EXHIBIT 10.11

<TABLE>
<S><C>
_____________________________________________________________________________________________
LOAN NUMBER             LOAN NAME               ACCT. NUMBER      NOTE DATE      INITIALS
   48108        International Isotopes, Inc.       243059          07/01/04         MDH
NOTE AMOUNT          INDEX (w/Margin)               RATE        MATURITY DATE   LOAN PURPOSE
$733,595.00     Texas State Bank Base Rate          7.5%           02/01/06      Commercial
                       plus 1.OOO%

                                     Creditor Use Only
_____________________________________________________________________________________________
</TABLE>


                                PROMISSORY NOTE
                 (Commercial - Single Advance - Variable Rate)


DATE AND PARTIES.  The date of  this Promissory Note (Note) is July 1, 2004. The
parties and their addresses are:

    LENDER:
        TEXAS STATE BANK
        3900 North 10th Street
        McAllen, Texas 78501- 1719
        Telephone: (956) 631-5401

    BORROWER:
        INTERNATIONAL ISOTOPES, Inc.
        a Texas Corporation
        4137 Commerce Circle
        Idaho Falls, Idaho 83401

1. DEFINITIONS. As used in this Note, the terms have the following meanings:

     A.  Pronouns.  The  pronouns  "I,"  "me," and "my"  refer to each  Borrower
     signing this Note.  individually and together with their heirs,  successors
     and assigns,  and each other person or legal entity (including  guarantors,
     endorsers,  and  sureties)  who agrees to pay this  Note.  "You" and "Your"
     refer to the Lender,  with its participants or syndicators,  successors and
     assigns, or any person or company that acquires an interest in the Loan.

     B.  Note.  Note  refers to this  document,  and any  extensions,  renewals,
     modifications and substitutions of this Note,

     C. Loan. Loan refers to this transaction  generally,  including obligations
     and duties  arising from the terms of all  documents  prepared or submitted
     for  this  transaction   such   as   applications.   security   agreements,
     disclosures or notes, and this Note.

     D. Property.  Property is any property, real, personal or intangible,  that
     secures my performance of the obligations of this Loan.

     E. Percent.  Rates and rate change  limitations are expressed as annualized
     percentages.

2. PROMISE TO PAY. For value  received,  I promise to pay you or your order,  at
your address, or at such other location as you may designate,  the principal sum
of  $733,595.00  (Principal)  plus  interest  from  July 1,  2004 on the  unpaid
Principal balance until this Note matures or this obligation is accelerated.

3. INTEREST.  Interest will accrue on the unpaid Principal  balance of this Note
at the rate of 7.5 percent  (Interest Rate) until July 2, 2004, after which time
it may change as described in the Variable Rate subsection.

     A. Post-Maturity  Interest.  After maturity or acceleration,  interest will
     accrue at highest rate permitted by law.

     B. Maximum  Interest  Amount.  Any amount assessed or collected as interest
     under the terms of this Note or  obligation  will be limited to the Maximum
     Lawful  Amount  of  interest  allowed  by state  or  federal  law.  Amounts
     collected in excess of the Maximum  Lawful  Amount will be applied first to
     the unpaid  Principal  balance.  Any remainder  will be refunded to me. The
     maximum  interest  rate  producing  the Maximum  Lawful  Amount will be the
     quarterly  ceiling rate announced by the Credit  Commissioner  from time to
     time hereafter.

     C. Statutory Authority.  The amount:  assessed or collected on this Note is
     authorized by the Texas usury laws under Tex. Fin. Code. Ch. 303.

     D. Accrual.  During the scheduled term of this Loan interest  accrues using
     an Actual1360 days counting method.

     E.  Variable  Rate.  The Interest  Rate may change  during the term of this
     transaction.

          (1) Index.  Beginning  with the first Change Date,  the Interest  Rate
          will be based on the following index: the base commercial lending rate
          announced by Texas State Bank.

          The Current  index is the most recent index  figure  available on each
          Change  Date.  You do not  guaranty by  selecting  this Index,  or the
          margin,  that the Interest Rate on this Note will be the same rate you
          charge  on any  other  loans or class of loans you make to me or other
          borrowers. If this Index is no longer available, you will substitute a
          similar index. You will give me notice of your choice.

          (2) Change Date.  Each date on which the  Interest  Rate may change is
          called a Change Date.  The  Interest  Rate may change July 2, 2005 and
          daily thereafter.

          (3) Calculation Of Change. On each Change Date, you will calculate the
          Interest Rate, which will be the Current Index plus 1.000 percent. The
          result  of  this  calculation  will be  rounded  to the  nearest  .001
          percent.  Subject to any  limitations,  this will be the Interest Rate
          until  the next  Change  Date.  The new  Interest  Rate  will   become
          effective on each Change Date.  The Interest Rate and other charges on
          this Note will never exceed the highest rate or charge  allowed by law
          for this Note.

          (4)  Limitations.  The  Interest  Rate  changes  are  subject  to  the
          following limitations:

               (a)  Lifetime.  The  Interest  Rate will never be less than 7.500
               percent.

          (5) Effect Of Variable  Rate. A change in the Interest  Rate will have
          the following effect on the payments: The amount of scheduled payments
          will change.

4. REMEDIAL CHARGES.  In addition to interest or other finance charges,  I agree
that I will pay these additional fees based on my method and pattern of payment.
Additional remedial charges may be described elsewhere in this Note.

     A. Late  Charge.  If a payment is more than 10 days late, I will be charged
     5.000  percent  of the  Amount  of  Payment.  I will pay this  late  charge
     promptly but only once for each late payment.

     B.  Returned  Check  Charge.  I agree to pay a fee not to exceed $30.00 for
     each check,  negotiable order of  withdrawal or draft I issue in connection
     with this Loan that is returned because it has been dishonored.

     C. Stop Payment. A(n) Stop Payment equal to $25.00.

5. PAYMENT.  I agree to pay this Note as follows:  6 monthly payments of accrued
interest  beginning  on August 01,  2004,  then 12 monthly  payments  of accrued
interest plus  $1,500.00 to principal  beginning  February 01, 2005, and a final
payment of the entire unpaid outstanding  balance of Principal and Interest will
be due on February 01, 2006.

Payments  will be rounded to the  nearest  $.01.  With the final  payment I also
agree to pay any additional fees or charges owing and the amount of any advances
you have made to  others on my  behalf.  Payments  scheduled  to be paid  on the
29th. 30th or 31st day of a month that contains  no such day will,  instead,  be
made on the last day of such month.

Each payment I make on this Note will be applied  first to interest  that is due
then to principal  that is due, and finally to any charges that I owe other than
principal  and  interest.  If you  and I agree  to a  different  application  of
payments,  we will describe our agreement on this Note.  The actual amount of my
final payment will depend on my payment record.

6.  PREPAYMENT.  I may  prepay  this  Loan in full or in part at any  time.  Any
partial  prepayment will not excuse any later scheduled  payments until I pay in
full.

