UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20222023
OR
o☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
Commission file number:
0-22923
INTERNATIONAL ISOTOPES INC.
(Exact name of registrant as specified in its charter)
Texas | 74-2763837 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
4137 Commerce Circle
Idaho Falls,, Idaho,, 83401
(Address of principal executive offices, including zip code)
(208)524-5300
(Registrant’sRegistrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý☒ Yes¨ ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý☒ Yes¨ ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer |
Non-accelerated | Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes ý☒ No
As of August 3, 2022,10, 2023, the number of shares of common stock, $0.01 par value, outstanding was .518,029,510.
INTERNATIONAL ISOTOPES INC.
FormFORM 10-Q
For The Quarter Ended June 30, 20222023
PART I –FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
| June 30, | December 31, | June 30, | December 31, | |||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | 3,025,513 | $ | 474,851 | $ | 3,274,125 | $ | 2,375,817 | ||||||||
| Accounts receivable | 1,301,822 | 853,675 | 1,289,936 | 1,596,886 | ||||||||||||
| Inventories | 943,645 | 924,775 | 701,411 | 744,793 | ||||||||||||
| Prepaids and other current assets | 619,649 | 1,004,423 | 220,930 | 1,023,129 | ||||||||||||
| Total current assets | 5,890,629 | 3,257,724 | 5,486,402 | 5,740,625 | ||||||||||||
| Long-term assets | ||||||||||||||||
| Restricted cash | 831,382 | 830,752 | 858,268 | 840,049 | ||||||||||||
| Property, plant and equipment, net | 2,039,703 | 4,299,937 | 2,010,374 | 2,024,486 | ||||||||||||
| Capitalized lease disposal costs, net | 237,436 | 246,748 | 218,814 | 228,125 | ||||||||||||
| Financing lease right-of-use asset | 15,626 | 18,631 | 9,616 | 12,621 | ||||||||||||
| Operating lease right-of-use asset | 2,371,382 | 2,429,622 | 2,248,642 | 2,311,082 | ||||||||||||
| Goodwill | 1,384,255 | 1,384,255 | 1,384,255 | 1,384,255 | ||||||||||||
| Patents and other intangibles, net | 3,781,651 | 3,859,473 | 3,620,905 | 3,703,353 | ||||||||||||
| Total long-term assets | 10,661,435 | 13,069,418 | 10,350,874 | 10,503,971 | ||||||||||||
| Total assets | $ | 16,552,064 | $ | 16,327,142 | $ | 15,837,276 | $ | 16,244,596 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable | $ | 560,535 | $ | 1,424,028 | $ | 541,874 | $ | 382,392 | ||||||||
| Accrued liabilities | 899,748 | 1,189,165 | 1,119,693 | 1,472,504 | ||||||||||||
| Unearned revenue | 1,050,084 | 907,953 | 835,854 | 879,365 | ||||||||||||
| Current portion of operating lease right-of-use liability | 127,217 | 121,069 | 136,075 | 131,572 | ||||||||||||
| Current portion of financing lease liability | 8,411 | 8,542 | 2,996 | 5,513 | ||||||||||||
| Current portion of related party notes payable, net of debt discount | 871,868 | 993,735 | 620,000 | 620,000 | ||||||||||||
| Current installments of notes payable | 48,973 | 290,017 | 10,415 | 23,348 | ||||||||||||
| Current portion of mandatorily redeemable preferred stock, net of debt discount | 4,063,000 | — | ||||||||||||||
| Total current liabilities | 7,629,836 | 4,934,509 | 3,266,907 | 3,514,694 | ||||||||||||
| Long-term liabilities | ||||||||||||||||
| Accrued long-term liabilities | 140,625 | — | 93,750 | 112,500 | ||||||||||||
| Related party notes payable, net of current portion and debt discount | 620,000 | 620,000 | 1,000,000 | 1,000,000 | ||||||||||||
| Notes payable, net of current portion | 39,556 | 57,769 | 29,100 | 34,406 | ||||||||||||
| Asset retirement obligation | 916,887 | 892,086 | 968,577 | 942,378 | ||||||||||||
| Financing lease liability, net of current portion | 4,305 | 8,346 | 1,309 | 2,832 | ||||||||||||
| Operating lease right-of-use liability, net of current portion | 2,299,136 | 2,363,815 | 2,163,061 | 2,232,244 | ||||||||||||
| Mandatorily redeemable convertible preferred stock, net of current portion and discount | — | 4,719,822 | ||||||||||||||
Mandatorily redeemable convertible preferred stock | 4,063,000 | 4,063,000 | ||||||||||||||
| Total long-term liabilities | 4,020,509 | 8,661,838 | 8,318,797 | 8,387,360 | ||||||||||||
| Total liabilities | 11,650,345 | 13,596,347 | 11,585,704 | 11,902,054 | ||||||||||||
| Stockholders' equity | ||||||||||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding respectively | 5,147,269 | 5,025,842 | ||||||||||||||
Common stock, $0.01 par value; 750,000,000 shares authorized; 517,941,366 and 514,889,916 shares issued and outstanding respectively | 5,179,414 | 5,148,899 | ||||||||||||||
| Additional paid in capital | 125,535,534 | 124,469,034 | 125,944,357 | 125,654,486 | ||||||||||||
| Accumulated deficit | (125,781,084 | ) | (126,764,081 | ) | (126,872,199 | ) | (126,460,843 | ) | ||||||||
| Total equity | 4,901,719 | 2,730,795 | 4,251,572 | 4,342,542 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 16,552,064 | $ | 16,327,142 | $ | 15,837,276 | $ | 16,244,596 | ||||||||
See accompanying notes to condensed consolidated financial statements.
3 |
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
| Three months ended June 30, | Six months ended June 30, | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| Sale of product | $ | 2,434,808 | $ | 2,759,896 | $ | 5,242,249 | $ | 4,752,408 | $ | 3,112,165 | $ | 2,434,808 | $ | 6,201,700 | $ | 5,242,249 | ||||||||||||||||
| Cost of product | 1,034,278 | 1,171,968 | 2,164,976 | 2,003,322 | 1,269,552 | 1,034,278 | 2,579,051 | 2,164,976 | ||||||||||||||||||||||||
| Gross profit | 1,400,530 | 1,587,928 | 3,077,273 | 2,749,086 | 1,842,613 | 1,400,530 | 3,622,649 | 3,077,273 | ||||||||||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||||||||
| Salaries and contract labor | 801,972 | 625,428 | 1,735,221 | 1,293,948 | 944,179 | 801,972 | 1,919,361 | 1,735,221 | ||||||||||||||||||||||||
| General, administrative and consulting | 863,025 | 875,799 | 1,776,148 | 1,781,728 | 943,870 | 863,025 | 1,771,852 | 1,776,148 | ||||||||||||||||||||||||
| Research and development | 87,642 | 71,979 | 294,056 | 109,216 | 183,024 | 87,642 | 307,468 | 294,056 | ||||||||||||||||||||||||
| Total operating expenses | 1,752,639 | 1,573,206 | 3,805,425 | 3,184,892 | 2,071,073 | 1,752,639 | 3,998,681 | 3,805,425 | ||||||||||||||||||||||||
| Net operating loss | (352,109 | ) | 14,722 | (728,152 | ) | (435,806 | ) | (228,460 | ) | (352,109 | ) | (376,032 | ) | (728,152 | ) | |||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||
| Other income | 225,768 | 32,356 | 2,028,568 | 175,476 | 37,518 | 225,768 | 100,930 | 2,028,568 | ||||||||||||||||||||||||
| Interest income | 680 | 46 | 725 | 81 | 9,856 | 680 | 28,942 | 725 | ||||||||||||||||||||||||
| Interest expense | (146,387 | ) | (211,456 | ) | (318,144 | ) | (409,747 | ) | (82,216 | ) | (146,387 | ) | (165,196 | ) | (318,144 | ) | ||||||||||||||||
| Total other income (expense) | 80,061 | (179,054 | ) | 1,711,149 | (234,190 | ) | (34,842 | ) | 80,061 | (35,324 | ) | 1,711,149 | ||||||||||||||||||||
| Net income (loss) | (272,048 | ) | (164,332 | ) | 982,997 | (669,996 | ) | $ | (263,302 | ) | $ | (272,048 | ) | $ | (411,356 | ) | $ | 982,997 | ||||||||||||||
| Income attributable to noncontrolling interest | — | 17,055 | — | 112,543 | ||||||||||||||||||||||||||||
| Net income (loss) attributable to International Isotopes Inc. | $ | (272,048 | ) | $ | (181,387 | ) | $ | 982,997 | $ | (782,539 | ) | |||||||||||||||||||||
| Net income per common share - basic: | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
| Net income per common share - diluted: | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
Net loss per common share - basic: | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
Net loss per common share - diluted: | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
| Weighted average common shares outstanding - basic | 510,499,497 | 460,798,173 | 506,985,962 | 457,123,946 | 517,926,610 | 510,499,497 | 516,746,718 | 506,985,962 | ||||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | 510,499,497 | 460,798,173 | 512,569,114 | 457,123,946 | 517,926,610 | 510,499,497 | 516,746,718 | 512,569,114 | ||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
| Six months ended June 30 | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net income (loss) | $ | 982,997 | $ | (669,996 | ) | $ | (411,356 | ) | $ | 982,997 | ||||||
| Adjustments to reconcile net income (loss) to net cash used by operating activities | ||||||||||||||||
| Depreciation and amortization | 203,551 | 287,250 | 175,398 | 203,551 | ||||||||||||
| Accretion of obligation for lease disposal costs | 24,801 | 19,136 | 26,199 | 24,801 | ||||||||||||
| Accretion of beneficial conversion feature and discount | 146,311 | 199,757 | — | 146,311 | ||||||||||||
| Equity based compensation | 237,474 | 49,093 | 224,846 | 237,474 | ||||||||||||
| Gain on sale of property, plant and equipment | (1,797,978 | ) | — | — | (1,797,978 | ) | ||||||||||
| Right-of-use asset amortization | (291 | ) | 14,532 | (2,240 | ) | (291 | ) | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (448,147 | ) | (272,422 | ) | 306,950 | (448,147 | ) | |||||||||
| Inventories | (18,870 | ) | 169,006 | 43,382 | (18,870 | ) | ||||||||||
| Prepaids and other current assets | 384,774 | 1,098,651 | 802,199 | 384,774 | ||||||||||||
| Accounts payable and accrued liabilities | (807,805 | ) | (964,392 | ) | (121,419 | ) | (807,805 | ) | ||||||||
| Unearned revenues | 142,131 | (169,388 | ) | (43,511 | ) | 142,131 | ||||||||||
| Net cash used in operating activities | (951,052 | ) | (238,773 | ) | ||||||||||||
Net cash provided by (used in) operating activities | 1,000,448 | (951,052 | ) | |||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Proceeds from sale of property, plant and equipment | 4,000,000 | — | — | 4,000,000 | ||||||||||||
| Purchase of property, plant and equipment | (55,200 | ) | (191,666 | ) | (66,522 | ) | (55,200 | ) | ||||||||
| Net cash provided by (used in) investing activities | 3,944,800 | (191,666 | ) | (66,522 | ) | 3,944,800 | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from sale of stock and exercise of options and warrants | 70,973 | 8,995 | 4,880 | 70,973 | ||||||||||||
| Payments on financing lease | (4,172 | ) | (3,803 | ) | (4,040 | ) | (4,172 | ) | ||||||||
| Proceeds from the issuance of notes payable | — | 351,250 | ||||||||||||||
| Principal payments on notes payable | (509,257 | ) | (329,464 | ) | (18,239 | ) | (509,257 | ) | ||||||||
| Net cash used in financing activities | (442,456 | ) | 26,978 | (17,399 | ) | (442,456 | ) | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 2,551,292 | (403,461 | ) | |||||||||||||
Net increase in cash, cash equivalents, and restricted cash | 916,527 | 2,551,292 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 1,305,603 | 1,751,692 | 3,215,866 | 1,305,603 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 3,856,895 | $ | 1,348,231 | $ | 4,132,393 | $ | 3,856,895 | ||||||||
| Supplemental disclosure of cash flow activities: | ||||||||||||||||
| Cash paid for interest | $ | 46,894 | $ | 61,320 | $ | 157,826 | $ | 46,894 | ||||||||
| Supplemental disclosure of noncash financing and investing transactions | ||||||||||||||||
| Decrease in accrued interest and increase in equity for conversion of dividends to stock | $ | 204,480 | $ | 207,480 | $ | 90,660 | $ | 204,480 | ||||||||
| Increase in operating lease right-of-use asset and right-of-use liability for new lease | $ | — | $ | 1,603 | ||||||||||||
| Increase in equity and decrease in liability for the conversion of preferred stock | $ | 675,000 | $ | 200,000 | $ | — | $ | 675,000 | ||||||||
| Non-cash increase of capitalized ARO for increased funding plan | $ | — | $ | 260,715 | ||||||||||||
Reconciliation of cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows is presented in the table below:
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Cash and cash equivalents | $ | 3,025,513 | $ | 517,506 | $ | 3,274,125 | $ | 3,025,513 | ||||||||
| Restricted cash included in long-term assets | 831,382 | 830,725 | 858,268 | 831,382 | ||||||||||||
| Total cash, cash equivalents, and restricted cash shown in statement of cash flows | $ | 3,856,895 | $ | 1,348,231 | $ | 4,132,393 | $ | 3,856,895 | ||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' (Deficit) Equity
Three and Six Months Ended June 30, 2023
(Unaudited)
Common stock | ||||||||||||||||||||
Additional | ||||||||||||||||||||
Shares | Common | Paid-in | Accumulated | Total | ||||||||||||||||
Outstanding | Stock | Capital | Deficit | (Deficit) Equity | ||||||||||||||||
Balance, January 1, 2023 | 514,889,916 | $ | 5,148,899 | $ | 125,654,486 | $ | (126,460,843 | ) | $ | 4,342,542 | ||||||||||
Shares issued under employee stock purchase plan | 191,390 | 1,914 | 2,966 | — | 4,880 | |||||||||||||||
Stock grant | 343,560 | 3,436 | (3,436 | ) | — | — | ||||||||||||||
Stock in lieu of dividends on convertible preferred C | 2,266,500 | 22,665 | 67,995 | — | 90,660 | |||||||||||||||
Shares issued for issuance of RSUs | 250,000 | 2,500 | (2,500 | ) | — | — | ||||||||||||||
Stock based compensation | — | — | 224,846 | — | 224,846 | |||||||||||||||
Net (loss) income | — | — | — | (411,356 | ) | (411,356 | ) | |||||||||||||
Balance, June 30, 2023 | 517,941,366 | $ | 5,179,414 | $ | 125,944,357 | $ | (126,872,199 | ) | $ | 4,251,572 | ||||||||||
Common stock | ||||||||||||||||||||
Additional | ||||||||||||||||||||
Shares | Common | Paid-in | Accumulated | Total | ||||||||||||||||
Outstanding | Stock | Capital | Deficit | (Deficit) Equity | ||||||||||||||||
Balance, April 1, 2023 | 517,852,831 | $ | 5,178,528 | $ | 125,878,017 | $ | (126,608,897 | ) | $ | 4,447,648 | ||||||||||
