EXHIBIT 10.13


                             NOTE PURCHASE AGREEMENT



THIS NOTE PURCHASE AGREEMENT (this  "Agreement"), is made and entered into as of
January  21,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower'7).

                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower,  the principal  amount of $ 156,000.00 , to be evidenced by
an  unsecured  convertible  promissory  note in the form set forth on  Exhibit A
attached hereto (the "Convertible Note" or the "Note'7).

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to Borrower  pursuant to the terms of  the  Convertible  Note and
this Agreement,  a maximum  principal  amount of $ 156,000.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
23, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's owl account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"), by reason of a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  or  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.



                                        1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                       2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or  any  underlying  shares of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severabilitv.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                       3
<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.

                                     BORROWER:


                                     INTERNATIONAL ISOTOPES INC.
                                     a Texas corporation

                                     By:    /S/ Steve T. Laflin
                                            -------------------
                                     Name:  Steve T. Laflin
                                     Title: President


                                     LENDER:


                                     By:    /S/ Ralph Richart
                                            -----------------
                                     Name:  Ralph Richart




                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.
                            NOTE PURCHASE AGREEMENT





                                       4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$156,000.00                                                   January 21,2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value received,  hereby  promises to pay to  the order of Ralph
Richart (the  "Holder")  in lawful money of the United  States at the address of
the Holder  set forth  below,  the  principal  amount of  Hundred  and Fifty Six
Thousand Dollars ($156,000.00) (the "Principal"),  together with simple interest
at the rate of six  percent  (6%) per annum.  Interest  shall be  computed  on a
365-day year for the actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in a5G-s 6ri June 30, 2004,  December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted  by  telecopier  (with  receipt  confirmed) or mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.



                                       5
<PAGE>


                    (i)   If to Company:

                          International Isotopes Inc.
                          4137 Commerce Circle
                          Idaho Falls, Idaho 83401
                          Fax: (208) 524-141 1

                   (ii)   If to Holder:

                          Ralph Richart
                          VC 14-212
                          630 West 168th St.
                          New York, NY 10032

                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue  certificates  evidencing the
shares of the  securities  issuable upon  conversion  unless such Note is either
delivered  to the Company or its  transfer  agent,  or the Holder  notifies  the
Company or its transfer agent that such Note has been lost,  stolen or destroyed
and executes an agreement  satisfactory  to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery,  or such agreement and indemnification,
issue  and  deliver  to such  Holder,  a  certificate  or  certificates  for the
securities  to which the Holder  shall be  entitled  and a check  payable to the
Holder in the amount of any cash  amounts  payable as the result of a conversion
into fractional  shares of common stock. Such conversion shall be deemed to have
been made on the conversion date specified in Holder's notice of conversion. The
person or persons entitled to receive  securities  issuable upon such conversion
shall be  treated  for all  purposes  as the  record  holder or  holders of such
securities  on such date.  If the Holder  elects to convert less than the entire
principal  amount of the Note,  upon  Lender's  surrender of the original  Note,
Borrower  shall deliver to Lender a new Note in an amount equal to the principal
amount of the original Note that has not been converted to common stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings  or if this Note is placed in the hands of attorneys for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.


                                        2
<PAGE>

         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE  STATE  OF TEXAS AS SUCH  1,AWS  ARE  APPLIED  TO  AGREEMENTS
BETWEEN TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


          HOLDER:                              INTERNATIONAL ISOTOPES INC.



          By:      /S/ Ralph Richart           By:    /S/ Steve T. Laflin
                   ------------------                 -------------------
          Name:    Ralph Richart               Name:  Steve T. Laflin
          Address: VC 14-212                   Title: President
                   630 West 168th St.
                   New York, NY 10032







                                       3
<PAGE>

                             NOTE PURCHASE AGREEMENT



THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  23,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower").

                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower, the principal amount of $ 130,500.00 ,to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note '7).

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this Agreement, a maximum  principal amount of $ 130,500.00 (the "Loan J').  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
28, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase  Entirely for Own  Account.  Lender is  acquiring
the Note and any securities  issuable upon conversion of the Note to be received
by Lender (the  "Securities")  for  investment  for Lender's own account and not
with a view to or for  resale in  connection  with,  any  distribution  thereof.
Lender  understands  that the  Securities  have not been  registered  under  the
Securities  Act of 1933,  as   amended  (the "Act"),  by  reason of  a  specific
exemption from the  registration  provisions of the Act that depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.


