As filed with the Securities and Exchange Commission on June 16, 2003
2010.
Registration No. 333-
______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. -------------------------
20549
FORM S-3
Registration Statement
Under The
Securities Act of
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-------------------------
INTERNATIONAL ISOTOPES INC.
----------------------------------------------
(Name
(Exact name of Small Business Issuerregistrant as specified in its Charter)
Texas 2835 74-276837
------------------------------- ---------------------------- ----------------
(State or other Jurisdiction of (Primary Standard Industrial (I.R.S.charter)
| Texas | 74-2763837 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer |
4137 Commerce Circle
Idaho Falls, Idaho 83401
------------------------------------------------------------
(Address
(208) 524-5300
(Address, including zip code, and Telephone Numbertelephone number, including area code, of Principal Executive Offices
and Principal Place of Business)
registrant's principal executive offices)
________
Steve T. Laflin
President and Chief Executive Officer
International Isotopes Inc.
4137 Commerce Circle
Idaho Falls, Idaho 83401
(208) 524-5300
---------------------------------------------------------
(Name, Address
(Name, address, including zip code, and Telephone Numbertelephone number, including area code, of Agentagent for Service)
Copyservice)
________
Copies to:
Curtis R. Ashmos
Locke Liddell & Sapp
Sonny Allison
Perkins Coie LLP
100 Congress,
1899 Wynkoop Street, Suite 300
Austin, Texas 78701
(512) 305-4716
700
Denver, CO 80202
(303) 291-2300
Approximate Datedate of Proposed Salecommencement of proposed sale to the Public:
public:From time to time after this Registration Statement becomes effective.
effective as determined by market conditions and other factors.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ||
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 underunder the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X|
[ ]
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ||
[ X ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act checkof 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ||
[ ]
If delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434, please462(e) under the Securities Act of 1933, check the following box. ||
[ ]
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act of 1933, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting company [ X ] |
| (Do not check if a smaller reporting company) | |||
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to Be Registered (3) | Amount to Be Registered (2) | Proposed Maximum Offering Price Per Unit (2) | Proposed Maximum Aggregate Offering Price (2) | Amount of Registration Fee (1) |
| Common stock, par value $0.01 | ||||
| Preferred stock, par value $0.01 | ||||
| Debt securities | ||||
| Convertible debt securities | ||||
| Warrants | ||||
Total | $100,000,000 | $7,130 |
| (1) | Calculated pursuant to Rule 457(o) under the Securities Act. |
| (2) | There are being registered under this registration statement such indeterminate number of |
| (3) | Pursuant to Rule 416 under the Securities Act, an indeterminate number of additional securities are registered hereunder that may be issued to prevent dilution in connection with a stock split, stock dividend, recapitalization, or similar event or adjustment. In addition, an indeterminate number of shares of common stock are registered hereunder that may be issued upon conversion of or exchange for any convertible preferred stock or debt securities. |
The Company is offering Units; each Unit consists of one share of
Common Stock and two warrants to purchase two additional shares of
Common Stock at $.04 and $.05, respectively.
(2) The registration fee is being paid in connection with the
registration of the underlying Common Stock.
(3) Includes 38,229,157 shares issuable upon exercise of warrants at
$.04 per share, and an additional 38,229,157 shares issuable upon
exercise of warrants at $.05 per share.
(4) Issuable to fill excess over-subscriptions.
(5) Includes the warrants issuable in connection with the 14,500,000
Unit over subscription option.
(6) Includes 14,500,000 shares issuable upon exercise of warrants at
$.04 per share, and an additional 14,500,000 shares issuable upon
exercise of warrants at $.05 per share.
(7) Evidencing the Rights to subscribe for Units.
The Registrantregistrant hereby amends this Registration Statementregistration statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration
Statementregistration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statementregistration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
2
PROSPECTUS
INTERNATIONAL ISOTOPES INC.
38,229,157 Units
Issuable Upon
The information in this prospectus is not complete and may be changed. We may not sell these securities until the Exerciseregistration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 16, 2010
PROSPECTUS
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Convertible Debt Securities
Warrants
We may, from time to time in one or more offerings, offer and sell up to $100,000,000 in the aggregate of Subscription Rights
International Isotopes Inc. ("I3"common stock, preferred stock, debt securities, convertible debt security, warrants to purchase common stock, preferred stock, debt securities or the "Company") is issuing to its
shareholders of record asconvertible debt securities, or any combination of the close of business on May 31, 2003 new
securities called "Rights". Holders of Rights will be entitled to subscribe for
an aggregate of 38,229,157 Units of I3's securities at the rateforegoing, either individually or as units comprised of one Unit for
each 2.5 Rights held. Theor more of the other securities.
This prospectus provides a general description of the securities we may offer. We will provide the specific terms of the Rights offering aresecurities offered in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. You should read carefully this prospectus, the applicable prospectus supplement and any related free writing prospectus, as follows:
o You will receive one Right for each sharewell as any documents incorporated by reference before you invest in any of I3our securities.This prospectus may not be used to offer or sell any securities unless accompanied by the applicable prospectus supplement.
Our common stock you
owned on May 31, 2003.
o You may purchase one Unit for every 2.5 Rights you receive, at
the Subscription Price of $.03 per Unit.
o Each Unit consists of (i) one share of common stock, (ii) one
warrant to purchase an additional share of common stock for $.04
per share ("Series A Warrant"), and (iii) one warrant to
purchase another share of common stock for $.05 per share
("Series B Warrant"). The warrants are exercisable through July
31, 2007.
o If you fully exercise your rights, you may subscribe for
additional Units through an over-subscription privilege. If the
over-subscriptions exceed the number of Units available, the
Units will be allocated to those shareholders who
over-subscribe, based upon their shareholdingsis quoted on the record
date as more fully described in this Prospectus.
o The Rights are not transferable and may be exercised only by
record date shareholders.
o The offer expires on July 31, 2003. There is no minimum number
of Units required to be sold as a condition to completing the
Offering.
The Company's Common Stock is quoted in the over the counter market in the "pink
sheets"OTC Bulletin Board® under the ticker symbol "INIS."INIS.OB." On June 10, 2003,14, 2010, the last reported bidsale price
for shares of the Company's Common Stockcommon stock, as reported on the OTC Bulletin Board®, was $0.39 per share. The applicable prospectus supplement will contain information, where applicable, as to any other listing on any securities market or exchange of the securities, if any, covered by the prospectus supplement.
Investing in our securities involves risk. You should carefully review the risks and uncertainties described under the heading "Risk Factors" beginning on page 4 and in the pink sheets was
$.03.
-----------------------------------documents which are incorporated by reference herein, and contained in the applicable prospectus supplement and any related free writing prospectus.
We will sell these securities directly to investors, through agents designated from time to time or to or through underwriters or dealers. For additional information on the methods of sale, you should refer to the section entitled "Plan of Distribution" in this prospectus. If any underwriters are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such underwriters and any applicable commissions or discounts will be set forth in a prospectus supplement. The price to the public of such securities offered hereby involveand the net proceeds we expect to receive from such sale will also be set forth in a high degree of risk.
See "Risk Factors" commencing on page 9.
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prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectusprospectus is truthful or complete. Any representation to the contrary is a criminal offense.
-----------------------------------
The Company has not authorized any person, agent or entity to give any
information or make any representation other than those contained in this
Prospectus (including material incorporated by reference herein). You should not
rely on any such information or representation as having been authorized by the
Company. This Prospectus is not an offer to sell the securities and it is not
soliciting an offer to buy the securities in any state where offers or sales are
not permitted.
Price to Public Proceeds to the Company
- -------------------------------------- ----------------------------------------
Per Unit $.03 $.03
- -------------------------------------- ----------------------------------------
Total $1,146,875 $1,146,875
- -------------------------------------- ----------------------------------------
Expenses of the Rights Offer are estimated to be $55,000. No underwriting
discounts or discounts will be paid.
The date of this Prospectusprospectus is June 30, 2003
3
TABLE OF CONTENTS
Page
Prospectus Summary..........................................................5
Risk Factors................................................................8
The Company................................................................11
The Rights Offer...........................................................13
Use of Proceeds............................................................19
Description of Securities..................................................20
Legal Matters..............................................................22
Experts....................................................................22
Incorporation of Certain Information by Reference..........................22
Additional Information.....................................................22
Exhibit A Form of Subscription Certificate ..............................A-1
Exhibit B Form of Notice of Guaranteed Delivery..........................B-1
Exhibit C Form of Nominee Holder Over Subscription Exercise Form.........C-1
Exhibit D Form of Warrant Agreement......................................D-1
Exhibit E Form of Warrant Certificate....................................E-1
4
| Page | |
| ABOUT THIS PROSPECTUS | 1 |
| SUMMARY | 1 |
| FINANCIAL RATIOS | 4 |
| RISK FACTORS | 4 |
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 5 |
| USE OF PROCEEDS | 5 |
| DILUTION | 6 |
| DESCRIPTION OF SECURITIES | 6 |
| PLAN OF DISTRIBUTION | 8 |
| LEGAL MATTERS | 10 |
| EXPERTS | 10 |
| WHERE YOU CAN FIND MORE INFORMATION | 10 |
| INCORPORATION OF CERTAIN INFORMATION BY REFERENCE | 10 |
ABOUT THIS PROSPECTUS SUMMARY
The following summary explains only some of the information in this
prospectus. More detailed information about International Isotopes Inc.("I3,"
the "Company," or "we") and the Rights offer, and financial statements appear
elsewhere in this prospectus or in the documents incorporated by reference into
this prospectus.
This prospectus is part of a registration statement on Form S-3 that we
have filed with the Securities and Exchange Commission.Commission, or the SEC, using a "shelf" registration process. Under this shelf registration process, we may from time to time sell common stock, preferred stock, debt securities, convertible debt securities or warrants to purchase common stock, preferred stock, debt securities or convertible debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities, in one or more offerings up to a total dollar amount of $100,000,000. We have provided to you in this prospectus a general description of the securities we may offer. Each time we sell securities under this shelf registration, we will, to the extent required by law, provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. The SEC allows us to
"incorporate by reference" informationprospectus supplement and any related free writing prospectus that we file with them. This means that
we can disclose important informationmay authorize to be provided to you by referring you to othermay also add, update or change information contained in this prospectus or in any documents that we have filedincorporated by reference into this prospectus. To the extent there is a conflict between the information contained in this prospectus and the prospectus supplement or any related free writing prospectus, you should rely on the information in the prospectus supplement or the related free writing prospectus; provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date — for example, a document incorporated by reference in this prospectus or any prospectus supplement or any related free writing prospectus — the SEC. Thestatement in the document having the later date modifies or supersedes the earlier statement.
We have not authorized any dealer, agent or other person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus and any accompanying prospectus supplement. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus or an accompanying prospectus supplement. This prospectus and the accompanying prospectus supplement, if any, do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus and the accompanying prospectus supplement constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is considered partcorrect on any date subsequent to the date of the document incorporated by reference (as our business, financial condition, results of operations and prospects may have changed since that date), even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered or securities are sold on a later date.
As permitted by the rules and regulations of the SEC, the registration statement, of which this prospectus forms a part, includes additional information that we file
later will automatically update andnot contained in this prospectus. You may supersede this information. For further
information about I3 and the securities being offered, you should refer toread the registration statement and the other reports we file with the SEC at the SEC's web site or at the SEC's offices described below under the heading "Where You Can Find Additional Information."
SUMMARY
This summary highlights selected information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. You should carefully read the entire prospectus, including the risks of investing discussed under "Risk Factors" and in the documents thatwhich are incorporated by reference. See
"Incorporationreference herein, and contained in the applicable prospectus supplement and any related free writing prospectus, the information incorporated by reference, including our financial statements, and the exhibits to the registration statement of Certain Information by Reference" elsewhere inwhich this prospectus.
Statements containedprospectus is a part. When used in this prospectus, the terms "International Isotopes," "INIS," "we," "our," "us" or the "Company" refer to International Isotopes Inc. and its consolidated subsidiaries, unless otherwise indicated or as the context otherwise requires.
1
About International Isotopes Inc.
We manufacture a full range of nuclear medicine calibration and reference standards, a wide range of products including cobalt teletherapy sources, and a varied selection of radioisotopes and radiochemicals for medical research, and clinical devices. We also provide a host of transportation, recycling, and processing services on a contract basis for clients. Additionally, we hold several patents for a fluorine extraction process that we are not historical facts
may constitute forward-looking statements that are subjectplanning to risksuse in conjunction with a new commercial depleted uranium de-conversion facility. Our core business consists of six reportable segments which include: Nuclear Medicine Standards, Cobalt Products, Radiochemical Products, Fluorine Products, Radiological Services, and uncertainties that could cause actual results to differ materially from those
discussed. Words such as "expects," "may," `will," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify
forward-looking statements. See "Risk Factors."
The Company
Transportation.
International Isotopes Inc. was establishedformed as a Texas corporation in 1995. The Company was initially formed to produce, market, and distribute a
broad range of products used in diagnostic and therapeutic nuclear medicine,
research and industry. In 1998 the Company acquired a subsidiary, subsequently
named International Isotopes Idaho Inc., which specialized in sales of isotopes
and providing hot cell services through a contract with the Department of Energy
(DOE) Idaho Operations and using the Advanced Test Reactor (ATR). Because of
difficulties encountered with start up of the Company's Radioisotope Production
Facility and Linear Accelerator, and the high cost of conducting commercial
operations in the midst of a DOE laboratory, the Company underwent a substantial
change in mission and strategy during 2000 and 2001. This change resulted in the
sales of the Radioisotope Production Facility and Linear Accelerator in Texas
and termination of the commercial isotope production contract with the DOE's
prime-operating contractor in Idaho. In June of 2001, the Company relocated its
corporate headquarters to Idaho to continue the subsidiary's operations as the
new, primary focus and mission of the Company.
In support of our new mission and strategy, in 2001 new contract
manufacturing and processing agreements were put in place, a new operating
facility was obtained and licensed through the Nuclear Regulatory Commission,
and new contracts put in place with the DOE's prime-operating contractor for
continued reactor production of high specific activity cobalt. These new
agreements now fully support the Company's business products and services, which
include manufacturing nuclear medicine reference and calibration standards,
processing gemstones that have undergone treatment for color enhancement, and
large volume production of high specific activity (HSA) cobalt. We have been
able to continue steady growth in the amount of revenues generated from these
business activities. We expect continued growth and the addition of new products
in 2003, which management feels will produce sufficient cash to meet our
operational needs. However, prospective investorsOur principal executive offices are cautioned regarding the
speculative nature of any forward-looking projections. For a discussion of these
and other risk factors relating to the Company when considering an investment in
our securities, see "Risk Factors."
Purpose of the Offer
The Board of Directors of I3 has determined that it is desirable to
raise capital in order to finance an expansion of our business operations. This
expansion will include construction of a building addition and acquisition of
hot cells and related equipment for processing a wide range of new products.
Although intended to provide a variety of processing capability, most of the
planned operations expansion will be directed towards implementation and
advancement of the Company's new Therapy Products business area.
This offering will allow us to raise additional capital without
diluting the ownership interests of existing shareholders who exercise their
Rights and without paying the higher underwriting commissions that would be
required to raise capital from third parties who are not already shareholders.
5
Terms of the Offer
Description of the Rights We are issuing Rights to each of our
Offering shareholders who owned shares of our
common stock at the close of business on
May 31, 2003. You will receive one Right
for every share of common stock you own.
You will be entitled to purchase one
Unit of our securities (one share of
common stock and two warrants to
purchase two additional shares) for
every 2.5 Rights you own. Holders of
Rights will be entitled to subscribe for
and purchase up to an aggregate of
38,229,157 Units.
Subscription Price If you wish to exercise your Rights to
purchase Units, the Subscription Price
will be $.03 per Unit. The Subscription
Price is payable in cash (including
check, money order and wire transfer),
except with respect to certain
shareholders of I3 who have loaned funds
to the Company and may choose to cancel
I3 debt in exchange for Units.
Description of Units Each Unit will consist of (i) one share
of our common stock, (ii) one Series A
Warrant to purchase an additional share
of our common stock at a price of $.04
per share, and (iii) one Series B
Warrant to purchase another share of our
common stock at a price of $.05 per
share. The warrants are exercisable at
any time on or prior to July 31, 2007.
The warrants are redeemable and may be
repurchased by the Company for $.001 per
warrant if the average closing price of
I3's common stock equals or exceeds $.12
per share with respect to Series A
Warrants and $.15 per share with respect
to Series B Warrants during any
consecutive 20 business day period. The
Warrants will be evidenced by Warrant
Certificates and will be subject to the
terms of a Warrant Agreement between the
Company and American Stock Transfer
Company, as Warrant Agent. See the
Warrant Agreement attached hereto as
Exhibit D and the form of Warrant
Certificate attached hereto as Exhibit
E.
Over-Subscription Privilege Shareholders who fully exercise their
Rights will be entitled to the
additional privilege of subscribing for
and purchasing, subject to certain
limitations and subject to allocation,
any Units not acquired by other holders
of Rights in the primary subscription.
If subscriptions for Units through the
over-subscription privilege exceed the
number of Units available for sale after
the primary subscription, we may issue
up to 14,500,000 additional Units to
fill all or a portion of the excess
over-subscriptions.
6
How to Exercise Rights The Rights will be evidenced by
Subscription Certificates, which will be
distributed to record date shareholders.
