EDGAR 10-K Filing

Company CIK: 1038277
Filing Year: 2023
Filename: 1038277_10-K_2023_0001515971-23-000035.json

---

ITEM 1. BUSINESS
Item 1. BUSINESS
General Business and Products Description
International Isotopes Inc. (the “Company”, “we”, “us” and “our”) produces an FDA approved generic sodium iodide I-131 drug product, manufactures a wide range of nuclear medicine calibration and reference standards, provides radiochemicals for clinical research and life sciences, and produces a variety of cobalt-60 products for medical, research, and industrial applications.
We were formed as a Texas corporation in 1995. Our wholly-owned subsidiaries are International Isotopes Idaho Inc., a Texas corporation; International Isotopes Fluorine Products, Inc., an Idaho corporation; International Isotopes Transportation Services, Inc., an Idaho corporation; RadQual, LLC, a limited liability company (RadQual); and TI Services, LLC, a limited liability company (TI Services). Our core business consists of four reportable segments which include: Radiochemical Products, Cobalt Products, Nuclear Medicine Standards, and Fluorine Products.
During 2022, we focused our efforts on achieving profitability in each of our core business segments and reached several significant goals. During 2022, we:
Increased company revenues by 16%.
Reached $11.2 million in total revenues which was the largest single year in company history.
Increased sales in the Radiochemical segment by 41% primarily through increases in sales of our FDA approved generic sodium iodide I-131 drug product.
Completed the sale of unused assets for $4.0 million in cash and for a gain of $1.8 million.
Developed several new products for our Nuclear Medicine products segment and expanded our range of products in this segment into Positron Emission Tomography (PET) imaging standards.
Expanded sales of our nuclear medicine products through exercising our management opportunity with RadQual, LLC (RadQual). In particular, we increased our international sales by utilizing the marketing and distribution expertise of our wholly owned subsidiary TI Services; and
Continued to pursue viable opportunities to obtain government or commercial contracts for depleted uranium de-conversion services for our U.S. Nuclear Regulatory Commission (NRC) licensed de-conversion project in Lea County, New Mexico.
In 2023, we plan to continue efforts to further expand and improve upon our operations in our core business segments. We intend to continue to invest in these segments and work to pursue product development, reduce production costs, and expand sales in each of our segments. The following paragraphs provide a brief description of each of our business segments. Certain financial information with respect to each of our business segments, including revenues from external customers, a measure of profit or loss, and total assets, is set forth in Note 15 to our Consolidated Financial Statements which begin on page.
Radiochemical Products
This segment includes the production and distribution of various isotopically pure radiochemicals for medical, industrial, and research applications. These products are either directly produced by us or are purchased in bulk from other producers and distributed by us in customized packages and chemical forms tailored to meet customer and market demands. In February 2020, we received FDA approval of our ANDA for our generic sodium iodide I-131 drug product. Our generic sodium iodide drug product is the only generic product of this type manufactured in the U.S. and offers customers an attractive domestic alternative to the single existing foreign commercial drug manufacturer. We have two suppliers of sodium iodide I-131 from whom we purchased material during 2021 and 2022 to produce this product in the most reliable manner possible.
Cobalt Products
Our cobalt products segment includes the production of bulk cobalt (cobalt-60), fabrication of cobalt capsules for radiation therapy as well as various industrial applications, and recycling of expended cobalt sources.
The year-over-year demand for cobalt products has remained strong as a result of the introduction of several new types of cobalt therapy units and we have continued to see demand for cobalt-manufactured products for those devices. We have explored, and intend to continue to explore, opportunities to further develop cobalt products and sales on an on-going basis. The production, use, transport, and import/export of these products are all heavily regulated, but we have developed an experienced staff of technicians, shipping specialists, and supervisors as part of our efforts to comply with the regulations and support cost effective, timely delivery of these products.
At the present time, we are the sole purchaser of high activity cobalt from any of the DOE reactors in the U.S. There are a few other cobalt source manufacturers in North America. We believe both our product and service provide us with a competitive edge in competing with these other manufacturers.
Nuclear Medicine Standards
This segment consists of the manufacture of sources and standards associated with Single Photon Emission Computed Tomography (SPECT) and Positron Emission Tomography (PET) imaging, patient positioning, and calibration or operational testing of dose measuring equipment for the nuclear pharmacy industry. Our nuclear medicine standards products include flood sources, dose calibrators, rod sources, flexible and rigid rulers, spot markers, pen point markers, and a host of specialty design items. These products are manufactured and distributed by our wholly-owned subsidiary, RadQual. In July 2021, we purchased the remaining 75.5% interest of RadQual. Prior this purchase we were one of two managing members of RadQual and had significant influence in management decisions with regard to RadQual’s business operations. Following the July 2021 acquisition, we have now fully consolidated the income and expenses from both RadQual LLC and TI Services.
There are over 5,000 nuclear medicine centers in the United States (U.S.) that require nuclear medicine products on a regular repeat basis. We have been manufacturing these products for RadQual since 2001. Most nuclear medicine product sales are to U.S. customers. However, in recent years, because of stronger marketing efforts, we have seen an increase in foreign sales, as shown in Note 14 to the accompanying audited financial statements. All these products contain radioactive isotopes that decay at a predictable rate. Therefore, customers are required to periodically replace most of these products when they reach the end of their useful lives. The useful life of these products varies depending on the isotope used in manufacture, but in most cases averages eighteen months to two years. Most of the isotopes used in manufacturing these nuclear medicine products are available from various sources world-wide and we are not dependent on a single supplier. In addition to the products themselves, we have developed a complete line of specialty packaging for the safe transportation and handling of these products.
This segment now includes source disposal activities that were previously reported in the discontinued Radiological Services business segment.
Radiological Services
We discontinued separate reporting of activities of our Radiological Services business segment.
The Radiological Services business segment included field services, gemstone processing, and source disposal. As the Company is no longer engaged in field services and gemstone processing, which previously made up the substantial portion of activities of this segment, separate reporting of this segment has been discontinued. Spaces and resources previously used to perform these discontinued business activities have been allocated to our other business segments. The loss of revenue from these activities has been more than compensated for by the expansion of sales in our Radiochemical products segment and expected expansion of sales in our Nuclear Medicine Standards segment. The Company continues to engage in source disposal activities and has begun reporting these activities under the Nuclear Medicine Standards segment starting January 1, 2022.
Fluorine Products and the Planned Uranium De-Conversion Facility
We established the fluorine products business segment in 2004 to support production and sale of various fluoride gases produced using our Fluorine Extraction Process (FEP). FEP was intended to be completed in conjunction with the operation of a proposed depleted uranium (DUF6) de-conversion facility in Lea County, New Mexico. DUF6 is the waste by-product of uranium enrichment, and any uranium enrichment facility will create very large quantities of DUF6. In October 2012, we received a construction and operating license from the NRC for the planned facility. Changes in the nuclear industry near the end of 2013, however, significantly reduced commercial demand for this type of facility. Therefore, we suspended all further development work on the project. We still anticipate a potential future need for a depleted uranium conversion facility and, therefore, we are keeping all licenses and permits current.
In connection with the proposed de-conversion facility, Lea County, New Mexico transferred property to us under the provisions of the New Mexico Local Economic Development Act, Project Participation Agreement (PPA) as a location for construction of the facility. Under the original agreement, we were obligated to meet certain performance objectives for construction start and staffing levels. Because of the project delay we did not meet those objectives. We plan to continue to work with Lea County to execute a modification to the agreement at some future point should the project move forward. If we do not extend or modify the commitment dates in a modified agreement then we may either purchase or re-convey the property to Lea County, New Mexico. If we do not retain title to the property, it could have a material adverse impact on future plans for the project.
Industry Overview, Target Markets, and Competition
The industries and markets that require or involve the use of radioactive material are diverse. Our current core business operations involve products that are used in a wide variety of applications and in various markets. The following provides an explanation of the markets and competitive factors affecting our current business segments.
Nuclear Medicine Standards
Calibration and reference standards are required for the daily operational checks and calibration of the measurement of SPECT and PET imaging devices frequently used in nuclear medicine. Calibration and quality assurance testing are required as a routine part of the normal operations of this equipment to ensure its reliability and accuracy. For years, we have been the exclusive manufacturer of RadQual reference standard products. As RadQual is now our wholly-owned subsidiary, we continue to sell these same RadQual products through distributors who make direct sales in the U.S. and internationally. We directly ship these products to all 50 states and many overseas locations. There is only one other major producer of these products in the world that competes directly with us for these products. Most of the products manufactured by our
competitor are similar in design to our products because all must meet Original Equipment Manufacturer (OEM) dimensional and performance standards. However, we attempt to differentiate our products from our competitor’s products through increased levels of quality control and customer service. We are certified under ISO-9001:2015 and ISO-13485-2016 quality programs that have allowed us to start selling these products into several foreign countries that require this additional quality certification for manufacturers. We use a small number of suppliers for the isotopes and other materials used in manufacturing these nuclear medicine products, but if we were to lose any of these suppliers, in most cases other suppliers would be available. We are also working to expand the number and types of products that are manufactured in this segment and expand our raw product qualified suppliers
Cobalt Products