                                       1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation of this Agreement and the Note it  may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                       2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severability.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.

                                           BORROWER:


                                           INTERNATIONAL ISOTOPES INC.
                                           a Texas corporation

                                           By:    /S/ Steve T. Laflin
                                                  -------------------
                                           Name:  Steve T. Laflin
                                           Title: President


                                           LENDER:

                                           By:    /S/ William Nicholson
                                                  ---------------------
                                           Name:  William Nicholson




                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.
                            NOTE PURCHASE AGREEMENT




                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$130,500.00                                                   January 23,2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value received,  hereby promises to pay to the order of William
Nicholson  (the "Holder") in lawful money of the United States at the address of
the Holder set forth below,  the principal amount of One Hundred Thirty Thousand
Five Hundred  Dollars  ($130,500.00)  (the  "Principal"),  together  with simple
interest at the rate of six percent (6%) per annum.  Interest  shall be computed
on a 365-day year for the actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days) prior to the  conversion  date,  Holder  shall  notify the Company of  its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered, transmitted by



                                        1
<PAGE>



         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


         HOLDER:                                  INTERNATIONAL ISOTOPES INC.



         By:      /S/ William Nicholson           By:   /S/ Steve T. Laflin
                  ---------------------                 -------------------
         Name:    William Nicholson               Name: Steve T. Laflin
         Address: 121 N. Post Oak Ln. Ste. 2105   Title: President
                  Houston, TX 77024






                                        3
<PAGE>

                             NOTE PURCHASE AGREEMENT


THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  21,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower").


                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower, the principal amount of $ 26,000.00 , to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note ").

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this  Agreement,  a maximum  principal  amount of $ 26,000.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
23, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower or at such other place as may be  mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's own account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"), by reason of a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.


                                        1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become privy to material  non-public  information  concerning  Borrower and  its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                        2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severabilitv.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.

                                           BORROWER:


                                           INTERNATIONAL ISOTOPES INC.
                                           a Texas corporation


                                           By:     /S/ Steve T. Laflin
                                                   -------------------
                                           Name:   Steve T. Laflin
                                           Title:  President




                                           LENDER:


                                           By:     /S/ Christopher Grosso
                                                   ----------------------
                                           Name:   Christopher Grosso





                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.

                             NOTE PURCHASE AGREEMENT




                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$26,000.00                                                    January 21,2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for  value  received,  hereby  promises  to  pay to  the  order  of
Christopher  Grosso (the  "Holder") in lawful money of the United  States at the
address  of the  Holder  set forth  below,  the  principal  amount of Twenty Six
Thousand Dollars ($ 26,000.00 ) (the "Principal"), together with simple interest
at the rate of six  percent  (6%) per annum.  Interest  shall be  computed  on a
365-day year for the actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted  by  telecopier  (with  receipt  confirmed) or mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.


                                        1
<PAGE>

                   (i)  If to Company:

                        International Isotopes Inc.
                        4137 Commerce Circle
                        Idaho Falls, Idaho 83401
                        Fax: (208) 524-1411

                  (ii)  If to Holder:

                        Christopher Grosso
                        480 Broadway, Suite 310
                        Saratoga Springs, NY 12866

                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue  certificates  evidencing the
shares of the  securities  issuable upon  conversion  unless such Note is either
delivered  to the Company or its  transfer  agent,  or the Holder  notifies  the
Company or its transfer agent that such Note has been lost,  stolen or destroyed
and executes an agreement  satisfactory  to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery,  or such agreement and indemnification,
issue  and  deliver  to such  Holder,  a  certificate  or  certificates  for the
securities  to which the Holder  shall be  entitled  and a check  payable to the
Holder in the amount of any cash  amounts  payable as the result of a conversion
into fractional  shares of common stock. Such conversion shall be deemed to have
been made on the conversion date specified in Holder's notice of conversion. The
person or persons entitled to receive  securities  issuable upon such conversion
shall be  treated  for all  purposes  as the  record  holder or  holders of such
securities  on such date.  If the Holder  elects to convert less than the entire
principal  amount of the Note,  upon  Lender's  surrender of the original  Note,
Borrower  shall deliver to Lender a new Note in an amount equal to the principal
amount of the original Note that has not been converted to common stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings  or if this Note is placed in the hands of attorneys for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.