7. LOAN PURPOSE. The purpose of this Loan is a renewal O/P payoff note #31083169

8.  SECURITY.  This Loan is secured by separate  security  instruments  prepared
together with this Note as follows:

Document Name                                       Parties to Document
Security Agreement - International Isotopes, Inc.   International Isotopes, Inc.

9. DEFAULT. I will be in default if any of the following occur:

     A. Payments. I fail to make a payment in full when due.

     B. Insolvency.  I make an assignment for the benefit of creditors or become
     insolvent, either because my liabilities exceed my assets or I am unable to
     pay my debts as they become due.


                                        1
<PAGE>


     C. Business Termination. I merge, dissolve,  reorganize, end my business or
     existence,  or a partner  or  majority  owner dies or is  declared  legally
     incompetent.

     D.  Failure to  Perform.  I fail to perform  any  condition  or to keep any
     promise or covenant of this Note.

     E.  Other  Documents.  A  default  occurs  under  the  terms  of any  other
     transaction document.

     F. Other  Agreements. I am in default on any other debt or agreement I have
     with you.

     G. Misrepresentation. I make any verbal or written statement or provide any
     financial  information that is untrue,  inaccurate,  or conceals a material
     fact at the time it is made or provided.

     H. Judgment. I fail to satisfy or appeal any judgment against me.

     I. Forfeiture.  The Property  is used in a  manner  or for a  purpose  that
     threatens confiscation by a legal authority.

     J. Name  Change.  I change my name or assume  an  additional  name  without
     notifying you before making such a change.

     K. Property  Transfer. I transfer all or a substantial  part of my money or
     property.

     L. Property Value. The value of the Property declines or is impaired.

     M. Material Change. Without first notifying you, there is a material change
     in my business, including ownership, management, and financial conditions.

     N. Insecurity. You reasonably believe that you are insecure.

10. ASSUMPTIONS.  Someone buying the Property cannot assume the obligation.  You
may declare  the entire  balance of the Note to be  immediately  due and payable
upon the creation of, or contract for the creation of, any lien, encumbrance, or
transfer  of the  Property.  However,  I may sell or  similarly  dispose  of any
Property that is inventory.

11. WAIVERS AND CONSENT.  To the extent not prohibited by law,  I waive protest,
presentment for payment,  demand,  notice of  acceleration.  notice of intent to
accelerate and notice of dishonor.

     A. Additional  Waivers By Borrower.  In addition,  I, and any party to this
     Note and Loan, to the extent  permitted by law,  consent to certain actions
     you may take, and generally  waive defenses that may be available  based on
     these actions or based on the status of a party to this Note.

          (1) You may renew or extend  payments on this Note,  regardless of the
          number of such renewals or extensions.

          (2)  You  may  release  any  Borrower,  endorser,  guarantor,  surety,
          accommodation maker or any other co-signer.

          (3) You may release,  substitute or impair any Property  securing this
          Note.

          (4) You, or any  institution  participating  in this Note,  may invoke
          your right of set-off.

          (5) You may enter into any sales,  repurchases  or  participations  of
          this  Note to any  person in any  amounts  and I waive  notice of such
          sales, repurchases or participations.

          (6) I  agree  that  any of us  signing  this  Note  as a  Borrower  is
          authorized  to  modify  the  terms  of  this  Note  or any  instrument
          securing, guarantying or relating to this Note.

     B. No Waiver By Lender.  Your course of dealing,  or your forbearance from,
     or delay in, the exercise of any of your rights,  remedies,  privileges  or
     right to insist upon my strict  performance of any provisions  contained in
     this Note, or other Loan  documents.  shall not be construed as a waiver by
     you, unless any such waiver is in writing and is signed by you.

12.  REMEDIES.  After I default,  and after you give any legally required notice
and  opportunity to cure the default,  you may at your option do any one more of
the following.

     A.  Acceleration.  You may make all or any part of the amount  owing by the
     terms of this Note immediately due.

     B.  Sources.  You may use any and all  remedies  you  have  under  state or
     federal law or in any instrument securing this Note.

     C.  Insurance  Benefits.  You may  make a claim  for any and all  insurance
     benefits or refunds that may be available on my default.

     D.  Payments  Made On My  Behalf.  Amounts  advanced  on my behalf  will be
     immediately  due and may be added to the  balance  owing under the terms of
     this Note, and accrue interest at the highest post-maturity interest rate.

     E.  Set-Off.  You may use the right of set-off.  This means you may set-off
     any amount due and payable under the terms of this Note against any right I
     have to receive money from you. My right to receive money from you includes
     any deposit or share account  balance I have with you; any money owed to me
     on an  item  presented  to you or in  your  possession  for  collection  or
     exchange;  and any repurchase  agreement or other  non-deposit  obligation.
     "Any amount due and  payable  under the terms of this Note" means the total
     amount to which you are entitled to demand  payment under the terms of this
     Note at the time you set-off.  Subject to any other written contract, if my
     right to receive money from you is also owned by someone who has not agreed
     to pay this Note,  your right of set-off  will apply to my  interest in the
     obligation  and to any other amounts I could withdraw on my sole request or
     endorsement.  Your right of  set-off  does not apply to an account or other
     obligation where my rights arise only in a representative capacity. It also
     does not apply to any Individual  Retirement  Account or other tax-deferred
     retirement  account.  You will not be liable for the  dishonor of any check
     when the dishonor  occurs  because you set-off  against any of my accounts.
     I agree to hold you harmless  from any such  claims  arising as a result of
     your exercise of your right of set-off.

     F. Waiver. Except as otherwise required by law, by choosing any one or more
     of these  remedies  you do not give up your right to use any other  remedy.
     You do not waive a default if you choose not to use a remedy.  By  electing
     not to use any remedy,  you do not waive your right to later  consider  the
     event a default and to use any remedies if the default  continues or occurs
     again.

13. COLLECTION  EXPENSES AND ATTORNEYS' FEES. On or after Default, to the extent
permitted  by law, I agree to pay all  expenses of  collection,  enforcement  or
protection of your rights and remedies under this Note.  Expenses  include,  but
are not limited to,  reasonable  attorneys'  fees,  court costs, and other legal
expenses.  These  expenses  are  due  and  payable  immediately.   If  not  paid
immediately,  these  expenses  will bear interest from the date of payment until
paid in full at the highest interest rate in effect as provided for in the terms
of this  Note.  All fees and  expenses  will be secured  by the Property  I have
granted to you, if any. To the extent permitted by the United States  Bankruptcy
Code, I agree to pay the  reasonable  attorneys'  fees you incur to collect this
Debt as awarded by any court exercising jurisdiction under the Bankruptcy Code.

14. WARRANTIES AND  REPRESENTATIONS.  I make to you the following warranties and
representations which will continue as long as this Note is in effect:

     A. Power. I am duly organized, and validly existing and in good standing in
     all  jurisdictions  in which I operate.  I have the power and  authority to
     enter into this  transaction  and to carry on my business or activity as it
     is now being  conducted and, as  applicable,  am qualified to do so in each
     jurisdiction in which I operate.