In 2014, we entered into a new 10-year agreement with the DOE utilizing a new cobalt target design for high activity cobalt production. Because of the lengthy irradiation time required we initially anticipated that cobalt shipments to customers would resume in late 2018. However, due to delays in the ATR operating schedule we were not able to take our first shipment of these targets until March 2020. Due to lower than desired activity rates in the material, we bought the remaining low activity targets at a discounted rate. There is a high demand for lower activity cobalt. We have taken shipment of and sold this material throughout 2021 and 2022 and will continue to have supply for at least two more years. We are now working with the DOE on future purchases of both high and low activity cobalt. Our cobalt products are used in applications such as radiation therapy, security devices, radiography examination and in some commercial applications. While there are other technologies available to provide external radiation therapy, there are several new devices just gaining market approval that still depend on cobalt sources for their specialized applications. There are currently no other producers of high specific activity cobalt in the U.S., however, there are producers of high specific activity material in Canada and several other countries. In addition to us, there is only one other company in the U.S. currently licensed to handle large quantities of cobalt.
There has been a significant increase in regulation by the NRC in recent years that has created a significant barrier to new entrants to this market. We expect steady demand for cobalt sealed source products over the next several years but are primarily dependent upon our contract relationship with the DOE for a large portion of our cobalt production supply. An interruption in the operation of the ATR could have a negative impact on our cobalt products business segment.
Radiochemical Products
In February 2020, our ANDA for a generic radiochemical sodium iodide drug product was approved by the FDA. This product is approved for use in treatment of hyperthyroidism and carcinoma of the thyroid and is the first and only generic sodium iodide I-131 product approved by the FDA in the U.S. and only generic product of this type manufactured in the U.S. The only other supplier to the U.S. of an FDA approved sodium iodide product comes from a foreign manufacturer.
Since the launch of this drug product in 2020, the corresponding sales have had a significant positive impact on our revenues in 2021 and 2022. We expect this significant growth in sales for this product to continue in 2023 and beyond. We are also considering other generic drug opportunities and plan to expand the range of FDA approved products offered within this business segment in the coming years.
We also supply radiochemical products in bulk form. The markets for most radiochemicals can be highly competitive. The target markets for these products are customers who (1) incorporate them into finished industrial or medical devices; (2) use radioisotope products in clinical trials for various medical applications; or (3) further process and include the radioisotope products into pharmaceutical products approved by the U.S. FDA for labeled use in therapy or imaging.
In February 2022, we sold the improvements and equipment in an expansion that had been constructed to our manufacturing facility for cGMP processing. Using the capital from this sale, we are currently developing a business plan and exploring other opportunities that support our current radiopharmaceutical product, produce additional radiopharmaceutical products or explore new contract manufacturing opportunities. We believe that we are uniquely qualified and have a competitive advantage for future opportunities because we have a unique combination of NRC licensing, GMP compliant operating facility, and trained personnel.
Fluorine Products and the Planned Depleted Uranium De-Conversion Facility
Our Fluorine Products segment was developed in conjunction with uranium de-conversion to take advantage of the anticipated need for depleted uranium de-conversion services. During 2013, we curtailed all further work on the de-conversion facility because of a lack of demand for uranium de-conversion services at that time. However, we believe that in the future
there will be a demand for this service to address still growing stockpiles of depleted UF6. When that demand occurs, we believe the groundwork we have completed on the depleted uranium de-conversion and fluorine extraction project should put us in a strong position to take advantage of the NRC license that has already been issued for this facility and should serve to justify the financial investment in this uranium de-conversion project in the future.
Government Regulation
Licensing
We currently operate under two NRC licenses, one for broad scope operations and another for exempt distribution. Our broad scope license covers calibration and reference standard manufacturing and distribution, radioisotope processing and distribution, large scale cobalt processing and recycle operations, radioactive gemstone processing, environmental sample analysis, certain field service activities, and research and development. The exempt distribution license permits the release and distribution of irradiated gemstones to unlicensed entities in the U.S. All of our existing licenses and permits are adequate to allow current business operations. We do not handle “special nuclear materials” (i.e. nuclear fuels and weapons grade uranium, thorium or plutonium); therefore, our facility is not designated as a “nuclear” facility that would require additional licensing.
As a condition of our NRC licenses in Idaho, we are required to provide financial assurance for decommissioning activities. We fulfill this license requirement with a surety bond which names the NRC as beneficiary and is supported by a restricted cash account held in trust by a third party. Similar financial assurances will be required to fund the decommissioning of the proposed de-conversion facility.
In October 2012, we were granted a 40-year construction and operating license by the NRC for our planned depleted uranium de-conversion and fluorine extraction processing facility (the “de-conversion facility”). The de-conversion facility is planned to be located in Lea County, New Mexico. Further engineering work on the proposed de-conversion facility was placed on hold in 2013 until additional contracts for utilization could be obtained. There is no specific timeline required by the NRC for the start of construction on this project. The majority of the pre-construction design, licensing and state permitting has already been completed for the project and a ground water permit from the state of New Mexico remains to be obtained before the plant could begin operation.
Regulation of Radioisotope Production Waste
All our manufacturing processes generate some radioactive waste. We must handle this waste pursuant to the Low-Level Radioactive Waste (LLRW) Policy Act (LLRW Act), which requires the safe disposal of mildly radioactive materials. The estimated costs for storage and disposal of these materials have been included in the manufacturing and sales price of our products. However, actual disposal costs are subject to change at the discretion of the disposal site and are ultimately applied at the time of disposal. We have obtained all necessary permits and approvals for the disposal of our waste materials, and we do not anticipate any negative changes in capacity or regulatory conditions that would limit or restrict our waste disposal capabilities.
Nuclear Regulatory Commission Oversight
We operate under two NRC licenses and are subject to NRC oversight and periodic inspections of our operations.
Other Regulations
We are registered as a medical device manufacturer through the FDA for several of our nuclear medicine reference and calibration standards. We are registered with the U.S. Department of Transportation (DOT) for the shipment of radioactive materials. We also have an NRC license for the import and export of radioactive materials. Because of increasing security controls and regulations, it is likely that we may encounter additional regulations affecting transportation, storage, sale, and import/export of radioactive materials.
We are also subject to inspection by the FDA to manufacture our sodium iodide I-131 product in compliance with our ANDA for sodium iodide I-131 and all applicable cGMP requirements for this and other contract manufactured products. We are registered with the FDA as a drug manufacturing facility, and we are subject to periodic and random inspections by the FDA for the continued manufacture of drug products.
We are subject to government regulation and intervention both in the U.S. and in all foreign jurisdictions in which we conduct business. Compliance with applicable laws and regulations results in higher capital expenditures and operating costs and changes to current regulations with which we must comply can necessitate further capital expenditures and increases in operating costs to enable continued compliance.
Environmental Compliance
We are subject to various federal, state, local and foreign government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. These laws and regulations include, but are not limited to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA) and state statutes such as the Idaho Hazardous Waste Management Act, the LLRW Policy Act, NRC regulations concerning various irradiated, radioactive, and depleted uranium materials, and U.S. DOT regulations concerning shipment of radioactive materials. Certain of these laws and regulations can impose substantial fines and criminal sanctions for violations and require installation of costly equipment or operational changes to limit emissions and/or decrease the likelihood of accidental hazardous substance releases. We have incurred, and expect to continue to incur, capital and operating costs to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement of policies, or the imposition of new clean-up requirements or remedial techniques, could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations.
Distribution Methods for Products
We sell our products directly to our customers who, in some cases, are both end users and distributors. We use common commercial carriers for delivery of our products.
Dependence on Customers
Historically, we had been dependent on one customer, RadQual, of which we owned 24.5%, for a significant amount of our gross revenue. In July 2021, we purchased the remaining 75.5% of the ownership interest in RadQual, making it a wholly-owned subsidiary. Our sales to RadQual for 2021 accounted for approximately 28% of our total gross revenue for that year. The change in ownership of RadQual has substantially eliminated any risks associated with having RadQual as a single major customer.
Combined sales, on which we are dependent, to our three largest customers, accounted for 23% of our total gross revenues in 2022 and accounted for 17% of our total gross revenues in 2021.
Patents, Trademarks, Licenses and Royalty Agreements
In 2004, we obtained certain patents related to the FEP. In 2010, we were granted an additional process patent on the FEP process. During 2012, we were granted additional process patents for the FEP process in the United States.
In May 2021, we entered into an exclusive licensing agreement with Memorial Sloan-Kettering Cancer Center (MSKCC) for commercial development of a Radioimmuno Assay (RIA) test lit for the detection for SARS COVID-19 virus in the blood. A patent application for this test kit was submitted to the U.S. patent office in March 2021. The useful application and commercial viability of this opportunity will continue to be evaluated, however, at the present time we do not plan commercial development of this product but may pursue other related commercial opportunities.
Employees
As of December 31, 2022, we had 33 total employees, including 32 full-time employees.
Available Information
Our internet website address is www.intisoid.com. We are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the Exchange Act). Consequently, we are required to file reports and information with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and other information concerning us are available free of charge through (i) our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC, and (ii) the SEC’s website at www.sec.gov. Information contained on, or accessible through, our website is not incorporated by reference into this Annual Report or other reports filed with the SEC.