                                        2
<PAGE>


         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.



         HOLDER:                                  INTERNATIONAL ISOTOPES INC.



         By:      /S/ Chistopher Grosso           By:    /S/ Steve T. Laflin
                  ---------------------                  -------------------
         Name:    Chistopher Grosso               Name:  Steve T. Laflin
         Address: 480 Broadway, Suite 310         Title: President
                  Saratoga Springs, NY 12866






                                        3
<PAGE>


                             NOTE PURCHASE AGREEMENT


THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  21,  2004,  by  and  between  the  undersigned   lender  ("Lender") and
International Isotopes Inc., a Texas corporation ("Borrower").


                                   WITNESSETH:

         WHEREAS, Borrower desires to borrow from Lender, and 1,ender is willing
to loan to Borrower, the principal amount of $ 29,000.00,  to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note").

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this  Agreement,  a maximum  principal  amount of $ 29,000.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
23, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing Date '7). The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2      Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's own account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"),  by reason 01a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.



                                       1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held 'indefinitely  unless subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                       2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severability.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>


         IN WITNESS WHEREOF, the  parties hereto have executed this Agreement as
of the date first above written.

                                         BORROWER:


                                         INTERNATIONAL ISOTOPES INC.
                                         a Texas corporation


                                         By:    /S/ Steve T. Laflin
                                                -------------------
                                         Name:  Steve T. Laflin
                                         Title: President


                                         LENDER:


                                         By:    /S/ Thomas Kershner
                                                -------------------
                                         Name:  Thomas Kershner




                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.
                            NOTE PURCHASE AGREEMENT





                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$29,000.00                                                    January 21,2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value  received,  hereby promises to pay to the order of Thomas
Kershner  (the  "Holder") in lawful money of the United States at the address of
the Holder set forth below, the principal amount of Twenty Nine Thousand Dollars
($29,000.00) (the "Principal"), together with simple interest at the rate of six
percent  (6%) per annum.  Interest  shall be computed on a 365-day  year for the
actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted  by  telecopier  (with  receipt  confirmed) or mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.


                                        1
<PAGE>

                   (i)    If to Company:

                          International Isotopes Inc.
                          4137 Commerce Circle
                          Idaho Falls, Idaho 83401
                          Fax: (208) 524-1411

                  (ii)    If to Holder:

                          Thomas Kershner
                          258E. Sanford St.
                          Glens Falls, NY 12801

                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder  and  whether  or not the  Note is  surrendered  to the  Company  or  its
transfer  agent.  The  Company  shall  not be  obligated  to issue  certificates
evidencing the shares of the  securities  issuable upon  conversion  unless such
Note is either  delivered  to the Company or its transfer  agent,  or the Holder
notifies the Company or its transfer agent that such Note has been lost,  stolen
or destroyed and executes an agreement  satisfactory to the Company to indemnify
the Company  from any loss  incurred  by it in  connection  with such Note.  The
Company shall, as soon as practicable after such delivery, or such agreement and
indemnification, issue and deliver to such Holder, a certificate or certificates
for the  securities to which the Holder shall be entitled and a check payable to
the  Holder  in the  amount  of any cash  amounts  payable  as the  result  of a
conversion into  fractional  shares of common stock.  Such  conversion  shall be
deemed to have been made on the conversion  date specified in Holder's notice of
conversion.  The person or persons entitled to receive securities  issuable upon
such  conversion  shall be treated  for all  purposes  as the  record  holder or
holders of such  securities  on such date.  If the Holder elects to convert less
than the entire  principal  amount of the Note,  upon Lender's  surrender of the
original Note, Borrower shall deliver to Lender a new Note in an amount equal to
the principal  amount of the original Note that has not been converted to common
stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings or if this Note is placed in the hands of attorneys  for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.



                                        2
<PAGE>


         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


         HOLDER:                                INTERNATIONAL ISOTOPES INC.