     B. Authority. The execution,  delivery and performance of this Note and the
     obligation  evidenced  by this Note are  within my  powers,  have been duly
     authorized,  have received all necessary  governmental  approval,  will not
     violate any provision of law, or order of court or governmental agency, and
     will not  violate any  agreement  to which I am a party or to which I am or
     any of my Property is subject.

     C. Name and place of Business.  Other than previously  disclosed in writing
     to you I have not changed my name or principal place of business within the
     last 10 years and have not used any other trade or fictitious name. Without
     your prior  written  consent,  I do not and will not use any other name and
     will preserve my existing name, trade names and franchises.

15. INSURANCE. I agree to obtain the insurance described in this Loan Agreement.

     A. Property  Insurance.  I will insure or retain insurance  coverage on the
     Property and abide by the insurance requirements of any security instrument
     securing this Loan.

     B. Insurance  Warranties.  I agree to purchase any insurance coverages that
     are required, in the amounts you require, as described in this or any other
     documents I sign for this Loan. I will provide you with continuing proof of
     coverage.  I will buy or  provide  insurance  from a  firm  licensed  to do
     business  in the  State  where the  Property  is  located.  I will have the
     insurance company name you as loss payee on any insurance policy.  You will
     apply  the  insurance  proceeds  toward  what I owe you on the  outstanding
     balance.  I agree that if the insurance proceeds do not cover the amounts I
     still owe you, I will pay the  difference.  I will keep the insurance until
     all  debts  secured  by  this  agreement  are  paid.  If I want  to buy the
     insurance  from you, I have  signed a separate  statement  agreeing to this
     purchase.

16.  APPLICABLE  LAW.  This Note is  governed  by the laws of Texas,  the United
States of America and to the extent  required,  by the laws of the  jurisdiction
where the Property is located.  In the event of a dispute,  the exclusive forum,
venue and place of jurisdiction will be in Texas,  unless otherwise  required by
law.

17. JOINT AND  INDIVIDUAL  LIABILITY AND  SUCCESSORS.  My obligation to pay this
Loan is independent of the obligation of any other person who has also agreed to
pay it. You may sue me alone,  or anyone else who is obligated on this Loan,  or
any number of us  together,  to collect  this Loan.  Extending  this Loan or new
obligations  under this Loan, will not affect my duty under this Loan and I will
still be obligated  to pay this Loan.  The duties and benefits of this Loan will
bind and benefit the successors and assigns of you and me.

18.  AMENDMENT,  INTEGRATION AND  SEVERABILITY.  This Note may not be amended or
modified  by oral  agreement.  No  amendment  or  modification  of this  Note is
effective  unless made in writing  and  executed by you and me. This Note is the
complete and final expression of the agreement. If any provision of this Note is
unenforceable,  then  the  unenforceable  provision  will  be  severed  and  the
remaining provisions will still be enforceable.


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<PAGE>

19.  INTERPRETATION.  Whenever  used,  the singular  includes the plural and the
plural includes the singular.  The section headings are for convenience only and
are not to be used to interpret or define the terms of this Note.

20.  NOTICE,  FINANCIAL  REPORTS  AND  ADDITIONAL  DOCUMENTS.  Unless  otherwise
required  by law,  any notice  will be given by  delivering  it or mailing it by
first  class  mail to the  appropriate  party's  address  listed in the DATE AND
PARTIES section,  or to any other address  designated in writing.  Notice to one
party will be deemed to be notice to all  parties.  I will inform you in writing
of any  change in my name,  address  or other  application  information.  I will
provide you any financial  statement or information  you request.  All financial
statements and  information I give you will be correct and complete.  I agree to
sign, deliver,  and file any additional documents or certifications that you may
consider necessary to perfect,  continue, and preserve my obligations under this
Loan and to confirm your lien status on any Property. Time is of the essence.

21.  CREDIT  INFORMATION.  I agree to supply you with whatever  information  you
reasonably  request.  You will make requests for this information  without undue
frequency, and will give me reasonable time in which to supply the information.

22. ERRORS AND OMISSIONS.  I agree,  if requested by you, to fully  cooperate in
the correction, if necessary, in the reasonable discretion of you of any and all
loan  closing  documents  so that all  documents  accurately  describe  the loan
between you and me. I agree to assume all costs including by way of illustration
and not limitation, actual expenses, legal fees and marketing losses for failing
to reasonably comply with your requests within thirty (30)days.

     THIS  WRITTEN  LOAN  AGREEMENT  REPRESENTS  THE  FINAL  AGREEMENT
     BETWEEN THE PARTIES  AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF
     PRIOR,  CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL  AGREEMENTS OF THE
     PARTIES.  THERE ARE NO  UNWRITTEN  ORAL  AGREEMENTS  BETWEEN  THE
     PARTIES.


23. SIGNATURES.  By signing, I agree to the terms contained in this Note. I also
acknowledge receipt of a copy of this Note.


    BORROWER:

       International Isotopes, Inc.

                By: /S/ Steve Laflin 7-9-04
                    ----------------------------
                    Steve Laflin, President, CEO

    LENDER:

       Texas State Bank

                By:
                    ----------------------------
                    M. Douglas Harris, Vice President








                                       3
<PAGE>


                               SECURITY AGREEMENT



DATE AND PARTIES.  The date of this Security  Agreement  (Agreement) is July 01,
2004. The parties and their addresses are:

    SECURED PARTY:
        TEXAS STATE BANK
        3900 North 10th Street
        McAllen, Texas 78501-1719

    DEBTOR:
        INTERNATIONAL ISOTOPES, INC.
        a Texas Corporation
        4137 Commerce Circle
        Idaho Falls, Idaho 83401

The pronouns "you" and "your" refer to the Secured Party. The pronouns "I," "me"
and "my" refer to each person or entity  signing  this  Agreement  as Debtor and
agreeing to give the Property  described  in this  Agreement as security for the
Secured Debts.

1. SECURED DEBTS. This Agreement will secure the following Secured Debts:

     A.  Specific  Debts.  The  following  debts and all  extensions,  renewals,
     refinancings,  modifications and  replacements.  A promissory note or other
     agreement,  No. 48108, dated July 1, 2004, from me to you, in the amount of
     $733,595.00.

     B. Sums Advanced.  All sums advanced and expenses incurred by you under the
     terms of this Agreement.

2.  SECURITY  INTEREST.  To secure the  payment and  performance  of the Secured
Debts, I give you a security  interest in ail of the Property  described in this
Agreement that I own or have sufficient rights in which to transfer an interest,
now or in the future,  wherever  the  Property  is or will be  located,  and all
proceeds and  products  from the  Property  (including,  but not limited to, all
parts, accessories,  repairs, replacements,  improvements, and accessions to the
Property).  Property is all the  collateral  given as  security  for the Secured
Debts and described in this Agreement, and includes all obligations that support
the  payment  or  performance  of the  Property.  "Proceeds"  includes  anything
acquired upon the sale, lease,  license,  exchange,  or other disposition of the
Property;  any rights and claims arising from the Property;  and any collections
and distributions on account of the Property.