---

ITEM 1A. RISK FACTORS
Item 1A. RISK FACTORS
Readers should carefully consider the following factors that may affect our business, future operating results and financial condition, as well as other information included in this Annual Report. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition and operating results could be materially adversely affected.
Risks Related To Our Company
We have incurred, and may continue to incur, losses. We have incurred net losses for most fiscal periods since our inception. From inception through December 31, 2022, we have an accumulated deficit (including preferred stock dividends and returns) in the amount of $126,460,843. The negative cash flow we have sustained has materially reduced our working capital, which in turn could materially and negatively impact our ability to fund future operations and continue to operate as a going concern. Management has taken and continues to take, actions to improve our financial condition and results of operations. The availability of necessary working capital, however, is subject to many factors beyond our control, including, among other things, our ability to obtain financing on favorable terms, or at all, economic cycles, market acceptance of our products, competitors' responses to our products, the intensity of competition in our markets, and the level of demand for our products.
We may need additional financing to continue operations. Because we may continue to experience negative cash flow, we may need to obtain additional financing to continue operations. Management will continue to plan and take actions to improve our financial results which could enhance our ability to obtain financing. However, obtaining additional financing is subject to many factors beyond our control and may not be available to us on acceptable terms or at all. If we are unable to raise additional funds when needed, we could be required to delay development and construction of projects, reduce the scope of, abandon or sell some or all our growth projects or default on our contractual commitments in the future, any of which would have a material adverse effect on our business, financial condition and operating results.
Our operations expose us to the risk of material environmental liabilities. We are subject to potential material liabilities related to the remediation of environmental hazards and to personal injuries or property damages that may be caused by hazardous substance releases and exposures. The materials used in our operations expose us to risks of environmental contamination that could subject us to liability, including remediation obligations that could be very costly. In addition, the discovery of previously unknown contamination could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations. We have a Surety Bond in place supported by funds in a restricted cash account to provide the financial assurance required by the NRC for our Idaho facility license for decommissioning and a similar mechanism will be required to fund the decommissioning of the proposed new depleted uranium facility. However, if a contamination event occurred within, or outside of, our facility, we may be financially responsible to remediate such contamination and could have to borrow money or fund the remediation liability from our future revenue. We may not be able to borrow the funds, or have available revenue, sufficient to meet this potential liability, which could have a significant negative impact on our financial condition and results of operations.
We are dependent upon key personnel. Our ongoing operations are currently dependent on Steve T. Laflin, President and Chief Executive Officer. The loss of Mr. Laflin could have a material adverse effect on our business. There is no assurance that we will be able to retain Mr. Laflin or our existing personnel or attract additional qualified employees. The loss of any of our key personnel or an inability to attract additional qualified employees could result in a significant decline in revenue.
General economic conditions in markets in which we do business can impact the demand for our goods and services. Decreased demand for our products and services can have a negative impact on our financial performance and cash flow. Demand for our products and services, in part, depends on the general economic conditions affecting the countries and industries in which we do business. A downturn in economic conditions in the U.S. or industry that we serve may negatively impact demand for our products and services, in turn negatively impacting our operations and financial results. Further, changes in demand for our products and services can magnify the impact of economic cycles on our businesses.
Volatility in raw material and energy costs, interruption in ordinary sources of supply and an inability to recover unanticipated increases in energy and raw material costs from customers could result in lost sales or significantly increase the cost of doing business. Market and economic conditions affecting the costs of raw materials, utilities, energy costs, and infrastructure required for the delivery of our goods and services are beyond our control and any disruption or halt in supplies, or rapid escalations in costs could affect our ability to manufacture products or to competitively price our products in the marketplace. For instance, an interruption in the supply of isotopes such as cobalt-57, cobalt-60, or iodine-131 could result in lost sales of nuclear medicine and calibration standards sales, cobalt product sales, and sodium iodide I-131 generic drug product. We also purchase some of our radiochemical products from overseas suppliers and the price of those products could be adversely affected through changes in currency exchange rates.
We are subject to extensive government regulation in jurisdictions around the globe in which we do business. Regulations address, among other things, environmental compliance, import/export restrictions, healthcare services, taxes and financial reporting, and can significantly increase the cost of doing business, which in turn can negatively impact our operations, financial results and cash flow. We are subject to government regulation and intervention both in the United States and in all foreign jurisdictions in which we conduct business. Compliance with applicable laws and regulations results in higher capital expenditures and operating costs and changes to current regulations with which we must comply can necessitate further capital expenditures and increases in operating costs to enable continued compliance. Additionally, from time to time, we may be involved in legal or administrative proceedings under certain of these laws and regulations. Significant areas of regulation and intervention include the following:
Radioactive Waste. All our manufacturing processes generate some radioactive waste. For waste that cannot be decayed in storage we must handle this waste pursuant to the LLRW Policy Act, which requires the safe disposal of mildly radioactive materials. The estimated costs for storage and disposal of these materials have been included in the manufacturing and sales price of our products. However, actual disposal costs are subject to change at the discretion of the disposal site and are ultimately applied at the time of disposal. An unexpected or material increase in these costs could have a material adverse effect on our financial condition and results of operations.
Health Compliance. Health regulations dictated by the United States Occupational Safety and Health Administration and NRC are extensive in our business. There is no assurance that our activities will comply with all applicable health regulations at times and, as a result, may expose us to liability under applicable health regulations. Costs and expenses resulting from such liability may materially negatively impact our operations and financial condition. Overall, health laws and regulations will continue to affect our business worldwide.
NRC License Enforcement Actions. The NRC may take enforcement action in the event that we are found to be in violation of NRC regulations or in violation of any of our license requirements. Consequences of violations depend upon the severity of the violations as well as the adequacy and timeliness of corrective actions implemented by the licensee to investigate and correct the cause of the violation and to prevent reoccurrence. The NRC has discretionary authority in the action they choose to take against license violations, but these actions can include civil penalties and restrictions upon licensee operations or license suspension. The imposition of any such penalties and/or restrictions upon our operations or suspension of our license could have a material adverse effect on our financial condition and results of operations.
Environmental Regulation. We are subject to various federal, state, local and foreign government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. These laws and regulations include, but are not limited to CERCLA, the RCRA and state statutes such as the Idaho Hazardous Waste Management Act, the LLRW Policy Act, NRC regulations concerning various irradiated, radioactive, and depleted uranium materials, and U.S. DOT regulations concerning shipment of radioactive materials. Certain of these laws and regulations can impose substantial fines and criminal sanctions for violations and require installation of costly equipment or operational changes to limit emissions and/or decrease the likelihood of accidental hazardous substance releases. We have
incurred, and expect to continue to incur, capital and operating costs to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement of policies, or the imposition of new clean-up requirements or remedial techniques, could require us to incur costs in the future that would have a negative effect on our financial condition or results of operations.
Import/Export Regulation. We are subject to significant regulatory oversight of our import and export operations due to the nature of our product offerings. Penalties for non-compliance can be significant and violations can result in adverse publicity. Because of increasing security controls and regulations, it is likely that we may encounter additional regulations affecting the transportation, storage, sale, and import/export of radioactive materials.
Taxes. We structure our operations to be tax efficient and to make use of tax credits and other incentives. Nevertheless, changes in tax laws, actual results of operations, final audit of tax returns by taxing authorities, and the timing and rate at which tax credits can be utilized can change the rate at which we are taxed, thereby affecting our financial results and cash flow.
We may incur material losses and costs as a result of product liability claims that may be brought against us. We face an inherent business risk of exposure to product liability claims in the event that products supplied by us fail to perform as expected or such failures result, or are alleged to result, in bodily injury. Although we have purchased insurance with coverage and in amounts that we believe to be adequate and reasonable in light of our current and planned operations, including our planned uranium de-conversion and fluoride gas production business, if a successful product liability claim were brought against us in excess of our available insurance coverage, it would have a material adverse effect on our business and financial results.
Catastrophic events such as natural disasters, pandemics, war and acts of terrorism could disrupt our business or the business of our suppliers or customers, and any such disruptions could have a negative impact on our operations, financial results and cash flow. Our operations are at all times subject to the occurrence of catastrophic events outside our control, ranging from severe weather conditions such as hurricanes, floods, earthquakes and storms, to health epidemics and pandemics, to acts of war and terrorism. Any such event could cause a serious business disruption that could affect our ability to produce and distribute our products and possibly expose us to third-party liability claims. Additionally, such events could impact our suppliers, thereby causing energy and raw materials to become unavailable to us, and our customers, who may be unable to purchase or accept our products and services. Any such occurrence could have a negative impact on our operations and financial condition.
In addition, public health epidemics or outbreaks could adversely impact our business. For example, as a result of the COVID-19 pandemic, we experienced a reduction of sales within our nuclear medicine calibration standards segment and radiochemicals segment during 2021. There was no discernable impact from COVID-19 to our cobalt products business segment during the period. The decrease in sales for 2021 for our nuclear medicine calibration standards segment was the result of the temporary closure of many imaging clinics and suspension of elective or non-essential imaging procedures. During 2021 and 2022, we experienced some global shipping disruption that were partially attributable to the COVID-19 pandemic.
To-date we have not furloughed or terminated any employees as a result of the financial impact of COVID-19. We have seen a limited impact in our raw material supply chain related to the COVID-19. However, from the beginning of 2022, we have experienced an increase in costs for many raw materials and production supplies due to recent cost inflation which have led to increases to costs of goods sold and operating expenses. Although, all segments have been impacted from these cost increases, our nuclear medicine calibration standards segment has been impacted the most. We have seen these increased costs stabilize somewhat; and we are working on counteracting these cost increases with an increase to our produce prices. We believe we can increase our sales prices enough to overcome these cost increases while continuing to maintain and grow our sales.
Our future growth is largely dependent upon our ability to develop new products that achieve market acceptance with acceptable margins. Our businesses operate in global markets that are characterized by rapidly changing technologies and evolving industry standards. Accordingly, our future growth rate depends upon several factors, including, but not limited to, our ability to (i) identify emerging technological trends in our target end-markets, (ii) develop and maintain competitive products, (iii) enhance our products by adding innovative features that differentiate our products from those of our competitors, and (iv) develop, manufacture, and bring products to market quickly and cost-effectively. Our ability to develop new products based on technological innovation or U.S. FDA approval can affect our competitive position and requires the investment of significant resources. These development efforts divert resources from other potential investments in our businesses, and they may not lead to the development of new products on a timely basis or that meet the needs of our customers as fully as competitive offerings. In addition, the markets for our products may not develop or grow as we currently anticipate. The failure of our technologies or products to gain market acceptance due to more attractive offerings by our competitors could significantly reduce our revenues and adversely affect our competitive standing and prospects.
We are dependent on various third parties in connection with our business operations. The production of high-specific activity cobalt is dependent upon the DOE, and its prime-operating contractor, which controls the Idaho reactor. Current activity at the Idaho ATR may continue to affect the supply of cobalt material needed for the manufacture of cobalt sources. Loss of the ability to use, or cost-effectively use, these irradiation services would significantly impact our cobalt products business segment because there is not currently another reactor available in the U.S. that is capable of providing this type of service for us. Our radiochemical iodine is supplied to us through two supply sources. Unanticipated contract terminations by these suppliers or suppliers the key raw materials of our other products or other third parties would have a material adverse impact on our operations, financial results, and cash flow.
We are dependent on a limited number of customers in connection with some of our current business operations. Combined sales to our three top customers accounted for 23% and 17% of our total gross revenue during 2022 and 2021, respectively. Although we are making efforts to reduce our dependency on a small number of customers, the loss of any one of these customers could have a significant impact on our future results of operations and financial condition. Unanticipated contract terminations by any of these current customers could have a material adverse impact on operations, financial results, and cash flow.
We are subject to competition from other companies. Each of our existing business areas has direct competition from other businesses. High-specific activity cobalt is supplied by other reactor facilities around the world. Nuclear medicine calibration and reference standards are being produced by one other major manufacturer in the U.S. We have one major competitor in the U.S. for our sodium iodide I-131 drug product. Most of our radiochemicals are also manufactured by several other companies in the world. Most of our competitors have significantly greater financial resources that could give them a competitive advantage over us.
Risks Related To Our Common Stock
Trading in our common stock is limited and the price of our common stock may be subject to substantial volatility. Our common stock is quoted on the OTCQB Marketplace under the U.S. trading symbol “INIS”. The market for our securities is limited, the price of our stock is volatile, and the risk to investors in our common stock is greater than the risk associated with stock trading on other markets. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.
We currently do not intend to pay dividends on our common stock. We do not plan to pay dividends on shares of our common stock in the near future. Consequently, an investor in our common stock can only achieve a return on its investment in us if the market price of our common stock appreciates.
We are contractually obligated to issue shares in the future, which will dilute your interest in us. As of December 31, 2022, there were approximately 16,716,000 shares of common stock issuable upon the exercise of vested stock options, at a weighted-average exercise price of $.06 per share. An additional 31,942,544 shares were reserved for issuance under our equity plans as of December 31, 2022. Our outstanding preferred stock and certain of our outstanding debt is also convertible into shares of our common stock at the holders’ option. In addition, we expect to issue additional options to purchase shares of our common stock to compensate employees, consultants and directors, and we may issue additional shares to raise capital to expand our manufacturing capability, develop additional products, or fund our planned uranium de-conversion plant. Any such issuance will have the effect of further diluting the interest of the holders of our securities.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. UNRESOLVED STAFF COMMENTS
We are a smaller reporting company, and therefore, are not required to provide the information required by this item.