         By:   /S/ Thomas Kershner              By:    /S/ Steve T. Laflin
               -------------------                     -------------------
         Name: Thomas Kershner                  Name:  Steve T. Laflin
         Address: 258 E. Sanford St.           Title:  President
                  Glens Falls, NY 12801








                                        3
<PAGE>


                            NOTE PURCHASE AGREEMENT



THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  23,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower").


                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower, the principal amount of $ 162,500.00 ,to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note'7).

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this Agreement,  a maximum  principal  amount of $ 162,500.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
28, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's own account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"), by reason of a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.


                                        1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange  Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this Agreement and the Note in the form attached as  Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                        2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severability.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission device  pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>


         IN WITNESS WHEREOF, the parties  hereto have executed this Agreement as
of the date first above written.

                                         BORROWER:


                                         INTERNATIONAL ISOTOPES INC.
                                         a Texas corporation


                                         By:    /S/ Steve T. Laflin
                                                ----------------------
                                         Name:  Steve T. Laflin
                                         Title: President


                                         LENDER:


                                         By:     /S/ John McCormack
                                                 ---------------------
                                         Name:   John McCormack





                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.
                            NOTE PURCHASE AGREEMENT





                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$162,500.00                                                   January 23,2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value  received,  hereby  promises  to pay to the order of John
McCormack  (the "Holder") in lawful money of the United States at the address of
the  Holder set forth  below,  the  principal  amount of One  Hundred  Sixty Two
Thousand Five Hundred Dollars  ($162,500.00)  (the  "Principal"),  together with
simple  interest at the rate of six percent  (6%) per annum.  Interest  shall be
computed on a 365-day year for the actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into  shares of the Company's  common  stock,  par  value
$.01 per share at a  conversion  price  equal to the  average of the closing bid
prices of the  Company's  common stock on the third  through the eighth  trading
days following the Company's announcement of its acquisition of certain fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted by telecopier  (with  receipt  confirmed)  or  mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.


                                        1
<PAGE>

                  (i)    If to Company:

                         International Isotopes Inc.
                         4137 Commerce Circle
                         Idaho Falls, Idaho 83401
                         Fax: (208) 524-1411

                 (ii)    If to Holder:

                         John McCormack
                         1303 Campbell
                         Houston, TX 77055


                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue  certificates  evidencing the
shares of the  securities  issuable upon  conversion  unless such Note is either
delivered  to the Company or its  transfer  agent,  or the Holder  notifies  the
Company or its transfer agent that such Note has been lost,  stolen or destroyed
and executes an agreement  satisfactory  to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery,  or such agreement and indemnification,
issue  and  deliver  to such  Holder,  a  certificate  or  certificates  for the
securities  to which the Holder  shall be  entitled  and a check  payable to the
Holder in the amount of any cash  amounts  payable as the result of a conversion
into fractional  shares of common stock. Such conversion shall be deemed to have
been made on the conversion date specified in Holder's notice of conversion. The
person or persons entitled to receive  securities  issuable upon such conversion
shall be  treated  for all  purposes  as the  record  holder or  holders of such
securities  on such date.  If the Holder  elects to convert less than the entire
principal  amount of the Note,  upon  Lender's  surrender of the original  Note,
Borrower  shall deliver to Lender a new Note in an amount equal to the principal
amount of the original Note that has not been converted to common stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings  or if this Note is placed in the hands of attorneys for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.



                                        2
<PAGE>


         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


         HOLDER:                                 INTERNATIONAL ISOTOPES INC.


         By:    /S/ John McCormack               By:    /S/ Steve T. Laflin
                ------------------                      -------------------
         Name:  John McCormack                   Name:  Steve T. Laflin
         Address:  1303 Campbell Rd.             Title: President
                   Houston, TX 77055





                                        3
<PAGE>

                             NOTE PURCHASE AGREEMENT



THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  21,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower").


                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower,  the principal amount of $ 73,000.00 ,to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note'7).

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this  Agreement,  a maximum  principal  amount of $ 73,000.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
23, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's own account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"), by reason of a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.