This  Agreement  remains in effect  until  terminated  in  writing,  even if the
Secured  Debts are paid and you are no longer  obligated to advance  funds to me
under any loan or credit agreement.

3. PROPERTY DESCRIPTION. The Property is described as follows:

     A.  Inventory.  All inventory  which I hold for ultimate sale or lease,  or
     which has been or will be supplied under contracts of service, or which are
     raw  materials,  work in  process,  or  materials  used or  consumed  in my
     business.

     B.  Accounts  and Other  Rights to Payment. All rights I have now or in the
     future to payments  including,  but not limited to, payment for property or
     services sold, leased, rented, licensed, or assigned, whether or not I have
     earned such payment by performance.  This includes any rights and interests
     (including  all liens and  security  interests)  which I may have by law or
     agreement against any Account Debtor or obligor of mine.

     C.  Instruments,  Documents and Chattel Paper. All instruments and rights I
     have now or in the future to payments including, but not limited to, rights
     to payment  arising out of all present and future  documents,  instruments,
     tangible  and  electronic   chattel  paper,   and  loans  and   obligations
     receivable. This includes any rights and interests [including all liens and
     security  interests)  which I may  have  by law or  agreement  against  any
     Account Debtor or obligor of mine.

     D. General Intangibles.  All general intangibles including, but not limited
     to, tax refunds, applications for patents, patents, copyrights, trademarks,
     trade  secrets,  good  will,  trade  names,  customer  lists,  permits  and
     franchises,  payment  intangibles,  computer  programs  and all  supporting
     information  provided in connection with a transaction relating to computer
     programs, and the right to use my name.

     E. Equipment.  All equipment including,  but not limited to, all machinery,
     vehicles, furniture, fixtures,  manufacturing equipment, farm machinery and
     equipment,  shop equipment,  office and recordkeeping  equipment, and parts
     and tools.  All equipment  described in a list or schedule  which I give to
     you will also be included in the Property, but such a list is not necessary
     for a valid security interest in my equipment.

     F. Specific Property.  Any and All deposit accounts,  payment  intangibles,
     investment  property and software  together with all supporting  obligation
     and proceeds of same property and all after-acquired collateral of the same
     classification.

4. WARRANTIES AND  REPRESENTATIONS.  I make to you the following  warranties and
representations which will continue as long as this Agreement is in effect:

     A. Power. I am duly organized, and validly existing and in good standing in
     all  jurisdictions  in which 1 operate.  I have the power and  authority to
     enter into this  transaction  and to carry on my business or activity as it
     is now being  conducted and, as  applicable,  am qualified to do so in each
     jurisdiction in which I operate.

     B. Authority. The execution, delivery and performance of this Agreement and
     the obligation  evidenced by this Agreement are within my powers, have been
     duly authorized,  have received all necessary governmental  approval,  will
     not violate any provision of law, or order of court or governmental agency,
     and will not violate any  agreement  to which I am a party or to which I am
     or any of my property is subject.

     C. Name and Location.  My name indicated in the DATE AND PARTIES section is
     my exact legal name. I am an entity organized and registered under the laws
     of Texas. I will provide  verification  of  registration  and location upon
     your request.  I will provide you with at least 30 days notice prior to any
     change in my name, address, or state of organization or registration.

     D. Business Name. Other than previously  disclosed in writing to you I have
     not changed my name or principal place of business within the last 10 years
     and have not used any other trade or  fictitious  name.  Without your prior
     written consent, I do not and will not use any other name and will preserve
     my existing name, trade names and franchises.

     E. Ownership of Property. I represent that I own all of the Property.  Your
     claim to the Property is ahead of the claims of any other creditor,  except
     as disclosed  in writing to you prior to any advance on the Secured  Debts.
     The  collateral  that is the subject of the chattel  paper is perfected and
     preserved. I represent that I am the original owner of the Property and, if
     I am not,  that I have  provided  you  with a list of prior  owners  of the
     Property.

5. DUTIES TOWARD PROPERTY.

     A.  Protection  of Secured  Party's  Interest.  I will defend the  Property
     against any other claim. I agree to do whatever you require to protect your
     security  interest  and to keep  your  claim in the  Property  ahead of the
     claims of other creditors.  I will not do anything to harm your position. I
     will keep books. records and accounts about the Property and my business in
     general.  I will let you examine  these and make  copies at any  reasonable
     time.  I will prepare any report or accounting you request which deals with
     the Property.

     B. Use, Location,  and Protection of the Property. I will keep the Property
     in my  possession  and in good  repair.  I will use it only for  commercial
     purposes.  I will not change this  specified use without your prior written
     consent.  You have the right of  reasonable  access to inspect the Property
     and I will immediately inform you of any loss or damage to the Property.  I
     will not cause or permit waste to the Property.

     I will keep the  Property  at my  address  listed  in the DATE AND  PARTIES
     section unless we agree I may keep it at another location.  If the Property
     is to be used in other states, I will give you a list of those states.  The
     location  of the  Property  is  given to aid in the  identification  of the
     Property.  It does not in any way limit the scope of the security  interest
     granted to you. I will notify you in writing and obtain your prior  written
     consent to any change in  location of any of the  Property.  I will not use
     the Property in violation of any law. I will notify you in writing prior to
     any change in my  address,  name or, if an  organization,  any change in my
     identity or structure.

     Until the Secured Debts are fully paid and this Agreement is terminated,  I
     will not grant a security  interest  in any of the  Property  without  your
     prior  written  consent.  I will pay all  taxes and  assessments  levied or
     assessed  against me or the Property and provide timely proof of payment of
     these taxes and assessments upon request.

     C. Selling,  Leasing or Encumbering the Property. I will not sell, offer to
     sell,  lease, or otherwise  transfer or encumber the Property  without your
     prior written permission,  except for inventory sold in the ordinary course
     of business at fair market value, or at a minimum price established between
     you and me. If I am in  default  under this  Agreement,  I may not sell the
     inventory  portion of the Property even in the ordinary course of business.
     Any  disposition  of the Property  contrary to this  Agreement will violate
     your  rights.  Your  permission  to sell  the  Property  may be  reasonably
     withheld without regard to the creditworthiness of any buyer or transferee.
     I will not  permit  the  Property  to be the  subject  of any  court  order
     affecting my rights to the Property in any action by anyone other than you.
     If the Property  includes chattel paper or instruments,  either as original
     collateral  or as  proceeds  of the  Property,  I will note  your  security
     interest on the face of the chattel paper or instruments.