See Exhibit A hereto. You may exercise
your Rights by completing the
Subscription Certificate and delivering
it, together with payment of the
Subscription Price, to the Subscription
Agent, American Stock Transfer & Trust
Company, 59 Maiden Lane, Plaza Entrance,
New York, New York 10038. Payment may be
made either by check drawn on a United
States bank, wire transfer or by notice
of guaranteed delivery (as explained
under "The Rights Offer--Payment for
Shares"). Certain shareholders who have
loaned funds to the Company have the
additional option of electing to cancel
all or a portion of the I3 debt owed to
them in exchange for Units. You must
exercise your Rights no later than July
31, 2003. You may not rescind your
purchase after exercising your Rights.
Non-Transferability of Rights The Rights are non-transferable and may
be exercised only by a record date
shareholder.
When You Can Exercise Your Rights You can exercise your Rights only during
the period beginning on June 30, 2003
and ending on July 31, 2003 at 5:00
p.m., New York City time.
Common Stock Outstanding Prior 95,572,893 shares of common stock.
to this Offering
Common Stock to be After this Offering, assuming the sale
Outstanding After the of the 38,229,157 Units initially
Offering offered plus the 14,500,000 unit
over-subscription option, 148,302,050
shares of common stock will be
outstanding. There will also be
outstanding warrants to purchase an
additional 105,458,314 shares.
Important Dates to Remember Record Date: May 31, 2003
Expiration Date: July 31, 2003
Last date of Guaranteed
Delivery: August 5, 2003
Amendment, Extension or The Company may in its sole discretion:
Termination of the Offer (a) terminate the Offer prior to
delivery of the Units for which Rights
holders have subscribed pursuant to the
exercise of Rights in the primary
subscription or the over-subscription
privilege; (b) extend the expiration
date to a later date; (c) change the
record date prior to the distribution of
the Rights to shareholders; or (d) amend
or modify the terms of the Rights offer.
Closing bid price of the Company's $.03 per share
common stock as reported in the
over the counter market pink sheets
on June 13, 2003 (the trading day
prior to announcement of the Rights
offering)
Closing bid price of the Company's $__________ per share
common stock as reported in the
over the counter market pink sheets
on June 30, 2003
7
Risk Factors An investment in the Units involves a
high degree of risk. The Units should be
purchased only by investors who can
afford the loss of their entire
investment. See "Risk Factors."
Use of Proceeds New facilities and equipment, debt
reduction and working capital. See "Use
of Proceeds."
Trading Symbol Our common shares are traded in the over
the counter market and reported in the
pink sheets under the symbol "INIS."
Participation of Certain Certain of I3's shareholders have
Shareholders recently loaned the Company the
aggregate principal amount of $823,500.
Although there can be no assurance, we
expect each of these shareholders to
participate in the Rights offer by
canceling all or a portion of the amount
of I3 debt owed to them in exchange for
Units offered hereby.
RISK FACTORS
International Isotopes has incurred and may continue to incur losses. With the
exception of 2002, we have incurred net losses for most fiscal periods since our
inception. From inception (November 1995) through December 31, 2002 the Company
generated $17,246,225 in revenues and had an accumulated deficit (including
preferred stock dividends and returns) in the amount of $87,390,165. However,
although we cannot provide any assurance we believe the Company's continued
growth in our new business areas will produce sufficient revenue to meet our
2003 cash flow and operational needs.
We may need additional financing to continue operations. As of December 31, 2002
we have an outstanding debt of $1,046,520 on a $1.1 million revolving line of
credit account with Texas State Bank. That note matures on December 31, 2003 and
is secured with 80% of our accounts receivable and 50% of our fixed assets.
Seventy-five percent (75%) of the cash resulting from the sale of any remaining
Linac equipment must be applied to the principal of this note. Sales of about
$460,000 of this equipment are expected in 2003. We will have to negotiate an
extension of terms on this note at the end of 2003. The Company also has a
ten-year note for $909,738 at 7% interest to our former Chairman of the Board.
Principal and interest payments on this note are to be paid annually based upon
net profits of the Company (annual principal payment to equal 30% of net pre-tax
profits). At December 31, 2002, the note holder agreed to defer the April 2003
principal payment. The Company also has notes totaling $823,500 in principal
amount with several of our principal shareholders, which mature in May 2004. We
expect the holders of these notes to convert all or a portion of the outstanding
amount of these notes to equity through the exercise of Rights in this offering.
Remaining Company Obligations on the Texas State Bank Loan for the Waxahachie
Property. The Company and Texas State Bank have agreed to have the loan of
$345,295 assumed by an individual in consideration of our sale of our Waxahachie
property. Liability for this loan would, however, revert to the Company should
this individual default on the assumed note.
8
We will continue to be dependent upon our remaining facilities and equipment to
function properly in order to provide consistent, timely shipments of products
that meet our customers' specifications. If we experience equipment failures or
breakdowns we may be unable to satisfy our customers, which could result in the
cancellation of contracts and the loss of revenues.
There is no long-term contract in place with the DOE Contractor for continued
HSA Cobalt production. The Company has put short term specific "work for
non-government sponsor agreements" in place with the DOE contractor to continue
sales of HSA cobalt irradiated at the Idaho reactor facility. We expect that
these agreements will continue, however, there is no assurance these contracts
will be equitable or continuing.
Operational hazards (i.e., spills, faults, ventilation failure, etc.) could
result in the spread of contamination within our facility and require additional
funding to correct. An irrevocable, automatic renewable letter of credit against
a $147,000 Certificate of Deposit at Texas State Bank has been used to provide
the financial assurance required by the Nuclear Regulatory Commission for our
Idaho facility license. If a contamination event resulted in greater liability
to us we would have to borrow money or fund the liability from our future
revenue.
Government regulation could adversely affect our business. Operations within our
Idaho facility are subject to the U.S. Nuclear Regulatory Commission and Food
and Drug Administration regulations. Nuclear medicine calibration and reference
standards are licensed and regulated. To the extent these regulations are or
become burdensome, our business development could be adversely affected.
We are dependent upon key personnel. Our ongoing operations are dependent on
Steve T. Laflin, President and Chief Executive Officer. The Company is highly
dependent upon this person and the loss of this individual could have a material
adverse effect on us. We have a $2 million dollar key man life insurance policy
on Mr. Laflin and a 5-year employment agreement with him extending through
February 2007. The Company has revised our employee stock options to assist with
offering incentives and retaining key personnel. In addition, there is no
assurance the Company will be able to retain our existing personnel or attract
additional qualified employees. Loss of any of these relationships would result
in a significant decline in revenue.
We are dependent on various third parties in connection with our business
operations. The production of HSA Cobalt is dependent upon the Department of
Energy, and its prime-operating contractor, who controls the Idaho reactor and
laboratory operations. Our gemstone production is tied to an exclusive agreement
with Quali Tech Inc. Nuclear medicine calibration and reference standard
manufacturing is conducted under an exclusive contract with RadQual, LLC who in
turn has agreements in place with several companies for marketing and sales.
We are subject to competition from other companies. Each of the business areas
of the Company has direct competition from other businesses. HSA cobalt is
supplied by other reactor facilities around the world. Nuclear medicine
calibration and reference standards are being produced by several other
manufacturers in the U.S. and overseas, and there is at least one other gemstone
processor in Europe. Each of our competitors has significantly greater financial
resources than us and that could create a competitive advantage for them over
us.
Regulation of Radioisotope Production and Radioactive Waste. The manufacture of
radioisotopes, nuclear medicine calibration and reference standards, and
processing gemstones are subject to extensive federal regulation. Prior to
commencing operations in our newly leased Idaho facility, the Company obtained
approval from the Nuclear Regulatory Commission. The nuclear medicine
calibration and reference standards are licensed as Sealed Sources through the
State of Texas Department of Health. The Company's production facility does not
handle "special nuclear materials" (i.e. nuclear fuels and weapons grade
uranium, thorium and plutonium) and, therefore, is not designated as a "nuclear"
facility.
9
Pursuant to the Low Level Radioactive Waste Policy Act of 1980, states are
required to assure the safe disposal of mildly radioactive materials. The
Nuclear Regulatory Commission, Region IV, regulates the disposal of radioactive
waste for facilities operating in Idaho. The radioactive waste we produce falls
into the category of low-level radioactive waste.
Other Regulations. In the event we enter into agreements with suppliers to
acquire neutron-produced research and therapeutic radioisotopes we could be
subject to additional regulations of the Nuclear Regulatory Commission or the
Food and Drug Administration.
Our shares are not currently listed on a securities exchange or traded on
Nasdaq, and there are no market makers making a market in our stock. As a
result, our shares are thinly traded and there can be no assurance that an
active trading market will develop for our stock. Accordingly, owners of our
shares may have a difficult time selling large blocks of shares at market
prices.
No Trading market is expected to develop for the Warrants. Although the Series A
Warrants and Series B Warrants are being registered and will be freely tradeable
(including through the Depository Trust Company), the Company does not expect an
active trading market to develop for the Warrants.
10
THE COMPANY
General
I3 was established as a Texas corporation in 1995. The Company was initially
formed to produce, market, and distribute a broad range of products used in
diagnostic and therapeutic nuclear medicine, research and industry. In 1998 the
Company acquired a subsidiary, subsequently named International Isotopes Idaho
Inc., which specialized in sales of isotopes and providing hot cell services
through a contract with the Department Of Energy (DOE) Idaho Operations and
using the Advanced Test Reactor (ATR). Because of difficulties encountered with
start up of the Company's Radioisotope Production Facility and Linear
Accelerator, and the high cost of conducting commercial operations in the midst
of a DOE laboratory, the Company underwent a substantial change in mission and
strategy during 2000 and 2001. This change resulted in the sales of the
Radioisotope Production Facility and Linear Accelerator in Texas and termination
of the commercial isotope production contract with the DOE's prime-operating
contractor in Idaho. In June of 2001, the Company relocated its corporate
headquarters to Idaho to continue the subsidiary's operations as the new,
primary focus and mission of the Company.
In support of our new mission and strategy, in 2001 new contract manufacturing
and processing agreements were put in place, a new operating facility was
obtained and licensed through the Nuclear Regulatory Commission, and new
contracts put in place with the DOE's prime-operating contractor for continued
reactor production of high specific activity cobalt. These new agreements now
fully support the Company's business products and services, which include
manufacturing nuclear medicine reference and calibration standards, processing
gemstones that have undergone treatment for color enhancement, and large volume
production of high specific activity (HSA) cobalt. We have been able to continue
steady growth in the amount of revenues generated from these business
activities. We expect continued growth and the addition of new products in 2003,
which management feels will produce sufficient cash to meet our operational
needs. However, prospective investors are cautioned regarding the speculative
nature of any forward-looking projections. For a discussion of these and other
risk factors relating to the Company when considering an investment in our
securities, see "Risk Factors."
Company Licensing, Capabilities, and Qualifications
We have a fully implemented Quality Assurance program which meets the
requirements of ANSI/ASME NQA-1 and 10 CFR 830.120. In order to support the
production of Nuclear Medicine calibration and reference standards the Company
is also a participating member of the National Institute of Standards and
Technology/ Nuclear Energy Institute's (NIST/NEI) Measurement Assurance Program
(MAP) for the radiopharmaceutical industry. This program participation ensures
that we can provide analytical methods and standards necessary for accurate
radioactivity measurement. The Company is also a registered Food and Drug
Administration (FDA) medical device manufacturer for Class I medical devices,
including Nuclear Sealed Calibration Sources (892.1400) and Nuclear Flood Source
Phantoms (892.1380).
Industry Overview and Target Markets
The industries and markets that require or involve the use of radioactive
material are diverse. Our current operations involve products that are used in a
wide variety of applications and in various markets. First, our HSA cobalt is
supplied as bulk material, which is subsequently assembled into medical devices
by our customer. Second, we are a contract manufacturer of several nuclear
medicine reference and calibrations standards used for operational checks of
various imaging and measurement systems for nuclear medicine. And third, we
support the special packaging and measurement of gemstones that have undergone
irradiation for color enhancement.
We conduct our operations in Idaho Falls, Idaho. Although the cobalt, nuclear
medicine calibration and reference standards, and gemstone products appear
diverse, they share the common links of being radioactive materials requiring
extensive process quality control. Therefore, the Company is required to have an
operating license from the Nuclear Regulatory Commission and specially trained
staff with rigorously employed quality standards to produce and process these
materials.
11
Products
HSA Cobalt - The Company is one of a very few sources of this material
worldwide. High Specific Activity (HSA) cobalt is used primarily in external
beam radiation medical devices such as Elekta's Leksell Gamma Knife. This device
is used for non-surgical radiation treatment of vascular deformities and
non-malignant tumors in the brain. The HSA cobalt requires three to five years
of irradiation to reach the necessary level of activity for this medical
application. We manage an inventory of approximately 800,000 curies of this
material in various stages of production, thus ensuring a long and continuous
supply of material. After irradiation the material is shipped by us directly
from the DOE reactor laboratory to the customer's facilities, thus eliminating
the need for any on site processing of the material following irradiation.
Other Reactor Produced Radioisotopes - The Company's facility and NRC license
permits processing of a wide variety of radioisotopes. We are evaluating
establishing additional radioisotope transport and processing capabilities that
would permit production and sale of various new radioisotopes using the DOE
laboratory test reactor for production and our Idaho Falls facility for
processing.
Nuclear medicine calibration and reference standards manufacturing - The Company
is an exclusive contract manufacturer to RadQual LLC for several of these types
of standards. There are approximately 6,000 nuclear medicine centers around the
U.S. and the number of these centers is expected to grow at an annual rate of
about 5%. Each of these centers has a variety of measurement and imaging systems
that require frequent use of calibration and reference standards to ensure their
proper operation. Because of the relatively short lived nature of the
radioactivity used in these standards, the customers are required to replace
them approximately once every 12 to 18 months.
Gemstone Processing - The Company has an exclusive contract with Quali-Tech Inc.
for processing gemstones. The processing involves special packaging of the
gemstones in containers, which allow them to undergo irradiation for color
enhancement. The processing we perform entails initial receipt of the gemstones,
packaging the gemstones for irradiation, managing the transport of the stones to
and from the reactor facility, and then completing post irradiation processing
of the stones before return shipment to the customer. In 2001 the production
volume of the gemstones was limited by the availability of irradiation
containers due to the difficulty involved with repairing and constructing these
containers. However, in January 2002 we had solved container construction
problems and implemented a new technology to repair containers. As a result we
have been able to double the number of containers available for irradiation of
the gemstones. During 2002, however, the general slowdown of the economy
impacted the market demand for gemstones and thus the Company's revenue
resulting from processing did not meet expectations.
Competition
HSA cobalt is produced in some other reactors, but we do not believe any in the
U.S. are capable of producing the high activity level and volume required for
meaningful commercial production. The two domestic reactor sources are the
University of Missouri Research Reactor and the High Flux Isotope Reactor
located in Oak Ridge Tennessee. There are, however, numerous foreign reactors
actively producing high and low specific activity cobalt. While the logistics of
international transport of cobalt presents some competitive barriers, the
Company must always consider the potential threat these other suppliers pose to
our HSA cobalt business.
Nuclear medicine calibration and reference standards - The Company is the
smallest of three major producers of these sources within the U.S. The Company's
customer (RadQual, LLC) has increased the number of authorized distributors and
plans to make further expansion into the market in 2003. However, there can be
no assurance of increased sales.
Gemstone processing - there is no other commercial company or reactor in the
U.S. processing irradiated gemstones. We believe there are one or two other
reactors in the world that support this business with other companies overseas.
Government Regulation
The Company has obtained a license from the Nuclear Regulatory Commission,
Region IV that permits use and possession of by-product material. The scope of
this license includes calibration and reference standard manufacturing and
distribution, radioactive gemstone processing, environmental sample analysis,
and various research and development activities. The scope and activities
permitted by this license are broad enough that it is not expected to restrict
any anticipated business activities in the coming year. The Company is also
registered as a medical device manufacturer through the U.S. Food and Drug
Administration (FDA).
12
THE RIGHTS OFFER
Issuance of Rights
We are issuing Rights to subscribe for Units of the Company's
securities. Each Unit consists of (i) one share of common stock, (ii) one Series
A Warrant to purchase an additional share of common stock at an exercise price
of $.04, and (iii) one Series B Warrant to purchase another share of common
stock at $.05 per share. The warrants are exercisable anytime prior to and
including July 1, 2007. Each shareholder as of the record date will be issued
one nontransferable Right for each share of common stock owned. No fractional
Rights will be issued. The Rights entitle the holder to acquire at the
Subscription Price one Unit for each 2.5 Rights held. The Rights will be
evidenced by Subscription Certificates (see Appendix A) which will be mailed to
shareholders.
The Rights are not transferable and will not be quoted for trading in
the over the counter market nor on any stock exchange. Shareholders who, after
exercising their Rights, are left with fewer than 2.5 Rights, will be unable to
exercise those remaining Rights and will not be entitled to receive any cash
from the Company in lieu of those remaining Rights.
Purpose of Offer
The Board of Directors of I3 has determined that it is desirable to
raise capital in order to finance an expansion of our business operations. This
expansion will include construction of a building addition and acquisition of
hot cells and related equipment for processing a wide range of new products.
Although intended to provide a variety of processing capability, most of the
planned operations expansion will be directed towards implementation and
advancement of the Company's new Therapy Products business area.
This Offering will allow us to raise additional capital without
diluting the ownership interests of existing shareholders who exercise their
Rights and without paying the higher underwriting commissions that would be
required to raise capital from third parties who are not already shareholders.
The Subscription Price
The Subscription Price for the Units to be issued pursuant to the
Rights is $.03 per Unit. We announced the offer on June , 2003. The last
reported bid prices of the common stock in the over the counter market pink
sheets on June , 2003, and June 30, 2003, were $.03 and $_________,
respectively. The Subscription Price is payable in cash (by check, money order
or wire transfer), except with respect to certain shareholders of I3 who have
loaned funds to the Company and may elect to cancel I3 debt in exchange for
Units.
