI Services; and continued

• Continued to pursue viable opportunities to obtain additionalgovernment or commercial contracts for depleted uranium de-conversion services related tofor our proposedU.S. Nuclear Regulatory Commission (NRC) licensed de-conversion project.
  project in Lea County, New Mexico.

In 2018,2023, we plan to continue efforts to further expand and improve upon our operations in our core business segments. We intend to continue to invest in these segments and work to pursue product development, reduce production costs, and expand sales in each of them.our segments. The following paragraphs provide a brief description of each of our business segments. Certain financial information with respect to each of our business segments, including revenues from external customers, a measure of profit or loss, and total assets, is set forth in Note 1415 to our Consolidated Financial Statements which begin on page F-6.F-7.

Radiochemical Products

This segment includes the production and distribution of various isotopically pure radiochemicals for medical, industrial, and research applications. These products are either directly produced by us or are purchased in bulk from other producers and distributed by us in customized packages and chemical forms tailored to meet customer and market demands. In February 2020, we received FDA approval of our ANDA for our generic sodium iodide I-131 drug product. Our generic sodium iodide drug product is the only generic product of this type manufactured in the U.S. and offers customers an attractive domestic alternative to the single existing foreign commercial drug manufacturer. We have two suppliers of sodium iodide I-131 from whom we purchased material during 2021 and 2022 to produce this product in the most reliable manner possible.

Cobalt Products

Our cobalt products segment includes the production of bulk cobalt (cobalt-60), fabrication of cobalt capsules for radiation therapy as well as various industrial applications, and recycling of expended cobalt sources.

The year-over-year demand for cobalt products has remained strong as a result of the introduction of several new types of cobalt therapy units and we have continued to see demand for cobalt-manufactured products for those devices. We have explored, and intend to continue to explore, opportunities to further develop cobalt products and sales on an on-going basis. The production, use, transport, and import/export of these products are all heavily regulated, but we have developed an experienced staff of technicians, shipping specialists, and supervisors as part of our efforts to comply with the regulations and support cost effective, timely delivery of these products.

At the present time, we are the sole purchaser of high activity cobalt from any of the DOE reactors in the U.S. There are a few other cobalt source manufacturers in North America. We believe both our product and service provide us with a competitive edge in competing with these other manufacturers.

Nuclear Medicine Standards

This segment consists of the manufacture of sources and standards associated with Single Photon Emission Computed Tomography (SPECT) and Positron Emission Tomography (PET) imaging, patient positioning, and calibration or operational testing of dose measuring equipment for the nuclear pharmacy industry. Our nuclear medicine standards products include flood sources, dose calibrators, rod sources, flexible and rigid rulers, spot markers, pen point markers, and a host of specialty design items. These products are manufactured through an exclusive manufacturing agreement with RadQual,and distributed by our wholly-owned subsidiary, RadQual. In July 2021, we purchased the remaining 75.5% interest of whichRadQual. Prior this purchase we own a 24.5% interest. In August 2017, affiliates of the Company purchased 75.5% of RadQual and at that time the Company was named aswere one of two managing members of RadQual.  As a result of this ownership change the Company will haveRadQual and had significant influence in management decisions with regard to RadQual’s business operations. The Company has a manufacturing agreement withFollowing the July 2021 acquisition, we have now fully consolidated the income and expenses from both RadQual that will remain in placeLLC and provides that we will manufacture sources exclusively for RadQual and will not manufacture products that would directly compete with RadQual sources.TI Services.

There are over 5,000 nuclear medicine centers in the United States (“U.S.”(U.S.) that require nuclear medicine products on a regular repeat basis. We have been manufacturing these products for RadQual since 2001. The majority ofMost nuclear medicine product sales are to U.S. customers; however,customers. However, in recent years, because of stronger marketing efforts, we have seen an increase in foreign sales.sales, as shown in Note 14 to the accompanying audited financial statements. All of these products contain radioactive isotopes that decay at a predictable rate. Therefore, customers are required to periodically replace most of these products when they reach the end of their useful lives. The useful life of these products varies depending on the isotope used in manufacture, but in most cases averages 18eighteen months to two years. TheMost of the isotopes used in manufacturing these nuclear medicine products are available from various sources world-wide and we are not dependent on a single supplier. In addition to the products themselves, we have developed a complete line of specialty packaging for the safe transportation and handling of these products.

RadQual has numerous distributors for direct sales of its products. Formerly, the largest distributor was Technology Imaging Services Inc. (“TIS”). In December 2010, we formed a 50/50 joint venture with RadQual to acquire the assets of TIS, and those assets were used to create TI Services, LLC (“TI Services”).  This joint venture has provided sales opportunities in existing and future RadQual product lines both domestically and internationally as a marketer for RadQual products.

Cobalt Products

Our cobalt products segment includes the production of bulk cobalt (cobalt-60), fabrication of cobalt capsules for radiation therapy or various industrial applications, and recycling of expended cobalt sources.

Although historically bulk cobalt sales have accounted for a significant amount of the total revenue from this business segment, as further described below, during the past several years we have not had any bulk sales because of an interruption in cobalt production in the DOE’s Advanced Test Reactor (“ATR”) located in Idaho.  However, through continued work with the DOE, a new cobalt target was designed and in October 2014, we entered into a ten-year agreement with the DOE for the irradiation of the new target design which should increase our supply of cobalt material from the ATR in late 2018. Subsequent to completing the agreement with the DOE, we began putting commercial sales agreements in place with some customers.  In accordance with those agreements, we began receiving pre-payments from customers on future cobalt shipments which we have recorded as unearned revenue.  We expect to recognize significant sales of our cobalt-60 material in late 2018. In the meantime, we have identified a secondary supplier of cobalt-60 material to fulfill customer needs and will also rely on obtaining recycled material for the manufacture of some sources.

The year-over-year demand for cobalt products has remained strong as a result of the introduction of several new types of cobalt therapy units and we have continued to see demand for cobalt-manufactured products for those devices. On an ongoing basis we explore opportunities to further develop cobalt products and sales.  The production, use, transport, and import/export of these products are all heavily regulated, but we have developed an experienced staff of technicians, drivers, and supervisors to comply with the regulations and support cost effective and timely delivery of these products.

We also own older cobalt targets that are stored at the ATR.  We are currently working with the DOE on determining a feasible transfer and shipping method for these targets.   The older targets continue to hold significant market value to us provided we are able to transport them to our facility for processing.    In December of 2016 we brought in two targets from the ATR which were used to build calibration sources for the DOE. We did not pull any additional older cobalt target material out of the ATR during 2017, however, some material could be transferred and sold during 2018. We will reevaluate the remaining value of this older material at the end of 2018 and either make additional impairments to value or schedule future shipments in 2019.

Radiochemical Products

This segment now includes production and distributionsource disposal activities that were previously reported in the discontinued Radiological Services business segment.

Radiological Services

We discontinued separate reporting of various isotopically pure radiochemicals for medical, industrial, and research applications.  These products are either directly produced by us or are purchased in bulk from other producers and distributed by us in customized packages and chemical forms tailored to meet customer and market demands.   Sodium Iodide (Iodine-131) radiochemical product accounts for the largest portion of sales within this segment.  The bulkactivities of our Iodine-131 is supplied to us through an agreement with NTP Radioisotopes (Pty) Ltd. (“NTP”) in South Africa and is imported as a radiochemical intended for medical applications.  In November 2017, we renewed our agreement with NTP for the supply of Iodine-131 that allows us to purchase iodine at a mutually agreeable pre-determined price through December 2019.  Either party may terminate the agreement by giving three months’ notice prior to the expiration of the term. We have identified additional suppliers of sodium iodide from whom we have purchased material during 2017 and will likely continue this relationship into the future.

Perhaps the most significant business development for the Company during 2016 was our submittal of an abbreviated New Drug Application (aNDA) to the FDA for sodium iodide I-131.  During 2017, we continued support and follow-up work with the FDA that such a submission typically requires and will continue these efforts during 2018.  Generally, Iodine-131 is used in the treatment and diagnosis of various diseases of the thyroid gland such as Graves’ disease, thyroid cancer and hyperthyroidism.  This is the first generic application for a sodium iodide product in the U.S. and after FDA approval sales of the product in the U.S. are expected to have a significant and beneficial impact to overall Company revenue and profitability.  Other less significant sales of radiochemical in this segment consist of sales of isotopes such as Cobalt-57 (Co-57), Cesium-137 (Cs-137), Germanium – 68 (Ge-68), Sodium-22 (Na-22), and Barium-133 (Ba-133).

Radiological Services business segment.

ThisThe Radiological Services business segment includes a wide variety ofincluded field services, such as decommissioning disused irradiation units, performing sealed source exchanges in irradiation and therapy units, and processing gemstones.  In May 2004, we entered into an exclusive contract with Quali-Tech, Inc., for gemstone processing, and historically,source disposal. As the Company is no longer engaged in field services and gemstone processing, which previously made up the substantial portion of activities of this contractsegment, separate reporting of this segment has accountedbeen discontinued. Spaces and resources previously used to perform these discontinued business activities have been allocated to our other business segments. The loss of revenue from these activities has been more than compensated for by the majorityexpansion of sales in thisour Radiochemical products segment and expected expansion of sales in our Nuclear Medicine Standards segment. In May 2012, we modifiedThe Company continues to engage in source disposal activities and renewed the contract, which remains in effect until either party gives a minimum of six months’ notice to the other that it does not intend to continue the contract. In November 2016, we made an additional modification to the contract to increase the gemstone processing charge on March 1^st of each year thereafter beginning on March 1, 2018.  The adjustment to the charge will be based on data provided by the U.S. Bureau of Labor Statistics Historical Consumer Price Index. All other provisions of the agreement remain unchanged.  The contract provides that we will act as the exclusive processor of gemstones for Quali-Tech, Inc., for the term of the contract and two years beyond.