Shares issued under employee stock purchase plan | 88,535 | 886 | 1,372 | — | 2,258 | |||||||||||||||
Stock based compensation | — | — | 64,968 | — | 64,968 | |||||||||||||||
Net (loss) income | — | — | — | (263,302 | ) | (263,302 | ) | |||||||||||||
Balance, June 30, 2023 | 517,941,366 | $ | 5,179,414 | $ | 125,944,357 | $ | (126,872,199 | ) | $ | 4,251,572 | ||||||||||
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
ReconciliationCondensed Consolidated Statement of Stockholders' (Deficit) Equity
Three and Six Months Ended June 30, 2022
(Unaudited)
| Common stock | Equity Attributable | Common stock | ||||||||||||||||||||||||||||||||||
| Additional | to | Additional | ||||||||||||||||||||||||||||||||||
| Shares | Common | Paid-in | Accumulated | Internat'l Isotopes | Total | Shares | Common | Paid-in | Accumulated | Total | ||||||||||||||||||||||||||
| Outstanding | Stock | Capital | Deficit | Shareholders | (Deficit) Equity | Outstanding | Stock | Capital | Deficit | (Deficit) Equity | ||||||||||||||||||||||||||
| Balance, January 1, 2022 | 502,584,176 | $ | 5,025,842 | $ | 124,469,034 | $ | (126,764,081) | $ | 2,730,795 | $ | 2,730,795 | 502,584,176 | $ | 5,025,842 | $ | 124,469,034 | $ | (126,764,081 | ) | $ | 2,730,795 | |||||||||||||||
| Shares issued under employee stock purchase plan | 119,910 | 1,199 | 7,974 | - | 9,173 | 9,173 | 119,910 | 1,199 | 7,974 | — | 9,173 | |||||||||||||||||||||||||
| Stock grant | 187,231 | 1,872 | (1,872) | - | - | - | 187,231 | 1,872 | (1,872 | ) | — | — | ||||||||||||||||||||||||
| Stock in lieu of dividends on convertible preferred C | 2,271,980 | 22,720 | 181,760 | - | 204,480 | 204,480 | 2,271,980 | 22,720 | 181,760 | — | 204,480 | |||||||||||||||||||||||||
| Shares issued for exercise of employee stock options | 611,111 | 6,111 | (6,111) | - | - | - | 611,111 | 6,111 | (6,111 | ) | — | — | ||||||||||||||||||||||||
| Warrant exercise | 515,000 | 5,150 | 56,650 | - | 61,800 | 61,800 | 515,000 | 5,150 | 56,650 | — | 61,800 | |||||||||||||||||||||||||
| Conversion of preferred B stock | 8,437,500 | 84,375 | 590,625 | 675,000 | 675,000 | 8,437,500 | 84,375 | 590,625 | — | 675,000 | ||||||||||||||||||||||||||
| Stock based compensation | - | - | 237,474 | - | 237,474 | 237,474 | — | — | 237,474 | — | 237,474 | |||||||||||||||||||||||||
| Net (loss) income | - | - | - | 982,997 | 982,997 | 982,997 | — | — | — | 982,997 | 982,997 | |||||||||||||||||||||||||
| Balance, June 30, 2022 | 514,726,908 | $ | 5,147,269 | $ | 125,535,534 | $ | (125,781,084) | $ | 4,901,719 | $ | 4,901,719 | 514,726,908 | $ | 5,147,269 | $ | 125,535,534 | $ | (125,781,084 | ) | $ | 4,901,719 | |||||||||||||||
| Common stock | Equity Attributable | |||||||||||||||
| Additional | to | |||||||||||||||
| Shares | Common | Paid-in | Accumulated | Internat'l Isotopes | Total | |||||||||||
| Outstanding | Stock | Capital | Deficit | Shareholders | (Deficit) Equity | |||||||||||
| Balance, April 1, 2022 | 506,237,443 | $ | 5,062,374 | $ | 124,885,936 | $ | (125,509,036) | $ | 4,439,274 | $ | 4,439,274 | |||||
| Shares issued under employee stock purchase plan | 51,965 | 520 | 3,456 | - | 3,976 | 3,976 | ||||||||||
| Conversion of preferred B stock | 8,437,500 | 84,375 | 590,625 | 675,000 | 675,000 | |||||||||||
| Stock based compensation | - | - | 55,517 | - | 55,517 | 55,517 | ||||||||||
| Net (loss) income | - | - | - | (272,048) | (272,048) | (272,048) | ||||||||||
| Balance, June 30, 2022 | 514,726,908 | $ | 5,147,269 | $ | 125,535,534 | $ | (125,781,084) | $ | 4,901,719 | $ | 4,901,719 | |||||
Common stock | ||||||||||||||||||||
Additional | ||||||||||||||||||||
Shares | Common | Paid-in | Accumulated | Total | ||||||||||||||||
Outstanding | Stock | Capital | Deficit | (Deficit) Equity | ||||||||||||||||
Balance, April 1, 2022 | 506,237,443 | $ | 5,062,374 | $ | 124,885,936 | $ | (125,509,036 | ) | $ | 4,439,274 | ||||||||||
Shares issued under employee stock purchase plan | 51,965 | 520 | 3,456 | — | 3,976 | |||||||||||||||
Conversion of preferred B stock | 8,437,500 | 84,375 | 590,625 | 675,000 | ||||||||||||||||
Stock based compensation | — | — | 55,517 | — | 55,517 | |||||||||||||||
Net (loss) income | — | — | — | (272,048 | ) | (272,048 | ) | |||||||||||||
Balance, June 30, 2022 | 514,726,908 | $ | 5,147,269 | $ | 125,535,534 | $ | (125,781,084 | ) | $ | 4,901,719 | ||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Reconciliation of Stockholders' (Deficit) Equity
Three and Six Months Ended June 30, 2021
(Unaudited)
| Common stock | Equity Attributable | Equity Attributable | |||||||||||||||||
| Additional | to | to | |||||||||||||||||
| Shares | Common | Paid-in | Accumulated | Internat'l Isotopes | Noncontrolling | Total | |||||||||||||
| Outstanding | Stock | Capital | Deficit | Shareholders | Interest | (Deficit) Equity | |||||||||||||
| Balance, January 1, 2021 | 424,344,298 | $ | 4,243,443 | $ | 122,191,837 | $ | (125,861,734) | $ | 573,546 | $ | 2,313,706 | $ | 2,887,252 | ||||||
| Shares issued under employee stock purchase plan | 211,640 | 2,117 | 6,878 | - | 8,995 | - | 8,995 | ||||||||||||
| Stock grant | 118,315 | 1,183 | (1,183) | - | - | - | - | ||||||||||||
| Stock in lieu of dividends on convertible preferred C | 1,398,200 | 13,982 | 193,498 | - | 207,480 | - | 207,480 | ||||||||||||
| Shares issued for exercise of employee stock options | 1,799,107 | 17,991 | (17,991) | - | - | - | - | ||||||||||||
| Warrant exercise | 32,621,409 | 326,214 | (326,214) | - | - | - | - | ||||||||||||
| Conversion of preferred C stock | 250,000 | 2,500 | 22,500 | - | 25,000 | - | 25,000 | ||||||||||||
| Conversion of preferred B stock | 87,500 | 875 | 174,125 | - | 175,000 | - | 175,000 | ||||||||||||
| Stock based compensation | - | - | 49,093 | - | 49,093 | - | 49,093 | ||||||||||||
| Net (loss) income | - | - | - | (782,539) | (782,539) | 112,543 | (669,996) | ||||||||||||
| Balance, June 30, 2021 | 460,830,469 | $ | 4,608,305 | $ | 122,292,543 | $ | (126,644,273) | $ | 256,575 | $ | 2,426,249 | $ | 2,682,824 | ||||||
| Common stock | Equity Attributable | Equity Attributable | |||||||||||||||||
| Additional | to | to | |||||||||||||||||
| Shares | Common | Paid-in | Accumulated | Internat'l Isotopes | Noncontrolling | Total | |||||||||||||
| Outstanding | Stock | Capital | Deficit | Shareholders | Interest | (Deficit) Equity | |||||||||||||
| Balance, April 1, 2021 | 460,636,690 | $ | 4,606,367 | $ | 122,103,290 | $ | (126,462,886) | $ | 246,771 | $ | 2,409,194 | $ | 2,655,965 | ||||||
| Shares issued under employee stock purchase plan | 106,279 | 1,063 | 3,454 | - | 4,517 | - | 4,517 | ||||||||||||
| Conversion of preferred B stock | 87,500 | 875 | 174,125 | - | 175,000 | - | 175,000 | ||||||||||||
| Stock based compensation | - | - | 11,674 | - | 11,674 | - | 11,674 | ||||||||||||
| Net (loss) income | - | - | - | (181,387) | (181,387) | 17,055 | (164,332) | ||||||||||||
| Balance, June 30, 2021 | 460,830,469 | $ | 4,608,305 | $ | 122,292,543 | $ | (126,644,273) | $ | 256,575 | $ | 2,426,249 | $ | 2,682,824 | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Equity Attributable to Internat’l Isotopes Shareholders
Equity Attributable to Noncontrolling Interest
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 20222023
(1) (1) The Company and Basis of Presentation
International Isotopes Inc. (INIS) was incorporated in Texas in November 1995. The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and include all operations and balances of INIS and its wholly owned subsidiaries, including RadQual, LLC (RadQual) and TI Services, LLC (TI Services). TI Services is headquartered in Youngstown, Ohio and was formed with RadQual in December 2010 to distribute products and services for nuclear medicine, nuclear cardiology, and Positron Emission Tomography (PET) imaging. RadQual is a global supplier of molecular imaging quality control and calibration devices, and is headquartered in Idaho Falls, Idaho. In August 2017, affiliates of INIS, purchased 75.5% of RadQual and at the time INIS was named as one of the two managing members of RadQual. In July 2021, INIS purchased the remaining interest in RadQual and now owns 100% of RadQual. INIS, its wholly-owned subsidiaries (including RadQual and TI ServicesServices) are collectively referred to herein as the “Company,” “we,” “our” or “us.”
Affiliates
Nature of Operations – The Company manufactures a full range of nuclear medicine calibration and reference standards, generic sodium iodide I-131I-131 drug product, cobalt teletherapy sources, and a varied selection of radiochemicals for medical research, and clinical applications. For 2022,2023, the Company’s business consists of four business segments: Nuclear Medicine Standards, Cobalt Products, Radiochemical Products, and Fluorine Products. Due to minimal activity, the Radiological Services business segment has been reorganized into the Company’s Nuclear Medicine Standards segment as of January 1, 2022. The Company’s headquarters and all operations, with the exception of TI Services, are located in Idaho Falls, Idaho.
With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products is considered to be two to three years. Accordingly, preliminary payments received on cobalt contracts, where shipment will not take place for greater than one year, have been recorded as unearned revenue and, depending upon estimated ship dates, classified under either current or long-term liabilities on the Company’s condensed consolidated balance sheets. These unearned revenues are being recognized as revenue in the periods during which the cobalt shipments take place. All assets expected to be realized in cash or sold during the normal operating cycle of business are classified as current assets.
Principles of Consolidation
Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements are presented in conformity with GAAP and include all operations and balances of INIS and its wholly-owned subsidiaries. See Note 4 “RadQual Acquisition” for additional information regardingsubsidiaries including RadQual and TI Services. See Note 4 “Investment and Business Consolidation” for additional information. All significant intercompany accounts and transactions have been eliminated in consolidation.
Interim Financial Information
Interim Financial Information – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three or six-month period and six months ended June 30, 20222023 are not necessarily indicative of the results that may be expected for the year ending December 31, 20222023 or any future periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K10-K for the year ended December 31, 20212022 filed with the SEC on March 31, 2022.April 6, 2023, as amended on May 3, 2023.
Recent Accounting Pronouncements
Recent Accounting Pronouncements – In August 2020, the Financial Accounting Standards Board issued ASU 2020-062020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20)470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)815-40). The update simplifies accounting related to convertible debt instruments. The standard is effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years. INISThe Company is currently evaluating the effect this standard will have on its financial statements.
(2) (2) Current Developments and Liquidity
Business Condition – Since inception, the Company has incurred substantial losses. During the six months ended June 30, 2023, the Company reported a net loss of $411,356 and net cash provided in operating activities of $1,000,448. During the six months ended June 30, 2022, the Company reported net income of $982,997, net of non-controlling interest,$982,997 and net cash used in operating activities of $951,052. During the six months ended June 30, 2021, the Company reported a net loss of $782,539, net of non-controlling interest, and net cash used in operating activities of $238,773.$951,052.
During the three and six months ended June 30, 2022,2023, the Company continued its focus on its strongest long-standing core business segments which consist of its radiochemical products, cobalt products, and nuclear medicine standards, and in particular, the pursuit of new business opportunities within those segments.
Additionally, the Company holds a Nuclear Regulatory Commission (NRC) construction and operating license for the depleted uranium facility and ain, as well as the property agreement with, Lea County, New Mexico, where the plant is intended to be constructed. The NRC license for the de-conversion facility is a forty (40) (40) year operating license and is the first commercial license of this type issued in the United States. There are no other companies with a similar license application under review by the NRC. Therefore, the NRC license represents a significant competitive barrier, and the Company considers it a valuable asset.
(3) The Company expects that cash from operations, equity or debt financing, and its current cash balance will be sufficient to fund operations for the next twelve months. Future liquidity and capital funding requirements will depend on numerous factors, including commercial relationships, technological developments, market factors, available credit, and management of redeemable convertible preferred stock. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.
(3) Net Income (Loss) Per Common Share - Basic and Diluted
For the three and six months ended June 30, 2023, the Company had 26,012,500 stock options outstanding, 7,000,000 restricted stock units outstanding and 4,063 outstanding shares of Series C redeemable convertible preferred stock (Series C Preferred Stock), each of which were not included in the computation of diluted income (loss) per common share because they would be anti-dilutive.