                                        1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan. b. Patent Acquisition.  All conditions  precedent to the closing
of that certain Asset Acquisition Agreement entered into as of November 24, 2003
between the  Borrower  and  International  Machine  Design,  LLC shall have been
satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable upon a full  conversion  of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                        2
<PAGE>


         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the Securities and Exchange  Commission  required  of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severability.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this Agreement may  be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign  its rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>


         IN WITNESS WHEREOF, the parties  hereto have executed this Agreement as
of the date first above written.

                                      BORROWER:


                                      INTERNATIONAL ISOTOPES INC.
                                      a Texas corporation


                                      By:    /S/ Steve T. Laflin
                                             -------------------
                                      Name:  Steve T. Laflin
                                      Title: President



                                      LENDER:


                                       By:    /S/ James Keane
                                              ------------------
                                       Name:  James Keane





                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.

                             NOTE PURCHASE AGREEMENT




                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OK OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$ 73,000.00                                                   January 21, 2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value  received,  hereby  promises to pay to the order of James
Keane (the  "Holder") in lawful money of the United States at the address of the
Holder set forth below,  the principal  amount of Seventy Three Thousand Dollars
($ 73,000.00) (the  "Principal"),  together with simple  interest at the rate of
six percent (6%) per annum. Interest shall be computed on a 365-day year for the
actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

        2.      Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted  by  telecopier  (with  receipt  confirmed) or mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.



                                        1
<PAGE>

                 (i)    If to company:

                        International Isotopes Inc.
                        4137 Commerce Circle
                        Idaho Falls, Idaho 83401
                        Fax: (208) 524-1411

                (ii)    If to Holder:

                        James Keane
                        Fifty Broadway
                        New York, NY 10004

                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue  certificates  evidencing the
shares of the  securities  issuable upon  conversion  unless such Note is either
delivered  to the Company or its  transfer  agent,  or the Holder  notifies  the
Company or its transfer agent that such Note has been lost,  stolen or destroyed
and executes an agreement  satisfactory  to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery,  or such agreement and indemnification,
issue  and  deliver  to such  Holder,  a  certificate  or  certificates  for the
securities  to which the Holder  shall be  entitled  and a check  payable to the
Holder in the amount of any cash  amounts  payable as the result of a conversion
into fractional  shares of common stock. Such conversion shall be deemed to have
been made on the conversion date specified in Holder's notice of conversion. The
person or persons entitled to receive  securities  issuable upon such conversion
shall be  treated  for all  purposes  as the  record  holder or  holders of such
securities  on such date.  If the Holder  elects to convert less than the entire
principal  amount of the Note,  upon  Lender's  surrender of the original  Note,
Borrower  shall deliver to Lender a new Note in an amount equal to the principal
amount of the original Note that has not been converted to common stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings  or if this Note is placed in the hands of attorneys for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.



                                        2
<PAGE>


         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


         HOLDER:                              INTERNATIONAL ISOTOPES INC.


         By:    /S/ James Keane               By:    /S/ Steve T. Laflin
                ---------------                      -------------------
         Name:  James Keane                   Name:  Steve T. Laflin
         Address: Fifty Broadway              Title: President
                  New York, NY 10004








                                        3
<PAGE>

                             NOTE PURCHASE AGREEMENT



THIS NOTE PURCHASE AGREEMENT (this "Agreement"),  is made and entered into as of
January  21,  2004,  by  and  between  the  undersigned  lender  ("Lender")  and
International Isotopes Inc., a Texas corporation ("Borrower").


                                   WITNESSETH:

         WHEREAS,  Borrower desires to borrow from Lender, and Lender is willing
to loan to Borrower,  the principal amount of $ 73,000.00 ,to be evidenced by an
unsecured  convertible  promissory  note in the form  set  forth  on  Exhibit  A
attached hereto (the "Convertible Note" or the "Note '7.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby specifically acknowledged, the parties hereto agree
as follows:

         1.     Closing;  Delivery. Upon the terms and subject to the conditions
herein,  Borrower agrees to issue to the Lender the Convertible  Note and Lender
agrees to lend to  Borrower  pursuant to the terms of the  Convertible  Note and
this  Agreement,  a maximum  principal  amount of $ 73,000.00 (the "Loan").  The
execution and delivery of the Convertible  Note and the delivery of the proceeds
of the Loan shall take place at closing  (the  "Closing")  to be held on January
23, 2004 at 9:00 a.m.,  Mountain  time,  or on such other date and at such other
time as may be mutually agreed upon (the "Closing  Date").  The Closing shall be
held at the  offices of the  Borrower  or at such other place as may be mutually
agreed upon.