Expiration of the Offer
The Offer will expire at 5:00 p.m. New York City time on July 31, 2003
(the "Expiration Date"). Rights will expire on the Expiration Date and may not
be exercised after that date.
Exercise of Rights
In order to exercise your Rights you must do all of the following:
o Fill in and sign the reverse side of the Subscription Certificate
which accompanies this prospectus;
o Deliver the completed and signed Subscription Certificate to the
Subscription Agent with your payment in full for the Units you
wish to purchase. You may use the enclosed envelope to mail the
Subscription Certificate and payment to the Subscription Agent, or
you may arrange for one of the alternative methods of delivery
described below. Shareholders choosing to cancel I3 debt owed to
them in exchange for Units should so indicate on their
Subscription Certificate.
13
o The method of making payment for your Units is described below
under "Payment for Shares."
o Properly completed and executed Subscription Certificates must be
received by the Subscription Agent at the offices of the
Subscription Agent at the address set forth below prior to 5:00
pm, New York City time, on the Expiration Date, unless payment is
effected by means of a notice of guaranteed delivery as described
below under "Payment for Shares."
o Rights may also be exercised through a broker, who may charge you
a servicing fee.
Signed Subscription Certificates, accompanied by payment of the
Subscription Price, should be sent to American Stock Transfer & Trust Company,
the Subscription Agent, by one of the methods described below:
1. By mail or by hand:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Entrance
New York, NY 10038
2. By express mail or overnight courier:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Entrance
New York, NY 10038
3. By facsimile (telecopier):
718/234-5001
with a copy of the original Subscription Certificate to be sent by one of the
methods described above. Confirm facsimile by telephone to 800/937-5449.
Do Not Send Subscription Certificates to the Company.
---------------------------------------------------
A subscription will be deemed accepted by the Subscription Agent when
payment (which may take the form of an election to cancel I3 debt owed to the
shareholder), together with a properly completed and executed Subscription
Certificate, and is received by the Subscription Agent.
If you are issued fewer than 2.5 Rights, you may subscribe for one full
Unit. Fractional Units will not be issued, and if after exercising your Rights
you are left with fewer than 2.5 Rights, you will not be able to exercise your
remaining Rights.
If you do not indicate the number of Rights you are exercising, or if
you do not deliver full payment of the Subscription Price for the number of
Units that you indicate you are subscribing for (which payment may take the form
of an election to cancel I3 debt owed to you), then you will be deemed to have
exercised Rights to purchase the maximum number of Units determined by dividing
the total Subscription Price you paid by the Subscription Price per Unit.
If you submit payment for more Units than may be purchased through the
regular exercise of your Rights, your excess payment will be deemed to be a
Subscription Payment for additional Units through the Over-Subscription
Privilege. The number of additional Units that you will be deemed to have
subscribed for in the Over-Subscription Privilege will be determined by dividing
the amount of the excess payment by the Subscription Price per Unit.
14
All questions concerning the time limits, validity, form and
eligibility of any exercise of Rights for subscriptions pursuant to the
Over-Subscription Privilege will be determined by I3, whose determination will
be final and binding. I3 in its sole discretion may waive any defect or
irregularity, or may permit any defect or irregularity to be corrected, within
such time as the Company may determine, or I3 may reject, in whole or in part,
the purported exercise of any Right in the primary subscription or any
subscription pursuant to the Over-Subscription Privilege. Neither I3 nor the
Subscription Agent will be under any duty or obligation to give any notification
or permit the cure of any defect or irregularity in connection with the
submission of any Subscription Certificate, the exercise or attempt to exercise
any Right or the Over-Subscription Privilege, or the payment of the Subscription
Price. Subscriptions through the exercise of Rights or the Over-Subscription
Privilege will not be deemed to have been received or accepted by I3 until all
irregularities or defects have been waived by I3 or cured to the satisfaction
of, and within the time allocated by, I3 in its sole discretion.
Over-Subscription Privilege
The Over-Subscription Privilege may allow you to acquire more Units
than the number issuable upon the exercise of the Rights initially issued to
you. By exercising the Over-Subscription Privilege, you may purchase any Units
that are left over by shareholders who fail to exercise their Rights.
The Over-Subscription Privilege may only be exercised by Rights holders
who were shareholders on the record date and who exercise all of the rights they
received from I3. Shareholders such as broker-dealers, banks, and other
professional intermediaries who hold I3 securities on behalf of clients, may
participate in the Over-Subscription Privilege for the client if the client
fully exercises all Rights attributable to him.
If you are eligible to exercise the Over-Subscription Privilege and you
wish to do so, you should indicate on your Subscription Certificate how many
Units you are willing to acquire through the Over-Subscription Privilege. If
sufficient common shares remain unsold, all over-subscriptions will be honored
in full.
If you were a shareholder on the record date and you wish to exercise
the Over-Subscription Privilege through The Depository Trust Corporation, you
must properly execute and deliver to the Subscription Agent a DTC Participant
Over-Subscription Form, together with payment of the Subscription Price for the
number of Units that you wish to purchase through the Over-Subscription
Privilege. Copies of the DTC Participant Over-Subscription Form and payment must
be received by the Subscription Agent at or prior to 5:00 p.m. New York City
time on the Expiration Date.
If you are eligible to exercise the Over-Subscription Privilege but do
not deliver full payment of the Subscription Price for the number of Units that
you indicate you are subscribing for through the Over-Subscription Privilege,
then you will be deemed to have exercised the Over-Subscription Privilege to
purchase the maximum number of Units determined by dividing the total
Subscription Price paid (in excess of the Subscription Price for the number of
Units you purchased through the full exercise of your Rights) by the
Subscription Price per Unit.
If subscriptions for Units through the Over-Subscription Privilege
exceed the initial 38,229,157 Units being offered by I3 through the exercise of
the Rights, I3 may issue up to 14,500,000 additional Units to fill all or a
portion of the over-subscriptions. The issuance of additional Units to fill
over-subscriptions may dilute the percentage ownership interests of other
shareholders.
I3 will not be obligated to issue any Units to fill over-subscriptions,
but we may do so in our sole and absolute discretion. We reserve the right to
limit the number of Units issued to fill an over-subscription from any single
shareholder or from shareholders that are known or believed by us to be under
common control or acting as a group for the purpose of acquiring Units.
15
Subject to the right of I3 to limit the number of Units issuable to any
shareholder, if the Rights offer is over-subscribed so that over-subscriptions
cannot be filled in full, the available Units will be allocated among those who
over-subscribe based on the number of Rights originally issued to them, so that
the number of Units issued to shareholders who subscribe pursuant to the
Over-Subscription Privilege will generally be in proportion to the number of
shares of common stock owned by them on the record date. The percentage of
available Units each over-subscribing shareholder may acquire may be rounded up
or down to result in delivery of whole Units. The allocation process may involve
a series of allocations in order to assure that the total number of Units
available for over-subscriptions is distributed on a prorata basis. If you are
not allocated the full amount of Units that you subscribe for pursuant to the
Over-Subscription Privilege, you will receive a refund of the Subscription Price
you paid for Units that are not allocated to and purchased by you. The refund
will be made by a check mailed by the Subscription Agent.
Payment for Units
If you wish to exercise your Rights or to acquire Units pursuant to the
Over-Subscription Privilege, you may choose between the following methods of
payment:
1. You may send the Subscription Certificate together with payment
(which may take the form of a written election on the Subscription Certificate
indicating your desire to cancel I3 debt owed to you in exchange for the
issuance of Units) for the Units acquired on primary subscription and any
additional Units that the you desire to acquire through the Over Subscription
Privilege to the Subscription Agent. A subscription will be deemed accepted when
payment, together with a properly completed and executed Subscription
Certificate, is received by the Subscription Agent. Such payment and properly
executed Subscription Certificate must be received by the Subscription Agent no
later than 5:00 p.m., New York City time on the Expiration Date. The
Subscription Agent will deposit all checks received by it for the purchase of
Units into a segregated interest bearing account of I3 (the interest of which
will belong to I3) pending pro ration and distribution of the Units. To be
accepted, a payment pursuant to this method must be in U.S. dollars by money
order or check drawn on a bank located in the United States, must be payable to
International Isotopes Inc., and must accompany a properly completed and
executed Subscription Certificate.
2. Alternatively, a subscription will be accepted by the
Subscription Agent if, prior to 5:00 p.m., New York City time, on the Expiration
Date, the Subscription Agent has received a Notice of Guaranteed Delivery by
facsimile (telecopy) or otherwise from a bank, trust company, or a New York
Stock Exchange member guaranteeing delivery of (i) payment of the full
Subscription Price for the Units subscribed for in the primary subscription and
any additional Units subscribed for pursuant to the Over Subscription Privilege
(which may take the form of a written election on the Subscription Certificate
indicating your desire to cancel I3 debt owed to you in exchange for the
issuance of Units), and (ii) a properly completed and executed Subscription
Certificate. The Subscription Agent will not honor a Notice of Guaranteed
Delivery unless a properly completed and executed Subscription Certificate and
full payment for the Units is received by the Subscription Agent by the close of
business on the third business day after the Expiration Date.
You will not be allowed to rescind a purchase after the Subscription
Agent has received your payment either by means of a notice of guaranteed
delivery or a check.
Nominees who hold common stock for the account of others, such as
brokers, trustees or depositories for securities, should notify the respective
beneficial owners of such common stock as soon as possible to ascertain such
beneficial owners and to obtain instructions with respect to the Rights. If the
beneficial owner so instructs, the nominee should complete the Subscription
Certificate and submit it to the Subscription Agent with the proper payment. In
addition, beneficial owners of common stock held through such a nominee should
contact the nominee and request the nominee to effect the transactions in
accordance with the beneficial owner's instructions.
No Transferability of Rights
The Rights evidenced by a Subscription Certificate may not be
transferred and will not be listed for trading in the over the counter market or
on any securities exchange.
16
Amendment, Extension or Termination of the Offer
The Company reserves the right, in its sole discretion to:
(a) terminate the Rights offer prior to delivery of the Units for
which Rights holders have subscribed pursuant to the exercise of Rights in the
primary subscription or the Over Subscription Privilege;
(b) extend the Expiration Date to a later date;
(c) change the record date prior to distribution of the Rights to
shareholders; or
(d) amend or modify the terms of the Rights offer. If the Company
amends the terms of the Rights offer, an amended Prospectus will be distributed
to holders of record of Rights and to holders of Rights who have previously
exercised Rights. All holders of Rights who exercise their Rights prior to such
amendment or within four business days after the mailing of the amended
Prospectus will be given the opportunity to confirm the exercise of their Rights
by executing and delivering a consent form.
Any Rights holder who exercised Rights before or within four days after
mailing of an amended Prospectus relating to an amendment of the Rights offer
and fails to deliver, in a proper and timely manner, a properly executed consent
form will be deemed to have rejected the amended terms of the Rights offer and
have elected to revoke in full his exercise of the Rights and the Over
Subscription Privilege. If a Rights holder's exercise of Rights is so revoked
the full amount of the Subscription Price paid by such Right's holder will be
returned to the Right's holder.
A Rights holder whose executed Subscription Certificate is received by
the Subscription Agent more than four days after the mailing of an amended
Prospectus will be deemed to have accepted any amended terms of the Rights
offering in connection with the exercise of his Rights and the Over Subscription
Privilege.
If the Company elects to terminate the Rights offer before delivering
the Units for which Rights holders have subscribed, the Subscription Price paid
will be returned by mail. Except for the obligation to return the Subscription
Price paid by Right's holders who attempted to exercise their Rights, neither
the Company or the Subscription Agent will have any obligation or liability to a
Rights holder or purchaser of Rights in the event of an amendment or termination
of the Rights offer.
Delivery of Share Certificates and Warrants
Certificates representing common stock and the warrants purchased
pursuant to the primary subscription will be delivered to the purchasers as soon
as practicable after the corresponding Rights have been validly exercised and
full payment for such common stock and warrants represented by the Units has
been received and cleared. Certificates representing common stock and the
warrants purchased pursuant to the Over Subscription Privilege will be delivered
to the purchaser as soon as practicable after the Expiration Date and after all
allocations have been affected. It is expected that such stock certificates and
warrant certificates will be available for delivery three business days
following the Expiration Date.
Subscription Agent
The Subscription Agent is American Stock Transfer & Trust Company,
which will receive for its administrative, processing, invoice and other
services as subscription agent, a fee estimated at $15,000, and reimbursement
for all out-of-pocket expenses related to the Rights offer. The Subscription
Agent is also the Company's transfer agent and registrar and will serve as the
Warrant Agent for the warrants. Questions regarding the Subscription
Certificates should be directed to the American Stock Transfer & Trust Company,
59 Maiden Lane, Plaza Entrance, New York, New York 10038 (telephone:
(800) 937-5449). Shareholders may consult their brokers or nominees.
What Happens to Unsubscribed Units
To the extent that any unsubscribed Units remain as of the Expiration
Date, they will expire.
17
Certain Federal Income Tax Considerations Regarding the Rights Offering
The following is a summary of certain income tax consequences to I3 and
shareholders of I3 residing in the United States resulting from the Rights
Offering. The discussion set forth below is based upon the Internal Revenue Code
of 1986, as amended, the Treasury Regulations promulgated thereunder, judicial
authority and current administrative rulings and pronouncements, as currently in
effect. I3 has not requested a ruling from the Internal Revenue Service (the
"IRS") with respect to the federal income tax consequences of the Rights
Offering. Accordingly, no assurance can be given that the tax consequences will
be as described below. Further, the federal income tax consequences to any
particular shareholder may be affected by matters not discussed below. For
example, certain types of investors (including individuals who are not United
States citizens or residents, foreign corporations, life insurance companies and
tax exempt organizations) may be subject to special rules not addressed herein.
There also may be state, local or foreign tax considerations applicable to each
shareholder. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH SHAREHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISOR AS TO THE
CONSEQUENCES OF THE RIGHTS OFFERING TO HIM UNDER FEDERAL AND APPLICABLE STATE,
LOCAL AND FOREIGN TAX LAWS.
Consequences of Rights Offering. The discussion of federal income tax
consequences of the Rights Offering set forth below assumes that the shares of
common stock owned by a shareholder and the shares issued pursuant to the Rights
Offering constitute capital assets in the hands of such shareholder.
Subject to the assumptions and qualifications above, for federal income
tax purposes:
1. A shareholder should not recognize any gain or loss upon his
receipt of a Right.
2. If a shareholder exercises a Right, the tax basis of such Right
in the hands of the shareholder will be determined by allocating the
shareholder's existing tax basis for his shares with respect to which the Right
was distributed ("Old Shares") between his Old Shares and the Right, in
proportion to their relative fair market values on the date of distribution. If,
however, the fair market value of the Rights distributed to the shareholder (on
the date of distribution) is less than 15% of the fair market value of his Old
Shares, the tax basis of each Right will be deemed to be zero unless the
shareholder affirmatively elects, by attaching an election statement to his
federal income tax return for the year in which he receives his Rights, to
compute the tax basis of his Rights in accordance with the preceding sentence.
Once made, such an election is irrevocable. A Right will not be treated as
having any tax basis if it lapses and, therefore, the holder of an expired Right
will not recognize a loss for tax purposes.
3. If a shareholder sells a Right, the shareholder will generally
recognize capital gain or loss in an amount equal to the difference between the
proceeds of the sale and the shareholder's tax basis for such Right. Such gain
or loss will be long-term capital gain or loss if the shareholder's holding
period for such Right (which will include the shareholder's holding period for
his or her Old Shares) is more than one year on the date of sale. However, since
the Rights are non-transferable, this provision of the tax law is inapplicable
to the Rights.
4. No gain or loss will generally be recognized by a shareholder
upon the purchase of a share pursuant to the exercise of a Right (or the
Over-Subscription Privilege). The tax basis of the shares purchased pursuant to
the exercise of Rights (or the Over-Subscription Privilege) will be equal to the
sum of (a) the holder's tax basis for the Rights exercised, and (b) the
Subscription Price paid for such shares. The holding period of the shares
purchased pursuant to the exercise of Rights (or the Over-Subscription
Privilege) will commence on the date of exercise. Upon the subsequent sale of
such shares, the shareholder will generally recognize capital gain or loss in an
amount equal to the difference between the proceeds of the sale and the
shareholder's tax basis for such shares. Such gain or loss will be long-term
capital gain or loss if the shareholder's holding period for such shares is more
than one year on the date of sale.
5. I3 will generally not recognize any gain or loss upon (a) the
issuance of Rights, (b) the receipt of payment for shares pursuant to the
exercise of Rights (or the Over-Subscription Privilege) or (c) the lapse of
Rights.
Participation of Certain Shareholders
Certain shareholders of I3, whom together own more than 50% of the
Company's outstanding capital stock, have recently loaned I3 an aggregate of
$823,500. Although there can be no assurance, the Company expects each of these
shareholders to exercise his or her Rights to purchase shares of I3 common stock
by canceling all or a portion of the principal amount of I3 debt owed to him or
her in payment for Units.
18
USE OF PROCEEDS
The net proceeds to the Company from the sale of 38,229,157 Units offered hereby
through the primary Rights offering are estimated to be approximately
$1,146,875, assuming an offering price of $.03 per Unit, before deducting
estimated offering expenses. With the balance of the funds, we will invest in
new equipment and facilities and reduce short-term debt and current payables
related to production equipment and supplies. Additional capital equipment for
new product production lines is required for 2003 revenues. The balance of funds
will be used for operations and general corporate purposes.
Facilities and Equipment................................ $ 800,000
Debt Reduction.......................................... $ 115,000
Legal and Fees.......................................... $ 55,000
Working Capital......................................... $ 176,875
Total................................................... $1,146,875
The amounts and timing of the Company's actual expenditures will depend on
several factors, including the completion of equipment modifications and the
amount of cash generated by the Company's operations. Pending such uses, the
Company will invest the funds in short-term interest bearing accounts with a
financial institution.