                                       1
<PAGE>

     D. Additional  Duties  Specific to Accounts.  I will not settle any Account
     for less than its full value  without  your written  permission.  Until you
     tell me  otherwise,  I will collect all Accounts in the ordinary  course of
     business.  I will not dispose of the  Accounts by  assignment  without your
     prior written  consent.  I will keep the proceeds from all the Accounts and
     any  goods  which  are  returned  to me or  which I take  back.  I will not
     commingle them with any of my other  property.  I will deliver the Accounts
     to you at your  request.  If you ask me to pay you the  full  price  on any
     returned  items  or  items  retaken  by me,  I will do so.  I will  make no
     material  change  in the  terms  of any  Account,  and I will  give you any
     statements, reports, certificates, lists of Account Debtors (showing names,
     addresses and amounts  owing),  invoices  applicable  to each Account,  and
     other data in any way pertaining to the Accounts as you may request.

6. INSURANCE.  I agree to keep the Property insured against the risks reasonably
associated  with the Property. I will maintain this insurance in the amounts you
require.  This  insurance  will last until the  Property is  released  from this
Agreement. I may choose the insurance company,  subject to your approval,  which
will not be unreasonably withheld.

I will  have  the  insurance  company  name you as loss  payee on any  insurance
policy. I will give you and the insurance  company immediate notice of any loss.
You may apply the insurance  proceeds  toward what is owed on the Secured Debts.
You may require  added  security  as a condition  of  permitting  any  insurance
proceeds to be used to repair or replace the Property.

If you acquire  the  Property in damaged  condition,  my right to any  insurance
policies and proceeds will pass to you to the extent of the Secured Debts.

I will immediately notify you of cancellation or termination of insurance.  If I
fail to keep the  Property  insured,  you may obtain  insurance  to protect your
interest in the Property.  This  insurance may include  coverages not originally
required of me, may be written by a company other than one I would  choose,  and
may be  written  at a  higher  rate  than I  could  obtain  if I  purchased  the
insurance.

7. COLLATERAL PROTECTION INSURANCE. As part of this Agreement, I am giving you a
security interest in the Property described in the Property Description Section.
I am required to maintain  insurance  on the Property in the amount you specify,
subject to applicable law. I agree to purchase the collateral  insurance from an
insurer  authorized to do business in Texas or an eligible surplus lines insurer
to the extent  permitted by law. I will name you as loss payee under the policy.
I may  be  required  to  deliver  to you a copy  of  the  collateral  protection
insurance  policy  and proof of payment  of  premiums.  If I fail to meet any of
these requirements, you may obtain collateral protection insurance on my behalf.
You are not required to purchase any type or amount of insurance. You may obtain
replacement cost insurance if authorized under applicable law, subject to policy
limits.  If you purchase  insurance for the Property,  I will be responsible for
the cost of that insurance, including interest and any other charges incurred by
you in connection with the placement of collateral  protection  insurance to the
extent  permitted  by law.  I  understand  that  insurance  you  obtain may cost
significantly greater than the cost of insurance I could have obtained.  Amounts
that I owe are due and payable upon demand or on such other terms as you require
to the extent permitted by law.

8. COLLECTION  RIGHTS OF THE SECURED PARTY.  Account Debtor means the person who
is obligated on an account,  chattel paper, or general  intangible.  I authorize
you to notify my Account Debtors of your security  interest and to deal with the
Account Debtors' obligations at your discretion. You may enforce the obligations
of an Account  Debtor,  exercising  any of my rights with respect to the Account
Debtors'  obligations  to make payment or otherwise  render  performance  to me,
including  the   enforcement   of  any  security   interest  that  secures  such
obligations.  You may apply  proceeds  received from the Account  Debtors to the
Secured  Debts  or you may  release  such  proceeds  to me. I  specifically  and
irrevocably authorize you to exercise any of the following powers at my expense,
without limitation, until the Secured Debts are paid in full:

     A. demand payment and enforce collection from any Account Debtor or Obligor
     by suit or otherwise.

     B. enforce any security  interest,  lien or encumbrance given to secure the
     payment or performance of any Account Debtor or any obligation constituting
     Property.

     C. file proofs of claim or similar  documents  in the event of  bankruptcy,
     insolvency or death of any person obligated as an Account Debtor.

     D. compromise,  release, extend, or exchange any indebtedness of an Account
     Debtor.

     E. take control of any proceeds of the Account Debtors' obligations and any
     returned or repossessed goods.

     F.  endorse all  payments by any  Account  Debtor  which may come into your
     possession as payable to me.

     G. deal in all  respects  as the holder and owner of the  Account  Debtors'
     obligations.

9.  AUTHORITY TO PERFORM.  I authorize  you to do anything  you deem  reasonably
necessary  to protect  the  Property,  and perfect and  continue  your  security
interest  in the  Property.  If I fail to  perform  any of my duties  under this
Agreement or any other security interest, you are authorized,  without notice to
me, to perform the duties or cause them to be  performed.  These  authorizations
include, but are not limited to, permission to:

     A. pay and discharge taxes, liens, security interests or other encumbrances
     at any time levied or placed on the Property.

     B. pay any rents or other charges under any lease affecting the Property.

     C.  order  and pay for the  repair,  maintenance  and  preservation  of the
     Property.

     D. sign,  when  permitted by law, and file any  financing  statements on my
     behalf and pay for filing and recording fees pertaining to the Property.

     E.  place a note on any  chattel  paper  indicating  your  interest  in the
     Property.

     F. take any action you feel necessary to realize on the Property, including
     performing any part of a contract or endorsing it in my name.

     G. handle any suits or other proceedings involving the Property in my name.

     H. prepare, file, and sign my name to any necessary reports or accountings.

     I. make an entry on my books and  records  showing  the  existence  of this
     Agreement.

     J. notify any Account  Debtor of your interest in the Property and tell the
     Account Debtor to make payments to you or someone else you name.

If you perform for me, you will use reasonable  care.  Reasonable  care will not
include:  any steps necessary to preserve rights against prior parties; the duty
to send notices,  perform  services or take any other action in connection  with
the management of the Property; or the duty to protect, preserve or maintain any
security interest given to others by me or other parties.  Your authorization to
perform  for me will not create an  obligation  to perform  and your  failure to
perform will not preclude you from  exercising any other rights under the law or
this Agreement.

If you come into actual or  constructive  possession of the  Property,  you will
preserve and protect the Property.  For purposes of this paragraph,  you will be
in actual possession of the Property only when you have physical,  immediate and
exclusive  control over the Property and you have  affirmatively  accepted  that
control.  You will be in  constructive  possession of the Property only when you
have both the power and the intent to exercise control over the Property.

10. DEFAULT. I will be in default if any of the following occur:

     A. Payments. I fail to make a payment in full when due.

     B.  Insolvency. I make an assignment for the benefit of creditors or become
     insolvent, either because my liabilities exceed my assets or I am unable to
     pay my debts as they become due.

     C. Business Termination. I merge, dissolve,  reorganize, end my business or
     existence,  or a partner  or  majority  owner dies or is  declared  legally
     incompetent.