         2.     Representations   and   Warranties  of  Lender.   Lender  hereby
represents and warrants that as of the Closing Date:

                a.    Purchase Entirely for Own Account. Lender is acquiring the
Note and any securities  issuable upon  conversion of the Note to be received by
Lender (the "Securities") for investment for Lender's own account and not with a
view to or for resale in  connection  with,  any  distribution  thereof.  Lender
understands  that the Securities have not been  registered  under the Securities
Act of 1933, as amended (the "Act"), by reason of a specific  exemption from the
registration  provisions of the Act that depends upon,  among other things,  the
bona fide nature of the investment intent as expressed herein.

                b.    Investment  Experience.  Lender is an accredited  investor
within the meaning of  Regulation D prescribed  by the  Securities  and Exchange
Commission  pursuant  to the  Act  and  by  virtue  of  Lender's  experience  in
evaluating  and investing in private  placement  transactions  of securities  in
companies  similar to Borrower,  such Lender is capable of evaluating the merits
and risks of Lender's  investment  in Borrower  and has the  capacity to protect
Lender's own interests.


                                        1
<PAGE>

                c.    Restricted   Securities.   Lender  acknowledges  that  the
Securities must be held indefinitely  unless  subsequently  registered under the
Act, or unless an exemption from such registration is available. Lender is aware
of the  provisions  of Rule 144 and 144A  promulgated  under the Act that permit
limited  resale of securities  purchased in a private  placement  subject to the
satisfaction of certain conditions.

         3.     Representations  and  Warranties  of Borrower.  Borrower  hereby
represents and warrants that, as of the Closing Date:

                a.    Authority.  Borrower has all requisite legal and corporate
power and authority  and has obtained all  approvals  and consents  necessary to
enter  into  this  Agreement  and the  Note  and to carry  out and  perform  its
obligations under the terms of this Agreement and the Note.

         4.     Covenant Concerning Confidential Information. Lender understands
that in connection  with the  negotiation  of this Agreement and the Note it may
become  privy to material  non-public  information  concerning  Borrower and its
business operations including proposed new business opportunities. Lender agrees
that it will  keep  such  information  confidential  and will not  disclose  any
material non-public information concerning Borrower to any third person and will
not purchase or sell or enter into any agreement to purchase or sell  securities
of  Borrower  so long as Lender is in  possession  of any  material  information
concerning Borrower which has not yet been announced publicly,  either through a
Borrower  press  release  or in a  disclosure  filing  with the  Securities  and
Exchange Commission.

         5.     Conditions of Lender's  Obligations at Closing.  The obligations
of the Lender under this  Agreement are subject to the  fulfillment on or before
the Closing of each of the following  conditions,  the waiver of which shall not
be effective against the Lender without its written consent:

                a.    Note. Borrower shall have executed and delivered to Lender
an original copy of this  Agreement and the Note in the form attached as Exhibit
A for the Loan.

                b.    Patent  Acquisition.   All  conditions  precedent  to  the
closing of that certain Asset Acquisition  Agreement entered into as of November
24, 2003 between the Borrower and International  Machine Design,  LLC shall have
been satisfied.

                c.    Minimum Loan  Amount.  The Company  shall have  received a
minimum of $650,000 pursuant to the Note and other similar unsecured convertible
promissory notes from existing Borrower shareholders.

         6.     Registration Rights. Borrower hereby covenants to include in its
next  registration  of its  securities  under  the  Securities  Act of 1933  the
registration,  on behalf of the Lender, as a selling shareholder, of that number
of shares of its common stock that would be issuable  upon a full  conversion of
the principal  amount of Lender's Note.  Such "piggy back"  registration  rights
shall be subject  to  limitation  due to  underwriter's  discretion  based on an
assessment of market  conditions in the event that the Company's next registered
offering of securities  involves a traditional  underwriting,  provided that any
such  limitation  shall affect Lender and other  similarly  situated  holders of
Borrower  notes  on an  equal  percentage  basis  according  to  the  number  of
conversion  shares held by Lender and such other  noteholders.  All  expenses of
such registration,  including the expenses of a single law firm representing the
interests of Lender and all other similarly situated selling shareholders, shall
be borne by Borrower.