For the six months ended June 30, 2022, the Company had stock options outstanding, and outstanding shares of Series C Preferred Stock, each of which were not included in the computation of diluted income per common share because they would be anti-dilutive. The Company used the treasury stock method in calculating weighted average common shares diluted.
For the three months ended June 30, 2022, the Company had stock options outstanding, and outstanding shares of Series C Preferred Stock, each of which were not included in the computation of diluted income (loss) per common share because they would be anti-dilutive. The Company used the treasury stock method in calculating weighted average common shares diluted.
For the three and six months ended June 30, 2021, the Company had stock options outstanding, warrants outstanding, outstanding shares of Series B redeemable convertible preferred stock (Series B Preferred Stock), and outstanding shares of Series C redeemable convertible preferred stock (Series C Preferred Stock), each of which were not included in the computation of diluted income (loss) per common share because they would be anti-dilutive.
Net Income (Loss) Per Common Share - Schedule of Weighted Average Number of Shares
| 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| Weighted average common shares outstanding - basic | 510,499,497 | 460,798,173 | 506,985,962 | 457,123,946 | 517,926,610 | 510,499,497 | 516,746,718 | 506,985,962 | ||||||||||||||||||||||||
| Effects of dilutive shares | ||||||||||||||||||||||||||||||||
| Stock Options | 0 | 0 | 5,583,152 | 0 | — | — | — | 5,583,152 | ||||||||||||||||||||||||
Series C Preferred Stock | — | — | — | — | ||||||||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | 510,499,497 | 460,798,173 | 512,569,114 | 457,123,946 | 517,926,610 | 510,499,497 | 516,746,718 | 512,569,114 | ||||||||||||||||||||||||
The table below summarizes common stock equivalents outstanding at June 30, 2022 2023 and 2021:2022:
Net Income (Loss) Per Common Share - Basic and Diluted - Schedule of Common Stock Equivalents Outstanding
| Series B Redeemable Convertible Preferred Stock | ||||||||
| Series C Redeemable Convertible Preferred Stock | June 30, | |||||||
| 2022 | 2021 | |||||||
| Stock options | 26,134,500 | 18,252,500 | ||||||
| Warrants | — | 7,065,000 | ||||||
| Shares of Series B redeemable convertible preferred stock | — | 337,500 | ||||||
| Shares of Series C redeemable convertible preferred stock | 40,630,000 | 41,880,000 | ||||||
| 66,764,500 | 67,535,000 | |||||||
June 30, | ||||||||
2023 | 2022 | |||||||
Stock options | 26,012,500 | 26,134,500 | ||||||
Restricted Stock Units | 7,000,000 | — | ||||||
Shares of Series C Preferred Stock | 40,630,000 | 40,630,000 | ||||||
| 73,642,500 | 66,764,500 | |||||||
(4) RadQual Acquisition
(4) Investment and Business Consolidation
On July 8, In 2021, the Company entered into a Membership Interest Purchase Agreement (the Purchase Agreement) with RadQual and the sellers set forth in the Purchase Agreement, which included the Company’s Chairman of the Board, Chief Executive Officer, former Chairman of the Board, and certain other stockholders of the Company (collectively, the “Sellers”). Pursuant to the Purchase Agreement, the Company acquired all of the outstanding membership interests of RadQual not then owned by the Company for an aggregate purchase price of approximately $4.4 million, payable in shares of the Company’s common stock valued at $ per share (determined by the average trading price of the Company’s common stock on the OTC Markets during the 60 trading day period immediately prior to June 2, 2021) (the RadQual Acquisition). The Company issued an aggregate of shares of its common stock to the Sellers as consideration in the RadQual Acquisition. Prior to the RadQual Acquisition, the Company owned 24.5% of the outstanding membership interests of RadQual, and after acquiring all of the remaining membership interests of RadQual, making RadQual became a wholly-owned subsidiary of the Company. The RadQual Acquisition closed on July 8, 2021. As TI Services is a 50/50 joint venture between the Company and RadQual, TI Services is also became a wholly-owned subsidiary of the Company as a result of the RadQual Acquisition.Company.
(5) (5) Inventories
At June 30, 20222023 and December 31, 2021,2022, the companyCompany held inventories of $943,645$701,411 and $924,775$744,793, respectfully.
Inventories consisted of work in process for the following business segments:
Inventories - Schedule of Inventory, Current
| June 30, 2022 | December 31, 2021 | |||||||
| Radiochemical Products | $ | 47,435 | $ | 79,747 | ||||
| Cobalt Products | 405,152 | 441,749 | ||||||
| Nuclear Medicine Products | 491,058 | 403,279 | ||||||
| 943,645 | 924,775 | |||||||
When indicators of inventory impairment exist, the Company measures the carrying value of the inventory against its market value, and if the carrying value exceeds the market value, the inventory value is adjusted down accordingly. No impairment was recorded for the six months ended June 30, 2022 and 2021.
June 30, 2023 | December 31, 2022 | |||||||
Radiochemical Products | $ | 77,018 | $ | 23,011 | ||||
Cobalt Products | 184,782 | 189,255 | ||||||
Nuclear Medicine Products | 439,611 | 532,527 | ||||||
| $ | 701,411 | $ | 744,793 | |||||
The Company has contracted with several customers for the sale of some of thisthe cobalt product material and has collected advance payments for project management, up-front handling, and other production costs from those customers. The advance payments from customers were recorded as unearned revenue which are recognized in the Company’s condensed consolidated financial statements as cobalt products are completed and shipped. For the six months ended June 30, 2022 2023 and 2021,2022, the Company recognized approximately $26,949$1,500 and $157,890,$26,949, respectively, of revenue in its condensed consolidated statements of operations for customer orders filled during the period under these cobalt contracts. For the three-monthsthree months ended June 30, 2022 2023 and 2021,2022, the Company recognized approximately $16,311$0 and $150,090,$16,311, respectively, of revenue in its condensed consolidated statements of operations for customer orders filled during the period under these cobalt contracts.
(6) (6) Stockholders’ Equity, Options, and Warrants
Employee Stock Purchase Plan
The Company has an employee stock purchase plan pursuant to which employees of the Company may participate to purchase shares of common stock at a discount. During the six months ended June 30, 2022 2023 and 2021,2022, the Company issued 191,390 and 119,910 shares of common stock, respectively, to employees under the employee stock purchase plan for proceeds of $9,173$4,880 and $8,995,$9,173, respectively. As of June 30, 2022, 2023, 2,350,020 shares of common stock remain available for issuance under the employee stock purchase plan.
Stock-Based Compensation Plans
2015 Incentive Plan - In April 2015, the Company’s Board of Directors approved the International Isotopes Inc. 2015 Incentive Plan (as amended, the 2015 Plan), which was subsequently approved by the Company’s shareholders in July 2015. The 2015 Plan was amended and restated in July 2018 to increase the number of shares authorized for issuance under the 2015 Plan by an additional shares. The 2015 Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock or cash-based awards. At June 30, 2022,2023, there were 20,788,574 shares available for issuance under the 2015 Plan.
Employee/Director Grants - The Company accounts for issuances of stock-based compensation to employees by recognizing, as compensation expense, the cost of employee services received in exchange for equity awards. The compensation expense is based on the grant date fair value of the award. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
Non-Employee Grants - The Company accounts for its issuances of stock-based compensation to non-employees by recognizing compensation expense based on the grant date fair value of the award. Stock option compensation expense is recognized over the vesting period for the award.
Option awards outstanding as of June 30, 2022,2023, and changes during the six months ended June 30, 2022,2023, were as follows:
Stockholders’ Equity, Options and Warrants - Schedule of Share-Based Compensation Stock Option Activity
Weighted | ||||||||||||||||||||||||||
Weighted | Average | |||||||||||||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||||||||||||
| Fixed Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | Shares | Exercise Price | Contractual Life | Intrinsic Value | ||||||||||||||||||
| Outstanding at December 31, 2021 | 20,777,500 | $ | 0.06 | |||||||||||||||||||||||
Outstanding at December 31, 2022 | 24,993,500 | $ | 0.05 | |||||||||||||||||||||||
| Granted | 8,025,000 | 0.09 | 3,025,000 | 0.04 | ||||||||||||||||||||||
| Exercised | (1,000,000) | 0.04 | — | — | ||||||||||||||||||||||
| Expired | 0 | — | (1,000,000 | ) | 0.09 | |||||||||||||||||||||
| Forfeited | (1,668,000) | 0.08 | (1,006,000 | ) | 0.08 | |||||||||||||||||||||
| Outstanding at June 30, 2022 | 26,134,500 | 0.06 | 6.3 | $ | 241,645 | |||||||||||||||||||||
| Exercisable at June 30, 2022 | 16,992,000 | $ | 0.06 | 4.7 | $ | 230,640 | ||||||||||||||||||||
Outstanding at June 30, 2023 | 26,012,500 | 0.05 | 6.1 | $ | 860,550 | |||||||||||||||||||||
Exercisable at June 30, 2023 | 19,117,500 | $ | 0.05 | 5.1 | $ | 686,630 | ||||||||||||||||||||
The intrinsic value of outstanding and exercisable shares is based on the closing price of the Company’s common stock on the OTCQB of $$0.08 per share on June 30, 2022,2023, the last trading day of the quarter.three months ended June 30, 2023.
As of June 30, 2022,2023, there was $$161,069 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of 1.87 years.
Total stock-based compensation expense for the six months ended June 30, 2022 2023 and 20212022 was $$224,846 and $$237,474, respectively.
Total stock-based compensation expense for the three-monthsthree months ended June 30, 2022 2023 and 20212022 was $$64,968 and $,$55,517, respectively.
Members of the Board
During the six months ended June 30, 2022,2023, the Company granted an employee aggregate of 3,025,000 qualified stock options with an exercise price of $ and another qualified stock options with an exercise price of $to one31 of its employees. These options vest over a five-year period with the first vesting at the one-year anniversarydate of the grant and expiration at ten-yearten-year anniversary for all grants. On February 21, 2022, the Compensation Committee granted qualified stock options to its executive officers and non-qualified stock options to members of the Board. The exercise price for these granted options was $. The remaining executive officer and board member . All these granted options expire at the ten-year anniversary of the grant. $0.06 per share. The options issued during the six months ended June 30, 20222023 have a fair value of $$79,532, as estimated on the date of issue using the Black-Scholes options pricing model with the following weighted-average assumptions: risk free interest rate of %3.94% to %4.26%, expected dividend yield rate of %0%, expected volatility of %68.65% to %74.16% and an expected life between and 7 years.
Executive Officers
In On March 2022, qualified3, 2023, the Compensation Committee of our Board of Directors approved the re-pricing of an aggregate of 12,450,000 outstanding stock options were exercised under a cashless exercise.held by executive officers and members of the Board, which had original exercise prices of either $0.06, $0.09 or $0.11 per share. The company withheld shares to satisfyCompensation Committee lowered the exercise price per share to $0.04 for each option, which was the fair market value of the Company’s stock on March 3, 2023.
On March 3, 2023, the Compensation Committee of our Board of Directors approved the cancellation of 1,000,000 outstanding stock options held by a member of the Board in exchange for the grant of 750,000 restricted stock units. The restricted stock units vest over a three-year period beginning on the grant date.
On May 8, 2023, pursuant to an executive employment agreement entered into with its newly appointed President, the Company granted 6,500,000 restricted stock units (“RSUs”) to its President. 1,500,000 RSUs vest on April 17, 2024, 2,000,000 RSUs vest on April 17, 2025, and issued shares3,000,000 RSUs vest on April 17, 2026. Under the same compensation terms, subject to approval by the Board, a special equity grant of common stock. The options exercised were2,500,000 fully-vested RSUs would be granted underupon a promotion of the 2015 Plan, and, accordingly, there was not any income tax effect in the accompanying unaudited condensed consolidated financial statements.Company's President to Chief Executive Officer.
Minimum
Maximum
Pursuant to an employment agreement with its Chief Executive Officer, the Company awarded 560,000 fully vested shares of common stock to its Chief Executive Officer in February 2022 2023 under the 2015 Plan. The number of shares awarded was based on a $$28,000 stock award using a price of $$0.05 per share. The employment agreement provides that the number of shares issued will be based on the average closing price of common stock for the 20 trading days prior to issue date but not less than $0.05$0.05 per share. Compensation expense recorded pursuant to this stock grant was $,$22,400, which was determined by multiplying the number of shares awarded by the closing price of the common stock on February 28, 2021, 2022, which was $$0.04 per share. The Company withheld 216,440 shares of common stock to satisfy payroll tax obligations in connection with this issuance. The net shares issued on February 28, 2022 2023 totaled .343,560.
Warrants
As
Preferred Stock
On May 31, 2022, the Company paid with shares of the Company’s common stock all outstanding Series B Preferred Stock outstanding with a mandatory redemption date of May 2022 at $ per share or $. The May 31, 2022 average price of the Company’s common stock was $ per share. The Company issued shares of commons stock to satisfy the $ redemption amount.
At June 30, 2022,2023, there were shares of the Series C Preferred Stock outstanding with a mandatory redemption date of February 17, 20232025 at $$1,000 per share in either cash or shares of common stock, at the option of the holder. Holders of the Series C Preferred Stock do not have any voting rights except as required by law and in connection with certain events as set forth in the Statement of Designation of the Series C Preferred Stock. The Series C Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on February 17th of each year. The Series C Preferred Stock are convertible at the option of the holders at any time into shares of the Company'sCompany common stock at an initial conversion price equal to $0.10 per share, subject to adjustment. If the volume-weighted average closing price of the Company’s common stock over a period of 90 consecutive trading days is greater than $0.25$0.25 per share, the Company may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per share plus any accrued and unpaid dividends, payable in shares of common stock.
During the six months ended June 30, 2022 2023 and 20212022, dividends paid to holders of the Series C Preferred Stock totaled $243,780 and $254,280, respectively.$243,780 for both years. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. For the threesix months ended March 31, 2022 June 30, 2023 and 20212022, the Company issued an aggregate of 2,266,500 and 2,271,980 shares of common stock, respectively, in lieu of a dividend paymentpayments in the aggregate of $204,480$90,660 and $207,480, respectively. The$204,480, respectively, with the remaining dividend payable was settled within cash of $39,300$153,120 and $46,800$39,300, respectively.