PRICE RANGE OF COMMON STOCK
AND DIVIDEND POLICY
The Company's Common Stock was quoted on the Nasdaq SmallCap Market
under the symbol "INIS" from August 19, 1997, to April 2, 2001, at which time
I3's stock was delisted from Nasdaq for failure to maintain a per share price of
at least $1.00. Since that time, I3's common stock has been traded in the over
the counter market in the "pink sheets." The table below sets forth, for the
fiscal quarters indicated, the high and low sale prices for the Common Stock as
reported by the Nasdaq SmallCap Market or the high and low closing bid prices as
reported in the pink sheets, as the case may be.
High Low
----- -----
Fiscal Year Ended December 31, 2001
First Quarter $0.35 $0.09
Second Quarter $0.13 $0.04
Third Quarter $0.09 $0.03
Fourth Quarter $0.05 $0.02
Fiscal Year Ended December 31, 2002
First Quarter $0.15 $0.02
Second Quarter $0.13 $0.05
Third Quarter $0.09 $0.05
Fourth Quarter $0.06 $0.03
Fiscal Year Ending December 31, 2003
First Quarter $0.06 $0.04
Second Quarter (through 6/13/03) $0.06 $0.03
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On June 10, 2003, the last reported bid price for the Company's Common
Stock as reported in the pink sheets was $.03. As of such date, there were
approximately 320 holders of record of the Company's Common Stock (although the
Company believes that the number of beneficial owners of its Common Stock is
substantially higher).
We intend to retain any future earnings for use in the business and do
not intend to pay cash dividends in the foreseeable future. The payment of
future dividends, if any, will be at the discretion of the Company's Board of
Directors and will depend, among other things, upon future earnings, operations,
capital requirements, restrictions in future financing agreements, the general
financial condition of the Company and general business conditions.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 250,000,000
shares of Common Stock, $.01 par value per share, and 5,000,000 shares of
preferred Stock, $.01 par value per share ("Preferred Stock"). As of the date of
this Prospectus, there are 95,572,893 shares of Common Stock issued and
outstanding and held of record by approximately 320 stockholders and 850 issued
and outstanding shares of Series B Preferred Stock.
Common Stock
The shares of Common Stock currently outstanding are, and the shares of
Common Stock that will be outstanding upon the consummation of this Rights
offering will be, validly issued, fully paid and non-assessable. Each holder of
Common Stock is entitled to one vote for each share owned of record on all
matters voted upon by the stockholders. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share equally and ratably in the assets of the Company, if any,
remaining after the payment of all debts and liabilities of the Company and the
liquidation preference of any outstanding Preferred Stock. The holders of the
Common Stock have no preemptive rights or cumulative voting rights and there are
no redemption, sinking fund or conversion provisions applicable to the Common
Stock.
Holders of Common Stock are entitled to receive dividends if, as and
when declared by the Board of Directors, out of funds legally available for such
purpose, subject to the dividend and liquidation rights of any Preferred Stock
that may be issued.
Preferred Stock
Pursuant to the Company's Restated Articles of Incorporation, the Board
of Directors is authorized, without further action by the stockholders, to issue
up to 5,000,000 shares of Preferred Stock in one or more series and to establish
the designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights and other special or relative rights of
any series of Preferred Stock so issued. The issuance of shares of Preferred
Stock could materially adversely affect the voting power and other rights of
holders of Common Stock. Because the terms of the Preferred Stock may be fixed
by the Board of Directors without stockholder action, the Preferred Stock could
be issued quickly with terms designated to defeat a proposed takeover of the
Company, or to make the removal of management or the directors of the Company
more difficult. The authority to issue Preferred Stock or rights to purchase
such stock could be used to discourage a change in control of the Company.
Management of the Company is not aware of any threatened transactions to obtain
control of the Company, and the Board has no current plans to issue any
additional shares of Preferred Stock.
Series B Preferred Stock
The Series B Preferred Stock is redeemable at $1,000 per share in March
2022. The Series B Preferred Stock does not accrue a dividend and has no voting
rights except in the case of certain major corporate actions.
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Indemnification
As permitted by the Texas Business Corporation Act ("TBCA"), the
Company's Restated Articles of Incorporation provide that the Company will
indemnify its officers, directors, employees and agents to the fullest extent
permitted by the TBCA against actions that may arise against them in such
capacities and to advance expenses in connection with any such actions. The TBCA
provides that a corporation may indemnify a person who was, is, or is threatened
to be made a named defendant in a proceeding because such person is or was a
director if it is determined in accordance with the provisions of the TBCA that
the person (i) conducted himself in good faith, (ii) reasonably believed, in the
case of conduct in his official capacity as director, that his conduct was in
the corporation's best interests or, in other cases, that his conduct at least
was not opposed to the corporation's interests and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. A director may not be indemnified with respect to a proceeding in
which the person is found liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity, or in which the person is found liable
to the corporation. Officers, employees and agents of a corporation are entitled
to be indemnified by the corporation as, and to the same extent provided for,
directors of the corporation. The Company carries directors' and officers'
liability insurance with an aggregate policy limit of $2,000,000.
Warrants
The warrants to be issued as part of the Units will entitle the holder
thereof to purchase two additional shares of Common Stock for each Unit held.
Each Unit includes one Series A Warrant with an exercise price of $.04 per share
and one Series B Warrant exercisable at $.05 per share. The warrants are only
exercisable on or prior to July 31, 2007. The warrants confer no voting rights
until exercised for Common Stock. The Company has the right to redeem the
warrants and repurchase them for $.001 per Warrant Share (the "Redemption
Price") if the average closing price of I3's common stock equals or exceeds $.12
per share with respect to Series A Warrants and $.15 per share with respect to
Series B Warrants for any 20 consecutive business day period. Warrant holders
will be given a minimum of 30 days written notice of the date on which the
Warrants will be redeemed. Holders of Warrants may exercise their Warrants up to
the day before the Redemption Date, but thereafter their Warrant Certificates
will only be exchangeable for the Redemption Price. The warrants are evidenced
by Warrant Certificates that contain certain of the terms applicable to the
warrants, but are also subject to the terms and conditions of a Warrant
Agreement between the Company and the Warrant Agent. A copy of the Series A
Warrant Agreement appears as Exhibit D to this Prospectus and a copy of the form
of Series A Warrant Certificate is included as Exhibit E. The Series B Warrant
Agreement and Series B Warrant Certificate are identical except for the amount
of the Warrant Exercise Price and the Company Call Price.
Trading Market, Transfer Agent and Registrar
The Common Stock is traded in the over the counter market in the pink
sheets under the symbol "INIS." American Stock Transfer & Trust Company, New
York, New York is the transfer agent and registrar for the Common Stock.
Anti-Takeover Measures
As a Texas corporation, the Company is subject to the provisions of the
TBCA that became effective on September 1, 1997. In general, the TBCA prohibits
a Texas "issuing public corporation" (such as the Company) from engaging in a
"business combination" with any shareholder who is a beneficial owner of 20% or
more of the corporation's outstanding stock for a period of three years after
such shareholder's acquisition of a 20% ownership interest, unless: (i) the
board of directors of the corporation approves the transaction or the
shareholder's acquisition of shares prior to the acquisition or (ii) two-thirds
of the unaffiliated shareholders of the corporation approve the transaction at a
shareholders' meeting. The TBCA may have the effect of inhibiting a
non-negotiated merger or other business combination involving the Company. The
Company is subject to the terms of the TBCA, unless its shareholders or
directors take action electing not to be governed by its terms (which action is
not currently contemplated).
21
LEGAL MATTERS
The validity of the shares of Common Stock and Warrants comprising the
Units offered by the Company hereby will be passed upon for the Company by Locke
Liddell & Sapp LLP.
EXPERTS
The consolidated balance sheets of International Isotopes Inc. and
subsidiaries as of December 31, 2002, and 2001, and the consolidated statements
of operations, stockholder deficit, and cash flows for the years then ended
incorporated by reference in this prospectus, have been included in reliance
upon the report of Hansen, Barnett & Maxwell, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
I3's Form 10-KSB for the fiscal year ended December 31, 2002, Form
10-QSB for the three months ended March 31, 2003, and all other reports filed by
I3 pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended, since the end of the fiscal year covered by such Form 10-KSB are
incorporated into this prospectus by reference. I3 will provide without charge
to each person, including any beneficial owner, to whom a prospectus is
delivered, upon written or oral request, a copy of any and all of the
information that has been incorporated by reference but not delivered with this
prospectus. Such requests may be addressed to the Secretary of I3 at 4137 Commerce Circle, Idaho Falls, Idaho 83401; Telephone:83401, and our phone number is (208) 524-5300. I3 is subjectOur wholly owned subsidiaries are International Isotopes Idaho Inc.; International Isotopes Fluorine Products, Inc.; and International Isotopes Transportation Services, Inc., all of which are Idaho corporations. Our headquarters and all current operations are located within two facilities in Idaho Falls, Idaho.
We maintain a website at www.internationalisotopes.com where our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon as reasonably practicable following the time they are filed with or furnished to the informational requirementsSEC. Information contained on our website does not constitute, and shall not be deemed to constitute, part of this prospectus and shall not be deemed to be incorporated by reference into the Securities
Exchange Actregistration statement as a result of 1934, as amended, and in accordance therewith files quarterly,
annual, and current reports and proxy statements and other information with the
Securities and Exchange Commission. The publicthis prospectus. You may read and copy any materials I3 fileswe file with the Securities and Exchange CommissionSEC at the Commission's Public
Reference RoomSEC's public reference room at 450 Fifth100 F Street, N.W.,NE, Washington, D.C.DC 20549. The publicYou may obtain information on the operation of the Public Reference Room by calling the CommissionSEC at 1-800-SEC-0330.1-800-SEC-0300. The CommissionSEC also maintains an electronic Internet site that contains our reports, proxy and information statements, and other information at http://www.sec.gov.
The Securities We May Offer
We may offer shares of our common stock and preferred stock, various series of debt securities and warrants to purchase any of such securities, either individually or in units, with a total value of up to $100,000,000 from time to time under this prospectus, together with any applicable prospectus supplement and related free writing prospectus, at prices and on terms to be determined by market conditions at the time of offering. If we issue any debt securities at a discount from their original stated principal amount, then, for purposes of calculating the total dollar amount of all securities issued under this prospectus, we will treat the initial offering price of the debt securities as the total original principal amount of the debt securities. Each time we offer securities under this prospectus, we will provide offerees with a prospectus supplement that will describe the specific amounts, prices and other important terms of the securities being offered, incl uding, to the extent applicable:
designation or classification;
aggregate principal amount or aggregate offering price;
maturity, if applicable;
original issue discount, if any;
rates and times of payment of interest or dividends, if any;
redemption, conversion, exchange or sinking fund terms, if any;
conversion or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or exchange prices or rates and in the securities or other property receivable upon conversion or exchange;
ranking;
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restrictive covenants, if any;
voting or other rights, if any; and
important United States federal income tax considerations.
A prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.
We may sell the securities to or through underwriters, dealers or agents or directly to purchasers. We, as well as any agents acting on our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities. Each prospectus supplement will set forth the names of any underwriters, dealers or agents involved in the sale of securities described in that prospectus supplement and any applicable fee, commission or discount arrangements with them, details regarding any over-allotment option granted to them, and net proceeds to us. The following is a summary of the securities we may offer with this prospectus.
Common Stock
We currently have authorized 500,000,000 shares of common stock, par value $0.01 per share, and we have asked our shareholders to approve an amendment to our Restated Certificate of Formation that would increase our authorized shares of common stock to 750,000,000. Our shareholders will vote on such proposal at our annual meeting of shareholders to be held on July 20, 2010. We may offer shares of our common stock either alone or underlying other registered securities convertible into or exercisable for our common stock. Holders of our common stock are entitled to such dividends as our board of directors may declare from time to time out of legally available funds, subject to the preferential rights of the holders of any shares of our preferred stock that are outstanding or that we may issue in the future. Currently, we do not pay any dividends. Each holder of our common stock is entitled to one vote per share. In this prospectus, we provide a general descriptio n of, among other things, the rights and restrictions that apply to holders of our common stock.
Preferred Stock
We currently have authorized 5,000,000 shares of preferred stock, par value $0.01 per share. Under our Restated Certificate of Formation, our board of directors has the authority to issue shares of our preferred stock in one or more series and to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred stock. The particular terms of each class or series of preferred stock, including redemption privileges, liquidation preferences, voting rights, dividend rights and/or conversion rights, will be more fully described in the applicable prospectus supplement relating to the preferred stock offered thereby.
The rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred stock that we offer and sell under this prospectus and applicable prospectus supplements will be set forth in a certificate of designation relating to the series. We will incorporate by reference into the registration statement of which this prospectus is a part the form of any certificate of designation that describes the terms of the series of preferred stock we are offering before the issuance of shares of that series of preferred stock. You should read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you related to the series of preferred stock being offered, as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.
Debt Securities
We may offer general debt obligations, which may be secured or unsecured, senior or subordinated and convertible into shares of our common stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together as the "debt securities." We may issue debt securities under a note purchase agreement or under an indenture to be entered into between us and a trustee; a form of the indenture is included
3
as an exhibit to the registration statement of which this prospectus is a part. The indenture does not limit the amount of securities that may be issued under it and provides that debt securities may be issued in one or more series. The senior debt securities will have the same rank as all of our other indebtedness that is not subordinated. The subordinated debt securities will be subordinated to our senior debt on terms set forth in the applicable prospectus supplement. In addition, the subordinated debt securities will be effectively subordinated to creditors and preferred shareholders of our subsidiaries. Our board of directors will determine the terms of each series of debt securities being offered. This prospectus contains only general terms and provisions of the debt securities. The applicable prospectus supplement will describe the particular terms of the debt securities offered thereby. You should read any prospectus supplement and any free writing prospectus that we ma y authorize to be provided to you related to the series of debt securities being offered, as well as the complete note agreements and/or indentures that contain the terms of the debt securities. Forms of indentures have been filed as exhibits to the registration statement of which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of debt securities being offered will be incorporated by reference into the registration statement of which this prospectus is a part from reports we file with the SEC.
Warrants
We may offer warrants for the purchase of shares of our common stock or preferred stock or of debt securities. We may issue the warrants by themselves or together with preferred stock, common stock or debt securities, and the warrants may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between us and the investors or a warrant agent. Our board of directors will determine the terms of the warrants. This prospectus contains only general terms and provisions of the warrants. The applicable prospectus supplement will describe the particular terms of the warrants being offered thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you related to the series of warrants being offered, as well as the complete warrant agreements that contain the terms of the warrants. Specific warrant agreements will con tain additional important terms and provisions and will be incorporated by reference into the registration statement of which this prospectus is a part from reports we file with the SEC.
THIS PROSPECTUS MAY NOT BE USED BY US TO OFFER OR SELL ANY SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
FINANCIAL RATIOS
If required, if we offer (i) debt securities, we will set forth in the applicable prospectus supplement our historical consolidated ratio of our earnings to fixed charges, or (ii) preferred stock, we will set forth in the applicable prospectus supplement our historical consolidated ratio of our earnings to combined fixed charges and preferred stock dividends.
RISK FACTORS
Except for the historical information contained in this prospectus or incorporated by reference, this prospectus (and the information incorporated by reference in this prospectus) contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed here or incorporated by reference. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Risk Factors" contained in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC, as well as any amendments thereto reflected in subsequent filings with the SEC, which are incorporated herein by reference in their entirety (the "INIS Risk Factors").
Investment in our securities involves risks. Prior to making a decision about investing in our securities, you should consider carefully the INIS Risk Factors, together with all of the other information contained or incorporated by reference in this prospectus and any prospectus supplement, including any additional specific risks described in any prospectus supplement. Each of these risk factors could adversely affect our business, operating results and financial condition, which may result in the loss of all or part of your investment.
4
Keep these risk factors in mind when you read forward-looking statements contained elsewhere or incorporated by reference in this prospectus and any accompanying prospectus supplement. These statements relate to our expectations about future events. Discussions containing forward-looking statements may be found, among other places, in "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference from our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, as well as any amendments thereto reflected in subsequent filings with the SEC. These forward-looking statements are based largely on our expectations and projections about future events and future trends affecting our business, and so are subject to risks and uncertainties, including the risks and uncertainties described below under "Forward-Looking Information," that could cause actual results to differ materially f rom those anticipated in the forward-looking statements.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus, in any prospectus supplement, in the documents incorporated by reference and in some of our other public statements contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should," or "will," or the negative of those terms, or comparable terminology.
Any or all of our forward-looking statements in this prospectus, in any prospectus supplement, in the documents incorporated by reference and in any other public statements we make may turn out to be inaccurate. Forward-looking statements reflect our current expectations or forecasts of future events or results and are inherently uncertain. Inaccurate assumptions we might make and known or unknown risks and uncertainties can affect the accuracy of our forward-looking statements. Accordingly, no forward-looking statement can be guaranteed and future events and actual or suggested results may differ materially.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as in any prospectus supplement relating to this prospectus and other public filings with the SEC.
USE OF PROCEEDS
Except as described in any prospectus supplement and any free writing prospectus in connection with a specific offering, we currently intend to use the net proceeds from the sale of the securities offered under this prospectus for general corporate purposes, including working capital. We may also use the net proceeds to repay any debts and/or invest in or acquire complementary businesses, products or technologies, although we have no current commitments or agreements with respect to any such investments or acquisitions as of the date of this prospectus. We have not determined the amount of net proceeds to be used specifically for the foregoing purposes. As a result, our management will have broad discretion in the allocation of the net proceeds and investors will be relying on the judgment of our management regarding the application of the proceeds of any sale of the securities. Pending use of the net proceeds, we intend to invest the proceeds in short-term, in vestment-grade, interest-bearing instruments.