---

ITEM 2. PROPERTIES
Item 2. PROPERTIES
We lease one property which serves as or main corporate headquarters and houses all of our current manufacturing operations for our core business segments. We also hold the conditional title to 640 acres of land in Lea County, New Mexico for the proposed de-conversion facility. The following paragraphs provide a brief summary of these properties.
4137 Commerce Circle, Idaho Falls, Idaho - The facility located on this property houses our main corporate headquarters and all of our current manufacturing operations. In January 2020, we entered into a new lease agreement due to new and expanded facilities made available to us. The initial lease term is until January 2030 and provides an option to renew for an additional 5 years. The lease provides for the Company to expand its leased space as needed into additional areas of the building. The facility was new when leased in March 2001 and remains in excellent condition. We have a right of first refusal on this property that allows us to match any offer to purchase this property.
Land - Lea County, New Mexico - In August 2011, we received land from Lea County, New Mexico, pursuant to a PPA, whereby the land was deeded to us for no monetary consideration. In return, we committed to construct a uranium de-conversion and FEP facility on the land. In order to retain title to the property, we were to begin construction of the de-conversion facility no later than December 31, 2014, and complete Phase I of the project and have hired at least 75 persons to operate the facility no later than December 31, 2015, although commercial operations need not have begun by that date. We did not meet the performance milestones set forth in the PPA and we executed a modification to the agreement extending these due dates to December 31, 2016 and 2017, respectively. We plan to work with Lea County to execute an additional modification to the agreement to further extend these dates once an estimated restart date for the project is determined. If we do not succeed in extending the commitment dates or in reaching performance dates set forth in a modified agreement then we may, at our sole option, either purchase or re-convey the property to Lea County, New Mexico. The purchase price of the property would be $776,078, plus interest at the annual rate of 5.25% from the date of the closing to the date of payment. We have not recorded the value of this property as an asset and will not do so until such time that sufficient progress on the project has been made to meet our obligations under the agreements for permanent transfer of the title.

---

ITEM 3. LEGAL PROCEEDINGS
Item 3. LEGAL PROCEEDINGS
We are not a party to any legal proceedings that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, financial condition, or cash flows.

---

ITEM 4. MINE SAFETY DISCLOSURE
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the OTCQB under the trading symbol “INIS”. The following table shows the high and low prices of our common stock on the OTCQB. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:
OTC Bulletin Board (Symbol “INIS”)
High Low
Period (US $) (US $)
First Quarter 2021 0.34 0.04
Second Quarter 2021 0.15 0.09
Third Quarter 2021 0.14 0.08
Fourth Quarter 2021 0.11 0.06
First Quarter 2022 0.10 0.08
Second Quarter 2022 0.10 0.06
Third Quarter 2022 0.09 0.04
Fourth Quarter 2022 0.07 0.03
Holders of Record
As of March 11, 2023, there were 490 holders of record of our common stock.
Dividends
We have never paid any cash dividends on our common stock. In the future, and based upon our profit performance, our Board of Directors (the “Board”) will evaluate and determine whether to issue dividends, subject to compliance and limitations under any applicable debt or other financing agreements in effect at that time or retain funds for research and development and expansion of our business. We do not anticipate paying any dividends to shareholders of our common stock for the foreseeable future.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Purchases of Equity Securities by the Issuer
None.
Performance Graph
We are a smaller reporting company, and therefore, are not required to provide the information required by this item.