     D.  Failure to  Perform.  I fail to perform  any  condition  or to keep any
     promise or covenant of this Agreement.

     E.  Other  Documents.  A  default  occurs  under  the  terms  of any  other
     transaction document.

     F. Other  Agreements. I am in default on any other debt or agreement I have
     with you.

     G. Misrepresentation. I make any verbal or written statement or provide any
     financial  information that is untrue,  inaccurate,  or conceals a material
     fact at the time it is made or provided.

     H. Judgment. I fail to satisfy or appeal any judgment against me.

     I.  Forfeiture.  The  Property  is used in a manner or for a  purpose  that
     threatens confiscation by a legal authority.

     J.  Name  Change. I change  my name or assume an  additional  name  without
     notifying you before making such a change.

     K. Property  Transfer. I transfer all or a substantial  part of my money or
     property.

     L. Property Value. The value of the Property declines or is impaired.

     M. Material Change. Without first notifying you, there is a material change
     in my business, including ownership, management, and financial conditions.

     N. Insecurity. You reasonably believe that you are insecure.



                                       2
<PAGE>

11.  REMEDIES.  After I default,  and after you give any legally required notice
and  opportunity to cure the default,  you may at your option do any one or more
of the following.

     A.  Acceleration.  You may make all or any part of the amount  owing by the
     terms of the Secured Debts immediately due.

     B.  Sources.  You may use any and all  remedies  you  have  under  state or
     federal law or in any  instrument  evidencing  or pertaining to the Secured
     Debts.

     C.  Insurance  Benefits.  You may  make a claim  for any and all  insurance
     benefits or refunds that may be available on my default.

     D.  Payments  Made On My  Behalf.  Amounts  advanced  on my behalf  will be
     immediately due and may be added to the Secured Debts.

     E. Assembly of Property. You may require me to gather the Property and make
     it available to you in a reasonable fashion.

     F. Repossession. You may repossess the Property so long as the repossession
     does not  involve  a breach  of the  peace.  You may sell the  Property  as
     provided  by law.  You may  apply  what  you  receive  from the sale of the
     Property to your expenses,  your  attorneys' fees and legal expenses (where
     not  prohibited  by law),  and any debt I owe you. If what you receive from
     the sale of the  Property  does not satisfy the debt,  I will be liable for
     the deficiency  (where  permitted by law). In some cases,  you may keep the
     Property to satisfy the debt.

     Where a notice is required, I agree that ten days prior written notice sent
     by  first  class  mail  to my  address  listed  in this  Agreement  will be
     reasonable  notice to me under the Texas  Uniform  Commercial  Code. If the
     Property is perishable or threatens to decline  speedily in value, you may,
     without  notice  to  me,  dispose  of any  or  all  of  the  Property  in a
     commercially  reasonable  manner at my expense  following any  commercially
     reasonable preparation or processing.

     If any items not otherwise  subject to this  Agreement are contained in the
     Property  when you take  possession,  you may hold these items for me at my
     risk and you will not be liable for taking possession of them.

     G. Use and Operation. You may enter upon my premises and take possession of
     all or any part of my property for the purpose of  preserving  the Property
     or its  value,  so long as you do not  breach  the  peace.  You may use and
     operate my property for the length of time you feel is necessary to protect
     your interest, all without payment or compensation to me.

     H. Waiver. By choosing any one or more of these remedies you do not give up
     your  right to use any other  remedy.  You do not  waive a  default  if you
     choose not to use a remedy.  By electing not to use any remedy, you do  not
     waive  your  right to later  consider  the event a  default  and to use any
     remedies if the default continues or occurs again.

12.  WAIVER OF CLAIMS. I waive all claims for loss or damage caused by your acts
or omissions  where you acted  reasonably  and in good faith.

13.  PERFECTION  OF  SECURITY  INTEREST.  I  authorize  you to file a  financing
statement covering the Property. I will comply with,  facilitate,  and otherwise
assist you in connection with obtaining  perfection or control over the Property
for purposes of perfecting your security  interest under the Uniform  Commercial
Code.

14.  APPLICABLE LAW. This Agreement is governed by the laws of Texas, the United
States of America and to the extent  required,  by the laws of the  jurisdiction
where the Property is located.  In the event of a dispute,  the exclusive forum,
venue and place of jurisdiction will be in Texas,  unless otherwise  required by
law.

15. JOINT AND INDIVIDUAL  LIABILITY AND  SUCCESSORS.  Each Debtor's  obligations
under this Agreement are independent of the obligations of any other Debtor. You
may sue each  Debtor  individually  or together with any other  Debtor.  You may
release  any part of the  Property  and I will  still be  obligated  under  this
Agreement for the remaining Property.  The duties and benefits of this Agreement
will bind and benefit the successors and assigns of you and me.

16. AMENDMENT,  INTEGRATION AND SEVERABILITY.  This Agreement may not be amended
or modified by oral agreement. No amendment or modification of this Agreement is
effective  unless made in writing and executed by you and me. This  Agreement is
the complete and final  expression of the  understanding  between you and me. If
any  provision  of this  Agreement  is  unenforceable,  then  the  unenforceable
provision  will  be  severed  and  the  remaining   provisions   will  still  be
enforceable.

17.  INTERPRETATION.  Whenever  used,  the singular  includes the plural and the
plural includes the singular.  The section headings are for convenience only and
are not to be used to interpret or define the terms of this Agreement.

18.  NOTICE,  FINANCIAL  REPORTS  AND  ADDITIONAL  DOCUMENTS.  Unless  otherwise
required  by law,  any notice  will be given by  delivering  it or mailing it by
first  class  mail to the  appropriate  party's  address  listed in the DATE AND
PARTIES section,  or to any other address  designated in writing.  Notice to one
party will be deemed to be notice to all  parties.  I will inform you in writing
of any  change in my name,  address  or other  application  information.  I will
provide you any financial  statement or information  you request.  All financial
statements and  information I give you will be correct and complete.  I agree to
sign, deliver,  and file any additional documents or certifications that you may
consider necessary to perfect,  continue, and preserve my obligations under this
Agreement  and to  confirm  your  lien  status on any  Property.  Time is of the
essence.

     REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
     CONTRADICTED   BY   EVIDENCE   OF  PRIOR,   CONTEMPORANEOUS,   OR
     SUBSEQUENT  ORAL   AGREEMENTS  OF  THE  PARTIES.   THERE  ARE  NO
     UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


SIGNATURES. By signing, I agree to the terms contained in this Agreement. I also
acknowledge receipt of a copy of this Agreement.


    DEBTOR:

        International Isotopes, Inc.

                By: /S/ Steve Laflin 7-9-04
                    -----------------------------
                    Steve Laflin, President & CEO



    SECURED PARTY:

        Texas State Bank

                By:
                    -----------------------------
                    M. Douglas Harris, Vice President





                                       3
<PAGE>


                             LOAN INFORMATION REPORT




Loan Number                              48108
Loan Officer                             M. Douglas Harris
Loan Summary                             This is a(n) Commercial, New, Secured,
                                         Term, Variable loan.