(7) (7) Debt
In December 2013, the Company entered into a promissory note agreement with its then Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $500,000$500,000 (the 2013 Promissory Note). The 2013 Promissory Note is secured and bears interest at 6%6% per annum and was originally due June 30, 2014. 2014. According to the terms of the 2013 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of our common stock. In December 2019, the 2013 Promissory Note was modified to extend the maturity date to December 31, 2021,, with all remaining terms unchanged. In January 2022, the 2013 Promissory Note was modified to extend the maturity date to December 31, 2023,, with all remaining terms unchanged. At June 30, 2022,2023, the principal balance of the 2013 Promissory Note was $500,000$500,000 and accrued interest payable on the 2013 Promissory Note was $256,734.$286,734. Interest expense recorded for the six months ended June 30, 2022, was $15,000.
In April 2018, we borrowed $120,000$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%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. 2018. At any time, the holder of the 2018 Promissory Note may elect to have any or all of the principal and accrued interest settled with shares of our common stock based on the average price of the shares over the previous 20 trading days. In June 2018, the 2018 Promissory Note was modified to extend the maturity date to March 31, 2019with all other provisions remaining unchanged. In February 2019, the 2018 Promissory Note was modified to extend the maturity date to July 31, 2019with all other provisions remaining unchanged. In July 2019, the 2018 Promissory Note was modified to extend the maturity date to January 31, 2020with all other provisions remaining unchanged. In December 2019, the 2018 Promissory Note was modified to extend the maturity date to December 31, 2021,, the note was also modified to become secured by company assets, with all other provisions remaining unchanged. In December 2021, the 2018 Promissory Note was modified to extend the maturity date to December 31, 2023,, with all remaining terms unchanged. At June 30, 2022,2023, accrued interest on the 2018 Promissory Note totaled $30,170.$37,370.
In December 2019 and February 2020, the Company borrowed $an aggregate of $1,000,000 from four of the Company’s major shareholders pursuant to a promissory note (the 2019 Promissory Note). The 2019 Promissory Note bears an interest rate of %4% annually and iswas originally due . 2022. According to the terms of the 2019 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of the Company’s common stock based on the average closing price of the Company’s common stock for the 20 days preceding the payment. In connection with the 2019 Promissory Note, the lenders were issued warrants totaling warrants to purchase shares of the Company’s common stock at $$0.045 per share (the Class O Warrants). The fair value of these Class O Warrants issued totaled $$446,079 and was recorded as a debt discount and will bewas amortized over the life of the 2019 Promissory Note. The Company calculated a beneficial conversion feature of $$315,643 which will bewas accreted to interest expense over the life of the 2019 Promissory Note. In December 2022, the 2019 Promissory Note was modified to extend the maturity date to December 31, 2024, with all remaining terms unchanged. At June 30, 2022,2023, the balance of the 2019 Promissory Note was $, The remaining debt discount was $, the remaining beneficial conversion feature was $,$1,000,000 and the accrued interest on the 2019 Promissory Note totaled $.
In April 2021, the Company borrowed $250,000 from its Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2021 Promissory Note). The 2021 Promissory Note accrued interest at 6% per annum, which was payable upon maturity of the 2021 Promissory Note. The 2021 Promissory Note was secured and was 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 accrued interest settled with shares of our common stock at a conversion price of $ 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.$139,131.
(8) (8) Commitments and Contingencies
Dependence on Third Parties
The production of High Specific Activity Cobalt is dependent upon the U.S. Department of Energy (DOE), and its prime operating contractor, which controls the Advanced Test Reactor (ATR) and laboratory operations at the ATR located outside of Idaho Falls, Idaho. In October 2014, the Company signed a ten-yearten-year contract with the DOE for the irradiation of cobalt targets for the production of cobalt-60.cobalt-60. The Company will be able to purchase cobalt targets for a fixed price per target with an annual 5% escalation in price. The contract term is October 1, 2014 through September 30, 2024, however, the contract may be extended beyond that date. Also, the DOE may end the contract if it determines termination is necessary for the national defense, security or environmental safety of the United States. If this were to occur, all payments made by the Company, for partially irradiated undelivered cobalt material, would be refunded.
Sales of our most predominant radiochemical products are dependent upon a few key suppliers. An interruption in production by any of these individual suppliers could have an immediate negative impact upon radiochemical sales until material could be purchased from alternate suppliers including obtaining regulatory approval to use material from alternative suppliers if necessary.
The Nuclear Medicine Reference and Calibration Standard products sold by the Company are dependent upon certain radioisotopes that are supplied to the Company through agreements with several suppliers. A loss of any of these suppliers could adversely affect operating results by causing a delay in production or a possible loss of sales.
Contingencies
Because all the Company’s business segments involve the handling or use of radioactive material, the Company is required to have an operating license from the NRC and specially trained staff to handle these materials. The Company has amended this operating license numerous times to increase the amount of material permitted within the Company’s facility. Although this license does not currently restrict the volume of business operations performed or projected to be performed in the upcoming year, additional processing capabilities and license amendments could be implemented that would permit processing of other reactor-produced radioisotopes by the Company. The financial assurance required by the NRC to support this license has been provided for with a surety bond held with North American Specialty Insurance Company which is supported by a restricted money market account held with Merrill Lynch in the amount of $831,382 at June 30, 2022.$858,268.
In August 2011, the Company received land from Lea County, New Mexico, pursuant to a Project Participation Agreement (PPA), whereby the land was deeded to the Company for no monetary consideration. In return, the Company committed to construct a uranium de-conversion and Fluorine Extraction Process facility on the land. In order to retain title to the property, the Company was to begin construction of the de-conversion facility no later than December 31, 2014, and complete Phase I of the project and have hired at least 75 persons to operate the facility no later than December 31, 2015, although commercial operations need not have begun by that date. In 2015, the Company negotiated a modification to the PPA that extended the start of construction date to December 31, 2015, and the hiring milestone to December 31, 2016. Those dates were also not met. The Company has been in discussiondiscussions with commercial companies possibly interested in purchasing rights to this project. Should those discussions come to fruition the Company plans to negotiate a second modification to the PPA agreement to further extend the commitment dates. If the Company is not successful in reaching an amendment to extend the performance dates in the PPAPPA., then it may, at its 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. The Company has 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 the Company’s obligations under the agreements for permanent transfer of the title.
(9) (9) Revenue Recognition
Revenue from Product Sales
The following tables present the Company’s revenue disaggregated by business segment and geography, based on management’s assessment of available data:
Revenue Recognition - Summary of Sales from Contracts with Customers Disaggregated by Business Segment and Geography
| U.S. | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Outside U.S. | U.S. | Outside U.S. | Total Revenues | % of Total Revenues | U.S. | Outside U.S. | Total Revenues | % of Total Revenues | |||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Outside | Total | % of Total | Outside | Total | % of Total | ||||||||||||||||||||||||||||||||||||||||||||||||
U.S. | U.S. | Revenues | Revenues | U.S. | U.S. | Revenues | Revenues | ||||||||||||||||||||||||||||||||||||||||||||||
| Radiochemical Products | $ | 1,266,249 | $ | 113,790 | $ | 1,380,039 | 57% | $ | 1,091,114 | $ | 137,095 | $ | 1,228,209 | 45% | $ | 1,605,313 | $ | 130,730 | $ | 1,736,043 | 56 | % | $ | 1,266,249 | $ | 113,790 | $ | 1,380,039 | 57 | % | |||||||||||||||||||||||
| Cobalt Products | 89,946 | 9,200 | 99,146 | 4% | 562,744 | 14,250 | 576,994 | 21% | 395,395 | 52,863 | 448,258 | 14 | % | 89,946 | 9,200 | 99,146 | 4 | % | |||||||||||||||||||||||||||||||||||
| Nuclear Medicine Products | 744,154 | 211,469 | 955,623 | 39% | 768,349 | 186,344 | 954,693 | 34% | 732,524 | 195,340 | 927,864 | 30 | % | 744,154 | 211,469 | 955,623 | 39 | % | |||||||||||||||||||||||||||||||||||
| Fluorine Products | 0 | 0 | 0 | 0% | 0 | 0 | 0 | 0% | — | — | — | 0 | % | — | — | — | 0 | % | |||||||||||||||||||||||||||||||||||
| $ | 2,100,349 | $ | 334,459 | $ | 2,434,808 | 100% | $ | 2,422,207 | $ | 337,689 | $ | 2,759,896 | 100% | $ | 2,733,232 | $ | 378,933 | $ | 3,112,165 | 100 | % | $ | 2,100,349 | $ | 334,459 | $ | 2,434,808 | 100 | % | ||||||||||||||||||||||||
Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Outside | Total | % of Total | Outside | Total | % of Total | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | Outside U.S. | Total Revenues | % of Total Revenues | U.S. | Outside U.S. | Total Revenues | % of Total Revenues | U.S. | U.S. | Revenues | Revenues | U.S. | U.S. | Revenues | Revenues | ||||||||||||||||||||||||||||||||||||||
| Radiochemical Products | $ | 2,776,571 | $ | 229,391 | $ | 3,005,962 | 57% | $ | 1,637,924 | $ | 251,462 | $ | 1,889,386 | 40% | $ | 3,230,429 | $ | 268,010 | $ | 3,498,439 | 56 | % | $ | 2,776,571 | $ | 229,391 | $ | 3,005,962 | 57 | % | |||||||||||||||||||||||
| Cobalt Products | 256,502 | 14,550 | 271,052 | 5% | 676,023 | 19,344 | 695,367 | 15% | 537,553 | 69,013 | 606,566 | 10 | % | 256,502 | 14,550 | 271,052 | 5 | % | |||||||||||||||||||||||||||||||||||
| Nuclear Medicine Products | 1,584,536 | 380,699 | 1,965,235 | 38% | 1,712,205 | 433,437 | 2,145,642 | 45% | 1,604,112 | 492,583 | 2,096,695 | 34 | % | 1,584,536 | 380,699 | 1,965,235 | 38 | % | |||||||||||||||||||||||||||||||||||
| Fluorine Products | 0 | 0 | 0 | 0% | 22,013 | 0 | 22,013 | 0% | — | — | — | 0 | % | — | — | — | 0 | % | |||||||||||||||||||||||||||||||||||
| $ | 4,617,609 | $ | 624,640 | $ | 5,242,249 | 100% | $ | 4,048,165 | $ | 704,243 | $ | 4,752,408 | 100% | $ | 5,372,094 | $ | 829,606 | $ | 6,201,700 | 100 | % | $ | 4,617,609 | $ | 624,640 | $ | 5,242,249 | 100 | % | ||||||||||||||||||||||||
The Company’s revenue consists primarily of calibration and reference standards manufactured for use in the nuclear medicine industry, distribution of radiochemicals including sodium iodide I-131I-131 drug product, and cobalt source manufacturing. With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products is considered to be two to three years. Accordingly, preliminary payments received on cobalt contracts, where shipment will not take place for greater than one year, have been recorded as unearned revenue on the Company’s condensed consolidated balance sheets and classified under current or long-term liabilities, depending upon estimated ship dates. For the six months ended June 30, 2022,2023, the Company reported current unearned revenue of $1,050,084.$835,854. For the period ended December 31, 2021,2022, the Company reported current unearned revenue of $907,953. $879,365. These unearned revenues will be recognized as revenue in the periods during which the cobalt shipments take place.
Accounts ReceivableContract Balances
The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. As of June 30, 2022,2023, and December 31, 2021,2022, accounts receivable totaled $1,301,822$1,289,936 and $853,675,$1,596,886, respectively. For the six months ended June 30, 2022,2023, the Company has an allowance for doubtful accounts of approximately $19,000.did not incur material impairment losses with respect to its receivables.
(10) (10) Leases
The Company leases office and warehouse space under operating leases. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease, right-of-use assets, and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates with the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires judgement. The company determines its incremental borrowing rate for each lease using its then-current borrowing rate. Certain of the Company’s leases include options to extend or terminate the lease. The Company establishes the number of renewal options periods used in determining the operating lease term based upon its assessment at the inception of the operating lease. The option to renew the lease may be automatic, at the option of the Company, or mutually agreed to between the landlord and the Company. Once the facility lease term has begun, the present value of the aggregate future minimum lease payments is recorded as a right-of-use asset. Lease expense is recognized on a straight-line basis over the term of the lease.
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating lease costs | $ | 141,605 | $ | 126,904 | ||||
| Short-term operating lease costs | 2,713 | 7,670 | ||||||
| Financing lease expense: | ||||||||
| Amortization of right-of-use assets | 4,172 | 3,005 | ||||||
| Interest on lease liabilities | 649 | 1,018 | ||||||
| Total financing lease expense | 4,821 | 4,023 | ||||||
| Total lease expense | $ | 149,139 | $ | 138,597 | ||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | — | $ | 1,603 | ||||
| Right-of-use assets obtained in exchange for new financing lease liabilities | $ | — | $ | — | ||||
| Weighted-average remaining lease term (years) - operating leases | 12.6 | 13.6 | ||||||
| Weighted-average remaining lease term (years) - financing leases | 1.8 | 2.6 | ||||||
| Weighted-average discount rate - operating leases | 6.75 | % | 6.75 | % | ||||
| Weighted-average discount rate - financing leases | 8.41 | % | 8.76 | % | ||||
Six Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Operating lease costs | $ | 150,732 | $ | 141,605 | ||||
Short-term operating lease costs | 3,600 | 2,713 | ||||||
Financing lease expense: | ||||||||
Amortization of right-of-use assets | 4,550 | 4,172 | ||||||
Interest on lease liabilities | 270 | 649 | ||||||
Total financing lease expense | 4,820 | 4,821 | ||||||
Total lease expense | $ | 159,152 | $ | 149,139 | ||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | — | $ | — | ||||
Right-of-use assets obtained in exchange for new financing lease liabilities | $ | — | $ | — | ||||
Weighted-average remaining lease term (years) - operating leases | 11.6 | 12.6 | ||||||
Weighted-average remaining lease term (years) - financing leases | 1.4 | 1.8 | ||||||
Weighted-average discount rate - operating leases | 6.75 | % | 6.75 | % | ||||
Weighted-average discount rate - financing leases | 6.75 | % | 8.41 | % | ||||
The future minimum payments under these operating lease agreements are as follows:
Leases - Schedule
Operating Leases | Financing Leases | |||||||
2023 (excluding the six-months ended June 30, 2023) | $ | 143,554 | $ | 1,598 | ||||
2024 | 287,108 | 2,929 | ||||||
2025 | 287,108 | — | ||||||
2026 | 287,108 | — | ||||||
2027 | 287,108 | — | ||||||
Thereafter | 2,025,192 | — | ||||||
Total minimum lease obligations | 3,317,178 | 4,527 | ||||||
Less-amounts representing interest | (1,018,042 | ) | (222 | ) | ||||
Present value of minimum lease obligations | 2,299,136 | 4,305 | ||||||
Current maturities | (136,075 | ) | (2,996 | ) | ||||
Lease obligations, net of current maturities | $ | 2,163,061 | $ | 1,309 | ||||
(11) (11) Segment Information
The Company has 4four reportable segments which include: Nuclear Medicine Standards, Cobalt Products, Radiochemical Products, and Fluorine Products. The Company had five reportable segments in 2021 which also included Radiological Services. The Radiological Services business segment included field services, gemstone processing, and source disposal. As the Company is no longer engaged in field services and gemstone processing, which made up the substantial portion of activities of this segment, separate reporting of this segment has been discontinued. The Company continues to engage in source disposal activities and has begun reporting these activities under the Nuclear Medicine Standards segment beginning January 1, 2022.