When we offer a particular series of securities, we will describe the intended use of the net proceeds from that offering in a prospectus supplement. The actual amount of net proceeds we spend on a particular use will depend on many factors, including, our future capital expenditures, the amount of cash required by our operations, and our future revenue growth, if any. Therefore, we will retain broad discretion in the use of the net proceeds.
5
DILUTION
If you invest in an offering of common stock by us, your interest will be diluted to the extent of the difference between the public offering price per share in an offering under this prospectus and the net tangible book value per share after the offering, except to the extent proceeds are applied to the repayment of debt. We will set forth in the applicable prospectus supplement or free writing prospectus the following information regarding any material dilution of the equity interests of investors purchasing shares in an offering by us under this prospectus:
the net tangible book value per share of our equity securities before and after the offering;
the amount of the increase in such net tangible book value per share attributable to the cash payments made by investors purchasing shares in the offering; and
the amount of the immediate dilution from the public offering price to such investors.
DESCRIPTION OF SECURITIES
We may offer shares of common stock, preferred stock, debt securities, convertible debt securities and warrants. We will set forth in the applicable prospectus supplement a description of the preferred stock, debt securities, convertible debt securities or warrants that may be offered under this prospectus. The terms of the offering of securities, the initial offering price, and the net proceeds to us will be contained in the prospectus supplement and other offering material, relating to such offering. A general description of our currently authorized securities is set forth below.
General
Our authorized capital stock consists of 500,000,000 shares of common stock, $0.01 par value per share, and 5,000,000 shares of preferred stock, $0.01 par value per share. We have asked our shareholders to approve an amendment to our Restated Certificate of Formation that would increase our authorized shares of common stock to 750,000,000. Our shareholders will vote on such proposal at our annual meeting of shareholders to be held on July 20, 2010. The following summary of some of the terms relating to our common stock, preferred stock, Restated Certificate of Formation and bylaws is not complete and may not contain all the information you should consider before investing in our common stock. You should read carefully our Certificate of Formation and bylaws.
Common Stock
The holders of common stock are entitled to one vote per share on all matters to be voted on by the common shareholders. The holders of our common stock are not entitled to cumulative voting in the election of our directors, which means that the holders of a majority of the outstanding shares of our common stock will be entitled to elect all of the directors standing for election. Subject to preferences of any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably any dividends our board of directors may declare out of funds legally available for the payment of dividends. If we are liquidated, dissolved or wound up, the holders of common stock are entitled to share pro rata all assets remaining after payment of or provision for our liabilities and liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights or rights to convert their common stock into any othe r securities. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued in this offering will be fully paid and nonassessable.
Preferred Stock
Our board of directors has the authority, without further action by the shareholders, to issue up to 5,000,000 shares of preferred stock from time to time in one or more series. The board of directors also has the authority to fix the designations, voting powers, preferences, privileges and relative rights and the limitations of any series of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. The board of directors, without shareholder approval, can issue preferred stock with voting, conversion or other rights that could adversely affect the
6
voting power and other rights of the holders of common stock. Preferred stock could thus be issued quickly with terms that could delay or prevent a change of control of us or make removal of management more difficult. Additionally, the issuance of preferred stock may decrease the market price of the common stock and may adversely affect the voting, economic and other rights of the holders of common stock.
Anti-Takeover Effects of Certain Provisions of our Restated Certificate of Formation, Bylaws and Texas Law
Provisions of our Restated Certificate of Formation, our bylaws and Texas law could have the effect of delaying or preventing a third party from acquiring us, even if the acquisition would benefit our shareholders. These provisions may delay, defer or prevent a tender offer or takeover attempt of our company that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the shares held by our shareholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by the board of directors and to discourage types of transactions that may involve our actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited proposal for a takeover that does not contemplate the acquisition of all of our outstanding shares, or an unsolicited pr oposal for the restructuring or sale of all or part of us.
Authorized but Unissued Shares of Common Stock and Preferred Stock.Our authorized but unissued shares of common stock and preferred stock are available for our board of directors to issue without shareholder approval. As noted above, our board of directors, without shareholder approval, has the authority under our Restated Certificate of Formation to issue preferred stock with rights superior to the rights of the holders of common stock. As a result, preferred stock could be issued quickly and easily, could adversely affect the rights of holders of common stock and could be issued with terms calculated to delay or prevent a change of control or make removal of management more difficult. We may use the additional authorized shares of common or preferred stock for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of our authorized but unis sued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction.
Special Meetings of Shareholders.Our bylaws provide that special meetings of our shareholders may be called only by the Chairman of the board of directors, by a majority of our board of directors or by the holders of not less than 10% of the shares entitled to vote at such meeting.
Amendment of Bylaws.Our directors are expressly authorized to amend our bylaws.
Business Combinations Under Texas Law.Section 21.606 of the Texas Business Organizations Code (the "TBOC") imposes a special voting requirement for the approval of certain business combinations and related party transactions between public corporations and affiliated shareholders unless the transaction or the acquisition of shares by the affiliated shareholder is approved by the board of directors of the corporation prior to the affiliated shareholder becoming an affiliated shareholder. Section 21.606 prohibits certain mergers, sales of assets, reclassifications and other transactions (defined as business combinations) between a shareholder beneficially owning 20% or more of the outstanding stock of a Texas public corporation (such shareholder being defined as an affiliated shareholder) for a period of three years following the date the shareholder acquired the shares representing 20% or more of the corporation's voting power unless two-thirds of the unaffiliated shareholders approve the transaction at a meeting held no earlier than six months after the shareholder acquires that ownership. The provisions requiring such a vote of shareholders do not apply to a transaction with an affiliated shareholder if such transaction or the purchase of shares by the affiliated shareholder is approved by the board of directors before the affiliated shareholder acquires beneficial ownership of 20% of the shares or if the affiliated shareholder was an affiliated shareholder prior to December 31, 1996 and continued as such through the date of the transaction. Section 21.607 contains a provision that allows a corporation to elect out of the statute by an amendment to its articles of incorporation or bylaws prior to December 31, 1997. Section 21.606 could have the effect of delaying, deferring or preventing a change in control of the Company.
The above discussion of the Texas Business Organizations Code, our Restated Certificate of Formation, and bylaws is not intended to be exhaustive and is qualified in its entirety by such statute, the Restated Certificate of Formation and bylaws, respectively.
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Registration Rights
Pursuant to certain securities purchase agreements between us and purchasers of our securities, certain shareholders are entitled to registration rights if they are unable, at any time following the six-month holding period provided in Rule 144, to sell their common stock pursuant to Rule 144. Upon the demand by such shareholders, we are required to register all of the common stock held by such shareholders within 45 days from such demand. The registration must be effective 120 days after the date of such demand. Such shareholders are also entitled to "piggyback" registration rights, which are subject to conditions and limitations, including the right of the underwriters of a public offering to limit the number of shares included in the registration statement and the ineligibility of such shareholders to "piggyback" if the shares are eligible for sale pursuant to Rule 144. The registration rights provisions contain customary indemnification and contribution pro visions.
A majority of the holders of such securities that are entitled to "piggyback" registration rights have waived their rights to participate in this offering or have their shares included in the registration statement of which this prospectus forms a part.
Pre-emptive Rights
Our shareholders are not entitled to pre-emptive rights.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Computershare Shareholder Services, Inc. Its address is 250 Royall Street, Canton, Massachusetts 02021.
OTC Bulletin Board® Quotation
Our common stock is quoted on the OTC Bulletin Board® under the ticker symbol "INIS.OB."
PLAN OF DISTRIBUTION
We may sell the securities to or through underwriters or dealers, through agents, or directly to one or more purchasers. A prospectus supplement or supplements (and any related free writing prospectus that we may authorize to be provided to you) will describe the terms of the offering of the securities, including, to the extent applicable
the name or names of any agents or underwriters;
the purchase price of the securities being offered and the proceeds we will receive from the sale;
any over-allotment options under which underwriters may purchase additional securities from us;
any agency fees or underwriting discounts and other items constituting agents' or underwriters' compensation;
any public offering price;
any discounts or concessions allowed or reallowed or paid to dealers; and
any securities exchanges or markets on which such securities may be listed.
We may distribute the securities from time to time in one or more transactions at:
fixed price or prices, which may be changed from time to time;
8
market prices prevailing at the time of sale;
prices related to such prevailing market prices; or
negotiated prices.
Agents
We may designate agents who agree to use their reasonable efforts to solicit purchases of our securities for the period of their appointment or to sell our securities on a continuing basis. We will name any agent involved in the offering and sale of securities and we will describe any commissions we will pay the agent in the applicable prospectus supplement.
Underwriters
If we use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. Subject to certain conditions, the underwriters will be obligated to purchase all the securities of the series offered if they purchase any of the securities of that series. We may change from time to time any public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We may use underwriters with whom we have a material relationship. We will describe the nature of any such relationship in any applicable prospectus supplement naming any such underwriter. Only unde rwriters we name in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
We may provide agents and underwriters with indemnification against civil liabilities related to offerings under this prospectus, including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities.
Direct Sales
We may also sell securities directly to one or more purchasers without using underwriters or agents. Underwriters, dealers and agents that participate in the distribution of the securities may be underwriters as defined in the Securities Act, and any discounts or commissions they receive from us and any profit on their resale of the securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify in the applicable prospectus supplement any underwriters, dealers or agents and will describe their compensation. We may have agreements with the underwriters, dealers and agents to indemnify them against specified civil liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with or perform services for us in the ordinary course of their businesses.
Trading Markets and Listing of Securities
Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established trading market, including our common stock, which is quoted on the OTC Bulletin Board® but for which there is currently no established trading market. We may elect to list any other class or series of securities on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
Stabilization Activities
Any underwriter may engage in overallotment, stabilizing transactions, short covering transactions and
9
penalty bids in accordance with Regulation M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of these activities at any time.
LEGAL MATTERS
The validity of the securities being offered by this prospectus will be passed upon for us by Perkins Coie LLP, Denver, Colorado. If the validity of any securities is also passed upon by counsel any underwriters, dealers or agents, that counsel will be named in the prospectus supplement relating to that specific offering.
EXPERTS
The financial statements incorporated in this prospectus by reference to our Annual Report on Form 10-K for the year ended December 31, 2009 have been so incorporated in reliance on the report of Hansen, Barnett & Maxwell, P.C., independent accountants, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information electronically with the SEC. You may read and copy these reports, proxy statements and other information at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. You can request copies of these documents by writing to the SEC and paying a fee for the copying costs. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.SEC, including us. The address of
suchSEC's Internet site iscan be found at http://www.sec.gov. ADDITIONALIn addition, we make available on or through our Internet site copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC. Our Internet site can be found at http://www.internationaliso topes.com. Information contained on our website does not constitute, and shall not be deemed to constitute, part of this prospectus and shall not be deemed to be incorporated by reference into the registration statement of which this prospectus is part.
INCORPORATION OF CERTAIN INFORMATION The Company hasBY REFERENCE
We are allowed to incorporate by reference information contained in documents that we file with the SEC. This means that we can disclose important information to you by referring you to those documents and that the information in this prospectus is not complete. You should read the information incorporated by reference for more detail. We incorporate by reference in two ways. First, we list below certain documents that we have already filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 under the
Securities Act with respect to the Common Stock and Warrants offered hereby.
This Prospectus does not contain allSEC. The information in these documents is considered part of this prospectus. Second, the information set forthin documents that we file in the Registration Statementfuture will update and exhibitssupersede the current information in, and schedules thereto, certain parts of
which having been omittedbe incorporated by reference in, accordancethis prospectus.
We incorporate by reference into this prospectus the documents listed below, any filings we make with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement and the exhibits and
schedules thereto which may be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material can be obtained from the Commission's Public Reference
Section at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval ("EDGAR") system. The address
of the Commission's Web site is http/www.sec.gov. The Registration Statement
including all exhibits thereto and amendments thereof, has been filed with the
Commission through EDGAR. Descriptions contained in this prospectus as to the
contents of any contract or other documents filed as an exhibit to the
Registration Statement are not necessarily complete and each such description is
qualified by reference to such contract or document.
22
EXHIBIT A
Form of Subscription Certificate
A-1
CERTIFICATE NUMBER INTERNATIONAL ISOTOPES INC. NUMBER OF RIGHTS
------------------ --------------------
SUBSCRIPTION CERTIFICATE FOR RIGHTS
SUBSCRIPTION CERTIFICATE FOR UNITS VOID IF SUBSCRIPTION PRICE U.S. $.03 PER UNIT
NOT EXERCISED AT OR BEFORE 5:00 P.M. (NEW
YORK TIME) ON JULY 31, 2003, THE EXPIRATION
DATE. THIS SUBSCRIPTION CERTIFICATE IS NOT
TRANSFERABLE.
EXPIRATION DATE: July 31, 2003 CUSIP
-----------------
THIS SUBSCRIPTION CERTIFICATE
MAY BE USED TO SUBSCRIBE FOR
UNITS. FULL INSTRUCTIONS APPEAR
ON THE BACK OF THIS SUBSCRIPTION
CERTIFICATE.
REGISTERED OWNER:
The registered owner of this
Subscription Certificate, named
above is entitled to the number
of Rights to subscribe for Units
(each Unit consisting of (i) one
share of common stock, par value
$.01 per share, (ii) one Series
A Warrant to purchase an
additional share at $.04 per
share, and (iii) one Series B
Warrant to purchase another
share at $.05 per share) of
International Isotopes Inc.
shown above, in the ratio of one
Unit for each 2.5 Rights held,
and upon the terms and
conditions and at the price for
each Unit specified in the
Prospectus dated June 30, 2003.
Date: _______________, 2003 IMPORTANT: Complete appropriate form on reverse.
INTERNATIONAL ISOTOPES INC.
-------------------------------------
PRESIDENT
---------------------------
SECRETARY
A-2
Expiration Date: July 31, 2003
PLEASE COMPLETE ALL APPLICABLE INFORMATION
By Mail: By Hand: By Overnight Courier:
To: American Stock Transfer To: American Stock Transfer To: American Stock Transfer
& Trust Company & Trust Company & Trust Company
59 Maiden Lane, Plaza Entrance 59 Maiden Lane, Plaza Entrance 59 Maiden Lane, Plaza Entrance
New York, New York 10038 New York, New York 10038 New York, New York 10038
TO SUBSCRIBE: I hereby irrevocably subscribe for the dollar amount of Units indicated as the total
of A and B below upon the terms and conditions specified in the Prospectus related hereto, receipt
of which is acknowledged.
Please check |_| below:
| | A. Subscription:
/ 2.5 = .000 x $.03 = $
------------------ ----------------- -------------------- -----------------
(Rights Exercised) (Units Requested) (Subscription Price) (Amount Required)
| | B. Over-Subscription Privilege:*
.000 x $.03 = $
----------------- -------------------- -----------------
(Units Requested) (Subscription Price) (Amount Required)
C. Total Subscription Price: (A + B) = $
-----------------
D. Method of Payment (Check and Complete Appropriate Box(es)):
| | Check in the amount of $_________ payable to Subscription Agent.
| | Certified Check, bank draft or money order in the amount of $_________ payable to Subscription
Agent.
| | Wire transfer in the amount of $_________ directed to American Stock Transfer & Trust Company,
Subscription Agent, JP Morgan Chase Bank WIRE CLEARING ACCOUNT ABA #021000021, Account
#323890121, Attention: Reorg. Dept.
| | Cancellation of Debt in the principal amount of $__________ owed by I3 to the undersigned.
E. Notice of Guaranteed Delivery:
| | CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY TO THE
SUBSCRIPTION AGENT PRIOR TO THE EXPIRATION DATE AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s)_________________________________________________________
Window Ticket Number (if any)__________________________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________________________
Name of Eligible Institution which Guaranteed Delivery_________________________________
Registered Owner(s) Telephone Number___________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
Unless otherwise indicated below, the Subscription Agent is hereby authorized to issue and deliver
stock certificates and warrants to the undersigned at the address appearing on the face of this
Subscription Certificate.
| | Check this box if stock certificates and warrants are to be issued in a name other than that
of the Rights Holder.
A-3
EXHIBIT B
Form of Notice of Guaranteed Delivery
B-1
NOTICE OF GUARANTEED DELIVERY OF
SUBSCRIPTION RIGHTS AND THE
SUBSCRIPTION PRICE FOR UNITS OF
INTERNATIONAL ISOTOPES INC.
SUBSCRIBED FOR IN THE RIGHTS OFFER
As set forth in the Prospectus under "The Rights Offer - Payment for
Units," this form or one substantially equivalent may be used as a means of
effecting subscription and payment for all Units of International Isotopes Inc.
("I(3)") subscribed for in the Rights offer. Such form may be delivered by hand
or sent by facsimile transmission, overnight courier or mail to the Subscription
Agent.
The Subscription Agent is:
American Stock Transfer & Trust Company
General Information
(800) 937-5449
By Mail: By Facsimile:
American Stock Transfer & Trust Company (718) 234-5001
59 Maiden Lane, Plaza Entrance Confirm by Telephone
New York, New York 10038 (800) 937-5449
By Hand: By Overnight Courier:
American Stock Transfer & Trust Company American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Entrance 59 Maiden Lane, Plaza Entrance
New York, New York 10038 New York, New York 10038
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS,
OR TRANSMISSION OF INSTRUCTIONS VIA
A TELECOPY OR FACSIMILE NUMBER, OTHER THAN AS
SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY
The New York Stock Exchange member firm or bank or trust company which
completes this form must communicate the guarantee and the number of Units
subscribed for to the Subscription Agent and must deliver this Notice of
Guaranteed Delivery guaranteeing delivery of (i) payment in full for all
subscribed Units (including any Units subscribed for through the
over-subscription privilege) and (ii) a properly completed and executed
Subscription Certificate (which certificate and full payment must then be
delivered by the close of business on the third business day after the
expiration date) to the Subscription Agent prior to 5:00 p.m., New York time, on
the expiration date (July 31, 2003, unless extended). Failure to do so will
result in a forfeiture of the Rights.