We are licensed throughhas begun reporting these activities under the Nuclear Regulatory commission (“NRC”) to perform certain field service activities in connection with the DOE’s Orphan Source Recovery Program (“OSRP”).  These activities include services to support recovery of disused sources under the DOE’s OSRP and installation or removal of certain cobalt therapy units. We designed and built a mobile hot cell unit to use in this field service work and during 2017 and 2016 used the unit to perform numerous OSRP field service jobs. The unique design of our mobile hot cell allows us to modify the hot cell’s components to perform customized source removal. This type of field service work is expected to generate the majority of revenue within this businessMedicine Standards segment in the coming years and has expanded to include similar international contract opportunities through the International Atomic Energy Agency (“IAEA”).starting January 1, 2022.

Transportation

We established this segment in 2006 through our subsidiary, International Isotopes Transportation Services (“IITS”), to provide transportation of our products (such as cobalt sources) and to offer “for hire” transportation services of hazardous and non-hazardous cargo materials. A major factor in our decision to establish this subsidiary and business segment was the high cost of third-party transportation services and high volume of regulations involving the security and tracking of shipments of cobalt.  IITS provides us with considerable savings for the transportation of our own products and produces a small revenue stream through the transportation of products for other companies. Because our transportation services have historically operated in support of our radiological field services work and other business segments, beginning in 2018, management has decided to eliminate transportation services as a separate reporting segment and will include future transportation service activity within the other business segments for which the service is performed.

Fluorine Products and the Planned Uranium De-conversionDe-Conversion Facility

In 2004, we began a major undertaking to construct the first commercial uranium de-conversion facility in the U.S.  At that time, we believed that such an undertaking would provide an excellent commercial opportunity to us in the future.

We established the fluorine products business segment in 2004 to support production and sale of thevarious fluoride gases produced using our Fluorine Extraction Process (“FEP”) that we(FEP). FEP was intended to usebe completed in conjunction with the operation of thea proposed depleted uranium (DUF6) de-conversion facility in Lea County, New Mexico. The FEP is a process that produces ultra-high-purity fluoride gas products through a solid-to-solid reaction between depleted uranium tetrafluoride (“DUF4”) and various solid metal oxides such as silicon. High-purity fluoride gases are in high demand for processes such as ion-implantation and chemical vapor deposition and also for the manufacture of organic complexes used in a host of industrial applications and manufacturing processes.  The FEP products have very high purity, which makes them ideally suited to these specialty applications.

We acquired seven patents for the FEP in January 2004 and built a pilot production facility in Idaho that began operation in 2006.  In 2010, we were granted an additional process patent on FEP based upon information gained through the operation of the pilot facility.  Our pilot facility was not used for commercial gas production but instead focused upon production of high-purity products and examined methods of scaling up the size of the production operations in support of the proposed de-conversion facility in New Mexico.  By the end of 2012, we had completed our testing of individual components and analytical processes and in April 2013, we shut down the pilot facility and terminated our lease on that property.

DUF6 is the waste by-product of uranium enrichment, and any uranium enrichment facility will create very large quantities of DUF6. Our intended plant design would process DUF6 into DUF4 and then use the DUF4 in the FEP process, thereby, creating a business model in which the Company is paid to process the DUF6 and then is able to sell the fluoride products produced from the DUF4.

We were able to put an agreement in place with URENCO in 2010 to process some of their DUF6 waste. In October 2012, we received the NRCa construction and operating license from the NRC for the planned de-conversion facility. This is a forty (40) year operating license and is the first commercial license of this type issued in the U.S.  There are no other companies with a similar license application under review by the NRC and the license does not require us to begin construction of the project by any specific date.   Therefore, the NRC license represents a significant competitive barrier and we believe that it provides us with a very valuable asset now and in the future when we are ready to resume formal design and engineering work on the plant.

Due to changesChanges in the nuclear industry near the end of 2013, however, significantly reduced commercial demand for this type of facility. Therefore, we placedsuspended all further engineeringdevelopment work on the proposed uranium de-conversion facility on hold.  The changes to market conditions were the result of changes in the outlookproject. We still anticipate a potential future need for growth in the nuclear industry.  When we began pursuing this project, there were several companies planning for construction of new commercial uranium enrichment plants in the U.S. The de-conversion service agreement we had put in place with URENCO USA (“UUSA”), would have used approximately 50% of the installed processing capacity of our proposed de-conversion facility.  Plans to obtain additional contracts with the other enrichment companies that would commit the remaining capacity of the planned facility have continued to be delayed because of the general slowdown in nuclear industry growth.

Further activity within this segment will be deferred until market and industry conditions change and justify resuming design and construction of the facility.  In the meantime, we expect to continue to incur some costs associated with the maintenance of licenses, property agreements, and other project investments.    Meanwhile, however, the facility operated by UUSA continues to produce and stockpilea depleted uranium tailsconversion facility and, therefore, we believe there is still an opportunity to provide commercial depleted uranium de-conversion services at some point in the future.  We were also made aware in 2015 that the DOE may have a need for DUF4 materialare keeping all licenses and we are continuing to monitor that additional opportunity.  We expect that, either DOE needs for DUF4 material or commercial enrichment needs to process DUF6 waste, will eventually dictate the appropriate time to resume this project.permits current.

In connection with the proposed de-conversion facility, Lea County, New Mexico transferred property to the Companyus under the provisions of the New Mexico Local Economic Development Act, Project Participation Agreement (“PPA”)(PPA) as a location for construction of the facility. Under the original agreement, the Company waswe were obligated to meet certain performance objectives.  The Companyobjectives for construction start and staffing levels. Because of the project delay we did not meet these objectives, however, in July 2015, the Company executed an amendmentthose objectives. We plan to the PPA that extended the due date of the Phase I constructioncontinue to December 31, 2016, and Phase I completion and hiring at least 75 employees to December 31, 2016.  The Company did not meet the December 31, 2016 deadline and management is workingwork with Lea County to execute an additionala modification to the agreement to furtherat some future point should the project move forward. If we do not extend these dates to at least 2020.  If the Company does not succeed in extendingor modify the commitment dates or in reaching performance dates set forth in a modified agreement then itwe may either purchase or re-convey the property to Lea County, New Mexico. In addition, if Lea County does not agree to that modification and the Company doesIf we do not retain title to the property, it could have a material adverse impact on our planned de-conversion and FEP project since another location would need to be selected and evaluatedfuture plans for environmental compliance.the project.

Industry Overview, Target Markets, and Competition

The industries and markets that require or involve the use of radioactive material are diverse. Our current core business operations involve products that are used in a wide variety of applications and in various markets. The following provides an explanation of the markets and competitive factors affecting our current business segments.

Nuclear Medicine Standards

Calibration and reference standards are required for the daily operational checks and calibration of the measurement of SPECT and PET imaging devices frequently used in nuclear medicine. Calibration and quality assurance testing isare required as a routine part of the normal operations of this equipment to ensure its reliability and accuracy. We exclusively manufacture manyFor years, we have been the exclusive manufacturer of theseRadQual reference standard products. As RadQual is now our wholly-owned subsidiary, we continue to sell these same RadQual products for one customer, RadQual, which in turn has manythrough distributors who make direct sales aroundin the U.S. and internationally. We directly ship these products to all 50 states and many overseas locations. There is only one other major producer of these products in the world that competes directly competes with us for these products. Most of the products manufactured by our

competitor are similar in design to our products because all must meet Original Equipment Manufacturer (“OEM”)(OEM) dimensional and performance standards. However, we attempt to differentiate our products from our competitor’s products through increased levels of quality control and customer service. We are certified under ISO-9001:20082015 and ISO-13485-2003ISO-13485-2016 quality programs that have allowed us to start selling these products into several foreign countries that require this additional quality certification for manufacturers. We use a small number of suppliers for the isotopes and other materials used in manufacturing these nuclear medicine products, but if we were to lose any of these suppliers, othersin most cases other suppliers would be available. We are also working to expand the number and types of products that are manufactured in this segment and expand our raw product qualified suppliers

Cobalt Products

Historically, we sold high-activity bulk cobalt to one customer that used it to fabricate several models of sealed sources for medical and industrial applications. In June 2012, a leak of a cobalt target at the ATR belonging to another commercial business resulted in the curtailment of all further cobalt handling and production activities at the ATR pending completion of several corrective actions.  Due to this issue, we were forced to discontinue the irradiation of that cobalt target design.  Aside from a few shipments in 2014 and 2016 we have not been able to process this old material due to the lack of a suitable transportation container.  Therefore, we have not recorded any bulk cobalt sales for the past several years. With some residual high activity cobalt material that we held at our facility and bulk cobalt purchased from another supplier, we were able to manufacture some sealed source products through 2017 and anticipate continued manufacture into 2018 using this alternate cobalt supply.

In 2014, we entered into a new 10-year agreement with the DOE utilizing a new cobalt target design.design for high activity cobalt production. Because of the lengthy irradiation time required we anticipateinitially anticipated that cobalt shipments to customers willwould resume in late 2018. However, due to delays in the ATR operating schedule we were not able to take our first shipment of these targets until March 2020. Due to lower than desired activity rates in the material, we bought the remaining low activity targets at a discounted rate. There is a high demand for lower activity cobalt. We have taken shipment of and sold this material throughout 2021 and 2022 and will continue to have supply for at least two more years. We are now working with the DOE on future purchases of both high and low activity cobalt. Our cobalt products are used in applications such as radiation therapy, security devices, radiography examination and in some commercial applications. While there are other technologies available to provide external radiation therapy, there are several new devices just gaining market approval that still depend on cobalt sources for their specialized applications. There are currently no other producers of high specific activity cobalt in the U.S., however, there is one producer of medium specific activity material and there are at least three significant producers of high specific activity material in Canada and several other parts of the world.countries. In addition to us, there is only one other company in the U.S. currently licensed to handle large quantities of cobalt.