Information regarding the operations and assets of these reportable business segments is contained in the following table:
Segment Information - Schedule
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Sale of Product | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Radiochemical Products | $ | 1,736,043 | $ | 1,380,039 | $ | 3,498,439 | $ | 3,005,962 | ||||||||
Cobalt Products | 448,258 | 99,146 | 606,566 | 271,052 | ||||||||||||
Nuclear Medicine Standards | 927,864 | 955,623 | 2,096,695 | 1,965,235 | ||||||||||||
Fluorine Products | — | — | — | — | ||||||||||||
Total Segments | 3,112,165 | 2,434,808 | 6,201,700 | 5,242,249 | ||||||||||||
Corporate revenue | — | — | — | — | ||||||||||||
Total Consolidated | $ | 3,112,165 | $ | 2,434,808 | $ | 6,201,700 | $ | 5,242,249 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Depreciation and Amortization | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Radiochemical Products | $ | 6,665 | $ | 7,415 | $ | 13,824 | $ | 49,345 | ||||||||
Cobalt Products | 13,142 | 12,140 | 25,976 | 24,281 | ||||||||||||
Nuclear Medicine Standards | 28,900 | 28,587 | 58,109 | 57,233 | ||||||||||||
Fluorine Products | 28,970 | 26,095 | 57,940 | 52,190 | ||||||||||||
Total Segments | 77,677 | 74,237 | 155,849 | 183,049 | ||||||||||||
Corporate depreciation and amortization | 10,453 | 10,196 | 19,549 | 20,502 | ||||||||||||
Total Consolidated | $ | 88,130 | $ | 84,433 | $ | 175,398 | $ | 203,551 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Segment Income (Loss) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Radiochemical Products | $ | 717,455 | $ | 505,630 | $ | 1,484,567 | $ | 2,976,293 | ||||||||
Cobalt Products | 53,640 | (42,332 | ) | 27,395 | (55,407 | ) | ||||||||||
Nuclear Medicine Standards | 9,728 | (26,144 | ) | 138,513 | 11,572 | |||||||||||
Fluorine Products | (21,895 | ) | (42,343 | ) | (51,134 | ) | (74,173 | ) | ||||||||
Total Segments | 758,928 | 394,811 | 1,599,341 | 2,858,285 | ||||||||||||
Corporate loss | (1,022,230 | ) | (666,859 | ) | (2,010,697 | ) | (1,875,288 | ) | ||||||||
Net Income | $ | (263,302 | ) | $ | (272,048 | ) | $ | (411,356 | ) | $ | 982,997 | |||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Expenditures for Segment Assets | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Radiochemical Products | $ | — | $ | — | $ | — | $ | — | ||||||||
Cobalt Products | 6,165 | — | 6,165 | — | ||||||||||||
Nuclear Medicine Standards | — | — | 3,130 | 51,100 | ||||||||||||
Fluorine Products | — | 4,100 | — | 4,100 | ||||||||||||
Total Segments | 6,165 | 4,100 | 9,295 | 55,200 | ||||||||||||
Corporate purchases | 8,155 | — | 57,227 | — | ||||||||||||
Total Consolidated | $ | 14,320 | $ | 4,100 | $ | 66,522 | $ | 55,200 | ||||||||
June 30, | December 31, | |||||||
Segment Assets | 2023 | 2022 | ||||||
Radiochemical Products | $ | 837,771 | $ | 1,075,252 | ||||
Cobalt Products | 324,755 | 406,629 | ||||||
Nuclear Medicine Standards | 2,661,330 | 2,744,394 | ||||||
Fluorine Products | 5,032,308 | 5,147,325 | ||||||
Total Segments | 8,856,164 | 9,373,600 | ||||||
Corporate assets | 6,981,112 | 6,870,996 | ||||||
Total Consolidated | $ | 15,837,276 | $ | 16,244,596 | ||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| Sale of Product | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Radiochemical Products | $ | 1,380,039 | $ | 1,228,209 | $ | 3,005,962 | $ | 1,889,386 | ||||||||
| Cobalt Products | 99,146 | 576,994 | 271,052 | 695,367 | ||||||||||||
| Nuclear Medicine Standards | 955,623 | 954,693 | 1,965,235 | 2,145,642 | ||||||||||||
| Fluorine Products | 0 | 0 | 0 | 22,013 | ||||||||||||
| Total Segments | 2,434,808 | 2,759,896 | 5,242,249 | 4,752,408 | ||||||||||||
| Corporate revenue | 0 | 0 | 0 | 0 | ||||||||||||
| Total Consolidated | $ | 2,434,808 | $ | 2,759,896 | $ | 5,242,249 | $ | 4,752,408 | ||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| Depreciation and Amortization | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Radiochemical Products | $ | 7,415 | $ | 78,430 | $ | 49,345 | $ | 157,977 | ||||||||
| Cobalt Products | 12,140 | 12,399 | 24,281 | 26,038 | ||||||||||||
| Nuclear Medicine Standards | 28,587 | 18,120 | 57,233 | 34,742 | ||||||||||||
| Fluorine Products | 26,095 | 31,158 | 52,190 | 57,253 | ||||||||||||
| Total Segments | 74,237 | 140,107 | 183,049 | 276,010 | ||||||||||||
| Corporate depreciation and amortization | 10,196 | 6,941 | 20,502 | 11,240 | ||||||||||||
| Total Consolidated | $ | 84,433 | $ | 147,048 | $ | 203,551 | $ | 287,250 | ||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| Segment Income (Loss) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Radiochemical Products | $ | 505,630 | $ | 404,457 | $ | 2,976,293 | $ | 408,882 | ||||||||
| Cobalt Products | (42,332 | ) | 208,581 | (55,407 | ) | 178,484 | ||||||||||
| Nuclear Medicine Standards | (26,144 | ) | 110,085 | 11,572 | 373,403 | |||||||||||
| Fluorine Products | (42,343 | ) | (31,627 | ) | (74,173 | ) | (65,141 | ) | ||||||||
| Total Segments | 394,811 | 691,496 | 2,858,285 | 895,628 | ||||||||||||
| Corporate loss | (666,859 | ) | (872,883 | ) | (1,875,288 | ) | (1,678,167 | ) | ||||||||
| Net Income | $ | (272,048 | ) | $ | (181,387 | ) | $ | 982,997 | $ | (782,539 | ) | |||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| Expenditures for Segment Assets | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Radiochemical Products | $ | 0 | $ | 0 | $ | 0 | $ | 3,103 | ||||||||
| Cobalt Products | 0 | 0 | 0 | 16,592 | ||||||||||||
| Nuclear Medicine Standards | — | 32,911 | 51,100 | 167,911 | ||||||||||||
| Fluorine Products | 4,100 | 0 | 4,100 | 4,060 | ||||||||||||
| Total Segments | 4,100 | 32,911 | 55,200 | 191,666 | ||||||||||||
| Corporate purchases | 0 | 0 | 0 | 0 | ||||||||||||
| Total Consolidated | $ | 4,100 | $ | 32,911 | $ | 55,200 | $ | 191,666 | ||||||||
| June 30, | December 31, | |||||||
| Segment Assets | 2022 | 2021 | ||||||
| Radiochemical Products | $ | 924,131 | $ | 2,890,590 | ||||
| Cobalt Products | 563,906 | 597,420 | ||||||
| Nuclear Medicine Standards | 1,358,491 | 2,259,759 | ||||||
| Fluorine Products | 5,205,266 | 5,258,823 | ||||||
| Total Segments | 8,051,794 | 11,006,592 | ||||||
| Corporate assets | 8,500,270 | 5,320,550 | ||||||
| Total Consolidated | $ | 16,552,064 | $ | 16,327,142 | ||||
(12) Subsequent Events
On July 12, 2023, Steve T. Laflin gave notice that he is stepping down as Chief Executive Officer of the Company, effective September 1, 2023 at the end of the term of his employment agreement. In addition, on July 12, 2023, Shahe Bagderjian, President of the Company, was appointed to replace Mr. Laflin as Chief Executive Officer, effective September 1, 2023.
ITEM 2. MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q (the “Quarterly Report”“Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Quarterly Report are forward-looking statements. Words such as “anticipates,“anticipates,” “believes,“believes,” “should,“should,” “expects,“expects,” “future,“future,” “intends”“intends” and similar expressions identify forward-looking statements. Forward-looking statements reflect management’smanagement’s current expectations, plans or projections, and are inherently uncertain. Actual results could differ materially from management's expectations, plans or projections. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. Certain risks and uncertainties that could cause our actual results to differ significantly from management’smanagement’s expectations are described in the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 filed with the Securities and Exchange Commission (SEC) on March 31, 2022April 6, 2023, as amended on May 3, 2023, and in the other reports we file with the SEC. These factors describe some but not all of the factors that could cause actual results to differ significantly from management’smanagement’s expectations. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by applicable law.events. Readers are urged, however, to review the risks and other factors set forth in the reports that we file from time to time with the SEC.
BUSINESS OVERVIEW
International Isotopes Inc., its wholly ownedwholly-owned subsidiaries including(including RadQual, LLC and TI Services, LLCLLC) (collectively, the Company, we, our,"Company", "we", "our", or us)"us") manufacture a full range of nuclear medicine calibration and reference standards, manufacture a range of cobalt products, and distribute sodium iodide I-131 as a generic drug. We own 100% interest of RadQual, LLC (RadQual), a global supplier of molecular imaging quality control and calibration devices.
RADQUAL ACQUISTION
On July 8, 2021, we entered into As TI Services, LLC is a Membership Interest Purchase Agreement (the Purchase Agreement) with RadQual and the sellers set forth in the Purchase Agreement, which included our Chairman of the Board, Chief Executive Officer, former Chairman of the Board, and certain other stockholders of50/50 joint venture between the Company (collectively, the Sellers). Pursuant to the Purchase Agreement, we acquired all of the outstanding membership interests ofand RadQual, not then-owned by the Company for an aggregate purchase price of approximately $4.4 million, payable in shares of our common stock valued at $0.11 per share (determined by the average trading price of our common stock on the OTC Markets during the 60 trading day period immediately prior to June 2, 2021) (the RadQual Acquisition). We issued an aggregate of 40,176,236 shares of its common stock to the Sellers as consideration in the RadQual Acquisition. Prior to the RadQual Acquisition, we owned approximately 24.5% of the outstanding membership interests of RadQual, and after acquiring all of the remaining membership interests of RadQual, RadQual becameTI Services, LLC is also a wholly-owned subsidiary of the Company. The RadQual Acquisition closed on July 8, 2021.
Our business consists of the following four business segments in 2022 and consisted of five business segments in 2021:segments:
Nuclear Medicine Standards. Our Nuclear Medicine Standards segment consists of the manufacture of sources and standards associated with Single Photon Emission Computed Tomography (SPECT) and Positron Emission Tomography (PET) imaging. These sources are used for indication of patient positioning for SPECT and PETimaging, SPECT camera operational testing, and calibration of dose measurement equipment. Revenue from nuclear medicine products includes consolidated sales from TI Services, LLC (TI Services), a 50/50 joint venture that we formed with RadQual in December 2010 to distribute our products.products, as well as consolidated sales from RadQual. Our nuclear medicine standards products include a host of specially designed items used in the nuclear medicine industry. In addition to the manufacture of these products, we have developed a complete line of specialty packaging for the safe transport and handling of these products. Beginning January 1, 2022, this segment also includes miscellaneous source disposal activities that were previously reported as part of the Radiological Services segment.
Cobalt Products. Our Cobalt Products segment includes the production of bulk cobalt (cobalt-60), fabrication of cobalt capsules for radiation therapy and various industrial applications, and recycling of expended cobalt sources. We are the only company in the U.S. that can provide all these unique services. There has been a significant increase in regulation by the Nuclear Regulatory Commission (NRC) in recent years that has created a significant barrier to new entrants into this market. The Company has a contract in place with the U.S. Department of Energy (DOE) for the production of high specific activity cobalt in the Advanced Test Reactor (ATR) in Idaho. This agreement will be in effect until October 2024.
Radiochemical Products. Our Radiochemical Products segment includes production and distribution and FDA approved generic sodium iodide I-131 drug product for the treatment of hyperthyroidism and carcinoma of the thyroid. We are the only U.S. Company distributing this generic drug product. This segment also includes distribution of certain other radiochemical products and contract manufacturing of radiopharmaceutical products for our customers.
Fluorine Products. We established the Fluorine Products segment in 2004 to support production and sale of the gases that we expected to produce using our Fluorine Extraction Process (FEP) in conjunction with the operation of the proposed depleted uranium de-conversion facility in Lea County, New Mexico. Near the end of 2013, due to changes in the nuclear industry, we placed further engineering work on this project on hold. We continue to hold discussions with potential future customers seeking this type of service, however, further development activity within this segment will be deferred until market and industry conditions change to justify resuming design and construction of the facility. In the meantime, the Company expects to continue to incur some costs associated with the maintenance of licenses and other necessary project investments, and to continue to keep certain agreements in place that will support resumption of project activities at the appropriate time.
Radiological Services. Our Radiological Services segment consisted of a wide variety of miscellaneous services such as decommissioning disused irradiation units, performing sealed source exchanges in irradiation and therapy units, and gemstone processing. The Company has suspended all of its field service activities and has terminated most gemstone processing. Due to decreased activity in this segment, starting January 1, 2022, this segment was reorganized into our Nuclear Medicine Standards segment.
COVID-19 UPDATE
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 the three months ended March 31, 2022, we experienced some global shipping disruption that were partially attributable to the COVID-19 pandemic. The decrease in sales in our nuclear medicine calibration standards segment for the six months ended June 30, 2022, is partially due to these shipping disruptions.