B-2
GUARANTEE
The undersigned, a member firm of the New York Stock Exchange or a bank
or trust company, guarantees delivery to the Subscription Agent by the close of
business (5:00 p.m., New York time) on the third business day after the
expiration date (August 5, 2003, unless extended) of (A) a properly completed
and executed Subscription Certificate and (B) payment of the full subscription
price of Units subscribed for in the Rights offer (including the
over-subscription privilege, if applicable) as subscription for such Units as
indicated herein or in the Subscription Certificate.
- ------------------------------------------- ---------------------------------
Number of Units subscribed for Number of Units subscribed for
(excluding the over-subscription privilege) pursuant to the over-subscription
for which you are guaranteeing delivery privilege for which you are
of Rights and payment guaranteeing delivery of Rights
and payment
Number of Rights to be delivered: _____________________________
Total subscription price payment
to be delivered: $_____________________________
Method of delivery [circle one] A. Through DTC
B. Direct to Corporation
Please note that if you are guaranteeing for over-subscription Units,
and are a DTC participant, you must also execute and forward to American Stock
Transfer & Trust Company a Nominee Holder Over-Subscription Exercise Form.
------------------------------ -----------------------------
Name of Firm Authorized Signature
------------------------------ -----------------------------
Address Title
------------------------------ -----------------------------
Zip Code (Type or Print)
------------------------------ -----------------------------
Name of Registered Holder (If Applicable)
------------------------------ -----------------------------
Telephone Number Date
IF THE RIGHTS ARE TO BE DELIVERED THROUGH DTC, A REPRESENTATIVE OF THE
SUBSCRIPTION AGENT WILL PHONE YOU WITH A PROTECT IDENTIFICATION NUMBER, WHICH
NEEDS TO BE COMMUNICATED BY YOU TO DTC.
PLEASE NOTE THAT IF YOU ARE GUARANTEEING FOR OVER-SUBSCRIPTION UNITS
AND ARE A DTC PARTICIPANT YOU MUST ALSO EXECUTE AND FORWARD TO THE SUBSCRIPTION
AGENT A NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM.
B-3
EXHIBIT C
Form of Nominee Holder Over Subscription Exercise Form
C-1
INTERNATIONAL ISOTOPES INC.
RIGHTS OFFER
NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM
PLEASE COMPLETE ALL APPLICABLE INFORMATION
By Mail: By Hand: By Overnight Courier:
To: American Stock Transfer To: American Stock Transfer To: American Stock Transfer
& Trust Company & Trust Company & Trust Company
59 Maiden Lane, Plaza Entrance 59 Maiden Lane, Plaza Entrance 59 Maiden Lane, Plaza Entrance
New York, New York 10038 New York, New York 10038 New York, New York 10038
THIS FORM IS TO BE USED BY NOMINEE HOLDERS TO EXERCISE THE
OVER-SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS THAT WERE EXERCISED AND
DELIVERED THROUGH THE FACILITIES OF A COMMON DEPOSITORY. ALL OTHER EXERCISES OF
OVER-SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE
SUBSCRIPTION CERTIFICATES.
-------------------
THE TERMS AND CONDITIONS OF THE RIGHTS OFFER ARE SET FORTH IN
INTERNATIONAL ISOTOPES' PROSPECTUS DATED: JUNE 30, 2003 (THE "PROSPECTUS") AND
ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE
UPON REQUEST FROM INTERNATIONAL ISOTOPES.
-------------------
VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY
5:00 P.M., NEW YORK TIME, ON JULY 31, 2003, UNLESS EXTENDED BY INTERNATIONAL
ISOTOPES (THE "EXPIRATION DATE").
1. The undersigned hereby certifies to the Subscription Agent that it is a
participant in ___________________ [Name of Depository] (the
"Depository") and that it has either (i) exercised all of the Rights
and delivered such exercised Rights to the Subscription Agent by means
of transfer to the Depository Account of International Isotopes Inc.,
or (ii) delivered to the Subscription Agent a Notice of Guaranteed
Delivery in respect of the exercise of the Rights and will deliver the
Rights called for in such Notice of Guaranteed Delivery to the
Subscription Agent by means of transfer to such Depository Account of
International Isotopes Inc.
2. The undersigned hereby exercises the over-subscription privilege to
purchase, to the extent available, Units and certifies to the
Subscription Agent that such over-subscription privilege is being
exercised for the account or accounts of persons (which may include the
undersigned) on whose behalf all Rights have been exercised. (*)
3. The undersigned understands that payment of the subscription price of
$.03 per Unit for each Unit (each Unit consists of one share of common
stock and two warrants to purchase an additional two shares) subscribed
for pursuant to the over-subscription privilege must be received by the
Subscription Agent at or before 5:00 p.m., New York time, on the
Expiration Date, and represents that such payment, in the aggregate
amount of $___________ either (check appropriate box):
| | has been or is being delivered to the Subscription Agent
pursuant to the Notice of Guaranteed Delivery referred to above
or;
| | is being delivered to the Subscription Agent herewith; or
| | has been delivered separately to the Subscription Agent;
C-2
and, in the case of funds not delivered pursuant to a Notice of
Guaranteed Delivery, is or was delivered in the manner set forth
below (check appropriate box and complete information relating
thereto):
| | uncertified check
| | certified check
| | bank draft
| | money order
| | cancellation of debt
________________________________________ ________________________________
Depository Subscription Confirmation Name of Nominee Holder
Number
________________________________________ ________________________________
Depository Participant Number Address
Contact Name ___________________________ ________________________________
City State Zip Code
Phone Number____________________________ By:_____________________________
Dated:___________________, 2003 Name:___________________________
Title:__________________________
* PLEASE COMPLETE THE BENEFICIAL OWNER CERTIFICATION ON THE BACK HEREOF
CONTAINING THE RECORD DATE POSITION OF RIGHTS OWNED, THE NUMBER OF
UNITS SUBSCRIBED FOR (OTHER THAN OVER-SUBSCRIPTIONS) AND THE NUMBER OF
OVER-SUBSCRIPTION UNITS, IF APPLICABLE, REQUESTED BY EACH SUCH OWNER.
C-3
INTERNATIONAL ISOTOPES INC.
BENEFICIAL OWNER CERTIFICATION
The undersigned, a bank, broker or other nominee holder of Rights
("Rights") to purchase Units (one share of common stock plus one warrant to
purchase an additional share) ("Units") of International Isotopes Inc. ("I(3)")
pursuant to the Rights offer described and provided for in I(3)'s Prospectus
dated June 30, 2003 (the "Prospectus") hereby certifies to I(3) and to American
Stock Transfer & Trust Company, as Subscription Agent for such Rights offer,
that for each numbered line filled in below the undersigned has exercised, on
behalf of the beneficial owner thereof (which may be the undersigned), the
number of Rights specified on such line, and such beneficial owner wishes to
subscribe for the purchase of additional Units pursuant to the over-subscription
privilege (as defined in the Prospectus), in the amount set forth in the third
column of such line:
Number of Units Requested
Pursuant to the
Record Date Shares Number of Rights Exercised Over-Subscription Privilege
------------------ -------------------------- ---------------------------
1.
------------------ -------------------------- ---------------------------
2.
------------------ -------------------------- ---------------------------
3.
------------------ -------------------------- ---------------------------
4.
------------------ -------------------------- ---------------------------
5.
------------------ -------------------------- ---------------------------
6.
------------------ -------------------------- ---------------------------
7.
------------------ -------------------------- ---------------------------
8.
------------------ -------------------------- ---------------------------
9.
------------------ -------------------------- ---------------------------
10.
------------------ -------------------------- ---------------------------
------------------------------ -------------------------------
Name of Nominee Holder Depository Participant Number
------------------------------ -------------------------------
Name: Depository Primary Subscription
Title: Confirmation Number(s)
Dated: ___________, 2003
C-4
EXHIBIT D
Form of Warrant Agreement
D-1
SERIES A WARRANT AGREEMENT
AGREEMENT, dated as of this _____ day of June, 2003, by and between
INTERNATIONAL ISOTOPES INC., a Texas corporation (the "Company") and AMERICAN
STOCK TRANSFER & TRUST COMPANY, as warrant agent (the "Warrant Agent").
WHEREAS, in connection with a Rights Offering by the Company to its
existing shareholders the Company is offering Rights to purchase Units of its
securities consisting of (i) one share of Common Stock at $.03 per share, (ii)
one warrant to purchase an additional share of Common Stock at $.04 per share
(the "Series A Warrants"), and (iii) one warrant to purchase another share of
Common Stock for $.05 per share (the "Series B Warrants");
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, and exchange of the Series A Warrants, the
issuance of certificates representing the Series A Warrants, the exercise of the
Series A Warrants, and the rights of the Registered Holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Series A Warrants and the certificates representing the Series
A Warrants and the respective rights and obligations thereunder of the Company,
the Registered Holders of certificates representing the Series A Warrants and
the Warrant Agent, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the Common Stock of the Company,
par value of $.01 per share.
(b) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal
business shall be administered, which office is located as of the date
hereof at 59 Maiden Lane, Plaza Entrance, New York, New York 10038.
(c) "Depository" shall mean the Depository Trust Company or
other securities depository serving the purpose of a book-entry
registration and transfer system.
(d) "Exercise Price" shall mean the purchase price to be paid
upon exercise of each Warrant in accordance with the terms hereof,
which price shall be $.04 per share, subject to adjustment from time to
time pursuant to the provisions of Section 6 hereof.
(e) "Registered Holder" shall mean the person in whose name
any certificate representing Warrants shall be registered on the books
maintained by the Warrant AgentSEC pursuant to Section 7.
(f) "Redemption Price" shall mean $.001 per Warrant Share.
(g) "Transfer Agent" shall mean American Stock Transfer &
Trust Company, as the Company's transfer agent,13(a), 13(c), 14 or its authorized
successor, as such.
(h) "Warrant Shares" shall mean shares of Common Stock
issuable upon exercise of Warrants.
(i) "Warrants" or "Series A Warrants" shall mean the Series A
Warrants issued to Registered Holders pursuant to the terms of this
Series A Warrant Agreement.
D-2
2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant shall initially entitle the Registered Holder15(d) of the Warrant Certificate representing such Warrant to purchase one share
of Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section
6.
(b) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall execute and deliver stock certificates in required
whole number denominations representing up to an aggregate of
38,229,157 shares of Common Stock, subject to adjustment as described
herein, upon the exercise of Warrants in accordance with this
Agreement.
(c) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall execute and deliver Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this
Agreement; provided that no Warrant Certificates shall be issued except
(i) those initially issued hereunder, (ii) those issued upon the
exercise of fewer than all Warrants represented by any Warrant
Certificate, to evidence any unexercised Warrants held by the
exercising Registered Holder, (iii) those issued upon any transfer or
exchange pursuant to Section 7; (iv) those issued in replacement of
lost, stolen, destroyed or mutilated Warrant Certificates pursuant to
Section 8; and (v) at the option of the Company, in such form as may be
approved by its Board of Directors, to reflect (a) any adjustment or
change in the Exercise Price or the number of shares of Common Stock
purchasable upon exercise of the Warrants, made pursuant to Section 6
hereof and (b) other modifications approved by Warrantholders in
accordance with Section 13.4 hereof.
3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks
of identification or designation and such legends, summaries or
endorsements printed, lithographed, engraved or typed thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Warrants may be
listed, or to conform to usage. The Warrant Certificates shall be dated
the date of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen, or destroyed Warrant
Certificates) and issued in registered form. Warrants shall be numbered
serially with the letters AW.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President
and by its Secretary or an Assistant Secretary, by manual signatures or
by facsimile signatures printed thereon. In case any officer of the
Company who shall have signed any of the Warrant Certificates shall
cease to be such officer of the Company before the date of issuance of
the Warrant Certificates and issue and delivery thereof, such Warrant
Certificates may nevertheless be issued and delivered with the same
force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company. After
execution by the Company, Warrant Certificates shall be delivered by
the Warrant Agent to the Registered Holder.
D-3
4. Cash Exercise and Redemption
4.1 Optional Exercise
Warrants may be exercised by a Registered Holder, at any time until
July 1, 2007 (the "Warrant Expiration Date"), in whole or in part, by delivering
to the Warrant Agent at 59 Maiden Lane, Plaza Entrance, New York, New York 10038
(or such other office or agency of the Warrant Agent as it may designate by
notice in writing to the Registered Holder at the address of the Registered
Holder appearing on the books of the Warrant Agent) (a) either (i) such Warrants
by book-entry transfer through the facilities of the Depository or (ii) the
Warrant Certificates evidencing the Warrants if Warrant Certificates have been
issued to the Registered Holder, (b) a certified or cashier's check payable to
the Company or a wire transfer in the amount of the Exercise Price multiplied by
the number of shares for which the Warrant is being exercised (the "Purchase
Price"), and (c) written notice of such election to exercise, designated
"International Isotopes Inc. Warrant Exercise," by hand or by facsimile, which
notice shall be in the form of an election to purchase shares of Common Stock of
the Company substantially in the form set forth on the reverse side of the
Warrant Certificate, properly completed and executed by the Registered Holder.
The Warrant Agent shall forward to the Company the Purchase Price received as a
result of any exercise of Warrants by wire transfer within 2 business days.
4.2 Redemption
(a) Provided that adequate provision has been made therefor,
upon the resolution of its Board of Directors , the Company may, but
shall not be required to, call for redemption at a redemption price of
$.001 per Warrant Share (the "Redemption Price") all of the Warrants at
any time, provided: (i) it provides to each Registered Holder of
Warrants to be redeemed a minimum of thirty (30) days' prior written
notice, and (ii) if the average closing price or bid price of the
Common Stock, as reported by the principal exchange on which the Common
Stock is traded, the NASDAQ Stock Market, Inc., the OTC Bulletin Board
or the Pink Sheet LLC, as the case may be, equals or exceeds $.12 for
twenty (20) consecutive trading days ending within 180 days prior to
the date of issuance of the notice of redemption. In such an event, the
Company shall cause to be filed with the Warrant Agent a certified copy
of such resolution and a form of notice of redemption and the Warrant
Agent shall mail to each of the Registered Holders of the Warrant
Certificates to be redeemed, by first class mail, postage prepaid, to
his last address appearing on the records of the Warrant Agent, such
written notice of such redemption. Such notice shall identify the
Warrants to be redeemed, state the date set for redemption (the
"Redemption Date"), the Redemption Price, and the date upon which the
Registered Holder's right to exercise the Warrants will terminate, and
describe the manner in which Warrant Certificates are to be
surrendered. Any notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. Failure to mail notice to any
Registered Holder, shall not affect the validity of any other
redemptions for which notice had been duly provided, only redemptions
of persons lacking notice.
(b) On or before the Redemption Date, each Registered Holder
of Warrants to be redeemed, unless he has previously exercised or will
exercise such Warrants on or before the Redemption Date, shall
surrender the Warrant Certificate or Certificates representing such
Warrants to the Warrant Agent. The Warrants to be redeemed shall be
exercisable up to and including the date immediately preceding the
Redemption Date. Upon receipt of such Warrant Certificates, the Warrant
Agent, as paying agent, shall pay the Redemption Price for such
Warrants to the order of the Registered Holders thereof. Any Warrants
to redeemed will be canceled by the Warrant Agent upon receipt. After
the Redemption Date, all rights with respect to such Warrants shall
cease, except for the right to receive the Redemption Price of the
Warrants.
(c) Upon or prior to the Redemption Date, the Company shall
deposit in trust with the Warrant Agent a sum equal to the Redemption
Price of all Warrants called for redemption, with irrevocable
instructions and authority to the Warrant Agent to pay, on and after
the Redemption Date, the Redemption Price to the Registered Holders
upon the surrender of the Warrant Certificates. The deposit shall
constitute full payment of the Warrants to the Registered Holders, and
from andExchange Act after the date of the deposit, the Warrants shall be deemed to
be no longer outstanding. The balanceinitial registration statement of the deposit remaining
unclaimed at the end of one year from the Redemption Date shall be
released to the Company, after which the holders of Warrants called for
redemption shall be entitled to receive payment of the Redemption Price
only from the Company.
D-4
5. Delivery of Stock Certificates; No Fractional Shares
5.1 Within ten (10) business days after the payment of the Purchase
Price following the exercise by a Registered Holder of a Warrant (in whole or in
part), the Warrant Agent, at Company expense, shall issue or cause the Company's
stock transfer agent to issue in the name of and deliver to the Registered
Holder (a) a certificate or certificates for the number of fully paid and
nonassessable Warrant Shares to which the Registered Holder shall be entitled
upon such exercise, and (b) a new Warrant of like tenor to purchase up to that
number of Warrant Shares, if any, as to which such Warrant has not been
exercised if such Warrant has not expired. The Registered Holder shall for all
purposes be deemed to have become the holder of record of such Warrant Shares on
the date such Warrant was exercised (the date the Registered Holder has fully
complied with the requirements of Section 4.1), irrespective of the date of
delivery of the certificate or certificates representing the Warrant Shares;
provided that, if the date such exercise is madethis prospectus is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of record of such Warrant Shares at the close of business on
the next succeeding date on which the stock transfer books are open.