---

ITEM 6. SELECTED FINANCIAL DATA
Item 6. [RESERVED]

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our results of operations and financial condition should be read in conjunction with the accompanying financial statements and related notes thereto included in Item 8, “Financial Statements and Supplementary Data,” within this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategies for our business, statements regarding the industry outlook, our expectations regarding the future performance of our business and the other non-historical statements contained herein are forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.” You should also review the “Risk Factors” in Item 1A. of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described herein or implied by such forward-looking statements.
Overview
International Isotopes Inc. (the “Company”, “we”, “us” and “our”) produces an FDA approved generic sodium iodide I-131 drug product, manufactures a wide range of nuclear medicine calibration and reference standards and provides radiochemicals for clinical research and life sciences. The Company also produces a variety of cobalt-60 products and supports clients contract manufacturing of radiopharmaceutical and radiochemical products. A more detailed description of each of these product lines and services along with a description of our business segments can be found in Item 1, “Business” within this Annual Report.
During 2022, we focused our efforts on achieving profitability in each of our core business segments and reached several significant goals. During 2022, we:
Increased company revenues by 16%.
Reached $11.2 million in total revenues which was the largest single year in company history.
Increased sales in the Radiochemical segment by 41% due to increases in sales of our FDA approved generic sodium iodide I-131 drug product.
Completed sale of unused assets for $4.0 million in cash for a gain of $1.8 million.
Developed several new products for our Nuclear Medicine products segment and expanded these products into Positron Emission Tomography (PET) imaging standards.
Expanded sales of our nuclear medicine products through exercising our management opportunity with RadQual, LLC (RadQual). In particular, we increased our international sales by utilizing the marketing and distribution expertise of our wholly owned subsidiary TI Services; and
Continued to pursue viable opportunities to obtain government or commercial contracts for depleted uranium de-conversion services for our U.S. Nuclear Regulatory Commission (NRC) licensed de-conversion project in Lea County, New Mexico.
As a result of the COVID-19 pandemic, we experienced a reduction of sales within our nuclear medicine calibration standards segment and radiochemicals segment during 2020 and 2021. There was no discernable impact from COVID-19 to our cobalt products business segment during the same period. The decrease in sales for 2020 and 2021 for our nuclear medicine calibration standards segment was the result of the temporary closure of many imaging clinics and suspension of elective or non-essential imaging procedures. In 2022, our sales in most segments recovered and we saw very limited continued negative impact related to COVID-19. The sale of radiochemical products increased during the year 2022; however, we believe the increases in revenue for 2022 for nuclear medicine could have been greater in 2022 were it not for the lingering negative impact of COVID-19 in the first quarter of 2022.
To-date we have not furloughed or terminated any employees as a result of the financial impact of COVID-19. The Company has only seen a limited impact in our raw material supply chain related to the COVID-19, primarily some plastics which have been in strong demand for certain types of PPE. Alternative sources of raw materials have been obtained without any interruption to production. With the heightened concern about corporate liquidity during the COVID-19 pandemic, the Company believes that it has adequate cash to support continuing operations.
Business Strategy and Core Philosophies
Broadly defined, our business strategy is to continue to build our reputation as a leader in the radiochemical, cobalt, and nuclear medicine product industries, and to maximizing the revenue potential of our generic sodium iodine I-131 product and nuclear medicine standards products. We also intend to continually seek ways to improve our customer service and expand our market share, with the ultimate goal of providing greater return to our shareholders. Specifically, we are continuously working with our customers to improve and develop new products to better serve the needs of the end user which, ultimately, we believe will boost product sales. A key part of our short-term and long-term business strategy is to develop and market additional generic drug products, similar to our sodium iodide I-131 product, and develop additional nuclear medicine standards products that will offer customers high quality, reliable, and affordable products as well as increase our revenues. In addition, we will manage cash reserves and pursue additional financial support that will be structured in such a way to support further expansion of our products and services to exploit additional market opportunities.
Our core philosophy is to strive to provide high quality products and services as a profitable and environmentally conscious business, while offering excellent customer service and providing a safe and productive working environment for our employees. We operate in accordance with an ISO Quality Management System and in accordance with all current Good Manufacturing Practices under which we seek to maintain the highest level of quality and continuously improve our product manufacturing processes.
Results of Operations
Following is a summary of results of operations for 2022:
· Revenue in 2022 was approximately $11.2 million, which was a 16% increase compared to 2022 and was the largest annual revenue generated in the company’s history;
· Our 2022 sales in our Radiochemical Products increased by approximately 41% as compared to 2021;
· Our 2022 sales in Cobalt Products and Nuclear Medicine Standards segments decreased by approximately 15% and 1% respectively as compared to 2021;
· Our total gross profit rate decreased to 56% in 2022 from 59% in 2021; and
· Our operating costs for 2022 increased approximately 17% as compared 2021; and
· We had a net profit of $303,238 in 2022 compared to a net loss of $902,347 in 2021
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
The following table presents comparative revenues for the years ended December 31, 2022 and 2021:
Revenues For the year ended
December 31, 2022
% of Total
Revenues 2022
For the year ended
December 31, 2021
% of Total
Revenues 2021
Radiochemical Products $ 6,045,767 54 % $ 4,275,044 44 %
Cobalt Products 1,157,536 10 % 1,354,517 14 %
Nuclear Medicine Standards 3,978,685 36 % 4,002,606 42 %
Flourine Products - 0 % 29,775 0 %
Total Segments $ 11,181,988 100 % $ 9,661,942 100 %
Revenues
Total revenues in 2022 were $11,181,988, compared to $9,661,942 in 2021, which represents an increase of $1,520,046, or approximately 16%. The performance of each segment is discussed in the following paragraphs.
For the year ended
For the year ended
Revenues December 31, 2022 December 31, 2021 $ change % change
Radiochemical Products $ 6,045,767 $ 4,275,044 $ 1,770,723 41 %
Cobalt Products 1,157,536 1,354,517 (196,981 ) -15 %
Nuclear Medicine Standards 3,978,685 4,002,606 (23,921 ) -1 %
Flourine Products - 29,775 (29,775 ) -100 %
Total Segments 11,181,988 9,661,942 1,520,046 16 %
Corporate revenue - - - -
Total Consolidated $ 11,181,988 $ 9,661,942 $ 1,520,046 16 %
Radiochemical Products
Sales of radiochemical products accounted for approximately 54% in 2022 as compared to 44% of our total sales revenue in 2021. Sales in this segment increased by $1,770,723, or approximately 41% to $6,045,767 in 2022 as compared to $4,275,044 in 2021. The increase is primarily the result of sales of our new generic sodium iodide I-131 drug product which was launched in March 2020. We expect sales of our new product to continue to trend upward.
In February 2020, we received approval of an ANDA to the FDA for a sodium iodide radiopharmaceutical product for use in treatment of hyperthyroidism and carcinoma of the thyroid. We began sales of this product in March 2020, and these sales have had a significant positive impact on our revenues for 2021 and 2022. We expect continued growth in sales for this product in 2022 and beyond. This is the first of several potential generic drug products we plan to submit to the FDA in the coming years. Within this segment, we also currently distribute sodium iodide (I-131) as a radiochemical product. The radiochemical product is being used for a variety of applications including industrial use and use in investigational and clinical trials. We believe that the product enhancements we have made, in addition to the generic drug products we plan to submit to the FDA, should increase future sales in this business segment.
In 2019, we entered into a manufacturing and supply agreement with a company and completed an expansion of our existing facility to support contract manufacturing activities. Because of changing market conditions that company requested a termination of that contract manufacturing arrangement, and a settlement agreement was reached with that company in December 2020. As part of the settlement agreement, we received a termination payment consisting of cash and the other company’s relinquishment on all claims to expansion of our facility and all the equipment purchased by them. The settlement resulted in a significant one-time gain for us in 2020. In February 2022, we were able to sell these assets we received in the settlement agreement for another significant one-time gain as detailed under Other Income (Expense) below. We are currently developing a business plan to produce additional radiopharmaceutical products or explore new contract manufacturing opportunities utilizing the cash from that sale.
Cobalt Products
Cobalt products sales accounted for approximately 10% of our total sales revenue in 2022 and approximately 14% in 2021. Sales in this segment decreased by $196,981, or approximately 15%, in 2022 to $1,157,536, as compared to $1,354,517 in 2021. The decrease in revenue within this segment was the result of decreased Cobalt Sealed Source Manufacturing due to timing of receipt of additional cobalt material from the ATR in 2022, delays in customer contracts for Cobalt Sealed Source Manufacturing, and delays due to maintenance and repairs to our manufacturing equipment. Our sealed source manufacturing generates the majority of our revenue within this segment and sealed source sales depend on our ability to produce or procure cobalt material.
In October 2014, we entered into a ten-year agreement with the DOE for the irradiation of cobalt targets. It takes many years to irradiate these cobalt targets to the desired level of activity and we anticipated having high specific activity cobalt available for our customers in 2020. However, the material had lower than expected activity and receipt of material was delayed until about June 2021. At that point the material still had lower than expected activity, and we reached an agreement with the DOE to purchase the lower activity material at a discounted rate. Periodically we have been able to acquire recycled material that can be used to manufacture sealed sources for customers, and in some instances, our customers have supplied their own cobalt material for source fabrication. We will continue to have access to additional low specific activity material produced by the DOE and expect to obtain, process, and sell additional cobalt products as a result during 2023.
We have entered into cobalt supply agreements with several customers. The terms of these cobalt contracts require some advance progress payments from each customer. The funding received under these contracts has been recorded as unearned revenue under short- and long-term liabilities in our consolidated financial statements. We recognized some of this revenue in prior years including in 2022 and 2021 when we fulfilled contract performance objectives by supplying sealed sources manufactured with cobalt from the ATR or alternate suppliers.
Nuclear Medicine Standards
Due to decreased activity in the Radiological Services segment, starting January 1, 2022, this segment was reorganized into our Nuclear Medicine Standards segment. Additionally, we reclassified our reporting for 2021 to include all activities for the Radiological Services business segment under the Nuclear Medicine Standards segment.
Sales in the nuclear medicine standards segment accounted for approximately 36% and 40%, of our total sales revenue in 2022 and 2021, respectively. Sales in this segment decreased by $23,921, or approximately 1%, to $3,978,685 in 2022, as compared to $4,002,606 in 2021. This small decrease in sales in 2022 is due to a $93,547 decrease in sales related to the discontinued Radiological Services segment partially offset by an increase of $69,626 in sales related to nuclear medicine standards products.