Lender Information                       001 Comm
                                         Texas State Bank
                                         3900 North 10th Street
                                         McAllen, TX 78501-1719
                                         (956) 631-5401


BORROWERS

Host ID:                                 243059
Name:                                    International Isotopes, Inc.
DBA:
Address:                                 4137 Commerce Circle
                                         Idaho Falls, ID 83401
EIN:                                     74-2763837
Phone:
NAlC -Primary:
NAlC -Secondary:


GENERAL INFORMATION

Specific Loan Purpose:                   a renewal O/P payoff note #3 1083 169


User Defined Fields:

Class Code                               05
Branch                                   01
Purpose Code                             540
Opened By Responsibility Code            039
Product Code                             10405
Collateral Code                          0052
Rate Index (if variable rate)            01
Payment Code                             2
Loan Rating Code                         02
Census Tract Number                      0.00


CALCULATION TERMS



                                  INPUT VALUES
    ____________________________________________________________________________

        PAYMENT INFORMATION
        Repayment Method                                                 Custom
        Amount Requested                                            $733,595.00
        Outstanding Balance                                               $0.00
        Payment Frequency                                               Monthly
        Number of Amortized Payments                                          0
        Funding Date                                               July 1, 2004
        Note Date                                                  July 1, 2004
            Funding Date is used to calculate the beginning
            of interest accrual
        First Payment Date                                       August 1, 2004
        Days to First Payment                                                31
        Accrual Method                                               Actual/360
        First Period Accrual Method                                  Actual/360
        Prepay Odd Days Interest                                             No
             Collect Odd Days As                                            N/A

    ____________________________________________________________________________

        INTEREST RATE DEFINITION
        Variable Interest Rate




                                        1
<PAGE>


        Index                                         Texas State Bank Base Rate
        Index Rate                                                        6.500%
        Market as Percent of Index                                        0.000%
        Margin as Percentage Points                                       1.OOO%
        Market Rate                                                       7.500%
        Round to the Nearest                                               .001%
        Lock Margin For (number of days)
        Lock Expiration Date
        Initial Rate Definition                                   Specific Value
        Initial Rate Subject to Floor                                         No
        Initial Rate Subject to Ceiling                                       No
        Initial Rate                                                      7.500%
        Discount/Premium
        Calculated Initial Rate                                           7.500%
        Periodic Cap                                                      0.000%
        Floor Definition                                          Specific Value
        Floor                                                             7.500%
        Floor Margin                                                      0.000%
        Calculated Floor                                                  7.500%
        Ceiling Definition                                                  None
        Ceiling                                                           0.000%
        Ceiling Margin                                                    0.000%
        Calculated Ceiling                                                0.000%
        Rate Change Affects                                       Payment Amount
        Initial Rate Hold Date                                      July 2, 2004
        Initial Rate Hold Term and Units                                  1 Days
        Rate Change Frequency and Units                                   1 Days
        Two Step                                                              No
        Initial Payment Hold                                          1 payments
        Payment Change Frequency                                      1 payments


                                CALCULATED VALUES
    ____________________________________________________________________________

        PROCEEDS INFORMATION

        Loan Amount                                                        $0.00
        Charges Not Affecting APR                                          $0.00
        Charges Affecting APR                                              $0.00
        Odd Days Prepaid/Credit                                            $0.00
            0 Days
        Pro Rata Charge                                                    $0.00
        Prepaid Insurance                                                  $0.00
        Escrow                                                             $0.00
        Insurance Renewal                                                  $0.00
        Single Premium PMI
        Interest                                                           $0.00
        Interest Reserve (Calculated)
        Interest Reserve (Lender)
        Minimum Interest Applies                                              No
        Finance Charge                                                     $0.00
        Amount Financed                                                    $0.00
        Proceeds                                                           $0.00

    ____________________________________________________________________________


PAYMENT STREAM INFORMATION

Number of Payments   Amount of Payments    When Payments Are Due
__________________   ___________________   _____________________________________
               N/A                   N/A   6 monthly payments of accrued
                                           interest beginning on August 01,
                                           2004, then 12 monthly payments of
                                           accrued interest plus $1,500.00 to
                                           principal beginning February 01,
                                           2005, and a final payment of the
                                           entire unpaid outstanding balance of
                                           Principal and Interest will be due on
                                           February 01, 2006
________________________________________________________________________________
Total of Payments                                                          $0.00

Maturity Date
                                APR 0.000%

________________________________________________________________________________
LATE CHARGES

If a payment is more than 10 days late, I will be charged  5.000  percent of the
Amount of Payment. I will pay this late charge  promptly  but only once for each
late payment.
________________________________________________________________________________

        INSURANCE DETAIL

        Credit Life Plan Selected                                 N/A
________________________________________________________________________________



                                       2
<PAGE>

        Credit Disability Plan Selected                           N/A
        Total Premium                                           $0.00
        Cost Per Day                                            $0.00


        Amount of Decreasing Insurance                          $0.00
        Amount of Level Insurance                               $0.00
        Amount of Disability Insurance                          $0.00
        Monthly Disability Benefit                              $0.00


        Decreasing Term               0.000 Months             0 Days
        Level Term                    0.000 Months             0 Days
        Disability Term               0.000 Months             0 Days

________________________________________________________________________________
POST MATURITY RATE DETAIL

        Post Maturity interest will accrue at highest rate permitted by law

________________________________________________________________________________
CUSTOM DETAIL

Loan Amount              $0.00
Maturity Date            February 1, 2006
Repayment Description    6 monthly payments of accrued interest beginning on
                         August 01, 2004, then 12 monthly payments of accrued
                         interest plus $1.500.00 to principal beginning February
                         01, 2005, and a final payment of the entire unpaid
                         outstanding balance of Principal and Interest will be
                         due on February 01, 2006

Fees and Charges
Description

________________________________________________________________________________

COLLATERAL


Collateral Type                      Accounts & Contract Rights (Generally)
Specific Collateral Description
Additional Comments
Location Address                     4137 Commerce Circle, Idaho Falls, ID 83401




Collateral Type                      Equipment (Generally)
Specific Collateral Description
Additional Comments
Location Address                     4137 Commerce Circle, Idaho Falls, ID 83401



Collateral Type                      General Intangibles (Generally)
Specific Collateral Description
Additional Comments
Location Address                     4137 Commerce Circle, Idaho Falls, ID 83401




Collateral Type                      Inventory
Specific Collateral Description
Additional Comments
Location Address                     4137 Commerce Circle, Idaho Falls, ID 83401




Collateral Type                      Chattel Paper
Specific Collateral Description      Any and All deposit accounts, payment
                                     intangibles, investment property and
                                     software together with all supporting
                                     obligation and proceeds of same property
                                     and all after-acquired collateral of the
                                     same classification.
Additional Comments
Location Address                     4137 Commerce Circle, Idaho Falls, ID 83401