5.2 No fractional shares shall be issued upon the exercise of any
Warrant. In lieu of fractional shares, the Company shall pay the Registered
Holder a sum in cash equal to the Daily Price (as defined below) of the
fractional share on the date of exercise.
"Daily Price" of a Warrant Share shall mean:
(a) If the Company's Common Stock is listedpart and traded
on an exchange or is quoted on the Nasdaq National Market, the closing
or last sale price on such day;
(b) If the Company's Common Stock is not traded on and
exchange or quoted on the Nasdaq National Market, but is traded in the
over-the-counter market, the average of the closing bid and asked
prices reported on such day; and
(c) If none of the above is applicable, the Daily Price
shall be the fair market value of the Common Stock as determined in
good faith by the Company's Board of Directors.
6. Adjustments Upon Certain Events
6.1 Effect of Reorganization
(a) Reorganization - No Change of Control
Upon a merger, consolidation, acquisition of all or
substantially all of the property or stock, liquidation or other
reorganization of the Company (collectively, a "Reorganization") during
the Exercise Period, as a result of which the shareholders of the
Company receive cash, stock or other property in exchange for their
shares of Common Stock and the holders of the Company's voting equity
securities immediately prior to the Reorganization together own a
majority interest of the voting equity securities of the successor
corporation following such Reorganization, lawful provision shall be
made so that the holder shall thereafter be entitled to receive, upon
exercise of this Warrant, the number of shares of securities of the
successor corporation resulting from such Reorganization (and cash and
other property), to which a holder of the Warrant Shares issuable upon
exercise of a Warrant would have been entitled in such Reorganization
if such Warrant had been exercised immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determine
in good faith by the Company's Board of Directors) shall be made in the
application of the provisions of the Warrants with respect to the
rights and interest of the Registered Holders after the Reorganization
to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and the number and type of securities
purchasable pursuant to the terms of this Warrant Agreement) shall be
applicable after that event, as near as reasonably may be, in relation
to any shares deliverable after that event upon the exercise of any
Warrant.
D-5
(b) Reorganization - Change of Control; Termination of Warrant
Upon a Reorganization prior to or during the Exercise Period, as
a result of which the shareholders of the Company receive cash, stock
or other property in exchange for their shares of Common Stock and the
holders of the Company's voting equity securities immediately prior to
such Reorganization together own less than a majority interest of the
voting equity securities of any successor corporation following such
Reorganization, Registered Holders of Warrants shall be given notice at
least ten (10) days prior to the effectiveness thereof. Notwithstanding
any other provision hereof, the Warrants shall become immediately
exercisable in full upon such notice to the Registered Holders, subject to the effectiveness of the Reorganization, provided, however, that
such acceleration of exercisability will not occur if, inregistration statement, and any filings we make with the opinionSEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Company's outside accountants, such acceleration would render
unavailable "pooling of interests" accounting treatment for any
Reorganization for which pooling of interests accounting treatment is
sought by the Company (in which event, lawful provision shall be made
so that the Registered Holders shall thereafter be entitled to receive,
upon exercise of their Warrants up to the Warrant Expiration Date, the
number of shares of securities of the successor corporation resulting
from such Reorganization (and cash and other property) to which a
Registered Holder of the Warrant Stock issuable upon exercise of such
Warrants would have been entitled in such Reorganization if such
Warrant had been exercised immediately prior to such Reorganization).
Each Registered Holder shall have five (5) daysExchange Act from the receiptdate of such notice to give notice tothis prospectus until the Warrant Agent, on behalf of the
Company, whether it intends to conditionally exercise his Warrant, in
whole or in part. Notwithstanding any other provision hereof, Warrants
shall become forever null and void to the extent not conditionally
exercised on or before 5:00 p.m., Eastern time, on the fifth day
following the receipt by the Registered Holders thereof of notice of
the proposed Reorganization (unless the acceleration of exercisability
is denied by the Company in order to preserve "pooling of interests"
accounting treatment as set forth above).
6.2 Adjustments for Stock Splits, Dividends
If the Company shall issue any shares of the same class as the Warrant
Stock as a stock dividend or subdivide the number of outstanding shares of the
same class as the Warrant Shares into a greater number of shares, then, in
either such case, the Exercise Price in effect before such dividend or
subdivision shall be proportionately reduced and the number of Warrant Shares at
that time issuable pursuant to the exercise of the Warrants shall be
proportionately increased; and, conversely, if the Company shall contract the
number of outstanding shares of the same class as the Warrant Shares by
combining such shares into a smaller number of shares, then the Exercise Price
in effect before such combination shall be proportionately increased and the
number of Warrant Shares at that time issuable pursuant to the exercise or
conversion of the Warrants shall be proportionately decreased. Each adjustment
in the number of Warrant Shares issuable shall be to the nearest whole share.
6.3 Certificate as to Adjustments
In the case of any adjustment in the Exercise Price or number and type
of securities issuable upon exercise of the Warrants, the Company will promptly
give written notice to the Registered Holders through the Warrant Agent in the
form of a certificate, certified and confirmed by an officer of the Company,
setting forth the adjustment in reasonable detail.
7. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of Warrants
of the same class or may be transferred in whole or in part. Warrant
Certificates to be exchanged shall be surrendered to the Warrant Agent
at its Corporate Office, and upon satisfaction for the terms and
provisions hereof, the Company shall execute, and the Warrant Agent
shall countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
D-6
(b) The Warrant Agent shall keep at its office books in
which, subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and the transfer thereof in
accordance with its regular practice. Upon due presentment for
registration of transfer of any Warrant Certificate at its office, the
Company shall execute and the Warrant Agent shall issue and deliver to
the transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented
for registration of transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly endorsed, or be
accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company, duly executed by the
Registered Holder or his attorney-in-fact duly authorized in writing.
(d) The Company may require payment by such holder of a
sum sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or
for exchange in case of mutilated Warrant Certificates shall be
promptly cancelled by the Warrant Agent and thereafter retained by the
Warrant Agent until termination of this Agreementoffering (in each case, except for the information furnished under Item 2.02 or resignationItem 7.01 in any current report on Form 8-K and Form 8-K/A):
our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 31, 2010;
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 17, 2010;
10
the description of the
Warrant Agent. (f) Prior to due presentment for registration of transfer thereof,Common Stock that is contained in theCompany and the Warrant Agent may deem and treat the Registered Holder of any Warrant Certificate as the absolute owner thereof and of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company or the Warrant Agent) for all purposes and shall not be affected by any notice to the contrary. 8. Lost or Damaged Warrant Certificate Upon receipt by the Warrant Agent of satisfactory evidence of the loss, theft, destruction or damage of any Warrant and either (in the case of loss, theft or destruction) reasonable indemnification or (in the case of damage) the surrender of such Warrant for cancellation, the Warrant Agent will execute and deliver to the Registered Holder, without charge, a new Warrant of like denomination. 9. Covenants as to Warrant Shares 9.1 Reservation of Shares The Company covenants that at all times during the Exercise Period there shall be reserved for issuance and delivery upon exercise of the Warrants such number of Warrant Shares as is necessary for exercise in full of all outstanding Warrants and, from time to time, it will take all steps necessary to provide sufficient reserves of Warrant Shares. All shares of Warrant Stock issued pursuant to the exercise of the Warrants will, upon their issuance, be validly issued, fully paid and nonassessable, free and clear of all liens and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except restrictions arising (a) under federal and state securities law, (b) not by or through the Company, or (c) by agreement between the Company and the Registered Holders or their successors. D-79.2 Registration of Warrant Shares The Company has registered the Warrants and the Warrant Shares under the Securities Act of 1933 and Rule 415 thereunder pursuant to aCompany's Registration Statement on FormS-3. In connection with such Registration Statement, the Company agrees8-A dated August 1, 1997, filed pursuant touse its best efforts to: (a) prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus filed as part thereof and take such other action, if any, as may be necessary to keep the Registration Statement effective until the earlier of (i) the expiration, cancellation or repurchaseSection 12 of theWarrants, or (ii) whenExchange Act, and allof the Warrantsamendments thereto and reports which have beenexercised byfiled for theRegistered Holders; (b) during the period when the Registration Statement is required to remain effective, will file all documents required to bepurpose of updating such description;our Current Reports on Form 8-K, filed with the Commission
pursuant to Section 13, 14 or 15on April 20, 2010 and May 27, 2010; andthe portions of our Definitive Proxy Statement on Schedule 14A filed with the
Exchange Act within the time periods requiring by the Exchange ActSEC on April 29, 2010 andthe rules and regulations promulgated thereunder; and (c) bear all expensessubsequently amended on June 7, 2010 in connection with theprocedures2009 annual meeting of shareholders that are incorporated by reference inparagraphs (a) and (b) of this Section 9.2 andthecontinued registration ofAnnual Report on Form 10-K for theWarrant Shares pursuantyear ended December 31, 2009.
We will provide each person, including any beneficial owner, to the Registration
Statement, other than any fees and expenses of counsel or other
advisers to the Registered Holders.
10. Agreement of Warrant Holders
Every holder ofwhom a Warrant, by his acceptance thereof, consents and
agrees with the Company, the Warrant Agent and every other holder ofprospectus is delivered, a Warrant
that:
(a) The Warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in person
or by his attorney duly authorized in writing and only if the Warrant
Certificates representing such Warrants are surrendered at the office
of the Warrant Agent, duly endorsed or accompanied by a proper
instrument of transfer satisfactory to the Warrant Agent and the
Company in their sole discretion, together with payment of any
applicable transfer taxes; and
D-8
(b) The Company may deem and treat the person in whose
name the Warrant Certificate is registered as the holder and as the
absolute, true and lawful owner of the Warrants represented thereby for
all purposes, and the Company shall not be affected by any notice or
knowledge to the contrary.
11. Cancellation of Warrant Certificates
If the Company shall purchase or acquire any Warrant or Warrants, the
Warrant Certificate or Warrant Certificates evidencing the same shall thereupon
be cancelled by it and retired. The Warrant Agent shall also cancel Warrant
Certificates following exercisecopy of any or all of the Warrants represented
therebyinformation that has been incorporated by reference into this prospectus but not delivered with this prospectus upon written or delivered to it for transfer, split-up, combination or exchange.
12. Concerning the Warrant Agent
The Warrant Agent acts hereunder as agent and in a ministerial capacity
for the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder be deemed to make any representations
asoral request at no cost to the validity, value or authorizationrequester. Requests should be directed to Steve Laflin, President and Chief Executive Officer, at our principal offices, which are located at 4137 Commerce Circle, Idaho Falls, Idaho 83401; telephone number (208) 524-5300.
This prospectus is part of a registration statement on Form S-3 that we filed with the SEC. That registration statement contains more information than this prospectus regarding us and our common stock, including certain exhibits and schedules. You can obtain a copy of the Warrant Certificatesregistration statement from the SEC at the address listed above or from the Warrants represented therebySEC's Internet website.
You should rely only on the information provided in and incorporated by reference into this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any securitiesdate other than the date on the front cover of these documents.
11
| INTERNATIONAL ISOTOPES INC. |
| $100,000,000 |
| Common Stock |
| Preferred Stock |
| Debt Securities |
| Convertible Debt Securities |
| Warrants |
| ________________ |
| PROSPECTUS |
| ________________ |
| ___, 2010 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the fees and expenses incurred or other property delivered
upon exercise of any Warrant or whether any stock issued upon exercise of any
Warrant is fully paid and nonassessable.
The Warrant Agent shall account promptlyexpected to the Company with respect to
Warrants exercised and concurrently pay the Company, as provided in Section 4,
all moneys receivedbe incurred by the Warrant Agent upon the exercise of such Warrants. The
Warrant Agent shall, upon request of the Company from time to time, deliver to
the Company such complete reports of registered ownership of the Warrants and
such complete records of transactions with respect to the Warrants and the
shares of Common Stock as the Company may request. The Warrant Agent shall also
make available to the Company for inspection by its agents or employees, from
time to time as either of them may request, such original books of accounts and
records (including original Warrant Certificates surrendered to the Warrant
Agent upon exercise of Warrants) as may be maintained by the Warrant AgentInternational Isotopes Inc. in connection with the issuance and exercisedistribution of Warrants hereunder, such
inspections to occurthe securities being registered hereby, other than underwriting discounts and commissions. All of the amounts shown are estimated except the SEC registration fee. Estimated fees and expenses can only reflect information that is known at the Warrant Agent's office during normal business hours.
The Warrant Agent shall not at any time be under any duty or
responsibilityof filing this registration statement and are subject to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Exercise Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustments, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of facts contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omissionfuture contingencies, including additional expenses in connection with this Agreement except for its own
negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
D-9
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments, costs
and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or willful
misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or willful misconduct), after giving 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
Warrant Agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. Any new Warrant Agent, whether appointed by
the Company or by such a court shall be a bank or trust company having a capital
and surplus, as shown by its last published report to its stockholders, of not
less than $10,000,000 or a stock transfer company. After acceptance in writing
of such appointment by the new Warrant Agent is received by the Company, such
new Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent
may be converted or merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new Warrant Agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates,subsequent underwritten offering and any prospectus supplements.
| Securities and Exchange Commission registration fee | $ | 7,130 | |
| Printing and engraving expenses | $ | 700 | |
| Legal fees and expenses | $ | 20,000 | |
| Accounting fees and expenses | $ | 7,500 | |
| Miscellaneous expenses | $ | 2,000 | |
| Total | $ | 37,330 |
Item 15. Indemnification of its or
their officers or directors, may buyOfficers and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not the Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
13. Miscellaneous
13.1 Registered Holder as Owner
The Warrant Agent shall deem and treat the Registered Holder of record
of any Warrant as the absolute owner for all purposes regardless of any notice
to the contrary.
D-10
13.2 No Shareholder Rights
The Warrants shall not entitle the Registered Holders to any voting
rights or any other rights as a shareholder of the Company or to any other
rights except the rights stated herein; and no dividend or interest shall be
payable or shall accrue in respect of the Warrant or the Warrant Shares, until
the WarrantsDirectors
We are exercised.
13.3 Notices
Unless otherwise provided, any notice under this Warrant Agreement
shall be given in writing and shall be deemed effectively given (a) upon
personal delivery to the party to be notified, (b) upon confirmation of receipt
by fax by the party to be notified, (c) two business days after deposit with a
reputable overnight courier, prepaid for overnight delivery and addressed as set
forth in (d), or (d) five days after deposit with the United States Post Office
or any foreign postal service, postage prepaid, registered or certified with
return receipt requested and addressed to the party to be notified at the
address indicated below, or at such other address as such party may designate by
ten (10) days' advance written notice to the other party given in the foregoing
manner.
If to the Warrant Agent: American Stock Transfer Company
59 Maiden Lane, Plaza Entrance
New York, New York 10038
Attn: _________________________
Telephone: ____________________
Facsimile: ____________________
If to the Company: International Isotopes Inc.
4132 Commerce Circle
Idaho Falls, Idaho 83401
Attn: Chief Executive Officer
Telephone: (208) 524-5300
Facsimile: (208) 524-1411
13.4 Amendments and Waivers
The Warrant Agent may by supplemental agreement make any changes or
corrections in this Agreement (i) that it shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained; or (ii) that it may deem necessary or
desirable and which shall not adversely affect the interests of the Registered
Holders of Warrant Certificates; provided, however, that this Agreement shall
not otherwise be modified, supplemented or altered in any respect except with
the consent in writing of the Registered Holders of Warrant Certificates
representing not less than 50% of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed.
13.5 Governing Law
This Warrant Agreement shall be governed by and construedorganized under the laws of the State of Texas without regard to principles of conflict of laws. The
parties irrevocably consent to the jurisdiction and venueTexas. Section 8.101 of the state and
federal courts located in Travis County, Texas in connection with any action
relating to this Warrant Agreement.
D-11
13.6 Successors and Assigns; Transfer
The terms and conditions of this Warrant Agreement shall inure to the
benefit of and be binding on the respective successors and assigns of the
parties. This Warrant Agreement may not be transferred or assigned by the
Warrant Agent without the consent of the Company.
13.7 Headings
The headings of the various sections of this Warrant Agreement have
been inserted for convenience of reference only and shall not be deemed to be
party of this Warrant Agreement.
13.8 Entire Agreement; Counterparts
This Warrant Agreement constitutes the entire agreement between the
parties about its subject and supersedes all prior agreements. This Warrant
Agreement may be executed in counterparts, which together shall constitute one
agreement.
IN WITNESS WHEREOF, the parties have executed this Warrant Agreement as
of the date first written above.
INTERNATIONAL ISOTOPES INC.
By: _______________________________
Steve T. Laflin, Chief Executive Officer
Warrant Agent:
AMERICAN STOCK TRANSFER COMPANY
By: ________________________________
Name:_______________________________
Title:______________________________
D-12
EXHIBIT E
Form of Warrant Certificate
E-1
___________________________________________________________________________________________________________________________________
NUMBER VOID AFTER JULY 31, 2007 WARRANT TO PURCHASE
WA________ ______________________
SHARES OF COMMON STOCK
CUSIP ________________
INTERNATIONAL ISOTOPES INC.
SERIES A WARRANT TO PURCHASE COMMON STOCK
This Series A Warrant Certificate ("Warrant Certificate")
certifies that
or its registered assigns, is the registered holder of a Warrant (the "Warrant") of International Isotopes Inc. (the "Company"), to
purchase the number of shares (the "Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of the Company set
forth above. This Warrant expires on July 31, 2007 (such date, the "Expiration Date") and entitles the holder to purchase from the
Company the number of fully paid and nonassessable Shares set forth above at the exercise price (the "Exercise Price") multiplied
by the number of shares set forth above (the "Purchase Price"), payable to the Company by wire transfer in immediately available
funds of the Purchase Price to an account of the Warrant Agent specified in writing by the Warrant Agent for such purpose or by
delivery of a certified check in immediately available funds of the Exercise Amount to the Warrant Agent at its corporate office.