We manufacture cobalt sources as well as recycle used cobalt sources by recovering the cobalt for re-use in the manufacture of new sealed sources for teletherapy devices, irradiators, and other source applications.  We are the only company in the U.S. that provides this unique service.   There has been a significant increase in regulation by the NRC in recent years that has created a significant barrier to new entrants to this market. We expect steady demand for cobalt sealed source products over the next several years but are currentlyprimarily dependent upon our contract relationship with the DOE for access to its ATR in Idaho for the majoritya large portion of our cobalt production activities.  Thesupply. An interruption to cobalt production experienced in 2012 had a significant negative impact on our cobalt products business segment, and although we currently have a ten-year irradiation contract in place with the DOE, future interruptions in the operation of the ATR could have a negative impact on our cobalt products business segment.  With

Radiochemical Products

In February 2020, our new cobalt production contractANDA for a generic radiochemical sodium iodide drug product was approved by the FDA. This product is approved for use in place withtreatment of hyperthyroidism and carcinoma of the DOE we anticipatethyroid and is the first and only generic sodium iodide I-131 product approved by the FDA in the U.S. and only generic product of this type manufactured in the U.S. The only other supplier to the U.S. of an FDA approved sodium iodide product comes from a foreign manufacturer.

Since the launch of this drug product in 2020, the corresponding sales have had a significant positive impact on our market positionrevenues in 2021 and 2022. We expect this significant growth in sales for this product to continue in 2023 and beyond. We are also considering other generic drug opportunities and plan to expand the range of FDA approved products offered within this business segment will remain strong in futurethe coming years.

Radiochemical Products

We typicallyalso supply radiochemical products in bulk form. The markets for most radiochemicals arecan be highly competitive. The target markets for these products are customers who (1) incorporate them into finished industrial or medical devices; (2) use radioisotope products in clinical trials for various medical applications; or (3) further process and include the radioisotope products into a pharmaceutical productproducts approved by the U.S. FDA approvedfor labeled use in therapy or imaging.

In November 2016,February 2022, we submittedsold the improvements and equipment in an aNDA to the FDA for a sodium iodide (I-131) radiopharmaceutical product. The FDA has respondedexpansion that had been constructed to our submission with various inquiries which will require continued effortmanufacturing facility for cGMP processing. Using the capital from this sale, we are currently developing a business plan and refinement ofexploring other opportunities that support our submission.  We will respond to the FDA’s comments and continue the efforts towards FDA approval of thiscurrent radiopharmaceutical product, during 2018.produce additional radiopharmaceutical products or explore new contract manufacturing opportunities. We believe that we are uniquely qualified and have a competitive advantage for future opportunities because we have a unique combination of NRC licensing, GMP compliant operating facility, and trained personnel.

Fluorine Products and the Planned Depleted Uranium De-conversionDe-Conversion Facility

Our Fluorine Products segment was developed in conjunction with uranium de-conversion in order to take advantage of the anticipated need for depleted uranium de-conversion services. Our FEP patents provide a unique opportunity to provide certain high-purity fluoride compounds while also offering a “for fee” de-conversion service to the uranium enrichment industry.  Although duringDuring 2013, we curtailed the formal engineeringall further work on the de-conversion facility because of a lack of demand for uranium de-conversion services at that time. However, we believe that in the future

there will be a resumptiondemand for this service to address still growing stockpiles of nuclear growth, driven by recent interest in Small Modular Reactors (“SMR’s”),depleted UF6. When that could positively impactdemand occurs, we believe the front end of the nuclear fuel cycle (i.e. uranium enrichment).  Once that occurs the ground workgroundwork we have completed on the depleted uranium de-conversion and fluorine extraction project should put us in an excellenta strong position to take advantage of our position in the industryNRC license that has already been issued for this facility and should serve to justify the financial investment in this uranium de-conversion project in the future.  We have also seen some interest by the DOE for a possible future supply of DUF4.  We intend to continue to monitor these opportunities and maintain our licenses and other necessary project investments so that the project activities can be resumed when market conditions improve.

Radiological Services

Historically, most of our radiological services have been performed in support of gemstone processing for Quali-Tech, Inc. Gemstone processing has fluctuated in recent years but has recently gained traction and has remained a significant contributor to this segment’s revenue.

In the past several years, we have seen increased opportunities for radiological field service activities involving installation or decommissioning of radiation devices in hospitals, research institutions, and various other commercial facilities. In 2012, we obtained our first amendment to our NRC license to permit certain field service activities and since that time radiological field service work has become a significant contributor to revenue within the segment.  During 2017 and 2016 we were awarded several contracts for field service activities in connection with the DOE’s OSRP project as well as contracts through the IAEA.  We designed and built a mobile hot cell unit for use in this field service work and in 2014 and 2015 we were granted additional amendments to our NRC license that have allowed us to expand the types of services we can provide. The design of our mobile hot cell allows us to adapt it to work in various source removal situations that would not otherwise be possible.  We will continue to use the mobile hot cell to support these expanded services both domestically and internationally. While there are other companies that compete with us for field services work, we believe our mobile hot cell gives us a unique competitive advantage in some of these opportunities. In 2017, we worked to further increase these field service opportunities in the U.S. and abroad and expect that, in future years, field services will be the major source of revenue within this business segment.

Transportation

IITS was formed to support transportation of our own products and to provide “for hire” transportation services.   IITS has specialized in the transportation of hazardous, radioactive materials including large cobalt shipments.  These types of shipments face a significant amount of regulation and enhanced security requirements and IITS has been well suited in meeting those requirements.   IITS has specially trained drivers and specially equipped vehicles intended to meet the standards for transportation of large cobalt shipments.   Over the years the business activities in this segment have been primarily derived from the Company’s radiological services and cobalt products business segments.  Because of this, Company management believes that combining the transportation services financial reporting within these other segments would provide more qualitative reporting and will begin such reporting in the first period of 2018.

Government Regulation

Licensing

We currently operate under two NRC licenses, one for broad scope operations and another for exempt distribution. Our broad scope license covers calibration and reference standard manufacturing and distribution, radioisotope processing and distribution, large scale cobalt processing and recycle operations, radioactive gemstone processing, environmental sample analysis, certain field service activities, and research and development. The exempt distribution license permits the release and distribution of irradiated gemstones to unlicensed entities in the U.S. All of our existing licenses and permits are adequate to allow current business operations. We do not handle “special nuclear materials” (i.e. nuclear fuels and weapons grade uranium, thorium or plutonium); therefore, our facility is not designated as a “nuclear” facility that would require additional licensing.

As a condition of our NRC licenses in Idaho, we are required to provide financial assurance for decommissioning activities. We fulfill this license requirement with a surety bond which names the NRC as beneficiary and is supported by a restricted cash account held in trust by a third party. In January 2018, we re-evaluated the financial assurance needed to support decommissioning and will be increasing the bond amount and the restricted cash amount during the first quarter of 2018. Similar financial assurances will be required to fund the decommissioning of the proposed de-conversion facility.

In October 2012, we were granted a 40-year construction and operating license by the NRC for our planned depleted uranium de-conversion and fluorine extraction processing facility (the “de-conversion facility”). The de-conversion facility is planned to be located in Lea County, New Mexico, and is proposed to initially de-convert up to approximately 11 million pounds of depleted uranium hexafluoride (“DUF₆”) annually into fluoride products and depleted uranium oxides (“DUO”).Mexico. Further engineering work on the proposed de-conversion facility was placed on hold in 2013 until additional contracts for utilization could be obtained. There is no specific timeline required by the NRC for the start of construction on this project. The majority of the pre-construction design, licensing and state permitting has already been completed for the project and a ground water permit from the state of New Mexico remains to be obtained before the plant could begin operation.

Regulation of Radioisotope Production Waste

All of our manufacturing processes generate some radioactive waste. We must handle this waste pursuant to the Low LevelLow-Level Radioactive Waste (“LLRW”)(LLRW) Policy Act (“LLRW Act”)(LLRW Act), which requires the safe disposal of mildly radioactive materials. The estimated costs for storage and disposal of these materials have been included in the manufacturing and sales price of our products. However, actual disposal costs are subject to change at the discretion of the disposal site and are ultimately applied at the time of disposal. We have obtained all necessary permits and approvals for the disposal of our waste materials, and we do not anticipate any negative changes in capacity or regulatory conditions that would limit or restrict our waste disposal capabilities.

The planned de-conversion facility will produce large quantities of depleted uranium oxide waste.  Disposal of depleted uranium waste will be the responsibility of the customers suppling DUF6 to the company for de-conversion.  There are proposed changes to some of the regulations for low level radioactive waste disposal that could impact the rules surrounding disposal of large quantities of depleted uranium.  The Company will continue to monitor any changes in the regulatory framework that could impact the de-conversion facility project.

Nuclear Regulatory Commission Oversight

We operate under two NRC licenses and are subject to NRC oversight and periodic inspections of our operations.

Other Regulations

We are registered as a medical device manufacturer through the FDA for several of our nuclear medicine reference and calibration standards. We are registered with the U.S. Department of Transportation (DOT) for the shipment of radioactive materials. We also have an NRC license for the import and export of radioactive materials. Because of increasing security controls and regulations, it is likely that we may encounter additional regulations affecting transportation, storage, sale, and import/export of radioactive materials.

We are also subject to inspection by the FDA to bemanufacture our sodium iodide I-131 product in compliance with cGMPour ANDA for our sodium iodide productI-131 and all applicable cGMP requirements for this and other contract manufactured products. We are registered with the FDA as an Active Pharmaceutical Ingredient manufacturera drug manufacturing facility, and a manufacturing facility.  In November 2016, we submitted an aNDA for our sodium iodide product. Once approved the facility will thereafter beare subject to periodic and random inspections by the FDA for the continued manufacture of this drug product.products.

We are subject to government regulation and intervention both in the U.S. and in all foreign jurisdictions in which we conduct business. Compliance with applicable laws and regulations results in higher capital expenditures and operating costs and changes to current regulations with which we must comply can necessitate further capital expenditures and increases in operating costs to enable continued compliance.