                                        2
<PAGE>

         7.     SEC Filings.  Borrower hereby covenants, at its expense, to make
any filings with the  Securities and Exchange  Commission  required of Lender in
connection  with the  issuance  of the Note or any  underlying  shares  of stock
issuable  upon  conversion  of the  Note,  including  any  Form 3s or 4s and any
filings required under Section 13(d) of the Securities and Exchange Act of 1934.
Lender  agrees to cooperate  with  Borrower's  legal  counsel in  providing  the
necessary information for such filings.

         8.     Miscellaneous.

                a.    Severability.  If any of the  provisions of this Agreement
shall be held to be invalid or unenforceable,  this Agreement shall be construed
as if not  containing  those  provisions  and the rights and  obligations of the
parties hereto shall be construed and enforced accordingly.

                b.    Counterparts. This Agreement may be executed in two (2) or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument. A facsimile,  telecopy of
other  reproduction  of this  Agreement  may be executed by one or more  parties
hereto,  and an executed copy of this  Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic  transmission  device pursuant
to which  the  signature  of or on behalf  of such  party can be seen,  and such
execution and delivery shall be considered valid,  binding and effective for all
purposes.  At the  request of any party  hereto,  all  parties  hereto  agree to
execute an  original of this  Agreement  as well as any  facsimile,  telecopy or
other reproduction hereof.

                c.    Governing  Law:  Jurisdiction.  This  Agreement  shall  be
construed  in  accordance  with and  governed  by the laws of the State of Texas
without regard to the conflicts of law principles thereof.

                d.    Integration.  This  Agreement and each Note (together with
the exhibits and  documents  referenced  herein and therein)  contain the entire
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior offers, letters, agreements and understandings of the parties.

                e.    Waiver and  Amendment.  Any term of this  Agreement may be
amended only with the written consent of Borrower and Lender.  The observance of
any term of this  Agreement  may be waived  only if such  waiver  is in  writing
signed by the party waiving such term.

                f.    Headings.  The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

                g.    Transfer and  Assignment.  The rights and  obligations  of
Lender and Borrower hereunder and pursuant to the Note may not be transferred or
assigned by either party without the prior written consent of the other,  except
that  Lender  may  transfer  or assign its  rights  and  obligations  under this
Agreement  or the Note to an  affiliate,  partner or limited  partner of Lender.
Except as otherwise  provided in this  Agreement and the Note, the provisions of
this  Agreement and the Note shall inure to the benefit of, and be binding upon,
the successors,  assigns,  heirs,  executors and  administrators  of the parties
hereto.


                                        3
<PAGE>


         IN WITNESS WHEREOF, the parties  hereto have executed this Agreement as
of the date first above written.

                                     BORROWER:


                                     INTERNATIONAL ISOTOPES INC.
                                     a Texas corporation


                                     By:     /S/ Steve T. Laflin
                                             -------------------
                                     Name:   Steve T. Laflin
                                     Title:  President



                                     LENDER:


                                     By:    /S/ Walter O'Hearn
                                            ------------------
                                     Name:  Walter O'Hearn



                  SIGNATURE PAGE TO INTERNATIONAL ISOTOPES INC.

                             NOTE PURCHASE AGREEMENT



                                        4
<PAGE>


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF  1933,  AS  AMENDED,  OR  QUALIFIED  UNDER  APPLICABLE  STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT  PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION  THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT,  EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES,  AN
OPINION OF COUNSEL FOR THE HOLDER,  CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.


                      UNSECURED CONVERTIBLE PROMISSORY NOTE

                                                              Idaho Falls, Idaho

$73,000.00                                                    January 21, 2004


         1.     Principal and Interest.

                (a)   International  Isotopes  Inc.,  a Texas  corporation  (the
"Company"),  for value  received,  hereby promises to pay to the order of Walter
O'Hearn (the  "Holder")  in lawful money of the United  States at the address of
the Holder set forth  below,  the  principal  amount of Seventy  Three  Thousand
Dollars  ($73,000.00)  (the  "Principal"),  together with simple interest at the
rate of six percent (6%) per annum. Interest shall be computed on a 365-day year
for the actual number of days elapsed.