                                       3
<PAGE>

<TABLE>
<S><C>
___________________________________________________________________________________________________

                LOAN NUMBER      ACCT. NUMBER       NOTE DATE       NOTE AMOUNT       MATURITY DATE
PRIOR
OBLIGATION         48108            243059           07101104       $733,595.00         02/01/06
INFORMATION


                LOAN NUMBER           ACCT. NUMBER         MODIFICATION DATE            NOTE AMOUNT
AMENDED
OBLIGATION         48108                 243059                07/01/04                 $733,595.00
INFORMATION
                MATURITY DATE       INDEX (w/margin)         INTEREST RATE               INITIALS

                  02/01/06           Not Applicable              7.5%                      MDH


                                Creditor Use Only
___________________________________________________________________________________________________
</TABLE>


                           DEBT MODIFICATION AGREEMENT
________________________________________________________________________________

DATE AND PARTIES. The date of this Debt Modification Agreement iModification1 is
July 1, 2004. The parties and their addresses are:


   LENDER:
        TEXAS STATE BANK
        3900 North 10th Street
        McAllen, Texas 78501-1719
        Telephone: (956) 63l-5401

   BORROWER:
        INTERNATIONAL ISOTOPES, INC.
        a Texas Corporation
        4137 Commerce Circle
        Idaho Falls, Idaho 83401


1. DEFINITIONS. In this Modification, these terms have the following meanings:

     A.  Pronouns.  The  pronouns  "I,'  "me," and "my"  refer to each  Borrower
     signing this  Modification,  individually  and  together  with their heirs,
     executors, administrators,  successors, and assigns. "You" and "your" refer
     to the  Lender,  with  its  participants  or  syndicators,  successors  and
     assigns,  or  any  person  or  entity  that  acquires  an  interest  in the
     Modification or Prior Obligation.

     B. Amended  Obligation.  Amended Obligation is the resulting agreement that
     is  created when  the  Modification  amends  the  Prior  Obligation.  It is
     described above in the AMENDED OBLIGATION INFORMATION section.

     C.  Loan.  Loan  refers to this  transaction  generally.  It  includes  the
     obligations and duties arising from the terms of all documents prepared  or
     submitted in association with the Prior  Obligation and this  modification,
     such as applications,  security agreements, disclosures, notes, agreements,
     and this Modification.

     D. Modification. Modification refers to this Debt Modification Agreement.

     E. Prior  Obligation.  Prior  Obligation  refers to my  existing  agreement
     described  above  in the  PRIOR  OBLIGATION  INFORMATION  section,  and any
     previous extensions, renewals, modifications or substitutions of it.

2. BACKGROUND.  You and I have previously entered into a Prior Obligation. As of
the date of this  Modification,  the  outstanding,  unpaid  balance of the Prior
Obligation is  $733,595.00.  Conditions  have changed since the execution of the
Prior 0bligation  instruments.  In response,  and for value received,  you and I
agree to modify  the  terms of the Prior  Obligation,  as  provided  for in this
Modification.

3. TERMS. The Prior Obligation is modified as follows:

     A. Interest. Our agreement for the payment of interest is modified to read:

          (1) INTEREST.  Interest will accrue on the unpaid Principal balance of
          this loan at the rate of 7.5 percent (Interest Rate).

               (a) Maximum Interest Amount.  Any amount assessed or collected as
               interest  under  the  terms of this  loan or  obligation  will be
               limited to the Maximum Lawful Amount of interest allowed by state
               or federal law. Amounts collected in excess of the Maximum Lawful
               Amount will be applied first to the unpaid Principal balance. Any
               remainder will be refunded to me.

               (b) Statutory Authority. The amount assessed or collected on this
               loan is authorized by the Texas usury law,  under Tex. Fin. Code.
               Ch. 303.

               (c)  Accrual.  During the  scheduled  term of this Loan  Interest
               accrues using an Actual/360 days counting method.

     B. Payments. The payment provision 1s modified to lead:

          (1) PAYMENT.  I agree to pay this loan as follows:  6 monthly payments
          of accrued  interest  beginning  on August 01,  2004,  then 12 monthly
          payments  of  accrued  interest  plus  $1,500.00   principal  payment
          beginning  February 01, 2005, and a final payment of the entire unpaid
          outstanding  balance of Principal and Interest will be due on February
          01, 2008.

          Payments will be refunded to the nearest $.01.  With the final payment
          I also  agree to pay any  additional  fees or  charges  owing  and the
          amount of any advances you have made to others on my behalf.  Payments
          scheduled  to be paid on the  29th,  30th or 31st day of a month  that
          contains  no such day will,  instead,  be made on the last day of such
          month.


     C. Fees and Charges. As additiona1  consideration for your consent to enter
     into  this  Modification  Agreement,  I agree to pay,  or have  paid  these
     additional fees and charges:

          (1) Stop Payment. A(n) Stop Payment equal to $25.00.

          (2) Late  Charge.  If a payment is more than 10 days  late,  I will be
          charged 5.000  percent of the Amount of Payment.  I will pay this late
          charge promptly but only once for each late payment.

          (3) Returned  Check Charge,  I agree to pay a fee not to exceed $30.00
          for each check,  negotiable  order of  withdrawal  or draft I issue in
          connection  with  this  Loan  that is  returned  because  it has  been
          dishonored.

4. CONTINUATION OF TERMS.  Except as specifically  amended by this Modification,
all of the terms of the Prior Obligation shall remain in full force and effect



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5. WAIVER. I waive all claims,  defenses,  setoffs, or counterclaims relating to
the Prior Obligation, or any document securing the Prior Obligation,  that I may
have. Any party to the Prior  Obligation  that does not sign this  Modification,
shall remain liable under the terms of the Prior  Obligation  unless released in
writing by you.

6.  ADDITIONAL  TERMS.  Interest  will  accrue  at the  fixed  rate of  7.50% as
indicated  on 3A for 12 months.  Fix rate will be  adjusted to change on July 1,
2005 to a variable  rate of Texas  State Bank Base Rate plus 1%.  Interest  rate
will change on a daily basis and will effect the amount of scheduled payment.

Interest rate will never be less than 7.50 percent for entire term of the loan,


     THIS  WRITTEN  LOAN  AGREEMENT  REPRESENTS  THE  FINAL  AGREEMENT
     BETWEEN THE PARTIES  AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF
     PRIOR,  CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL  AGREEMENTS OF THE
     PARTIES.  THERE ARE NO  UNWRITTEN  ORAL  AGREEMENTS  BETWEEN  THE
     PARTIES.


7. SIGNATURES.  By signing, I agree to the terms contained in this Modification.
I also acknowledge receipt of a copy of this Modification.




    BORROWER:

        International Isotopes, Inc.

            By:   /S/ Steve Laflin
                  -----------------------------
                  Steve Laflin, President & CEO



    LENDER:

        Texas State Bank

            By:  /S/ M. Douglas Harris
                 ---------------------------------
                 M. Douglas Harris, Vice President





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