EmployeesEnvironmental Compliance

AsWe are subject to various federal, state, local and foreign government requirements regulating the discharge of December 31, 2017, we had 30 total employees including 28 full-time employees.materials into the environment or otherwise relating to the protection of the environment. These laws and regulations include, but are not limited to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA) and state statutes such as the Idaho Hazardous Waste Management Act, the LLRW Policy Act, NRC regulations concerning various irradiated, radioactive, and depleted uranium materials, and U.S. DOT regulations concerning shipment of radioactive materials. Certain of these laws and regulations can impose substantial fines and criminal sanctions for violations and require installation of costly equipment or operational changes to limit emissions and/or decrease the likelihood of accidental hazardous substance releases. We have incurred, and expect to continue to incur, capital and operating costs to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement of policies, or the imposition of new clean-up requirements or remedial techniques, could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations.

Distribution Methods for Products

We sell our products directly to our customers who, in some cases, are both end users and distributors. We use common commercial carriers and our own transportation vehicles and personnel for delivery of our products.  For smaller quantities of material, and overnight and next-day delivery, we utilize other commercial carriers.  For our products that involve large quantities of radioactive material, most commonly cobalt-60, and that invoke certain special transportation requirements, we use our own specially trained transportation employees.

Dependence on Customers

Historically, we havehad been dependent on one customer, RadQual, of which we ownowned 24.5%, for a significant amount of our gross revenue. In August 2017, several affiliates of the CompanyJuly 2021, we purchased the remaining 75.5% and at that time,of the Company was named asownership interest in RadQual, making it a managing member of RadQual.wholly-owned subsidiary. Our sales to RadQual prior to August 2017for 2021 accounted for approximately 17%28% of our total gross revenue for 2017.that year. The change in ownership of RadQual has substantially eliminated any risks associated with having RadQual as a single major customer.

Combined sales, on which we are dependent, to our three largest customers, accounted for 31%23% of our total gross revenues in 20172022 and accounted for 43%17% of our total gross revenues in 2016. We are making efforts to reduce our dependency on a small number of customers by expanding sales in both domestic and foreign markets and through our establishment of the joint venture, TI Services, to expand distribution of products.  The change in ownership of RadQual, and naming the Company as a managing member of RadQual business operations, has significantly reduced any risk associated with RadQual as a single major customer to the Company.2021.

Patents, Trademarks, Licenses and Royalty Agreements

In 2004, we obtained certain patents related to the FEP. In 2010, the Company waswe were granted an additional process patent on the FEP process and during 2011 the Company started the process to file for international protections of this patent in South Africa, Japan, Russia, China, Canada, and the European Union.process. During 2012, the Company waswe were granted additional process patents for the FEP process in the United States.

In 2013,May 2021, we entered into an exclusive licensing agreement with Memorial Sloan-Kettering Cancer Center (MSKCC) for commercial development of a Radioimmuno Assay (RIA) test lit for the FEP process patent was granted in Russia and in 2014 the FEP process patent was granted in South Africa.  In 2015, the FEP process patents in China and Japan were abandoned and in 2017 the process patent in Canada was abandoned. The applicationsdetection for SARS COVID-19 virus in the blood. A patent application for this test kit was submitted to the U.S. patent office in March 2021. The useful application and commercial viability of this opportunity will continue to be evaluated, however, at the present time we do not plan commercial development of this product but may pursue other countries are still in process.related commercial opportunities.

Research and DevelopmentEmployees

In 2017,As of December 31, 2022, we had research and development expenses totaling $376,698, compared with $511,283 in 2016.  These expenses were primarily associated with current product development activities related to our sodium iodide product.33 total employees, including 32 full-time employees.

Available Information

Our internet website address is http://www.intisoid.com. Our annualWe are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the Exchange Act). Consequently, we are required to file reports and information with the SEC, including Annual Reports on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q, current reportsCurrent Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)Act. These reports and other information concerning us are available free of charge through (i) our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.SEC, and (ii) the SEC’s website at www.sec.gov. Information contained on, or accessible through, our website is not incorporated by reference into this reportAnnual Report or other reports filed with the SEC.

Item 1A.

RISK FACTORS

Readers should carefully consider the following factors that may affect our business, future operating results and financial condition, as well as other information included in this Annual Report. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business, financial condition and operating results could be materially adversely affected.

Risks Related To Our Company Generally

We have incurred, and may continue to incur, losses. We have incurred net losses for most fiscal periods since our inception. From inception through December 31, 2017,2022, we have generated $104,648,480 in revenues and an accumulated deficit (including preferred stock dividends and returns) in the amount of $125,696,845.$126,460,843. The negative cash flow we have sustained has materially reduced our working capital, which in turn could materially and negatively impact our ability to fund future operations and continue to operate as a going concern. Management has taken and continues to take, actions to improve our results.financial condition and results of operations. The availability of necessary working capital, however, is subject to many factors beyond our control, including, among other things, our ability to obtain financing on favorable financing,terms, or at all, economic cycles, market acceptance of our products, competitors' responses to our products, the intensity of competition in our markets, and the level of demand for our products.

We may need additional financing to continue operations. Because we may continue to experience negative cash flow, we may need to obtain additional financing to continue operations. Management will continue to plan and take actions to improve our financial results which could enhance our ability to obtain debt financing. However, obtaining additional financing is subject to many factors beyond our control and may not be available to us on acceptable terms or at all. If we are unable to raise additional funds when needed, we could be required to delay development and construction of projects, reduce the scope of, abandon or sell some or all our growth projects or default on our contractual commitments in the future, any of which would have a material adverse effect on our business, financial condition and operating results.

Our operations expose us to the risk of material environmental liabilities.  We are subject to potential material liabilities related to the remediation of environmental hazards and to personal injuries or property damages that may be caused by hazardous substance releases and exposures. The materials used in our operations subjectexpose us to risks of environmental contamination that could subject us to liability, including remediation obligations that could be very costly. In addition, the discovery of previously unknown contamination could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations. We have a Surety Bond in place supported by funds in a restricted cash account to provide the financial assurance required by the NRC for our Idaho facility license for decommissioning and a similar mechanism will be required to fund the decommissioning of the proposed new depleted uranium facility. However, if a contamination event occurred within, or outside of, our facility, we wouldmay be financially responsible to remediate such contamination and could have to borrow money or fund the remediation liability from our future revenue. We may not be able to borrow the funds, or have available revenue, sufficient to meet this potential liability, which could have a significant negative impact on our financial condition and results of operations.

We are dependent upon key personnel.  Our ongoing operations are currently dependent on Steve T. Laflin, President and Chief Executive Officer. The loss of Mr. Laflin could have a material adverse effect on our business. We have a $2 million key man life insurance policy on Mr. Laflin and an employment agreement that extends through February 28, 2022. However, thereThere is no assurance that we will be able to retain Mr. Laflin or our existing personnel or attract additional qualified employees. The loss of any of our key personnel or an inability to attract additional qualified employees could result in a significant decline in revenue.

General economic conditions in markets in which we do business can impact the demand for our goods and services. Decreased demand for our products and services can have a negative impact on our financial performance and cash flow.  Demand for our products and services, in part, depends on the general economic conditions affecting the countries and industries in which we do business. A downturn in economic conditions in the U.S. or industry that we serve may negatively impact demand for our products and services, in turn negatively impacting our operations and financial results. Further, changes in demand for our products and services can magnify the impact of economic cycles on our businesses. For instance, our topaz gemstone processing is affected by the demand for luxury items such as jewelry as well as by the instability of foreign markets which are key factors in the manufacture of products using irradiated gemstones.

Volatility in raw material and energy costs, interruption in ordinary sources of supply and an inability to recover unanticipated increases in energy and raw material costs from customers could result in lost sales or significantly increase the cost of doing business.  Market and economic conditions affecting the costs of raw materials, utilities, energy costs, and infrastructure required for the delivery of our goods and services are beyond our control and any disruption or halt in supplies, or rapid escalations in costs could affect our ability to manufacture products or to competitively price our products in the marketplace. For instance, an interruption in the supply of isotopes such as cobalt-57, cobalt-60, or iodine-131 could result in lost sales of nuclear medicine and calibration standards sales, cobalt product sales, and sodium iodide I-131 generic drug product. We also purchase some of our radiochemical products.products from overseas suppliers and the price of those products could be adversely affected through changes in currency exchange rates.

We are subject to extensive government regulation in jurisdictions around the globe in which we do business. Regulations address, among other things, environmental compliance, import/export restrictions, healthcare services, taxes and financial reporting, and can significantly increase the cost of doing business, which in turn can negatively impact our operations, financial results and cash flow.  We are subject to government regulation and intervention both in the United States and in all foreign jurisdictions in which we conduct business. Compliance with applicable laws and regulations results in higher capital expenditures and operating costs and changes to current regulations with which we must comply can necessitate further capital expenditures and increases in operating costs to enable continued compliance. Additionally, from time to time, we may be involved in legal or administrative proceedings under certain of these laws and regulations. Significant areas of regulation and intervention include the following:

Radioactive Waste. All of our manufacturing processes generate some radioactive waste. For waste that cannot be decayed in storage we must handle this waste pursuant to the Low Level Radioactive WasteLLRW Policy Act, which requires the safe disposal of mildly radioactive materials. The estimated costs for storage and disposal of these materials have been included in the manufacturing and sales price of our products. However, actual disposal costs are subject to change at the discretion of the disposal site and are ultimately applied at the time of disposal. An unexpected or material increase in these costs could have a material adverse effect on our financial condition and results of operations.

Health Compliance. Health regulations dictated by the United States Occupational Safety and Health Administration and NRC are extensive in our business. There is no assurance that our activities will notcomply with all applicable health regulations at times and, as a result, inmay expose us to liability under applicable health regulations. Costs and expenses resulting from such liability may materially negatively impact our operations and financial condition. Overall, health laws and regulations will continue to affect our business worldwide.