                (b)   The  Principal  of this Note  shall be due and  payable on
December 30, 2005 (the "Maturity Date").  Accrued interest on this Note shall be
payable in arrears on June 30, 2004, December 30, 2004, June 30, 2005 and on the
Maturity Date. This Note may be prepaid without penalty, in whole or in part, at
any time.

                (c)   Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         2.     Conversion.

                (a)   Conversion. The outstanding principal balance of this Note
and all  interest  accrued and unpaid  thereon may be converted at the option of
the Holder at any time into shares of the Company's common stock, par value $.01
per share at a  conversion  price equal to the average of the closing bid prices
of the  Company's  common  stock on the third  through the eighth  trading  days
following the Company's  announcement  of its  acquisition  of certain  fluorine
extraction  process  patents  from  International   Machine  Design,  LLC,  such
announcement  to be made by the  Company  within  two (2)  business  days of the
closing of the acquisition of the patents.

                (b)   Option  Exercise.  At least 10 days  (but not more than 30
days)  prior to the  conversion  date,  Holder  shall  notify the Company of its
desire to  convert  all or part of this Note to common  stock.  Holder's  notice
shall  specify  the  conversion  date and the amount of  principal  and  accrued
interest to be  converted.  Any notice  required or that may be given under this
Note  shall be in  writing  and shall be deemed  to have  been duly  given  when
delivered,  transmitted  by  telecopier  (with  receipt  confirmed) or mailed by
registered  or  certified  first class mail,  postage  prepaid,  return  receipt
requested to the parties  hereto at the address set forth below (as the same may
be  changed  from time to time by  notice  similarly  given)  or the last  known
business  or  residence  address of much other  person as may be  designated  by
either party hereto in writing.


                                        1
<PAGE>

                  (i)     If to Company:

                          International Isotopes Inc.
                          4137 Commerce Circle
                          Idaho Falls, Idaho 83401
                          Fax: (208) 524- 14 11

                 (ii)     If to Holder:

                          Walter O'Hearn
                          1115 5th Ave, Apt 4A
                          New York, NY 10128

                (c)   Mechanics of  Conversion.  Upon  conversion of this entire
Note as set forth above,  the outstanding  principal and accrued interest of the
Note shall be converted as elected by Holder  without any further  action by the
Holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue  certificates  evidencing the
shares of the securities  issuable upon  conversion  unless such Note is  either
delivered  to the Company or its  transfer  agent,  or the Holder  notifies  the
Company or its transfer agent that such Note has been lost,  stolen or destroyed
and executes an agreement  satisfactory  to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery,  or such agreement and indemnification,
issue  and  deliver  to such  Holder,  a  certificate  or  certificates  for the
securities  to which the Holder  shall be  entitled  and a check  payable to the
Holder in the amount of any cash  amounts  payable as the result of a conversion
into fractional  shares of common stock. Such conversion shall be deemed to have
been made on the conversion date specified in Holder's notice of conversion. The
person or persons entitled to receive  securities  issuable upon such conversion
shall be  treated  for all  purposes  as the  record  holder or  holders of such
securities  on such date.  If the Holder  elects to convert less than the entire
principal  amount of  the Note,  upon Lender's  surrender of the original  Note,
Borrower  shall deliver to Lender a new Note in an amount equal to the principal
amount of the original Note that has not been converted to common stock.

         3.     Attorneys Fees. If the indebtedness  represented by this Note or
any part thereof is  collected in  bankruptcy,  receivership  or other  judicial
proceedings  or if this Note is placed in the hands of attorneys for  collection
after  default,  the Company  agrees to pay, in  addition to the  principal  and
interest payable hereunder, reasonable attorneys' fees and costs incurred by the
Holder.



                                        2
<PAGE>


         4.     Governing Law. THIS AGREEMENT  SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN
TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS.


         HOLDER:                                  INTERNATIONAL ISOTOPES INC.


         By:    /S/ Walter O'Hearn                By:    /S/ Steve T. Laflin
                ------------------                       -------------------
         Name:  Walter O'Hearn                    Name:  Steve T. Laflin
         Address: 1115 5th Ave, Apt 4A            Title: President New
                  York, NY 10128




                                        3
<PAGE>