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 the COVID-19, primarily some plastics which have been in strong demand for certain types of personal protective equipment. Alternative sources of raw materials have been obtained without any interruption to production. However, if we are unable to obtain alternative sources of raw materials in the future or if we experience other disruptions from the COVID-19 pandemic, we may experience an adverse impact on our operations, financial results, and cash flow. The Company has seen an increase in costs for many production supplies due to recent cost inflation which have led to increases to costs of goods sold and operating expenses.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2022 2023,Compared to Three Months Ended June 30, 20212022
Revenue for the three months ended June 30, 20222023 was $2,434,808$3,112,165 as compared to $2,759,896$2,434,808 for the same period in 2021,2022, an overall decreaseincrease of $325,088,$677,357, or approximately 12%28%. This decreaseincrease in revenue was the result of decreased revenue in our cobalt segment offset by increased revenue in our Radiochemicalradiochemical and Nuclear Medicine Standardscobalt products segments offset by decreased revenues in our nuclear medicine standards segment, as discussed in more detail below.
The following table presents a period-to-period comparison of total revenue by segment for the three months ended June 30, 20222023 and 2021:2022:
For the three- | For the three- | ||||||||||||||||||||||||||
months ended | months ended | ||||||||||||||||||||||||||
For the three- months ended June 30, | For the three- months ended June 30, | June 30, | June 30, | ||||||||||||||||||||||||
| Sale of Product | 2022 | 2021 | $ change | % change | 2023 | 2022 | $ change | % change | |||||||||||||||||||
| Radiochemical Products | $ | 1,380,039 | $ | 1,228,209 | $ | 151,830 | 12% | $ | 1,736,043 | $ | 1,380,039 | $ | 356,004 | 26 | % | ||||||||||||
| Cobalt Products | 99,146 | 576,994 | (477,848) | -83% | 448,258 | 99,146 | 349,112 | 352 | % | ||||||||||||||||||
| Nuclear Medicine Standards | 955,623 | 954,693 | 930 | 0% | 927,864 | 955,623 | (27,759 | ) | -3 | % | |||||||||||||||||
| Fluorine Products | - | - | - | 0% | — | — | — | — | % | ||||||||||||||||||
| Total Consolidated | $ | 2,434,808 | $ | 2,759,896 | $ | (325,088) | -12% | $ | 3,112,165 | $ | 2,434,808 | $ | 677,357 | 28 | % | ||||||||||||
Cost of sales decreasedincreased to $1,034,278$1,269,552 for the three months ended June 30, 20222023 from $1,171,968$1,034,278 for the same period in 2021.2022. This is a decreasean increase of $137,690,$235,274, or approximately 12%23%. The decreaseincrease in cost of sales in the three-month comparison was primarily due to the decreasedincreased sales activity in our Cobalt segment,radiochemical and cobalt products segments, as discussed in detail below. Gross profit for the three months ended June 30, 20222023 was $1,400,530,$1,842,613, compared to $1,587,928$1,400,530 for the same period in 2021.2022. This represents a decreasean increase in gross profit of $187,398,$442,083, or approximately 12%32%.
The following table presents cost of sales and gross profit data for each of our business segments for the three months ended June 30, 20222023 and 2021:2022:
For the three- | For the three- | |||||||||||||||||||||||||
months ended | % of | months ended | % of | |||||||||||||||||||||||
For the three- months ended June 30, | % of Total Sales | For the three- months ended June 30, | % of Total Sales | June 30, | Total Sales | June 30, | Total Sales | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||||||
| Total Sales | $ | 2,434,808 | $ | 2,759,896 | $ | 3,112,165 | $ | 2,434,808 | ||||||||||||||||||
| Cost of Sales | ||||||||||||||||||||||||||
| Radiochemical Products | $ | 506,522 | 50% | $ | 487,126 | 18% | $ | 597,063 | 19 | % | $ | 506,522 | 21 | % | ||||||||||||
| Cobalt Products | 26,014 | 1% | 263,948 | 10% | 246,398 | 8 | % | 26,014 | 1 | % | ||||||||||||||||
| Nuclear Medicine Standards | 501,742 | 21% | 420,894 | 14% | 426,091 | 14 | % | 501,742 | 21 | % | ||||||||||||||||
| Fluorine Products | - | 0% | - | 0% | — | — | % | — | — | % | ||||||||||||||||
| Total Segments | 1,034,278 | 72% | 1,171,968 | 42% | 1,269,552 | 41 | % | 1,034,278 | 42 | % | ||||||||||||||||
| Gross Profit | $ | 1,400,530 | $ | 1,587,928 | $ | 1,842,613 | $ | 1,400,530 | ||||||||||||||||||
| Gross Profit % | 58% | 58% | 59 | % | 58 | % | ||||||||||||||||||||
Operating expense increased approximately 11%18% to $1,752,639$2,071,073 for the three months ended June 30, 2022,2023, from $1,573,206$1,752,639 for the same period in 2021.2022. This increase of $179,433,$318,434 is primarily due to an approximate 28%18% increase in Salaries and Contract Labor costsExpenses, 9% increase in General, Administrative, and Consulting Expenses and a 22%109% increase in Research and Development costs. The increase in Salaries and Contract Labor Expenses is primarily due to increased costs of salaries and benefits for employees. The increase in General, Administrative, and Consulting Expenses is aprimarily the result of an increased number of employeeslegal and increases to labor rates incurredprofessional expenses during the three months ended June 30, 2022,2023, as compared to the same period in 2021.2022. The 22%109% increase in Research and Development cost is due to increased activity inexpenses related to product development during the three months ended June 30, 2022,2023, as compared to the same period in 2021.2022.
The following table presents a comparison of total operating expense for the three months ended June 30, 20222023 and 2021:2022:
For the three- months ended June 30, | For the three- months ended June 30, | ||||||||||
| Operating Costs and Expenses: | 2022 | 2021 | % change | $ change | |||||||
| Salaries and Contract Labor | $ | 801,972 | $ | 625,428 | 28% | $ | 176,544 | ||||
| General, Administrative and Consulting | 863,025 | 875,799 | -1% | (12,774) | |||||||
| Research and Development | 87,642 | 71,979 | 22% | 15,663 | |||||||
| Total operating expenses | $ | 1,752,639 | $ | 1,573,206 | 11% | $ | 179,433 | ||||
For the three- | For the three- | |||||||||||||||
months ended | months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
Operating Costs and Expenses: | 2023 | 2022 | % change | $ change | ||||||||||||
Salaries and Contract Labor | $ | 944,179 | $ | 801,972 | 18 | % | $ | 142,207 | ||||||||
General, Administrative and Consulting | 943,870 | 863,025 | 9 | % | 80,845 | |||||||||||
Research and Development | 183,024 | 87,642 | 109 | % | 95,382 | |||||||||||
Total operating expenses | $ | 2,071,073 | $ | 1,752,639 | 18 | % | $ | 318,434 | ||||||||
Other income was $225,768$37,518 for the three months ended June 30, 2022,2023, as compared to $32,356$225,768 for the same period in 2021.2022. This is an increasea decrease of $193,412,$188,250, or approximately 598%83%, primarily due to $200,000 in income from a sublease of our facility. In February 2022, we entered into an Asset Purchase Agreement with Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4.0 millionfacility in cash. The Assets consisted primarily of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company.three months ended June 30, 2022. As part of this sublease agreement, we received $200,000 once relocation and build-out costs were completed.
Interest expense for the three months ended June 30, 20222023 was $146,387,$82,216, compared to $211,456$146,387 for the same period in 2021.2022. This is a decrease of $65,069,$64,171, or approximately 31%44%. The decrease in interest expense is due to decreased accretion of beneficial conversion feature and discount and decreased interest due for outstanding debt. Interest expense includes dividends accrued on our Series C Redeemable Convertible Preferred Stock (Series C Preferred Stock).Stock. As discussed below, we issued Series C Preferred Stock in February 2017 and May 2017. For the three months ended June 30, 2023 and 2022, we accrued dividends payable of $61,695 and $60,945 respectively, which have been recorded as interest expense. Additionally, non-cash interest expense in the amount of $26,548 for the accretion of the beneficial conversion feature of the 2019 Promissory Note (as defined below) and $37,518 for the issuance of warrants in conjunction with the 2019 Promissory Note were recorded for the three months ended June 30, 2022. See Note 7 “Debt” to our unaudited consolidated financial statements in this Quarterly Report for additional information about our indebtedness and the associated interest expense.
19
Our net loss for the three months ended June 30, 2022,2023, was $272,048,$263,302, compared to net loss of $181,387,$272,048, for the same period in 2021.2022. This is an increasea decrease in net loss of $90,661$8,746 that is largely the result of the decrease in revenue in our Cobalt product segments offset by the increase in revenue in our Radiochemicalradiochemical products segment. The increase in loss is also due toand cobalt products segments partially offset by the increasedecrease in operating expense from salaries and contract labor and expenses from research and development for the three months ended June 30, 2022,2023, as compared to the same period in 2021, but offset somewhat by the increase in other income.2022.
Radiochemical Products. Revenue from the sale of Radiochemical Productsradiochemical products for the three months ended June 30, 20222023 was $1,380,039,$1,736,043, compared to $1,228,209$1,380,039 for the same period in 2021.2022. This is an increase of $151,830,$356,004, or approximately 12%26% during the three months ended June 30, 2022.2023. The increase is the result of continued increased sales of our generic sodium iodide I-131 drug product. We expect continued sales growth for our Radiochemical products going forward.forward, primarily from the sale of our generic sodium iodide I-131 drug product.
Cost of sales for Radiochemical Products increased to $506,522 for the three months ended June 30, 2022, as compared to $487,126 for the same period in 2021. This is an increase of $19,396, or approximately 4%, and was primarily the result of increased sales of product. Gross profit of radiochemical products for the three months ended June 30, 20222023 was $873,517,$1,138,980, compared to $741,083,$873,517, for the same period in 2021,2022, and gross profit percentages were approximately 63%66% and 60%63% for the three months ended June 30, 2023 and 2022, respectively. Cost of sales for radiochemical products increased to $597,063 for the three months ended June 30, 2023, as compared to $506,522 for the same period in 2022. This is an increase of $90,541, or approximately 18%, and 2021, respectively. This increased gross profit percentage is awas primarily the result of increased sales of our new generic sodium iodine I-131 drug product, which carries a higher gross margin, and continued improvements of utilization of raw materials.product. Operating expense for this segment increased to $367,887$421,525 for the three months ended June 30, 2022,2023, compared to $336,627$367,887 for the same period in 2021.2022. This increase in operating expense of $31,260,$53,638, or approximately 9%15%, was primarily due to increased costs for labor costs, production supplies,research and advertising expense.development for this segment. This segment reported net income of $505,630$717,455 for the three months ended June 30, 2022,2023, as compared to net income of $404,457$505,630 for the same period in 2021.2022. The increase in net income of $101,173$211,825 is the result of the increaseincreases in revenue.revenue and gross profit.
Cobalt Products. Revenue from the sale of Cobalt Productscobalt products for the three months ended June 30, 20222023 was $99,146,$448,258, compared to $576,994,$99,146, for the same period in 2021.2022. This represents a decreasean increase of $477,848,$349,112, or approximately 83%352%. The decreaseincrease was primarily due to the timing of cobalt sealed source manufacturing sales. Large value sales of high activity cobalt sources occur at somewhat randomvarious times throughout the year. Frequently the timing of these sales can have a significant impact on period comparisons.
In October 2014, we entered into a ten-year agreement with the DOE for the irradiation of cobalt targets. It takes many years to irradiate these cobalt targets to the desired level of activity and we anticipated having high specific activity cobalt available for our customers in 2020. However, the material had lower than expected activity and further receipt of material was delayed until about June 2021. At that point the material still had lower than expected activity, and we reached an agreement with the DOE to purchase the material at a discounted rate. Periodically we have been able to acquire recycled material that can be used to manufacture sealed sources for customers, and in some instances, our customers have supplied their own cobalt material for source fabrication. We also have access to additional low specific activity material produced by the DOE and expect to obtain, process, and sell additional cobalt products as a result during the remainder of 2022.
We have entered into cobalt purchase agreements with several customers. Pursuant to these contracts, we will supply some bulk cobalt-60 and provide sealed source manufacturing for the customers. The terms of these cobalt contracts require some advance progress payments from each customer. The funding received under these contracts has been recorded as unearned revenue under short- and long-term liabilities in our consolidated financial statements. For the three months ended June 30, 2022 and 2021, we recognized approximately $16,311 and $150,090, respectively when we fulfilled contract performance objectives by supplying sealed sources manufactured with cobalt from the ATR or alternate suppliers.
Cost of sales for the three months ended June 30, 2022,2023, was $26,014,$246,398, as compared to $263,948,$26,014, for the same period in 2021.2022. Gross profit for cobalt products for the three months ended June 30, 2022,2023 was $73,132$201,860 compared to $313,046$73,132 for the same period in 2021.2022. This is a decreasean increase of $239,914,$128,728, or approximately 77%176% and is attributable to a decrease inincreased source manufacturing for the three months ended June 30, 2022, as compared2023. Operating expense in this segment increased to the same period in 2021. Our gross profit percentages were approximately 74% and 54% for the three-month periods ended June 30, 2022 and 2021, respectively. The increase in the gross profit percentage$148,220 for the three months ended June 30, 2022 is primarily due to decreased costs of raw material used in the manufacture of sealed sources. Operating expense in this segment increased to2023, from $115,464 for the three months ended June 30, 2022, from $104,465 for the same period in 2021.2022. This is an increase of $10,999,$32,756, or approximately 11%28%. This increase in operating expenses for the three months ended June 30, 20222023 is due to increased equipment expenses and labor expenses. Our net lossincome for Cobalt Productscobalt products was $42,332$53,640 for the three months ended June 30, 2022,2023, as compared to a net incomeloss of $208,581$42,332 for the same period in 2021.2022. The decreaseincrease in net income of $250,913,$95,972, or approximately 120%227%, was attributable to the decreaseincreased activity in revenue from cobalt sealed source manufacturing.
Nuclear Medicine Standards. Revenue from Nuclear Medicine Standardsnuclear medicine products for the three months ended June 30, 2022,2023, was $955,623,$927,864, compared to $954,693$955,623 for the same period in 2021.2022. This represents an increasea decrease in revenue of $930,$27,759, or less than 1%approximately 3%.
20
Cost of sales for our Nuclear Medicine Standardsnuclear medicine standards segment for the three months ended June 30, 2022,2023, was $501,742,$426,091, as compared to $420,894$501,742 for the same period in 2021.2022. The increasedecrease in cost of sales in the period-to-period comparison of $80,848,$75,651, or 19%15%, was due to increased costs for suppliesdecreased sales and raw materialsimproved gross profit during the three-month period ended June 30, 2022,2023, as compared to the same period in 2021.2022. Gross profit for our nuclear medicine standards segment for the three months ended June 30, 20222023 was $453,881$501,773 compared to $533,799$453,881 for the same period in 2021,2022, and gross profit percentages were approximately 47%54% and 56%47% for the three months ended June 30, 20222023 and 2021,2022, respectively. This is a decreasean increase in gross profit of $79,918,$47,892, or approximately 15%11%. The decrease in gross profit in the period-to-period comparison is primarily the result of increased costs for supplies and raw materials attributable to cost inflation. We expect these increased costs to continue going forward.