NRC License Enforcement Actions. The NRC may take enforcement action in the event that the Company iswe are found to be in violation of NRC regulations or in violation of any of our license requirements. Consequences of violations depend upon the severity of the violations as well as the adequacy and timeliness of corrective actions implemented by the licensee to investigate and correct the cause of the violation and to prevent reoccurrence. The NRC has discretionary authority in the action they choose to take against license violations, but these actions can include civil penalties and restrictions upon licensee operations or license suspension. The imposition of any such penalties and/or restrictions upon our operations or suspension of our license could have a material adverse effect on our financial condition and results of operations.

Environmental Regulation. We are subject to various federal, state, local and foreign government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. These laws and regulations include, but are not limited to CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery ActRCRA and state statutes such as the Idaho Hazardous Waste Management Act, the Low Level Radioactive WasteLLRW Policy Act, NRC regulations concerning various irradiated, radioactive, and depleted uranium materials, and United States Department of TransportationU.S. DOT regulations concerning shipment of radioactive materials. Certain of these laws and regulations can impose substantial fines and criminal sanctions for violations and require installation of costly equipment or operational changes to limit emissions and/or decrease the likelihood of accidental hazardous substance releases. We have

incurred, and expect to continue to incur, capital and operating costs to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement of policies, or the imposition of new clean-up requirements or remedial techniques, could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations.

Import/Export Regulation. We are subject to significant regulatory oversight of our import and export operations due to the nature of our product offerings. Penalties for non-compliance can be significant and violations can result in adverse publicity. Because of increasing security controls and regulations, it is likely that we may encounter additional regulations affecting the transportation, storage, sale, and import/export of radioactive materials.

Taxes. We structure our operations to be tax efficient and to make use of tax credits and other incentives. Nevertheless, changes in tax laws, actual results of operations, final audit of tax returns by taxing authorities, and the timing and rate at which tax credits can be utilized can change the rate at which we are taxed, thereby affecting our financial results and cash flow.

Financial Accounting Standards.  Our financial results can be impacted by new or modified financial accounting standards.

We may incur material losses and costs as a result of product liability claims that may be brought against us. We face an inherent business risk of exposure to product liability claims in the event that products supplied by us fail to perform as expected or such failures result, or are alleged to result, in bodily injury. Although we have purchased insurance with coverage and in amounts that we believe to be adequate and reasonable in light of our current and planned operations, including our planned uranium de-conversion and fluoride gas production business, if a successful product liability claim were brought against us in excess of our available insurance coverage, or established reserves, it would have a material adverse effect on our business and financial results.

Our earnings, cash flow and financial position are exposed to financial market risks worldwide, including interest rates.   Fluctuations in domestic and world markets could adversely affect interest rates and impact our ability to obtain credit or attract investors. Such market risk could have a negative impact on future business opportunities including our ability to raise additional capital for planned business expansion.  We also purchase some of our radiochemical products from overseas suppliers and the price of those products could be adversely affected through changes in currency exchange rates.

Catastrophic events such as natural disasters, pandemics, war and acts of terrorism could disrupt our business or the business of our suppliers or customers, and any such disruptions could have a negative impact on our operations, financial results and cash flow.  Our operations are at all times subject to the occurrence of catastrophic events outside our control, ranging from severe weather conditions such as hurricanes, floods, earthquakes and storms, to health epidemics and pandemics, to acts of war and terrorism. Any such event could cause a serious business disruption that could affect our ability to produce and distribute our products and possibly expose us to third-party liability claims. Additionally, such events could impact our suppliers, thereby causing energy and raw materials to become unavailable to us, and our customers, who may be unable to purchase or accept our products and services. Any such occurrence could have a negative impact on our operations and financial condition.

In addition, public health epidemics or outbreaks could adversely impact our business. For example, as a result of the COVID-19 pandemic, we experienced a reduction of sales within our nuclear medicine calibration standards segment and radiochemicals segment during 2021. There was no discernable impact from COVID-19 to our cobalt products business segment during the period. The decrease in sales for 2021 for our nuclear medicine calibration standards segment was the result of the temporary closure of many imaging clinics and suspension of elective or non-essential imaging procedures. During 2021 and 2022, we experienced some global shipping disruption that were partially attributable to the COVID-19 pandemic.

To-date we have not furloughed or terminated any employees as a result of the financial impact of COVID-19. We have seen a limited impact in our raw material supply chain related to the COVID-19. However, from the beginning of 2022, we have experienced an increase in costs for many raw materials and production supplies due to recent cost inflation which have led to increases to costs of goods sold and operating expenses. Although, all segments have been impacted from these cost increases, our nuclear medicine calibration standards segment has been impacted the most. We have seen these increased costs stabilize somewhat; and we are working on counteracting these cost increases with an increase to our produce prices. We believe we can increase our sales prices enough to overcome these cost increases while continuing to maintain and grow our sales.

Our future growth is largely dependent upon our ability to develop new products that achieve market acceptance with acceptable margins.  Our businesses operate in global markets that are characterized by rapidly changing technologies and evolving industry standards. Accordingly, our future growth rate depends upon a number ofseveral factors, including, but not limited to, our ability to (i) identify emerging technological trends in our target end-markets, (ii) develop and maintain competitive products, (iii) enhance our products by adding innovative features that differentiate our products from those of our competitors, and (iv) develop, manufacture, and bring products to market quickly and cost-effectively. Our ability to develop new products based on technological innovation or U.S. Food and Drug AdministrationFDA approval can affect our competitive position and requires the investment of significant resources. These development efforts divert resources from other potential investments in our businesses, and they may not lead to the development of new products on a timely basis or that meet the needs of our customers as fully as competitive offerings. In addition, the markets for our products may not develop or grow as we currently anticipate. The failure of our technologies or products to gain market acceptance due to more attractive offerings by our competitors could significantly reduce our revenues and adversely affect our competitive standing and prospects.

Risks Related To Our Current Business Operations

We are dependent on various third parties in connection with our business operations.  The production of high-specific activity cobalt is dependent upon the DOE, and its prime-operating contractor, which controls the Idaho reactor. Current activity at the Idaho ATR may continue to affect the supply of cobalt material needed for the manufacture of cobalt sources. Loss of the ability to use, or cost-effectively use, these irradiation services would significantly impact our cobalt products business segment because there is not currently another reactor available in the United StatesU.S. that is capable of providing this type of service for us. Our radiochemical iodine is supplied to us through two supply sources with a third source expected to become available during 2018.sources. Unanticipated contract terminations by any of these suppliers andor suppliers the key raw materials of our other products or other third parties would have a material adverse impact on our operations, financial results, and cash flow.

We are dependent on a limited number of customers in connection with some of our current business operations.  During 2017 and 2016, sales to RadQual represented 17% and 31%, respectively, of our total gross revenue. Combined sales to our three top customers accounted for 31%23% and 17% of our total gross revenue during 2017,2022 and combined sales to our top three customers accounted for 43% of gross revenue in 2016.2021, respectively. Although we are making efforts to reduce our dependency on a small number of customers, the loss of any one of these customers could have a significant impact on our future results of operations and financial condition. Unanticipated contract terminations by any of these current customers could have a material adverse impact on operations, financial results, and cash flow.

We are subject to competition from other companies.  Each of our existing business areas has direct competition from other businesses. High-specific activity cobalt is supplied by other reactor facilities around the world. Nuclear medicine calibration and reference standards are being produced by one other major manufacturer in the United States.U.S. We have one major competitor in the U.S. for our sodium iodide I-131 drug product. Most of our radiochemicals are also manufactured by several other companies in the world, and there are other providers of radiological field services.world. Most of our competitors have significantly greater financial resources that could give them a competitive advantage over us.

Risks Related To Our Common Stock

Trading in our common stock is limited and the price of our common stock may be subject to substantial volatility.  Our common stock is quoted on the OTCQB Marketplace under the U.S. trading symbol “INIS”. The market for our securities is limited, the price of our stock is volatile, and the risk to investors in our common stock is greater than the risk associated with stock trading on other markets. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.

We currently do not intend to pay dividends on our common stock.  We do not plan to pay dividends on shares of our common stock in the near future. Consequently, an investor in our common stock can only achieve a return on its investment in us if the market price of our common stock appreciates.

We are contractually obligated to issue shares in the future, which will dilute your interest in us.As of December 31, 2017,2022, there were approximately 2,750,00016,716,000 shares of common stock issuable upon the exercise of vested stock options, outstanding, at a weighted-average exercise price of $.05$.06 per share. An additional 13,625,97531,942,544 shares were reserved for issuance under our equity plans as of December 31, 2017.2022. Our outstanding preferred stock and certain of our outstanding debt is also convertible into shares of our common stock at the holders’ option. In addition, we expect to issue additional options to purchase shares of our common stock to compensate employees, consultants and directors, and we may issue additional shares to raise capital to expand our manufacturing capability, develop additional products, or fund our planned uranium de-conversion plant. Any such issuancesissuance will have the effect of further diluting the interest of the holders of our securities.  Also, outstanding as of December 31, 2017, were Series L Warrants for the issuance of 25,000,000 shares of common stock, Series M Warrants for the issuance of 17,165,000 shares of common stock and Series N Warrants for the issuance of 2,925,000 shares of common stock. The weighted average exercise price for all outstanding warrants as of December 31, 2017 was $0.09 per share.

Risks Related to Our Proposed De-Conversion and FEP Produced Fluoride Gas Business

We will need to raise additional funds to complete the construction of our de-conversion and FEP facility.  We need to secure more customer contracts and raise additional funds to complete the design and construction of a de-conversion facility with a production-scale FEP operation. We may not be able to raise the additional capital required to complete the facility on acceptable terms, or at all.  In addition, the total funds required to complete this project have been based upon early preliminary estimates and, while we believe these estimates are conservative, there can be no assurance that unforeseen expenses will not be incurred and additional funding will not be required to complete the project.

We do not have an operating history with respect to our strategy to combine de-conversion services and FEP-produced fluoride gas products and this business may not succeed.   We have no operating results with respect to providing de-conversion services or producing high volumes of fluoride gas products using FEP to date and, therefore, we do not have an operating history upon which you can evaluate this business or our prospects. Our prospects must be considered in light of the risks and uncertainties encountered in entering a new line of business.