In 2017, affiliates of the Company purchased 75.5% of the member units of RadQual and at that time, we were named as one of the managing members of RadQual. Because of this change in member ownership and management, we have consolidated RadQual’s operations within the nuclear medicine segment for financial reporting since that time. For purposes of consolidation, all significant intercompany activity has been eliminated in the reporting process. In July 2021, we acquired the remaining 75.5% of the member units of RadQual. As a result of the acquisition, RadQual and TI Services are now our wholly-owned subsidiaries and are fully consolidated.
We anticipate that our sales of RadQual products will remain strong and that our ownership of RadQual will create significant future opportunities through new product development and expanding markets. Additionally, we will continue to work closely with TI Services using their expertise in marketing and distribution strategies to strengthen nuclear medicine product sales.
Radiological Services
Starting in 2022, due to drastically decreased activity in the segment, all remaining activities in our Radiological Services is reported in our Nuclear Medicine Standards segment.
In January 2020, we notified our gemstone processing customer that the service contract with them was being terminated because the volume of gemstones sent for processing did not meet contract minimums. The termination activities and wrap up of this service substantially occurred in 2021 and the Company saw a steady decline in revenue from this service as production was wrapped up. In the first half of 2022, we converted the spaces in the facility that were previously used to perform this contract work into expanded Nuclear Medicine new product manufacturing. The loss in revenue expected from termination of the gemstone processing agreement is expected to be more than compensated for by the expansion of new nuclear medicine source products.
Revenue from field service work for the DOE had accounted for the majority of revenue in this segment. However, Radiological Field Services work was terminated in 2020 and we did not generate any Radiological Field Services revenue in 2021 or 2022. We have removed this type of activity from our NRC license and do not expect to perform this in future years.
We continue to engage in source disposal activities and have begun reporting these activities under the Nuclear Medicine Standards segment starting January 1, 2022. Additionally, we reclassified our reporting for 2021 to include all activities for the Radiological Services business segment under the Nuclear Medicine Standards segment.
Fluorine Products
In 2022, we had no revenues related to Fluorine Products as compared to $29,775 in 2021. These revenues were related to an agreement to provide engineering and technical assistance services related to our fluorine products’ intellectual property. We did not have any revenue from this agreement in 2022. In October 2022, we entered into an option agreement with a Company to sell the NRC license and other assets related to this business area. The agreement gives the buyer up to 18 months to purchase these assets. Work on this project had been on hold since 2013 because of a slowdown in the nuclear industry that specifically impacted fuel cycle facilities. Until such time that we execute the asset sales agreement we will limit our expenditures to essential items such as maintenance of the NRC license, land use agreements, communication with our prospective FEP product customers, and interface with the State of New Mexico and Lea County officials.
During 2021, we incurred $144,860 of planning and other expenses related to the de-conversion project, as compared to $150,196 in 2021. This is a decrease of $5,336, or approximately 4%, and is the result of decreased professional services allocated to this project in 2022. The largest expense in this business segment is $104,379, approximately 72% of the total expenses for 2022, for the amortization of our NRC license for this project. We expect that our costs in the future will be limited to essential items such as continued interactions with our customers, the state of New Mexico, and Lea County, New Mexico.
Cost of Revenues and Gross Profit
Cost of revenues for 2022 was $4,891,927 as compared to $3,924,142 in 2021, an increase of $967,785, or 25%. Gross profit percentage decreased to 56% for 2022, from 59% in 2021. The following table presents revenues and cost of revenues information:
For the year ended
December 31, 2022
% of Total
Revenues 2022
For the year ended
December 31, 2021
% of Total
Revenues 2021
Total Revenues $ 11,181,988 100 % $ 9,661,942 100 %
Cost of Revenues
Radiochemical Products $ 2,217,468 20 % $ 1,698,124 18 %
Cobalt Products 577,417 5 % 546,043 6 %
Nuclear Medicine Standards 2,097,042 19 % 1,679,975 17 %
Fluorine Products - - - -
Total Segments $ 4,891,927 44 % $ 3,924,142 41 %
Gross Profit $ 6,290,061
$ 5,737,800
Gross Profit %
56 %
59 %
967,785 25 % 2,956,357
During 2022, we continued to monitor and control direct costs. Raw materials used in our radiochemical products and nuclear medicine standards represented the bulk of direct costs for 2022. In each of these business segments, we have purchase agreements in place with suppliers to obtain optimum pricing. Periodically, the cost increases for these raw materials or we may also use alternate supply sources for our material which might not carry pricing as favorable as our contracted suppliers.
The decrease in gross profit percentage in 2022 is a result of increased cost in raw material and supplies in our Nuclear Medicine Standards segment driven by recent cost inflation. We have seen these increased costs stabilize somewhat; and we are working on further offsetting these cost increases with increases to our product prices. We believe we can increase our sales prices enough to overcome these cost increases while continuing to be competitive and maintain sales growth.
Operating Costs and Expenses
Total operating costs and expenses for 2022 were $7,492,958, as compared to $6,418,592 in 2021. This is an increase of $1,074,366, or approximately 17%.
The following table presents operating costs and expenses for 2022 as compared to 2021:
For the year ended
December 31, 2022
For the year ended
December 31, 2021
% change
$ change
Operating Costs and Expenses:
Salaries and Contract Labor
$ 3,390,652
$ 2,687,735
%
$ 702,917
General, Administrative and Consulting
3,568,590
3,459,143
%
109,447
Research and Development
533,716
271,714
%
262,002
Total operating expenses
$ 7,492,958
$ 6,418,592
%
$ 1,074,366
Salaries and contract labor expense increased by $702,917, or approximately 26%, which was the result of an increased number of employees and increases to labor rates. In addition, non-cash equity compensation expense recorded for the year ended December 31, 2022, was $352,458 as compared to $84,564 for the same period in 2021. This is an increase of $267,894, or approximately 317%, and is the result of equity compensation recorded for outstanding stock options granted to directors, officers, and employees.
General administrative and consulting expenses increased to $3,568,590 in 2022, as compared to $3,459,143 in 2021, an increase of $109,447, or approximately 3%. This increase is due to periodic waste disposal costs of $329,237 in 2022 with no such cost in 2021. Research and development expense was $533,716 for 2022, compared to $271,714 for 2021. This is an increase of $262,002, or approximately 96%. This increase in research and development expense was the result of increased costs associated with product development in our Radiochemical and Nuclear Medicine Standards business segments.
During both 2022 and 2021, we limited further investment in the planned de-conversion facility and limited further spending on the project only for expenses necessary to maintain licensing, continue interactions with Lea County, New Mexico, and supporting a due diligence review of the project by a company interested in purchasing these project assets. We will continue to delay further engineering work on the de-conversion project until we are able to secure additional contracts for de-conversion services.
Other Income (Expense)
The following table presents other income (expense) for 2022 as compared to 2021:
For the year ended
December 31, 2022
For the year ended
December 31, 2021
Other income (expense)
$ 2,110,576
$ 683,253
Interest income
9,502
Interest expense
(613,943 )
(791,532 )
Total other (expense)
$ 1,506,135
$ (108,168 )
Other income was $2,110,576 for 2022 as compared to other income of $683,253 for 2021. This is an increase in other income of $1,427,323. The increase is primarily due to a $1,797,978 gain on the sale of assets to Pharmalogic Idaho, LLC. In February 2022, we entered into an Asset Purchase Agreement with Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4,000,000 in cash. The assets consisted primarily of manufacturing equipment and a sublease acquired by the Company in connection with the previously announced termination of the manufacturing and supply agreement with another company. In 2021, we recognized “other income” for an anticipated tax refund of approximately $440,000 for the Employer Retention Credit.
In September 2022, we experienced a fraudulent transactions incident. The fraudulent charges totaled approximately $85,000. These charges were recorded as “other expense”. Investigations by our bank and by law enforcement are ongoing. There have been no indications of any involvement within our Company. As we expected to recoup all fraudulent charges from our bank, we recognized "other income" to offset the fraudulent charges recorded under “other expense”. In October and November 2022, we recovered all the fraudulent charges from our bank.
Interest income in 2022 was $9,502 as compared to $111 in 2021. This increase of $9,391 was due to increased interest rates earned for cash balances held at banks and other institutions in interest-bearing accounts.
Interest expense decreased during 2022, to $613,943, from $791,532 in 2021. This decrease of $177,589, or approximately 22%, was due to a decrease in non-cash interest expense and the payoff of some notes payable. In 2022, non-cash interest expense was $274,443 as compared to $401,077 in 2021. This is a decrease of $126,634. Interest expense includes dividends accrued on our Series C Preferred Stock (as defined below) issued in 2017. In 2022, we recorded interest expense of $243,780 for dividends payable on our Series C Preferred Stock.
In connection with the 2013 Promissory Note (as defined below), we recorded $30,000 of interest expense for each of 2022 and 2021, and approximately $3,000 and $13,000 of non-cash interest expense related to a debt discount feature on the 2013 Promissory Note for 2022 and 2021 respectively.
In connection with the 2019 Promissory Note (as defined below), we recorded $40,000 of interest expense for 2022 and 2021, and approximately $256,000 of non-cash interest expense related to a debt discount feature and issuance of warrants related to the 2019 Promissory Note for 2022 and 2021. We will have $0 in non-cash interest expense in connection with the 2019 Promissory Note in 2023 and future years.
In connection with our 2017 issuance of Series C Preferred Stock, we issued Class M Warrants and Class N Warrants. All these warrants expired in 2021. We recorded approximately $0 and $131,000 of non-cash interest expense for 2022 and 2021 respectively in relation to these warrants.
Net Income or Loss
Our net income was $303,238 in 2022, compared to a net loss was $902,347 in 2021. This is an increase in net income of $1,205,578. This increase is largely the result of the approximate $1.8 million gain on sale of assets. Additionally, the increase in income is the result of the increase in revenue in our Radiochemical Products segment offset by the increase in operating expense from salaries and contract labor and expenses from research and development in 2022, as compared to the same period in 2021.
Liquidity and Capital Resources
On December 31, 2022, we had cash and cash equivalents of $2,375,817 compared to $474,851 at December 31, 2021. Net cash used in operating activities was $1,497,719 in 2022, compared to net cash used by operating activities of $161,914 in 2021. This represents an increase in cash used in operating activities of approximately $1,335,805. This increase is due to a large increase in accounts receivable due to the increased sales activity in 2022 as compared to 2021 and decreased net income from operating activities in the year over year comparison.
Accounts receivable at December 31, 2022 were $1,596,886 as compared to $853,675 at December 31, 2021. Our allowance for bad debt at December 31, 2022 was $0 as compared to $18,910 at December 31, 2021.
Inventories at December 31, 2022 were $744,793 as compared to $924,775 at December 31, 2021. A large portion of our inventory consists of Cobalt target inventory. For 2022, our target inventory accounted for approximately 25% of our work in process inventory. For 2021, our target inventory accounted for approximately 48% of our work in process inventory.
Included in our work in process inventory are in-process and completed nuclear medicine products, irradiated cobalt, and nuclear medicine-related materials and products.
We recognized a net profit of $303,238, for the year ended December 31, 2022, and have an accumulated deficit of $126,460,843 since inception. To date, our operations and plant and equipment expenditures have been funded principally from proceeds from public and private sales of debt and equity as well as through asset sales.