Operating expense for this segment for the three months ended June 30, 20222023 increased to $480,025,$492,045, from $423,714$480,025 for the same period in 2021.2022. This is an increase of 56,311,$12,020, or approximately 13%3%, and is the result of increased research and development costs in the three months ended June 30, 2022. Operating expenses includes non-controlling member interest expense attributable to RadQual and TI Services of $0 for the three months ended June 30, 2022 compared with $17,055 for the three months ended June 30, 2021. In July 2021, we purchased the remaining 75.5% interest in RadQual; this resulted in RadQual and TI Services becoming our fully owned subsidiaries.labor costs. Net lossincome for this segment for the three months ended June 30, 20222023 was $26,144,$9,728, compared to a net income $110,085loss of $26,144 for the same period in 2021.2022. This decreaseis an increase in net income of $136,229,$35,872, or approximately 123%137% and is primarily the result of increased cost of sales and increased operating expenses.
Radiological Services. Starting in 2022, due to drastically decreased activity in the segment, all remaining activities in our Radiological Services is reported in our Nuclear Medicine Standards segment.
In January 2020, we notified our gemstone processing customer that the service contract with them was being terminated because the volume of gemstones sent for processing did not meet contract minimums. The termination activities and wrap up of this service substantially occurred in 2021 and the Company saw a steady decline in revenue from this service as production was wrapped up. In the first half of 2022, we converted the spaces in the facility that were previously used to perform this contract work into expanded Nuclear Medicine new product manufacturing. The loss in revenue expected from termination of the gemstone processing agreement is expected to be more than compensated for by the expansion of new nuclear medicine source products.
Revenue from field service work for the DOE had accounted for the majority of revenue in this segment. However, Radiological Field Services work was terminated in 2020 and we did not generate any Radiological Field Services revenue in 2021 or 2022.We have removed this type of activity from our NRC license and do not expect to perform this in future years.gross profit.
Fluorine Products. For the three months ended June 30, 20222023 and June 30, 2021,2022, we had no revenue for our Fluorine Productsfluorine products segment.
During the three months ended June 30, 2022,2023, we incurred $42,343$21,895 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $31,627$42,343 for the same three-month period in 2021. This2022. The decrease in expenses is an increase of 34% indue to decreased professional costs during the period-to-period comparison and is the result of increased professional services costs related to exploring options for possible renewal of work on this project.three months ended June 30, 2023
We established the Fluorine Products segment in 2004 to support production and sale of the gases produced using our FEP. The project has been placed on hold since 2013 and we will continue to limit our expenditures to essential items such as maintenance of the NRC license, land use agreements, communication with our prospective FEP product customers, and interface with the State of New Mexico and Lea County officials until such time that we decide to resume the project.
Six Months Ended June 30, 20222023, Compared to Six Months Ended June 30, 20212022
Revenue for the six-month periodsix months ended June 30, 20222023 was $5,242,249,$6,201,700 as compared to $4,752,408$5,242,249 for the same period in 2021,2022, an overall increase of $489,841,$959,451, or approximately 10%18%. The performanceThis increase in revenue was the result of increased revenue in all our business segments for the six-month period isas discussed in furthermore detail below.
The following table presents a period-to-period comparison of total revenue by segment for the six months ended June 30, 20222023 and June 30, 2021:2022:
For the six- | For the six- | ||||||||||||||||||||||||||
months ended | months ended | ||||||||||||||||||||||||||
For the six- months ended June 30, | For the six- months ended June 30, | June 30, | June 30, | ||||||||||||||||||||||||
| Sale of Product | 2022 | 2021 | $ change | % change | 2023 | 2022 | $ change | % change | |||||||||||||||||||
| Radiochemical Products | $ | 3,005,962 | $ | 1,889,386 | $ | 1,116,576 | 59% | $ | 3,498,439 | $ | 3,005,962 | $ | 492,477 | 16 | % | ||||||||||||
| Cobalt Products | 271,052 | 695,367 | (424,315) | -61% | 606,566 | 271,052 | 335,514 | 124 | % | ||||||||||||||||||
| Nuclear Medicine Standards | 1,965,235 | 2,145,642 | (180,407) | -8% | 2,096,695 | 1,965,235 | 131,460 | 7 | % | ||||||||||||||||||
| Fluorine Products | - | 22,013 | (22,013) | -100% | — | — | — | 100 | % | ||||||||||||||||||
| Total Consolidated | $ | 5,242,249 | $ | 4,752,408 | $ | 489,841 | 10% | $ | 6,201,700 | $ | 5,242,249 | $ | 959,451 | 18 | % | ||||||||||||
Gross profitCost of sales increased to $2,579,051 for the six-month periodsix months ended June 30, 2022 was $3,077,273, compared to $2,749,086,2023 from $2,164,976 for the same period in 2021.2022. This is an increase of $414,075, or approximately 19%. The increase in cost of sales in the six-month comparison was primarily due to the increased sales activity in all our business segments, as discussed in detail below. Gross profit for the six months ended June 30, 2023 was $3,622,649, compared to $3,077,273 for the same period in 2022. This represents an increase in gross profit of $328,187$545,376, or approximately 12%18%.
The following table presents cost of sales and gross profit data for each of our business segments for the six months ended June 30, 20222023 and 2021:2022:
For the six- | For the six- | |||||||||||||||||||||||||
months ended | % of | months ended | % of | |||||||||||||||||||||||
For the six- months ended June 30, | % of Total Sales | For the six- months ended June 30, | % of Total Sales | June 30, | Total Sales | June 30, | Total Sales | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2023 | 2023 | 2022 | 2022 | |||||||||||||||||||
| Total Sales | $ | 5,242,249 | $ | 4,752,408 | $ | 6,201,700 | $ | 5,242,249 | ||||||||||||||||||
| Cost of Sales | ||||||||||||||||||||||||||
| Radiochemical Products | $ | 1,068,887 | 20% | $ | 792,609 | 17% | $ | 1,227,401 | 20 | % | $ | 1,068,887 | 20 | % | ||||||||||||
| Cobalt Products | 82,525 | 2% | 307,201 | 6% | 337,359 | 5 | % | 82,525 | 2 | % | ||||||||||||||||
| Nuclear Medicine Standards | 1,013,564 | 19% | 903,512 | 19% | 1,014,291 | 16 | % | 1,013,564 | 19 | % | ||||||||||||||||
| Fluorine Products | - | 0% | - | 0% | — | — | % | — | — | % | ||||||||||||||||
| Total Segments | 2,164,976 | 41% | 2,003,322 | 42% | 2,579,051 | 42 | % | 2,164,976 | 41 | % | ||||||||||||||||
| Gross Profit | $ | 3,077,273 | $ | 2,749,086 | $ | 3,622,649 | $ | 3,077,273 | ||||||||||||||||||
| Gross Profit % | 59% | 58% | 58 | % | 59 | % | ||||||||||||||||||||
Operating expenses were $3,805,425expense increased approximately 5% to $3,998,681 for the six-month periodsix months ended June 30, 2022, compared to $3,184,8922023, from $3,805,425 for the same period in 2021.2022. This represents an increase of $620,533, or approximately 19%. This increase$193,256 is primarily due to an approximate 34%11% increase in Salaries and Contract Labor costsExpenses and a 169%5% increase in Research and Development costs. The increase in Salaries and Contract Labor costsExpenses is aprimarily the result of increased equity-based compensationcosts of salaries and increases to labor rates incurredbenefits for employees during the six months ended June 30, 2022,2023, as compared to the same period in 2021.2022. The 5% increase in Research and Development cost is due to increased activity inexpenses related to product development during the six months ended June 30, 2022,2023, as compared to the same period in 2021.2022.
The following table showspresents a comparison of total operating expenses for the six-month period ended June 30, 2022 and 2021:
For the six- months ended June 30, | For the six- months ended June 30, | ||||||||||
| Operating Costs and Expenses: | 2022 | 2021 | % change | $ change | |||||||
| Salaries and Contract Labor | $ | 1,735,221 | $ | 1,293,948 | 34% | $ | 441,273 | ||||
| General, Administrative and Consulting | 1,776,148 | 1,781,728 | 0% | (5,580) | |||||||
| Research and Development | 294,056 | 109,216 | 169% | 184,840 | |||||||
| Total operating expenses | $ | 3,805,425 | $ | 3,184,892 | 19% | $ | 620,533 | ||||
Other income was $2,028,568expense for the six months ended June 30, 2022,2023 and 2022:
For the six- | For the six- | |||||||||||||||
months ended | months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
Operating Costs and Expenses: | 2023 | 2022 | % change | $ change | ||||||||||||
Salaries and Contract Labor | $ | 1,919,361 | $ | 1,735,221 | 11 | % | $ | 184,140 | ||||||||
General, Administrative and Consulting | 1,771,852 | 1,776,148 | 0 | % | (4,296 | ) | ||||||||||
Research and Development | 307,468 | 294,056 | 5 | % | 13,412 | |||||||||||
Total operating expenses | $ | 3,998,681 | $ | 3,805,425 | 5 | % | $ | 193,256 | ||||||||
Other income was $100,930 for the six months ended June 30, 2023, as compared to $175,476$2,028,568 for the same period in 2021.2022. This is an increasea decrease of $1,853,092,$1,927,638, or approximately 1056%95%, primarily due to a $1,797,978 gain on sale of assets to Pharmalogic Idaho, LLC.LLC in the six months ended June 30, 2022. In February 2022, we entered into an Asset Purchase Agreementasset purchase agreement with Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4.0 million in cash. The Assetssold assets consisted primarily of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company.
Interest expense for the six months ended June 30, 20222023 was $318,144,$165,196, compared to $409,747$318,144 for the same period in 2021.2022. This is a decrease of $91,603,$152,948, or approximately 22%48%. The decrease in interest expense is due to decreased accretion of beneficial conversion feature and discount and decreased interest due for outstanding debt. Interest expense includes dividends accrued on our Series C Preferred Stock. As discussed below, we issued Series C Preferred Stock in February 2017 and May 2017. For the six months ended June 30, 2023 and 2022, we accrued dividends payable of $122,640 and $121,890 respectively, which have been recorded as interest expense. Additionally, non-cash interest expense in the amount of $53,096 for the accretion of the beneficial conversion feature of the 2019 Promissory Note and $75,037 for the issuance of warrants in conjunction with the 2019 Promissory Note were recorded for the six months ended June 30, 2022. See Note 7 “Debt” to our unaudited consolidated financial statements in this Quarterly Report for additional information about our indebtedness and the associated interest expense.
Our net incomeloss for the six months ended June 30, 2022,2023, was $982,997,$411,356, compared to net lossincome of $782,539,$982,997, for the same period in 2021.2022. This is an increasea decrease in net income of $1,765,536$1,394,353 that is largely the result of the approximate $1.8 million gain on sale of assets. Additionallyassets for the six months ended June 30, 2022. This decrease in gain on sale of assets is partially offset by the increase in income is theas a result of the increase in revenue in all our Radiochemical Products segment offset by the increase in operating expense from salaries and contract labor and expenses from research and developmentbusinesses segments for the six months ended June 30, 2022,2023, as compared to the same period in 2021.2022.
Radiochemical Products. Revenue from the sale of Radiochemical Productsradiochemical products for the six-month periodsix months ended June 30, 2022,2023 was $3,005,962$3,498,439, compared to $1,889,386$3,005,962 for the same period in 2021.2022. This is an increase of $1,116,576,$492,477, or approximately 59%.16% during the six months ended June 30, 2023. The increase is the result of increased sales to most of our customers and further enhanced by a reduction in sales by our competitor in the first quarter of 2022. The reduction in sales by our competitor resulted from a short-term shutdown of a European reactor facility that normally supplied their sodium iodide I-131 during the first quarter of 2022. The increase is also the result ofcontinued increased sales of our new generic sodium iodide I-131 drug product. We expect continued sales growth for our Radiochemical Productsproducts going forward.
Costforward, primarily from the sale of sales was $1,068,887 for the six-month period ended June 30, 2022, and $792,609 for the same period in 2021. This is an increase of $276,278, or approximately 35%. This increase is primarily the result increased sales for the period.our generic sodium iodide I-131 drug product.
Gross profit percentages for our Radiochemical Products for the six months ended June 30, 2022 and 2021 were approximately 64% and 58%, respectively. This increased gross profit percentage is a result of increased sales of our new generic sodium iodine I-131 drug product, which carries a higher gross margin, and continued improvements of utilization of raw materials. Operating expense for this segment for the six-month period ended June 30, 2022 was $758,760, compared to $687,895 for the same period in 2021. This is an increase of $70,865, or approximately 10%, and is primarily due to increased costs for labor costs, production supplies, advertising expense, and professional services. As discussed above, other income from the Radiochemical Products segment included a $1,797,978 gain on sale of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company. Net income for this segment increased to $2,976,293 for the six-month period ended June 30, 2022, from $408,882 for the same period in 2021. This increase of $2,567,411, or approximately 628%, is the result of the gain on sale of assets and the 59% increase in revenue
Cobalt Products. Revenues from the sale of Cobalt Products for the six-month period ended June 30, 2022 were $271,052, compared to $695,367 for the same period in 2021. This is a decrease of $424,315, or approximately 61%, and is the result of decreased cobalt sealed source manufacturing and cobalt recycling. The decrease was primarily due to the timing of cobalt sealed source manufacturing sales. Large value sales of high activity cobalt sources occur at somewhat random times throughout the year. Frequently the timing of these sales can have a significant impact on period comparisons.
During 2015, we entered into cobalt-60 supply agreements with several customers. The terms of the agreements required pre-payments to secure cobalt material in future years. Those prepayments were recorded as unearned revenue on our condensed consolidated balance sheet.