Some of these risks relate to our potential inability to:

•  construct our planned de-conversion and FEP production plant, including the effective management of the cost of the design and construction of the facility, and obtain the additional financing necessary for such construction;

•  maintain the necessary regulatory approvals for the facility and the ongoing operations of the facility;

•  obtain the groundwater permit from the state of New Mexico;

•  produce commercially economic volumes of high-purity fluoride products using FEP;

•  effectively manage this new business and its operations;

•  successfully establish and maintain our intended low-cost structure; and

•  successfully address the other risks described throughout this Annual Report.

If we cannot successfully manage these risks, our business and results of FEP operations and financial condition will suffer.

We currently have only one contract to provide de-conversion services to an enrichment firm.   We currently have only one de-conversion services agreement with UUSA but that agreement is effectively expired since all of the contract milestone dates have passed.  The initial term of the agreement was to extend for a period sufficient to cover the first five years of de-conversion services once our planned uranium de-conversion facility is operational, based on operations that were to have started no later than January 1, 2014. UUSA has indicated they are willing to discuss possible modification of the agreement commitment dates once we establish firm dates for start of construction.  If we cannot demonstrate certain production capacities in accordance with the agreement, UUSA has the option to terminate the agreement and we would have no opportunity to cure pursuant to the terms of the agreement.

There is no history of large-scale commercial fluoride gas production utilizing FEP.   We have successfully demonstrated the feasibility of using FEP to produce some fluoride gases and Starmet Corporation (“Starmet”), which originally developed and patented the technology, also used FEP to produce a fluoride gas. However, FEP has not been used for large-scale commercial production of the size and magnitude envisioned in conjunction with the de-conversion process and there may be technical issues and process challenges related to the utilization of FEP for large-scale commercial production. Unforeseen issues associated with constructing and scaling up these new FEP operations could significantly impact our proposed schedule and our overall ability to produce high-purity fluoride gas in the quantities anticipated.

Prior to the start of operations of the facility, we must obtain a Ground Water Permit from the State of New Mexico, and we cannot guarantee the amount of time required to obtain this permit from the State of New Mexico for operation of these facilities.   The operation of the planned depleted uranium de-conversion facility requires a ground water permit from the State of New Mexico.  There is no assurance that the ground water permit will be issued to us by the State of New Mexico.  We also have no control over the actual time required by the State of New Mexico to review and approve the application for the ground water permit.  Failure to obtain the permit, or any delay in obtaining the permit, could delay the start of operations of our planned depleted uranium de-conversion facility, thereby delaying revenue-generating operations at the facility.

The DOE is obligated to take depleted uranium from enrichment companies.   The DOE has constructed two depleted uranium de-conversion facilities. These facilities are obligated to process depleted uranium produced from United States commercial uranium enrichment facilities at a price determined by DOE. We believe our depleted uranium processing facility will offer the better value to enrichment companies but we cannot assure you that enrichment companies will not select the DOE as their de-conversion service provider. If UUSA terminates our agreement and other enrichment companies do not resume their enrichment facility construction plans, we may not be able to realize the expected economic benefit from our planned de-conversion and FEP production plant.

We may be handling large quantities of DUF₆ and fluoride gases, which are radioactive and hazardous materials, respectively, and are subject to intense regulation.  The hazardous nature of DUF₆ and fluoride gases affects the actions we are required to take for licensing, air permitting, environmental review, emergency response, liability insurance, personnel training, and generally increases the level of concern by the general public with respect to our handling of these materials. All of these factors complicate the licensing and operations processes and involve a host of additional regulatory factors that could affect the timeline for completing our de-conversion and FEP facility.  Additionally, the NRC is revising its regulations on the disposal of depleted uranium waste at Low Level Radioactive Waste (“LLRW”) disposal facilities that accept large quantities of depleted uranium. Any changes to the current regulations may result in increased disposal costs that we intend to pass through to our customers, which, depending on the significance of the increased cost, may cause potential customers to continue to store their DUF ₆ rather than pay for de-conversion and disposal services.

We will be subject to competition from the DOE and other companies.   While there are no currently operating commercial DUF₆ de-conversion facilities in the United States, the DOE is operating two de-conversion plants intended to process DUF₆ from the DOE’s existing 1.5 billion-pound stockpile.  Additionally, AREVA currently operates a de-conversion plant in France, UUSA is constructing a facility in the U.K., and the State Atomic Energy Corporation ROSATOM has constructed a facility in Russia. We cannot assure you that the operators of the existing DUF ₆ de-conversion facilities will not build additional facilities to expand their operations and compete with us in providing de-conversion services or that commercial enrichment companies will not choose to ship their depleted DUF ₆ overseas for processing in France, the U.K., or Russia.

Item 1B.

UNRESOLVED STAFF COMMENTS

We are a smaller reporting company, and therefore, are not required to provide the information required by this item.

Item 2.      PROPERTIES

PROPERTIES

We lease one property which serves as or main corporate headquarters and houses all of our current manufacturing operations for our core business segments. We also hold the conditional title to 640 acres of land in Lea County, New Mexico for the proposed de-conversion facility. The following paragraphs provide a brief summary of these properties.

4137 Commerce Circle, Idaho Falls, Idaho – The facility located on this property houses our main corporate headquarters and all of our current manufacturing operations. We hold this property pursuantIn January 2020, we entered into a new lease agreement due to anew and expanded facilities made available to us. The initial lease that extends through April 2021.term is until January 2030 and provides an option to renew for an additional 5 years. The lease provides for the Company to expand its leased space as needed into additional areas of the building. The facility was new when leased in March 2001 and remains in excellent condition. We have a purchase option and a right of first refusal on this property that allows us to match any offer to purchase this property at any time for a stated amount.property.

Land - Lea County, New Mexico – In August 2011, we received land from Lea County, New Mexico, pursuant to a PPA, whereby the land was deeded to us for no monetary consideration. In return, we committed to construct a uranium de-conversion and FEP facility on the land. In order to retain title to the property, we were 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 75 persons to operate the facility no later than December 31, 2015, although commercial operations need not have begun by that date. We did not meet the performance milestones set forth in the PPA and we executed a modification to the agreement extending these due dates to December 31, 2016 and 2017, respectively but did not meet either of those milestones and are working againrespectively. We plan to work with Lea County to execute an additional modification to the agreement to further extend these dates once an estimated restart date for the commitment dates.project is determined. If we do not succeed in extending the commitment dates or in reaching performance dates set forth in a modified agreement then we may, at our sole option, either purchase or re-convey the property to Lea County, New Mexico. The purchase price of the property would be $776,078, plus interest at the annual rate of 5.25% from the date of the closing to the date of payment. We have not recorded the value of this property as an asset and will not do so until such time that sufficient progress on the project has been made to meet our obligations under the agreements for permanent transfer of the title.

Item 3.

LEGAL PROCEEDINGS

In 2016, we deliveredWe are not a Demand for Arbitration letterparty to Alpha Omega Services (“AOS”) of Bellflower, California, seeking the recovery of a $255,000 deposit on a shipping container. The demand letter requested arbitration before the American Arbitration Association seeking the recovery of the cash deposit made to AOS plus additional amounts for lost revenue as a result of not owning the container, for a total claim of $1,673,241. Arbitrationany legal proceedings took place in 2017. In December 2017, we received notification that we wouldbelieve to be material and we are not recoveraware of any damages from AOS through arbitration.  Accordingly,pending or threatened litigation against us that we recordedbelieve could have a $255,000 lossmaterial adverse effect on deposited funds which is included in other expenses on the consolidated statements of income.our business, operating results, financial condition, or cash flows.

Item 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the OTCQB under the trading symbol “INIS”. High asked pricesThe following table shows the high and low bid prices reported byof our common stock on the OTCQB during the periods indicated are shown below, whichOTCQB. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflectnecessarily represent actual transactions:

Holders of Record

As of March 22, 2017,11, 2023, there were 522490 holders of record of our common stock.

Dividends

We have never paid any cash dividends on our common stock. In the future, and based upon our profit performance, our Board of Directors (the “Board”) will evaluate and determine whether to issue dividends, subject to compliance and limitations under any applicable debt or other financing agreements in effect at that time or retain funds for research and development and expansion of our business. We do not anticipate paying any dividends to shareholders of our common stock for the foreseeable future.

Item 6.

SELECTED FINANCIAL DATARecent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

None.

Purchases of Equity Securities by the Issuer

None.

Performance Graph

We are a smaller reporting company, and therefore, are not required to provide the information required by this item.

Item 6.      [RESERVED]

Item 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our results of operations and financial condition should be read in conjunction with the accompanying financial statements and related notes thereto included in Item 8, “Financial Statements and Supplementary Data,” within this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategies for our business, statements regarding the industry outlook, our expectations regarding the future performance of our business and the other non-historical statements contained herein are forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.” You should also review the “Risk Factors” in Item 1A. of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described herein or implied by such forward-looking statements.

Overview

We manufactureInternational Isotopes Inc. (the “Company”, “we”, “us” and “our”) produces an FDA approved generic sodium iodide I-131 drug product, manufactures a fullwide range of nuclear medicine calibration and reference standards a wide range of products including cobalt teletherapy sources, and a varied selection of radioisotopes andprovides radiochemicals for medicalclinical research pharmacy compounding, and clinical applications. Welife sciences. The Company also provideproduces a hostvariety of transportation, recycling,cobalt-60 products and processing services on asupports clients contract basis for customers.manufacturing of radiopharmaceutical and radiochemical products. A more detailed description of each of these product lines and services along with a description of our business segments can be found in Item 1, “Business” within this Annual Report.

During 2017,2022, we focused our efforts on achieving profitability in each of our core business segments and reached several significant goals. During 2017,2022, we:

·

Continued research into

• Increased company revenues by 16%.
• Reached $11.2 million in total revenues which was the expansionlargest single year in company history.
• Increased sales in the Radiochemical segment by 41% due to increases in sales of radiochemical products and performed follow-up work with regard to our 2016 submission of an abbreviated New Drug Application (aNDA) to the U.S. food and Drug Administration for a newFDA approved generic sodium iodide drug;I-131 drug product.
• Completed sale of unused assets for $4.0 million in cash for a gain of $1.8 million.