The initial Exercise Price shall be $.04 .
Subject to the terms and conditions set forth herein and in the Warrant Agreement, this Warrant may be exercised by the Holder
thereof, by:
(i) providing written notice of such election ("Warrant Exercise Notice") to exercise the Warrant to the Warrant Agent at the
address set forth in the Warrant Agreement, "Re: International Isotopes Inc. Warrant Exercise," by hand or by facsimile, no later
than 5:00 p.m., New York City time, on the Expiration Date, which Warrant Exercise Notice shall be in the form of an election to
purchase Shares of Common Stock of the Company substantially in the form set forth on the reverse side of this certificate,
properly completed and executed by the Holder.
(ii) delivering, either (x) such Warrants to the Warrant Agent by book-entry transfer through the facilities of the Depository
or, (y) the Warrant Certificates evidencing such Warrants to the Warrant Agent if Warrant Certificates have been issued and
delivered pursuant to the Warrant Agreement; and
(iii) paying the applicable Purchase Price, together with any applicable taxes and governmental charges.
The Exercise Price and the number of Shares purchasable upon exercise of this Warrant are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.
No Warrant may be exercised after the Expiration Date. After the Expiration Date, the Warrants will become wholly void and of
no value.
This Warrant may be redeemed by the Company at a redemption price of $.001 per warrant share if the average closing price of
the Company's Common Stock exceeds $.12 for twenty consecutive business days.
REFERENCE IS HERBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed by its duly authorized officer.
Dated: INTERNATIONAL ISOTOPES INC.
By:_________________________________ By:_________________________________
Secretary President
___________________________________________________________________________________________________________________________________
E-2
INTERNATIONAL ISOTOPES INC.
This Warrant evidenced by this Warrant Certificate is a part of a duly
authorized issue of Warrants to purchase a maximum of 38,229,157 shares of
Common Stock issued pursuant to that certain Series A Warrant Agreement, dated
as of ________, 2003 (the "Warrant Agreement"), duly executed and delivered by
the Company and American Stock Transfer & Trust Company, as Warrant Agent (the
"Warrant Agent"). The Warrant Agreement hereby is incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be inspected at the Warrant
Agent's corporate office and is available upon written request addressed to the
Company. All capitalized terms used herein but not defined that are defined in
the Warrant Agreement shall have the meanings assigned to them therein.
Warrants may be exercised to purchase Shares from the Company through
5:00 p.m. New York City time on the Expiration Date, at the Expiration Price set
forth on the face hereof, subject to adjustment as described in the Warrant
Agreement. Subject to the terms and conditions set forth herein and in the
Warrant Agreement, the Holder of the Warrant evidenced by this Warrant
Certificate may exercise such Warrant by:
(i) providing a Warrant Exercise Notice to the Warrant Agent at the
address set forth in the Warrant Agreement, "Re: International Isotopes Inc.
Warrant Exercise," by hand or by facsimile, no later than 5:00 p.m., New York
City time, on the Expiration Date, which Warrant Exercise Notice shall be in the
form of an election to purchase Shares of Common Stock of the Company
substantially in the form set forth on the reverse side of this certificate,
properly completed and executed by the Holder.
(ii) delivering, either (x) such Warrants to the Warrant Agent by
book-entry transfer through the facilities of the Depository or (y) the Warrant
Certificates evidencing such Warrants to the Warrant Agent if Warrant
Certificates have been issued and delivered pursuant to the Warrant Agreement;
and
(iii) paying the applicable Purchase Price, together with any
applicable taxes and governmental charges.
The Exercise Amount shall be payable by wire transfer in immediately
available funds of the Purchase Price to an account of the Warrant Agent
specified in writing by the Warrant Agent for such purpose or by delivery of a
certified check in immediately available funds of the Exercise Amount to the
Warrant Agent at its corporate office. The initial Exercise Price shall be $.04.
In the event that upon any exercise of the Warrant evidenced hereby the
number of Shares actually purchased shall be less than the total number of
Shares purchasable upon exercise of the Warrant evidenced hereby, there shall be
issued to the holder hereof, or such holder's assignee, a new Warrant
Certificate evidencing a Warrant to purchase the Shares not so purchased. No
adjustment shall be made for any cash dividends on any Shares issuable upon
exercise of this Warrant. After the Expiration Date, unexercised Warrants shall
become wholly void and of no value.
The Company shall not be required to issue fractions of Shares or any
certificates that evidence fractional Shares. If any fraction of a share of
Common Stock would, except for the provisions of the preceding sentence, be
issuable upon exercise of any Warrant or Warrants, the Company shall, at its
election, either (i) purchase such fraction for an amount in cash equal to such
fraction of the Daily Price (as defined in the Warrant Agreement) of a share of
Common Stock or (ii) round up the number of Shares issued upon exercise of such
Warrant or Warrants to the next whole integer.
Warrant Certificates, when surrendered at the Warrant Agent Office by
the registered holder thereof in person or by a legal representative or attorney
duly authorized in writing, by mail or by book-entry delivery through the
facilities of the Depositary may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing Warrants to purchase in the aggregate a like number of Shares.
The Company and Warrant Agent may deem and treat the registered holder
hereof as the absolute owner of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone) for the purpose of
any exercise hereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
This Warrant may be redeemed by the Company at a repurchase price of
$.001 per Warrant (the "Redemption Price") if the average closing price of the
Company's Common Stock exceeds $.12 for twenty consecutive business days. The
Company will give a minimum of 30 days notice of the Redemption Date. The holder
may exercise this Warrant up to the day before the Redemption Date, but
thereafter will only be entitled to receive the Redemption Price in exchange for
this Warrant Certificate.
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ELECTION TO EXERCISE
(TO BE EXECUTED UPON EXERCISE OF THE WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ newly issued
shares of Common Stock of International Isotopes Inc. (the "Company") at the
Exercise Price of $___________ per share. The undersigned represents, warrants
and promises that it has the full power and authority to exercise and deliver
the Warrants exercised hereby.
The undersigned represents, warrants and promises that it has delivered
or will deliver in payment for such Shares $__________ by wire transfer in
immediately available funds of the Purchase Price to an account of the Warrant
Agent specified in writing by the Warrant Agent for such purpose or by delivery
of a certified check in immediately available funds of the Purchase Price to the
Warrant Agent at its corporate office.
The undersigned requests that a certificate representing the Shares be
registered and delivered as follows:
__________________________________________________
Name
__________________________________________________
Address
__________________________________________________
Delivery Address (if different)
If such number of Shares is less than the aggregate number of Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the balance of such Shares shall be registered and delivered as
follows:
__________________________________________________
Name
__________________________________________________
Address
__________________________________________________
Delivery Address (if different)
_________________________________ ________________________________________
Social Security or Other Taxpayer Signature
Identification Number of Holder
Note: The above signature must
correspond with the name as written upon
the face of this Warrant Certificate in
every particular, without alteration or
enlargement or any change whatsoever. If
the certificate representing the Shares
or any Warrant Certificate representing
Warrants not exercised is to be
registered in a name other than that in
which this Warrant Certificate is
registered, the signature of the holder
hereof must be guaranteed.
SIGNATURE GUARANTEED:
E-4
I3
INTERNATIONAL ISOTOPES INC.
38,229,157 Units, consisting of
38,229,157 Shares of Common Stock and
76,558,314 Warrants
E-5
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses of this offering, all of which will be paid by
Registrant, are as follows:
SEC Registration Fee $ 512.00
Accounting Fees and Expenses $ 5,000.00
Registrant's Legal Fees and Expenses $45,000.00
Printing Fees $ 1,000.00
Transfer Agent and Registrar's Fees and Expenses $15,000.00
Miscellaneous Expenses $ 4,000.00
----------
Total $70,512.00
------------------
o To be completed by amendment
(a) Item 14. Indemnification of Directors and Officers
As permitted by the Texas Business Corporation Act ("TBCA"), the
Company's Restated Articles of Incorporation provide that the Company will
indemnify its officers, directors, employees and agents to the fullest extent
permitted by the TBCA against actions that may arise against them in such
capacities, and to advance expenses in connection with any such actions.
Registrant's Restated Articles of Incorporation provides that directors of the
Company will not be personally liable to Registrant or its stockholders for
monetary damages for any act or omission in his capacity as a director except as
authorized under the TBCA. The TBCATBOC provides that a corporation may indemnify a
personany director or officer who was, is or is threatened to be madenamed as a named defendant or respondent in a proceeding because such personhe is or was a director if it is determined in
accordance with the provisions of the TBCAor officer, provided that the persondirector or officer (i) conducted himself in good faith, (ii) reasonably believed (a) in the case of conduct in his official capacity, as director, that his conduct was in the corporation's best interests or (b) in all other cases, that his conduct was at least was not opposed to the corporation's best interests and (iii) in the case of any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. ASubject to certain exceptions, a director or officer may not be indemnified with respectif such person is found liable to a proceeding in which the corporation or if such person is found liable on the basis that personal benefit washe improperly received a personal benefit. Under Texas law, reasonable expenses incurred by a director or officer may be paid or reimbursed by the corporation in advance of a final disposition of the proceeding after the corporation receives a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification and a written undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined that the director or officer is not entitled to indemnification by the corporation. Texas law requires a corporation to indemnify an officer or director against reasonable expenses incurred in connection with a proceeding in which he is named a defendant or respondent because he is or was a director or officer if he is wholly successful in the defense of the proceeding.
Texas law also permits a corporation to purchase and maintain insurance or another arrangement on behalf of any person who is or was a director or officer against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person, whether or not the benefit resulted from an action taken incorporation would have the person's official capacity, or
in which the person is found liablepower to the corporation. Officers, employees and
agents of a corporation are entitled to be indemnified by the corporation as,
and to the same extent provided for, directorsindemnify him against that liability under Section 8.101 of the corporation.
Registrant carries directors'TBOC.
Our Restated Certificate of Formation and officers' liability insuranceour Bylaws require the company to indemnify each of our directors and officers against liabilities imposed upon them (including reasonable amounts paid in settlement) and expenses incurred by them in connection with an
aggregate policy limitany claim made against them or any action, suit or proceeding to which they may be a party by reason of $2,000,000.
Recent Sales of Unregistered Securities
In May 2003 eleventheir being or having been a director or officer of the Company's current shareholders loanedcompany. To the Companyextent permissible by applicable law, the grant of mandatory indemnification to our officers and directors shall extend to proceedings involving the negligence of such persons. Management believes that such indemnification provisions are necessary to attract and retain qualified persons as directors and executive officers. We have purchased insurance against certain costs of indemnification that may be incurred by us and by our officers and
directors. Any repeal or modification of Article X of our Restated Certificate of Formation shall not adversely affect any right of protection of an aggregate of $823,500. The loans bear interestofficer or director existing at 5% per annum and
are due in May 2004. Eachthe time of the eleven shareholders is an accredited investor
and the private placement of the debt securities was exempt pursuant to Section
4(2) of the Securities Act of 1933.
II-1
Item 16. Exhibits.
(a) Exhibits
3.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company'
Registration Statement on form SB-2 (Registration No.
333-26269)).
3.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form SB-2 (Registration No. 333-26269)).
4.1 Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form SB-2 (Registration No. 333-26269)).
5.1 Authorizing legal opinion of Locke Liddell & Sapp LLP with
respect to the issuance of the securities.
10.1 Copy of Company's 2002 Long Term Incentive Plan, including
forms of nonqualified Stock Option Agreement, Incentive
Stock Option Agreement and Restrictive Stock Option
Agreement (incorporated by reference to Exhibit 10.1 to
the Company's Annual Report on form 10-KSB for the year
ended December 31 2002).
23.1 Consent of Hansen, Barnett & Maxwell.
23.2 Consent of Locke Liddell & Sapp LLP (included in Exhibit
5.1).
24 Power of Attorney (included as part of Signature page).
--------------------
*To be filed by amendment.
Item 17. Undertakings.
repeal or modification.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as amended (the `Act"expressed in the Securities Act of 1933 and is, therefore, unenforceable.
Item 16. Exhibits
| ExhibitNumber | Description |
| 1.1 | Form of Underwriting Agreement (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 3.1 | Restated Certificate of Formation of International Isotopes Inc. (incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 31, 2010). |
| 3.2 | Bylaws of International Isotopes Inc. (incorporated by reference to Exhibit 3.2 to our Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 333-26269)). |
| 4.1 | Form of Common Stock Certificate (incorporated by reference to (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 33-26269)). |
| 4.2* | Form of Senior Debt Indenture |
| 4.3* | Form of Subordinated Debt Indenture |
| 4.4 | Form of Warrant (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 4.5 | Form of Preferred Stock Certificate (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 4.6 | Form of Certificate of Designation with respect to Preferred Stock (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 5.1* | Opinion of Perkins Coie LLP |
| 12.1 | Statement regarding computation of ratios (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 23.1* | Consent of Hansen, Barnett & Maxwell, P.C., independent auditors |
| 23.2* | Consent of Perkins Coie LLP (included in Exhibit 5.1). |
| 24.1* | Power of attorney (included on the signature page to the registration statement). |
| 25.1 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, under the Senior Debt Indenture (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 25.2 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, under the Subordinated Debt Indenture (to be filed by amendment or as an exhibit to a report pursuant to Section |
| 13(a), 13(c) or 15(d) of the Exchange Act) |
| * | Filed herewith |
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering there of.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; and
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering
of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of an undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrantthe registrant pursuant to the foregoing provisions, of its Restated
Articles of Incorporation, its By-Laws, the Texas Business Corporation Act or otherwise, Registrantthe registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant forthe registrant of expenses incurred or paid by ana director, officer director or controlling person of Registrantthe registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrantthe registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whetherwhethe r such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrantregistrant hereby undertakes:
undertakes that:
(1) For purposes of determining any liability under the Securities Act to treatof 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Registrant underthe registrant pursuant to Rule 424(b)(1), or (4), or 497(h) under the Securities Act asshall be deemed to be part of this Registration Statementregistration statement as of the time the Commissionit was declared it effective.
(2) For the purpose of determining any liability under the Securities Act to treatof 1933, each post-effective amendment that contains a form of prospectus asshall be deemed to be a new registration statement forrelating to the securities offered intherein, and the registration statement, and that offering of thesuch securities at that time asshall be deemed to be the initial bona fide offering thereof.
(f) The undersigned registrant hereby undertakes to file an application for the purpose of those
securities.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, there under duly authorized, in the City of Idaho Falls, State of Idaho, on the 16th day of June, 2010.
International Isotopes Inc.
/s/ Steve T. Laflin
By: Steve T. Laflin
President and Chief Executive Officer
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MENPERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constituteconstitutes and appointappoints Steve T. Laflin and Dr. Ralph
M. Richart,Laurie A. McKenzie-Carter, and each of them acting individually, as his or her true and lawful attorneys-in-fact and agent, with full power of each to act without the other, his truealone, with full powers of substitution and lawful attorney-in-fact and agentresubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any orand all amendments to this Registration
Statementregistration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462 and otherwise), and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same,connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all that said attorneys-in-fact and agents, or any of them or their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.
II-3
SIGNATURES
In accordance with
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and authorizedas amended, this Registration
Statement to be signed on its behalf by the undersigned, in Idaho Falls, State
of Idaho, on the 16th day of June, 2003.
INTERNATIONAL ISOTOPES INC.
By: /s/ Steve T. Laflin
-------------------
Steve T. Laflin
President and CEO
In accordance with the requirements of the Securities Act of 1933, this
Registration Statementregistration statement has been signed by the following persons in the capacities and on the dates stated.
Signature Title Date
/s/ Steve T. Laflin President, CEO and CFO June 16, 2003
------------------------
Steve T. Laflin
/s/ Dr. Ralph M. Richart Chairman June 16, 2003
------------------------
Dr. Ralph M. Richart
/s/ Christopher Grosso Director June 16, 2003
------------------------
Christopher Grosso
II-4
Signature | Title | Date |
| /s/ Ralph M. Richart Ralph M. Richart | Chairman of the Board | June 16, 2010 |
| /s/ Steve T. Laflin Steve T. Laflin | Director, President, and Chief Executive Officer (Principal Executive Officer) | June 16, 2010 |
| /s/ Laurie A. McKenzie-Carter Laurie A. McKenzie-Carter | Chief Financial Officer (Principal Finance and Accounting Officer) | June 16, 2010 |
| /s/ Christopher Grosso Christopher Grosso | Director | June 16, 2010 |
EXHIBIT INDEX
| ExhibitNumber | Description |
| 1.1 | Form of Underwriting Agreement (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 3.1 | Restated Certificate of Formation of International Isotopes Inc. (incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 31, 2010). |
| 3.2 | Bylaws of International Isotopes Inc. (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 333-26269)). |
| 4.1 | Form of Common Stock Certificate (incorporated by reference to (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 33-26269)). |
| 4.2* | Form of Senior Debt Indenture |
| 4.3* | Form of Subordinated Debt Indenture |
| 4.4 | Form of Warrant (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 4.5 | Form of Preferred Stock Certificate (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 4.6 | Form of Certificate of Designation with respect to Preferred Stock (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 5.1* | Opinion of Perkins Coie LLP |
| 12.1 | Statement regarding computation of ratios (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 23.1* | Consent of Hansen, Barnett & Maxwell, P.C., independent auditors |
| 23.2* | Consent of Perkins Coie LLP (included in Exhibit 5.1). |
| 24.1* | Power of attorney (included on the signature page to the registration statement). |
| 25.1 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, under the Senior Debt Indenture (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| 25.2 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, under the Subordinated Debt Indenture (to be filed by amendment or as an exhibit to a report pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act) |
| * | Filed herewith |