Cost of sales for the six months ended June 30, 2022, was $82,525, as compared to $307,201, for the same period in 2021. Gross profit for cobaltradiochemical products for the six months ended June 30, 20222023 was $188,527$2,271,038, compared to $388,166$1,937,075, for the same period in 2021. This is a decrease of $199,639, or 51%. Our2022, and gross profit percentages were approximately 70%65% and 56% for the six-month periods ended June 30, 2022 and 2021, respectively. Operating expense in this segment increased to $243,93464% for the six months ended June 30, 2023 and 2022, from $209,683respectively. Cost of sales for radiochemical products increased to $1,227,401 for the six months ended June 30, 2023, as compared to $1,068,887 for the same period in 2021.2022. This is an increase of $34,251,$158,514, or approximately 16% is a15%, and was primarily the result of increased labor expensessales of product. Operating expense for this segment increased to $786,471 for the six months ended June 30, 2023, compared to $758,760 for the same period in 2022. This increase in operating expense of $27,711, or approximately 4%, was primarily due to increased costs for research and production supplydevelopment costs within the segment. As discussed above, other income from the radiochemical products segment in the six months ended June 30, 2022 as compared to the same period in 2021. Our net loss for Cobalt Products was $55,407 for the six months ended June 30, 2022, as compared toincluded a net income of $178,484 for the same period in 2021. The decrease in net income of $233,891 or approximately 131%, was attributable to the decreased cobalt sealed source manufacturing sales for the six months ended June 30, 2022, as compared to the same period in 2021.
Nuclear Medicine Standards. Revenue from Nuclear Medicine Standards for the six-month period ended June 30, 2022 was $1,965,235 compared to $2,145,642 for the same period in 2021. This represents a decrease in revenue attributable to this segment of $180,407, or approximately 8%. The decrease in sales for the period ended June 30, 2022 was due to continued slow demand of nuclear medicine imaging products resulting from the continued adverse impact of COVID-19 upon our customers and clinics during the six months ended June 30, 2022.
Gross profit for the six-month period ended June 30, 2022 was $951,671, as compared to $1,242,130 for the same period in 2021, a decrease of $290,459, or approximately 23%. Operating expense for this segment for the six-month period ended June 30, 2022 increased to $940,099, from $868,727 for the same period in 2021. This is an increase of $71,372 or approximately 8% and is the result of increased research and development costs in the six months ended June 30, 2022. Operating expenses include consolidated non-controlling member interest expense of $0 for the six months ended June 30, 2022, compared to $112,541, for the six months ended June 30, 2021. Net income for this segment for the six-month period ended June 30, 2022, decreased to $11,572, approximately 97%, from $373,403 for the same six-month period in 2021. This decrease is due to decreased sales.
Radiological Services. Starting in 2022, due to drastically decreased activity in the segment, all remaining activities in our Radiological Services is reported in our Nuclear Medicine Standards segment.
In January 2020, we notified our gemstone processing customer that the service contract with them was being terminated because the volume of gemstones sent for processing did not meet contract minimums. The termination activities and wrap up of this service substantially occurred in 2021 and the Company saw a steady decline in revenue from this service as production was wrapped up. In the first half of 2022, we have converted the spaces in the facility that had been used to perform this contract work into expanded Nuclear Medicine new product manufacturing. The loss in revenue expected from termination of the gemstone processing agreement is expected to be more than compensated for by the expansion of new nuclear medicine source products.
Revenue from field service work for the DOE had accounted for the majority of revenue in this segment. However, Radiological Field Services did not generate any Radiological Services segment sales in 2022 or 2021. This was the result the removal of this activity from our NRC license.
Fluorine Products. For the six months ended June 30, 2022, we had no revenue related to Fluorine Products compared to $22,013, for the same period in 2021. These revenues were related to an agreement to provide engineering and technical assistance services related to our fluorine products intellectual property. During the six months ended June 30, 2022, we incurred $74,173 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $87,153 for the same six-month period in 2021. This is a decrease of 13% in the period-to-period comparison.
We established the Fluorine Products segment in 2004 to support production and$1,797,978 gain on sale of the gases produced using our Fluorine Extraction Process (“FEP”). We will continue to limit our expenditures to essential items such as maintenance of the NRC license, land use agreements, communication with our prospective FEP product customers, and interface with the State of New Mexico and Lea County officials.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2022, we had cash and cash equivalents of $3,025,513 as compared to $474,851 at December 31, 2021. This is an increase of $2,550,662 or approximately 537%. For the six months ended June 30, 2022, net cash used in operating activities was $951,052 and for the six months ended June 30, 2021, net cash used in operating activities was $238,773. The increase in cash used in operating activities was a result of increased accounts receivable due to increased revenue and a reduction in accounts payable and accrued liabilities. The increase in cash and cash equivalents at period end in the period-to-period comparison is the result of increased net income.
Inventories at June 30, 2022 totaled $943,645, and inventories at December 31, 2021 totaled $924,775. Our inventory consists of work in process material for our Radiochemical Products, Cobalt Products, and Nuclear Medicine Products segments.
Cash provided by investing activities was $3,944,800 for the six months ended June 30, 2022, and cash used in investing activities was $191,666 for the same period in 2021. The cash provided in the six months ended June 30, 2022 was for the sale of assets for $4,000,000. In February 2022, we entered into an 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 Company in connection with the previously announced termination of the manufacturing and supply agreement with another company. This segment reported net income of $1,484,567 for the six months ended June 30, 2023, as compared to net income of $2,976,293 for the same period in 2022. The decrease in net income of $1,491,726 is the result of the difference in the gain on sale of assets but somewhat offset by the increases in revenue and gross profit.
Cobalt Products. Revenue from the sale of cobalt products for the six months ended June 30, 2023 was $606,566, compared to $271,052, for the same period in 2022. This represents an increase of $335,514, or approximately 124%. The increase was primarily due to the timing of cobalt sealed source manufacturing sales. Large value sales of high activity cobalt sources occur at various times throughout the year. Frequently the timing of these sales can have a significant impact on period comparisons.
Cost of sales for the six months ended June 30, 2023, was $337,359, as compared to $82,525, for the same period in 2022. Gross profit for cobalt products for the six months ended June 30, 2023 was $269,207 compared to $188,527 for the same period in 2022. This is an increase of $80,680, or approximately 43% and is attributable to increased source manufacturing for the six months ended June 30, 2023. Operating expense in this segment decreased to $241,812 for the six months ended June 30, 2023, from $243,934 for the same period in 2022. This is a decrease of $2,122, or approximately 1%. This decrease in operating expenses for the six months ended June 30, 2023 is due to decreased expenses for supplies. Our net income for cobalt products was $27,395 for the six months ended June 30, 2023, as compared to a net loss of $55,407 for the same period in 2022. The increase in net income of $82,802, or approximately 149%, was attributable to the increased activity in cobalt sealed source manufacturing.
Nuclear Medicine Standards. Revenue from nuclear medicine products for the six months ended June 30, 2023, was $2,096,695, compared to $1,965,235 for the same period in 2022. This represents an increase in revenue of $131,460, or approximately 7%.
Cost of sales for our nuclear medicine standards segment for the six months ended June 30, 2023, was $1,014,291, as compared to $1,013,564 for the same period in 2022. The increase in cost of sales in the period-to-period comparison of $727 was less than 1%. Gross profit for our nuclear medicine standards segment for the six months ended June 30, 2023 was $1,082,404 compared to $951,671 for the same period in 2022, and gross profit percentages were approximately 52% and 48% for the six months ended June 30, 2023 and 2022, respectively. This is an increase in gross profit of $130,733, or approximately 14%.
Operating expense for this segment for the six months ended June 30, 2023 increased to $943,891, from $940,099 for the same period in 2022. This is an increase of $3,792, or less than 1%. Net income for this segment for the six months ended June 30, 2023 was $138,513, compared to $11,572 for the same period in 2022. This is an increase in net income of $126,941, or approximately 1,097% and is the direct result of increased gross profit in the six months ended June 30, 2023.
Fluorine Products. For the six months ended June 30, 2023 and 2022, we had no revenue for our fluorine products segment.
During the six months ended June 30, 2023, we incurred $51,134 of expense related to items in support of future planning and design for the proposed de-conversion facility, as compared to $74,173 for the same six-month period in 2022. The decrease in expenses is due to decreased professional costs during the six months ended June 30, 2023.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2023, we had cash and cash equivalents of $3,274,125 as compared to $2,375,817 at December 31, 2022. This is an increase of $898,308 or approximately 38%. For the six months ended June 30, 2023, net cash provided by operating activities was $1,000,448 and for the six months ended June 30, 2022, net cash used in operating activities was $951,052. The increase in cash provided by operating activities was a result of cash from operations and the receipt of other current assets. The increase in cash and cash equivalents at period end in the period-to-period comparison is the result of cash provided by operating activities.
Inventories at June 30, 2023 totaled $701,411, and inventories at December 31, 2022 totaled $744,793. Our inventory consists of work in process material for our Radiochemical Products, Cobalt Products, and Nuclear Medicine Products segments.
Cash used in investing activities was $66,522 for the six months ended June 30, 2023, and cash provided by investing activities was $3,944,800 for the same period in 2022. The cash used in the six months ended June 30, 20212023 was for the purchase of equipment. The cash provided by investing activities in the six months ended June 30, 2022 was for the sale of assets for $4,000,000 somewhat offset by purchases of equipment.
Financing activities used cash of $442,456,$17,399, during the six months ended June 30, 2022,2023, and cash providedused by financing activities for the same period in 20212022 was $26,978.$442,456. During the six months ended June 30, 2022,2023, cash paid for interest was $46,894$157,826 and during the same six-month period in 2021,2022, cash paid for interest was $61,320.$46,894. Additionally, during the six months ended June 30, 2022,2023, we received $9,173$4,880 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan, as compared to $9,805 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan and $61,800$61,168 for exercise of warrants as compared to $8,995 in proceeds from the sale of our common stock through our Employee Stock Purchase Plan for the same period in 2021.2022. During the six months ended June 30, 2022,2023, principal payments on notes payable was $509,257,were $18,239, as compared to $329,464$509,257 for the same period in 2021. This increase2022, primarily as a result of debt repayments in principal payments was largely due to payment in full of the 2021 Promissory Note as described below.six months ended June 30, 2022.
In February 2022,2023, the Company paid its thirdsixth annual dividend on the Series C Preferred Stock. Dividends payable totaled $243,780.$243,780 at that time. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. The Company issued 2,271,9802,266,500 shares of common stock in lieu of a dividend payment of $204,480.$90,660. The remaining $39,300$153,120 of dividend payable was settled with cash.
Total increase in cash for the six-month period ended June 30, 2022,2023, was $2,551,292$916,527 compared to a cash decreaseincrease of $403,461$2,551,292 for the same period in 2021.2022.
We expect that cash from operations, cash raised via equity financing, and our current cash balance will be sufficient to fund operations for the next twelve months. Our future liquidity and capital funding requirements will depend on numerous factors, including contract manufacturing agreements, commercial relationships, technological developments, market factors, available credit, and voluntary warrant redemption bypreferred stock shareholders. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.
At June 30, 2022, there were no outstanding warrants to purchase our common stock.
Debt
In December 2013, we entered into a promissory note agreement with our then Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $500,000 (the 2013 Promissory Note). The 2013 Promissory Note is secured and bears interest at 6% per annum and was originally due June 30, 2014. According to the terms of the 2013 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of our common stock. In June 2014, pursuant to a modification, the maturity date was extended to December 31, 2017. In February 2017, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2020, with all remaining terms unchanged. In December 2019, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2021, with all remaining terms unchanged. In January 2022, the 2013 Promissory Note was modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged. At June 30, 2022,2023, accrued interest payable on the 2013 Promissory Note totaled $256,734.$286,734.
In April 2018, we borrowed $120,000 from our Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2018 Promissory Note). The 2018 Promissory Note accrues interest at 6% per annum, which is payable upon maturity of the 2018 Promissory Note. The 2018 Promissory Note was originally unsecured and originally matured on August 1, 2018. At any time, the holder of the 2018 Promissory Note may elect to have any or all of the principal and accrued interest settled with shares of our common stock based on the average price of the shares over the previous 20 trading days. Pursuant to an amendment to the 2018 Promissory Note in June 2018, the maturity date was extended to March 31, 2019 with all other provisions remaining unchanged. Pursuant to a second amendment to the 2018 Promissory Note in February 2019, the maturity date was extended to July 31, 2019 with all other provisions remaining unchanged. Pursuant to a third amendment to the 2018 Promissory Note in July 2019, the maturity date was extended to January 31, 2020 with all other provisions remaining unchanged. Pursuant to a fourth amendment to the 2018 Promissory Note in December 2019, the maturity date was extended to December 31, 2021, the note was modified to become secured by company assets, with all other provisions remaining unchanged. In December 2021, the 2018 Promissory Note was modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged. At June 30, 2022,2023, accrued interest on the 2018 Promissory Note totaled $30,170.$37,370.
In December 2019 and February 2020, we borrowed an aggregate of $1,000,000 from our Chief Executive Officer, Chairman of the Board, former Chairman of the Board, and one of our major shareholders pursuant to a promissory note (the 2019 Promissory Note). The 2019 Promissory Note bears an interest rate of 4% annually and iswas originally due December 31, 2022. According to the terms of the 2019 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of the Company’s common stock based on the average closing price of the Company’s common stock for the 20 days preceding the payment. At June 30,In December 2022, the balance of the 2019 Promissory Note was $1,000,000, Themodified to extend the maturity date to December 31, 2024, with all remaining debt discount was $75,037, the remaining beneficial conversion feature was $53,096, and theterms unchanged. At June 30, 2023, accrued interest on the 2019 Promissory Note totaled $99,131.
In April 2021, we borrowed $250,000 from its Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2021 Promissory Note). The 2021 Promissory Note accrued interest at 6% per annum, which was payable upon maturity of the 2021 Promissory Note. The 2021 Promissory Note was originally secured and was 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 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.$139,131.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
From time-to-time, management reviews and evaluates certain accounting policies and estimates that are considered to be significant in determining our results of operations and financial position.
A description of the Company’s critical accounting policies and estimates that affect the preparation of the Company’s financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC on March 31, 2022.April 6, 2023, as amended on May 3, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness, as of June 30, 2022,2023, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2022.2023.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II– –OTHER INFORMATION
A discussion of legal matters is found in Note 8, “Commitments and Contingencies”, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I - Item 1. Financial Statements of this Quarterly Report.
There have been no material changes or updates to the risk factors previously disclosed in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Exhibit No. | Description |
3.1 |
3.2 |
3.3 |
3.4 | |
3.5 | Bylaws |
31.2* | Certification by the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** | Certification by the Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** | Certification by the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). |
_______________
* Filed herewith.
** Furnished herewith.
† Constitutes a management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August | International Isotopes Inc. | |
By: | /s/ Steve T. Laflin | |
Steve T. Laflin | ||
Chief Executive Officer | ||
By: | /s/ W. Matthew Cox | |
W. Matthew Cox | ||
Chief Financial Officer | ||