• Developed several new products for our Nuclear Medicine products segment and expanded these products into Positron Emission Tomography (PET) imaging standards.
• Expanded sales of our nuclear medicine products through exercising our management opportunity with RadQual, LLC (RadQual). In February 2017,particular, we issued 3,433 sharesincreased our international sales by utilizing the marketing and distribution expertise of Series C redeemable convertible preferred stock (Series C Preferred Stock)our wholly owned subsidiary TI Services; and warrants
• Continued to pursue viable opportunities to obtain government or commercial contracts for depleted uranium de-conversion services for our U.S. Nuclear Regulatory Commission (NRC) licensed de-conversion project in which $205,000 of convertible debt was exchanged for shares of the Series C Preferred stock;

  
  

  ·

  In March 2017, we amended our 8% convertible notes to provide noteholders with certain additional rights to convert any or all of the convertible debt held into shares of Series C Preferred Stock and warrants and $1,835,000 of debt was retired in early cash redemptions and $780,000 of debt was converted into an aggregate of 780 shares of Series C Preferred Stock;

  
  

  ·

  Lea County, New Mexico.

As a result of continued focus on manufacturing practices and procedures inthe COVID-19 pandemic, we experienced a reduction of sales within our nuclear medicine product manufacturing area,calibration standards segment and radiochemicals segment during 2020 and 2021.  There was no discernable impact from COVID-19 to our cobalt products business segment during the same period.  The decrease in sales for 2020 and 2021 for our nuclear medicine calibration standards segment was the result of the temporary closure of many imaging clinics and suspension of elective or non-essential imaging procedures. In 2022, our sales in most segments recovered and we maintained a minimum levelsaw very limited continued negative impact related to COVID-19. The sale of wasted and scrapped materialradiochemical products increased during the year 2022; however, we believe the increases in that segment;

·

Werevenue for 2022 for nuclear medicine could have been greater in 2022 were successful in purchasing additional cobalt-60it not for customers to stem the shortages in supply that have occurredlingering negative impact of COVID-19 in the past, and that will continuefirst quarter of 2022.

To-date we have not furloughed or terminated any employees as a result of the financial impact of COVID-19. The Company has only seen a limited impact in our raw material supply chain related to occur until the first full cobalt irradiation services are completedCOVID-19, primarily some plastics which have been in 2018;

·

Following an ownership changestrong demand for certain types of RadQual. we were placed inPPE. Alternative sources of raw materials have been obtained without any interruption to production.  With the position of managing RadQual business operations.  This change in management securesheightened concern about corporate liquidity during the Company’s contract manufacturing role and allowsCOVID-19 pandemic, the Company to begin accelerated marketing and product development for an expanded RadQual product line;

·

We were awarded several radiological services jobs through the U.S. Department of Energy’s (“DOE”) Orphan Source Recovery Program (“OSRP”) as well as contracts with the International Atomic Energy Agency (“IAEA”) in which we were able to use our mobile hot cell; and,

·

We continuedbelieves that it has adequate cash to support the essential tasks related to our de-conversion project and continued to pursue opportunities to obtain contracts with other companies for depleted uranium de-conversion services.continuing operations.

Business Strategy and Core Philosophies

Broadly defined, our business strategy is to continue to build our reputation as a leader in the cobalt, radiochemical, field services,cobalt, and nuclear medicine product industries, as well asand to maximizing the revenue potential of our generic sodium iodine I-131 product and nuclear medicine standards products. We also intend to continually seek ways to improve our customer service and expand our market share, with the ultimate goal of providing greater return to our shareholders. Specifically, we are continuously working with our customers to improve and develop new products to better serve the needs of the end user which, ultimately, we believe will boost product sales. A key part of our short-term and long-term business strategy is to develop and market additional generic drug products, such assimilar to our sodium iodide I-131 product, in our core business segmentsand develop additional nuclear medicine standards products that will offer customers a high quality, reliable, and desirable productaffordable products as well as increase our revenues and secure additional customer contracts.revenues. In addition, we will manage cash reserves and pursue additional financial support that will be structured in such a way to support further expansion of our products and services.services to exploit additional market opportunities.

Our core philosophy is to strive to provide high quality products and services as a profitable and environmentally conscious business, while offering excellent customer service and providing a safe and high-qualityproductive working environment for our employees. We operate in accordance with an ISO Quality Management System and in accordance with all current Good Manufacturing Practices under which we seek to maintain the highest level of quality and continuously improve our product manufacturing processes.

Year Ended December 31, 20172022 Compared to Year Ended December 31, 20162021

The following table presents comparative revenues for the years 2017ended December 31, 2022 and 2016:2021:

Revenues

Cost of Revenues and Gross Profit

During 2017,2022, we continued to monitor and control direct costs. Raw materials used in both our radiochemical products and our nuclear medicine standards manufacturing representrepresented the bulk of direct costs infor 2022. In each of these business segments, and we have purchase agreements in place with suppliers to obtain optimum pricing. Periodically, the cost ofincreases for these raw materials increases or we may also use alternate supply sources for our material which might not carry pricing as favorable as our contracted suppliers. In our cobalt products segment, we have identified a supplier for cobalt-60 material used

The decrease in source production which will increase our direct costsgross profit percentage in that business segment.  We have turned to alternate suppliers for this material until we are able to obtain cobalt from the targets currently undergoing irradiation at the DOE’s ATR.

Throughout 2017, in our nuclear medicine product segment, we maintained a low cost of scrapped material as2022 is a result of adjustments madeincreased cost in the manufacturing processes in this segment during 2016.  In 2017, as part of our monthly procedures, we recorded approximately $1,500 of scrapped raw material and supplies in our cobalt productsNuclear Medicine Standards segment and during 2016, as part of our periodic review of raw material inventory, we recorded approximately $47,000 of impairment expense for raw material that no longer held economic value to us.  The expense was recorded asdriven by recent cost of sales in our cobalt products segment in both 2017inflation. We have seen these increased costs stabilize somewhat; and 2016. With the exception of the cost of cobalt material, we are not aware of any significant future priceworking on further offsetting these cost increases that may potentially affectwith increases to our product prices. We believe we can increase our sales prices enough to overcome these cost of revenues.increases while continuing to be competitive and maintain sales growth.

Operating Costs and Expenses

Total operating costs and expenses for 20172022 were $5,303,258,$7,492,958, as compared to $4,347,575$6,418,592 in 2016.2021. This is an increase of $955,683,$1,074,366, or approximately 22%17%.

The following table presents operating costs and expenses for 20172022 as compared to 2016:2021:

The 22% increase in operating expense noted above, for the year ended December 31, 2017, as compared to the same period in 2016, is largely due to significant legal costs incurred during 2017 and is discussed in more detail below.

Salaries and contract labor expense increased by $335,483,$702,917, or approximately 19%26%, which iswas the result of annual salaryan increased number of employees and wage increases and periodic performance awards made during the year as well as the addition of personnel.to labor rates. In addition, non-cash equity compensation expense recorded for the year ended December 31, 20172022, was $163,873$352,458 as compared to $64,785$84,564 for the same period in 2016.2021. This is an increase of $99,088,$267,894, or approximately 153%317%, and is the result of equity compensation recorded for 11,500,000outstanding stock options granted to employeesdirectors, officers, and non-employees in July 2017. Non-cash equity compensation is calculated based on unexercised and outstanding stock options, warrants, and other equity-based instruments.  As these instruments become fully vested, are exercised or expire the related non-cash compensation expense will decrease.employees.

General administrative and consulting expenses increased to $2,808,303$3,568,590 in 2017,2022, as compared to $2,053,518$3,459,143 in 2016,2021, an increase of $754,785,$109,447, or approximately 37%3%. This significant increase is the result of legal costs incurred during the year ended December 31, 2017, as compareddue to the same period in 2016.  In March 2016, we submitted a demand for arbitration letter to Alpha Omega Services (AOS) and requested arbitration before the American Arbitration Association in an attempt to recover monies paid to AOS as deposit on a shipping container and for lost revenue as a result of not owning the container. Arbitration proceedings took place on several occasions during 2016 and 2017.  The matter was settled in December 2017 when we received notification from the American Arbitration Association that we would not recover any damages. Total legal costs recorded during the year ended December 31, 2017 were approximately $791,000 whereas during the same period in 2016, total legal costs recorded were approximately $263,000.

Also, during the year ended December 31, 2016, we recorded $229,000 ofperiodic waste disposal costs whereas we hadof $329,237 in 2022 with no similar expense during the same periodsuch cost in 2017.

2021. Research and development expense was $376,698$533,716 for 2017 as2022, compared to $511,283$271,714 for 2016.2021. This is a decreasean increase of $134,585,$262,002, or approximately 26%96%. The majority of this decreaseThis increase in research and development expense iswas the result of reduction inincreased costs associated with product development work being done in our radiochemical productsRadiochemical and Nuclear Medicine Standards business segment, specifically, reduced consulting costs pertaining to the submittal of the abbreviated new drug application to the FDA.  segments.

During both 20172022 and 20162021, we limited further investment in the planned de-conversion facility and limited further spending on the project only for expenses necessary to maintain licensing, and continuedcontinue interactions with Lea County, New Mexico, and Lea County.supporting a due diligence review of the project by a company interested in purchasing these project assets. We will continue to delay further engineering work on the de-conversion project until we are able to secure additional contracts for de-conversion services.

Other Income (Expense)

Other expenseincome was $1,203,234$2,110,576 for 20172022 as compared to other income of $6,605$683,253 for 2016. For the year ended December 31, 2017, we recorded2021. This is an increase in other income of $1,427,323. The increase is primarily due to a loss$1,797,978 gain on the forfeitsale of assets to Pharmalogic Idaho, LLC. In February 2022, we entered into an asset, discussed above,Asset Purchase Agreement with Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4,000,000 in cash. The assets consisted primarily of manufacturing equipment and a sublease acquired by the amountCompany in connection with the previously announced termination of $255,000.  This was the amount thatmanufacturing and supply agreement with another company. In 2021, we paid asrecognized “other income” for an anticipated tax refund of approximately $440,000 for the Employer Retention Credit.