Net cash provided in investing activities was $3,879,986 for 2022 and net cash used in investing activities was $205,474 for 2021. During 2022, we used $120,014 to purchase equipment, and we used $205,474 to purchase equipment in 2021. We had proceeds from sale of equipment of $4,000,000 in 2022, and we had no proceeds from sale of equipment in 2021.
Financing activities used cash of $472,004 for the year ended December 31, 2022. We received proceeds from the sale of common stock in the amount of $76,571 and made principal payment on loans in the amount of $540,032 in 2022. For the year ended December 31, 2021, financing activities used cash of $78,699. We received proceeds from the sale of common stock in the amount of $18,890 and issued debt for proceeds of $351,255. In addition, we made principal payment on loans in the amount of $437,627 in 2021.
In February 2017, we entered into subscription agreements with certain investors, including two of our directors, for the sale of (i) an aggregate of 3,433 shares of Series C Preferred Stock, and (ii) Class M warrants to purchase an aggregate of 17,165,000 shares of our common stock (Class M Warrants), for gross proceeds of $3,433,000. The Series C Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on February 17th of each year, commencing on February 17, 2018. Shares of Series C Preferred Stock are convertible at the option of the holder at any time into shares of our common stock at an initial conversion price equal to $0.10 per share, subject to adjustment. At any time after February 17, 2019, if the volume-weighted average closing price of our common stock over a period of 90 consecutive trading days is greater than $0.25 per share, we may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per
share plus any accrued and unpaid dividends, payable in shares of common stock. All outstanding shares of Series C Preferred Stock must be redeemed by us on February 17, 2022 at the original purchase price per share, payable in cash or shares of common stock, at the option of the holder. In February 2022, based on approval of majority of the Preferred C Holders, we extended the redemption date of the Series C Preferred Stock to February 17, 2023. In December 2022, based on approval of majority of the Preferred C Holders, we extended the redemption date of the Series C Preferred Stock to February 17, 2025. Holders of Series C Preferred Stock do not have any voting rights, except as required by law and in connection with certain events as set forth in the Statement of Designation of the Series C Preferred Stock. The Class M Warrants were exercisable at an exercise price of $0.12 per share, subject to adjustment as set forth in the warrant, and expired in February 2022. In February 2022, 515,000 Class M Warrants were exercised at a price of $0.12. The Company received $61,800 for the exercise.
In March 2017, we amended our 8% unsecured debentures issued that were scheduled to mature in July 2017 (the Notes) and gave the noteholders certain additional rights (the Amendment). Pursuant to the Amendment, the Notes were modified to provide each holder the right, at the holder’s option and exercisable prior to May 12, 2017, to convert all or any portion of the principal amount of the Notes, plus accrued but unpaid interest, into shares of our Series C Preferred Stock at a conversion price of $1,000 per share. Holders that elected to convert their Notes into Series C Preferred Stock received a warrant to purchase up to 3,750 shares of our common stock for each share of Series C Preferred Stock received upon conversion of the Notes, with each warrant having a five-year term, a cashless exercise feature, and an exercise price of $0.10 per share of common stock. As a result of this modification, an aggregate of $780,000 of the Notes was converted to 780 shares of Series C Preferred Stock and 2,925,000 Class N Warrants (as defined below). Residual interest was also paid to Note holders who converted of $1,515. The Notes matured in July 2017 and were repaid in full.
As discussed above, in May 2017, we issued 780 shares of Series C Preferred Stock, and Class N warrants to purchase an aggregate of 2,925,000 shares of our common stock (Class N Warrants) upon conversion of $780,000 of the Notes. The Series C Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on February 17th of each year, commencing on February 17, 2018. Shares of Series C Preferred Stock are convertible at the option of the holder at any time into shares of our common stock at an initial conversion price equal to $0.12 per share, subject to adjustment. At any time after February 17, 2019, if the volume-weighted average closing price of our common stock over a period of 90 consecutive trading days is greater than $0.25 per share, we may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per share plus any accrued and unpaid dividends, payable in shares of common stock. All outstanding shares of Series C Preferred Stock were to be redeemed by us on February 17, 2022 at the original purchase price per share, payable in cash or shares of common stock, at the option of the holder. In February 2022, based on approval of majority of the Preferred C Holders, we extended the redemption date of the Series C Preferred Stock to February 17, 2023. In December 2022, based on approval of majority of the Preferred C Holders, we extended the redemption date of the Series C Preferred Stock to February 17, 2025. Holders of Series C Preferred Stock do not have any voting rights, except as required by law and in connection with certain events as set forth in the Statement of Designation of the Series C Preferred Stock. The Class N Warrants were exercisable at an exercise price of $0.12 per share, subject to adjustment as set forth in the warrant, and expired in February 2022.
In December 2013, we entered into a promissory note agreement with our then Chairman of the Board and one of our major shareholders, pursuant to which we borrowed $500,000 (the 2013 Promissory Note). The 2013 Promissory Note is secured and bears interest at 6% per annum and was originally due June 30, 2014. According to the terms of the 2013 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of our common stock. In connection with the 2013 Promissory Note, each of the two lenders was issued 5,000,000 Class L warrants to purchase shares of our common stock at an exercise price of $0.06 per share. The warrants were immediately exercisable. In June 2014, we renegotiated the terms of the 2013 Promissory Note. Pursuant to the modification, the maturity date was extended to December 31, 2017 and each lender was granted an additional 7,500,000 Class L warrants to purchase shares of our common stock at an exercise price of $0.06 per share. The warrants were immediately exercisable. In February 2017, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2020, with all remaining terms unchanged. On December 23, 2018, all 25,000,000 Class L warrants expired. In December 2019, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2021, with all remaining terms unchanged. In January 2022, the 2013 Promissory Note was further modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged.
In April 2018, we borrowed $120,000 from our Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2018 Promissory Note). The 2018 Promissory Note accrues interest at 6% per annum, which is payable upon maturity of the 2018 Promissory Note. The 2018 Promissory Note was originally unsecured and originally matured on August 1, 2018. At any time, the holder of the 2018 Promissory Note may elect to have any or all the principal and accrued interest settled with shares of our common stock based on the average price of the shares over the previous 20 trading days. Pursuant to an
amendment to the 2018 Promissory Note in June 2018, the maturity date was extended to March 31, 2019 with all other provisions remaining unchanged. Pursuant to a second amendment to the 2018 Promissory Note in February 2019, the maturity date was extended to July 31, 2019 with all other provisions remaining unchanged. Pursuant to a third amendment to the 2018 Promissory Note in July 2019, the maturity date was extended to January 31, 2020 with all other provisions remaining unchanged. Pursuant to a fourth amendment to the 2018 Promissory Note in December 2019, the maturity date was extended to December 31, 2021, the note was modified to become secured by company assets, with all other provisions remaining unchanged. In December 2021, the 2018 Promissory Note was further modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged.
In December 2019, we entered into a promissory note agreement with our Chief Executive Officer, Chairman of the Board, former Chairman of the Board, and one of our major shareholders (the 2019 Promissory Note). The 2019 Promissory Note authorizes us to borrow up to $1,000,000. As of December 31, 2019, we borrowed $675,000 under the 2019 promissory note; the remaining $325,000 was borrowed in February 2020. The 2019 Promissory Note is secured and bears interest at 4% per annum and has a maturity date of December 31, 2022. According to the terms of the 2019 Promissory Note, at any time, a holder of the 2019 Promissory Note may elect to have any or all of the principal and accrued interest settled with shares of our common stock based on the average price of the shares over the previous 20 trading days. In connection with the 2019 Promissory Note, we are required to issue up to 30,000,000 Class O Warrants to purchase shares of our common stock at $0.045 per share (the Class O Warrants). The warrants are exercisable at an exercise price of $0.045 per share and have a term of five years. In December 2022, the 2019 Promissory Note was modified to extend the maturity date to December 31, 2024, with all remaining terms unchanged.
In April 2021, we borrowed $250,000 from its Chief Executive Officer and Chairman of the Board pursuant to a promissory note (the 2021 Promissory Note). The 2021 Promissory Note accrued interest at 6% per annum, which was payable upon maturity of the 2021 Promissory Note. The 2021 Promissory Note was originally secured and was to mature on December 31, 2022. At any time, the holders of the 2021 Promissory Note were able to elect to have any or all of the principal and accrued interest settled with shares of our common stock at a conversion price of $0.11 per share. On March 31, 2022, the Company repaid the 2021 Promissory Note in full. The payment included $250,000 in principal and $14,500 in interest.
We expect that cash from operations, cash obtained through securities offerings, and our current cash balance will be sufficient to fund operations for the next twelve months. Although we may seek additional debt financing for our projects and operations in the future, there is no assurance that we will be able to secure additional debt financing on acceptable terms to us, or at all.
Goals for 2023
Based upon the investments we have made in our facilities and investments we anticipate making, and based on projects, and products developed thus far in 2023, we have the following goals for the rest of 2023:
· Continue to expand sales of our FDA approved sodium iodide I-131 generic drug product;
· Complete development of and launch a fully automated I-131 capsule loading system to pharmacies in the U.S and select overseas customers;
· Begin development of one or more new generic drug products to further enhance revenue production within our Radiochemical segment and identify additional future generic product opportunities;
· Expand sales of our nuclear medicine products and increase cash flow by offering new products and further expanding our international sales and distributor relationships;
· Develop a business plan to produce additional radiopharmaceutical products or explore new contract manufacturing opportunities.
· Explore acquisition opportunities to expand our product offerings and increase, revenue, cash flow, and profit margin;
· Continue to expand our customer base, increase revenues, reduce production and operating costs, and attempt to achieve profitability in our core business segment operations; and
· Continue to support essential tasks related to our de-conversion project and continue to pursue any opportunities to benefit from sale of these assets through and through royalty payment arrangements.
Critical Accounting Estimates
Asset retirement obligation - The asset retirement obligation is based on the expected future cash flows of the decommissioning funding plan. The decommissioning funding plan is based on the estimated number of hours of specific personnel, estimated wages and disposal costs. Once the decommissioning funding plan has been developed, we use a discount rate to determine the estimated current value of the liability.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, and therefore, are not required to provide the information required by this item.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are included herewith and are hereby incorporated by reference:
Index to Consolidated Financial Statements
Page No.
Report of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021
Consolidated Statement of Shareholders’ Equity for the years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
Notes to Consolidated Financial Statements

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Exchange Act) that are designed to ensure information required to be disclosed in our reports that are filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act) of the effectiveness of our disclosure controls and procedures as of December 31, 2022. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2022.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the U.S. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the year ended December 31, 2022, that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. OTHER INFORMATION
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. Our Code of Ethics is posted on our website and can be accessed, free of charge, at http://www.intisoid.com. If we waive, or implicitly waive, any material provision of the Code of Ethics that apply to our executive officers, or substantively amend the Code of Ethics, in each case that is required to be disclosed, we will disclose that fact on our website.
The other information required by this item is incorporated by reference from our definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed with the SEC within 120 days after December 31, 2022.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from our definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed with the SEC within 120 days after December 31, 2022.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from our definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed with the SEC within 120 days after December 31, 2022.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference from our definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed with the SEC within 120 days after December 31, 2022.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to our definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed with the SEC within 120 days after December 31, 2022.

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) and (a)(2) Financial Statements
See the index to and the financial statements beginning on page [31], which financial statements are incorporated herein by reference.
(a)(3) Exhibits
The following documents are filed or incorporated herein by reference as exhibits to this report:
2.1++ Membership Interest Purchase Agreement, dated July 8, 2021, between RadQual, LLC, International Isotopes Inc., and each of the sellers named therein (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on July 14, 2021).
2.2++ Asset Purchase Agreement, dated February 10, 2022, between International Isotopes Inc. and Pharmalogic Idaho, LLC (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on February 16, 2022).
3.1 Restated Certificate of Formation of the Company, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for quarter ended June 30, 2010).
3.2 Statement of Designation of the Series C Convertible Redeemable Preferred Stock of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on February 24, 2017).
3.3 Certificate of Amendment to Statement of Designation of the Series C Convertible Redeemable Preferred Stock International Isotopes Inc., dated February 16, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on February 22, 2022).
3.4 Certificate of Amendment to Statement of Designation of the Series C Convertible Redeemable Preferred Stock International Isotopes Inc., dated December 28, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed December 28, 2022).
3.5 Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form SB-2 filed on May 1, 1997 (Registration No. 333-26269).
10.1† International Isotopes Inc. Amended and Restated Employee Stock Purchase Plan (incorporated by reference to Exhibit 10,1 of the Company’s Current Report on Form 8-K, filed on July 21, 2020).
10.2† International Isotopes Inc. Amended and Restated 2015 Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on July 30, 2018).
10.3+ Lease Agreement (4137 Commerce Circle), dated January 20, 2020, between the Company and Adrian Rand Robison and Dorothy Robison.
10.4† Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on September 17, 2008).
10.5 Memorandum of Agreement, dated October 22, 2009, between the Company and the New Mexico Environment Department (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on October 27, 2009).
10.6 Registration Rights Agreement, dated February 17, 2017, among the Company and the purchasers named therein (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 24, 2017).
10.7† Amended and Restated Employment Agreement, dated May 16, 2012, between the Company and Stephen Laflin (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.8† Modification #3 to the Amended and Restated Employment Agreement, dated February 22, 2023, between the Company and Stephen Laflin (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 28, 2023).
10.9 Promissory Note Agreement, dated December 23, 2013, among the Company, Ralph Richart and John McCormack (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013).
10.10 Modification #1 to the Promissory Note Agreement, dated June 30, 2014, among the Company, Ralph M. Richart and John M. McCormack (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014).
10.11 Modification #2 to the Promissory Note Agreement, dated February 3, 2017, among the Company, Ralph M. Richart and John M. McCormack (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).
10.12 Isotope and Technical Service Order Form, dated October 2, 2014, between the Company and the U.S. Department of Energy (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).**
10.13 Cobalt-60 Pellet Supply Agreement, dated April 7, 2015, between Nordion (Canada) Inc., as general partner of and on behalf of Nordion Sterilization LP, and International Isotopes Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015).**
10.14 First Modification to Cobalt-60 Pellet Supply Agreement, effective April 21, 2017, between International Isotopes Inc. and Nordion (Canada) Inc., as general partner of and on behalf of Nordion Sterilization LP (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 10, 2017).**
10.15 Certificate of Amendment to Statement of Designation of the Series C Convertible Redeemable Preferred Stock International Isotopes Inc (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on December 28, 2022).
21.1+ Subsidiary list.
23.1+ Consent of Haynie & Company.
31.1+ Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+ Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer furnished under Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer furnished under Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+ XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+ XBRL Taxonomy Extension Schema Document
101.CAL+ XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+ XBRL Taxonomy Extension Definition Linkbase Document
101.LAB+ XBRL Taxonomy Extension Label Linkbase Document
101.PRE+ XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101
† This exhibit constitutes a management contract or compensatory plan or arrangement.
** Confidential treatment has been granted as to certain portions, which portions were omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.
++ Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to supplementally furnish copies of any omitted schedules to the Securities and Exchange Commission upon request.
+ Filed herewith.
* Furnished herewith.