In September 2022, we experienced a cash deposit on the AOS shipping container that we hadfraudulent transactions incident. The fraudulent charges totaled approximately $85,000. These charges were recorded as an asset on“other expense”. Investigations by our consolidated balance sheets.  Whenbank and by law enforcement are ongoing. There have been no indications of any involvement within our Company. As we were informed after arbitration proceedings thatexpected to recoup all fraudulent charges from our bank, we would not recoverrecognized "other income" to offset the depositfraudulent charges recorded under “other expense”. In October and November 2022, we recordedrecovered all the $255,000 loss as an expense.fraudulent charges from our bank.

In addition, in August 2017, affiliates of the Company, including our Chairman of the Board and Chief Executive Officer, acquired a 75.5% interest in RadQual. As a result of this change in ownership, the Company was named as a managing member of RadQual, and pursuant to GAAP, as of the date of the change in ownership, we have reported the accounts of RadQual in our financial statements on a consolidated basis.  Prior to this ownership change, we reported our investment in RadQual on the equity basis and recorded this investment in RadQual as an asset on our consolidated balance sheets in the amount of $1,436,843. At August 10, 2017, the fair market value of the Company’s investment in RadQual was determined to be $489,999 and the Company recorded a loss of $946,844 as other expense for the year ended December 31, 2017, to adjust the carrying value to fair value.

In September 2016,connection with the 2019 Promissory Note (as defined below), we borrowed an aggregaterecorded $40,000 of $360,000 frominterest expense for 2022 and 2021, and approximately $256,000 of non-cash interest expense related to a debt discount feature and issuance of warrants related to the 2019 Promissory Note for 2022 and 2021. We will have $0 in non-cash interest expense in connection with the 2019 Promissory Note in 2023 and future years.

In connection with our Chairman 2017 issuance of the Board of Directors and one of our directors. The $360,000 note bears interest at 6%, which is payable upon maturity of the note on March 31, 2017 and was secured by all unencumbered assets.  Per the terms of the 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, or other securities of the Company, based on the average closing price of the Company’s common stock over a 20-day period. In February 2017, all principal plus accrued interest under this note was converted into shares of our Series C Preferred Stock, we issued Class M Warrants and Class N Warrants. All these warrants that we offered through a private placement transaction, as described above.expired in 2021. We recorded approximately $0 and $131,000 of non-cash interest expense for 2022 and 2021 respectively in relation to these warrants.

Net Income or Loss

Our net lossincome was $3,757,284$303,238 in 2017,2022, compared to a net loss of $1,879,112was $902,347 in 2016.2021. This is an increase in lossnet income of $1,878,172, or approximately 100%. Our$1,205,578. This increase is largely the result of the approximate $1.8 million gain on sale of assets. Additionally, the increase in net lossincome is the result of the increase in revenue in our increased expenditures forRadiochemical Products segment offset by the increase in operating costs suchexpense from salaries and contract labor and expenses from research and development in 2022, as legal fees as well ascompared to the loss we recorded on our investmentsame period in RadQual and the loss recorded on the forfeited deposit on the shipping container.2021.

Liquidity and Capital Resources

On December 31, 2017,2022, we had cash and cash equivalents of $409,338$2,375,817 compared to $315,520$474,851 at December 31, 2016.2021. Net cash used in operating activities was $853,199$1,497,719 in 2017,2022, compared to net cash used inby operating activities of $324,176$161,914 in 2016.2021. This represents an increase in cash used in operating activities of approximately $529,000 and$1,335,805. This increase is the result of thedue to a large increase in net loss reported for 2017accounts receivable due to the increased sales activity in 2022 as compared to 2016, as well as decreases in most non-cash expenses2021 and decreased net income from operating activities in the two-year comparison and increases in prepaid expenses and inventory.year over year comparison.

Accounts receivable at December 31, 20172022 were $635,026$1,596,886 as compared to $774,275$853,675 at December 31, 2016. Historically, we have not written off any accounts receivable, and there were no accounts written off during 2017.2021. Our allowance for bad debt at December 31, 2022 was $0 as compared to $18,910 at December 31, 2021.

Inventories at December 31, 20172022 were $1,951,513$744,793 as compared to $1,476,240$924,775 at December 31, 2016.  The majority2021. A large portion of our inventory consists of irradiated material held at the site of the DOE’s prime-operating contractor, which controls the ATR located outside of Idaho Falls, Idaho.Cobalt target inventory. For 2017,2022, our target inventory accounted for approximately 92%25% of our work in process inventory, and includes cobalt targets of an older design as well as irradiated cobalt material under a new contract with the DOE. During 2016,inventory. For 2021, our target inventory accounted for approximately 85%48% of our work in process inventory. In 2017 and 2016, as part of our year-end procedures, we evaluated our older target inventory for impairment and concluded that these older design targets have varying but significant degrees of market value depending on any additional costs we may have to incur to transport them to our facility for processing.

Included in our raw materialwork in process inventory are the various pellet holdersin-process and housings involved in target fabrication, raw cobalt, strontium and other raw elements, completed flood sources,nuclear medicine products, irradiated cobalt, and nuclear medicine-related materials and products. Raw material inventory is regularly reviewed for obsolescence, and during 2017 we wrote-off approximately $1,500 to expense for raw material we believed to be of no future value to us.

We incurredrecognized a net lossprofit of $3,757,284$303,238, for the year ended December 31, 2017,2022, and have an accumulated deficit of $125,696,845$126,460,843 since inception. To date, our operations and plant and equipment expenditures have been funded principally from proceeds from public and private sales of debt and equity as well as through asset sales.

Net cash provided byin investing activities was $77,236$3,879,986 for 20172022 and net cash used in investing activities was $205,474 for 2016 was $73,000.2021. During 2017,2022, we used $110,115$120,014 to purchase property and equipment, and intangible assetswe used $205,474 to purchase equipment in 2021. We had proceeds from sale of equipment of $4,000,000 in 2022, and we received member distributionshad no proceeds from our investmentsale of equipment in RadQual in the amount of $109,111. During 2016, we used $93,603 for the purchase of property, equipment and intangible assets, and received member distributions from RadQual in the amount of $16,104.2021.

In December 2013, we entered into a promissory note agreement with our chairmanthen Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $500,000.$500,000 (the 2013 Promissory Note). The $500,000 note2013 Promissory Note is secured and bears interest at 6% per annum and was originally due June 30, 2014. AtAccording 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 the Company’sour common stock. In connection with the note,2013 Promissory Note, each of the two lenders was issued 5,000,000 Class L warrants to purchase shares of the Company’sour common stock at a purchasean exercise price of $0.06 per share. The warrants were immediately exercisable. In June 2014, we renegotiated the terms of this promissory note.the 2013 Promissory Note. Pursuant to the modification, the maturity date was extended to December 31, 2017 and each Lenderlender was granted an additional 7,500,000 Class L warrants to purchase shares of the Company’sour common stock at an exercise price of $0.06 per share. The warrants were immediately exercisable. In February 2017, the 2013 Promissory Note was further modified to extend the maturity date to December 2016,31, 2020, with all remaining terms unchanged. On December 23, 2018, all 25,000,000 Class L warrants expired. 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 further modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged.

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 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 further modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged.

In December 2019, we entered into a promissory note agreement with our Chief Executive Officer, Chairman of the Board, former Chairman of the Board, and one of our major shareholders (the 2019 Promissory Note). The 2019 Promissory Note authorizes us to borrow up to $1,000,000. As of December 31, 2019, we borrowed $675,000 under the 2019 promissory note; the remaining $325,000 was borrowed in February 2020. The 2019 Promissory Note is secured and bears interest at 4% per annum and has a maturity date of December 31, 2022. According to the terms of the 2019 Promissory Note, at any time, a holder of the 2019 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. In connection with the 2019 Promissory Note, we are required to issue up to 30,000,000 Class O Warrants to purchase shares of our common stock at $0.045 per share (the Class O Warrants). The warrants are exercisable at an exercise price of $0.045 per share and have a term of five years. In December 2022, the 2019 Promissory Note was modified to extend the maturity date to December 31, 2022,2024, with all remaining terms remaining unchanged.

In March 2016, we entered into a note payable for the purchase of a vehicle.  The principal amount financed was $47,513.  The term of the note is six years and the note carries an interest rate of 6.66%.  Monthly payments are $805 and the note matures April 2022. The note is secured by the vehicle.

In August 2017,April 2021, we entered into a promissory note agreement with ourborrowed $250,000 from its Chief Executive Officer and Chairman of the Board pursuant to which we borrowed $60,000.a promissory note (the 2021 Promissory Note). The note bears2021 Promissory Note accrued interest at 5%6% per annum, which was payable upon maturity of the 2021 Promissory Note. The 2021 Promissory Note was originally secured and matures June 30, 2018was to mature on December 31, 2022. At any time, the holders of the 2021 Promissory Note were able to elect to have any or all of the principal and is unsecured.accrued interest settled with shares of our common stock at a conversion price of $0.11 per share. On March 31, 2022, the Company repaid the 2021 Promissory Note in full. The payment included $250,000 in principal and $14,500 in interest.

We expect that cash from operations, cash obtained through securities offerings, and our current cash balance will be sufficient to fund operations for the next twelve months. Although we may seek additional debt financing for our projects and operations in the future, there is no assurance that we will be able to secure additional debt financing on acceptable terms to us, or at all.

Off-Balance Sheet Arrangements

As of December 31, 2017, we had no material off-balance sheet arrangements or obligations.

Goals for 20182023

Based upon the investments we have made in our facilities and investments we anticipate making, and based on projects, and products developed thus far in 2017,2023, we have the following goals for 2018:the rest of 2023:

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