FORM 10-QSB
SECURITIES EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 1997
Commission file number:
333-26269 SB-2
INTERNATIONAL ISOTOPES INC.
(Exact name of registrant as specified in its charter)
Texas 74-2763837
(State of incorporation) (IRS Employer Identification Number)
2600 Longhorn Boulevard, Suite 105 78758
Austin, Texas (Zip Code)
(Address of principal executive offices)
512-834-1822
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X* NO
As of November 11, 1997 the aggregate market value of the common stock of the
registrant held by non-affiliates of the registrant as determined by reference
to the closing price of Common Stock as reported on the Nasdaq Small Cap Market
System, was $ 59,051,525 As of November 11, 1997 the number of shares of common
stock, $.01 par value, outstanding was 6,215,950.
*Registrant became subject to the filing requirements of the Securities Exchange
Act of 1934 on August 12, 1997, when its Registration Statements on Form SB-2
and Form 8-A were declared effective by the Commission.
<PAGE>
INTERNATIONAL ISOTOPES INC.
TABLE OF CONTENTS
Page No.
PART I - FINANCIAL INFORMATION:
Item 1 - Financial Statements:
Consolidated Balance Sheets at September 30, 1997
and December 31, 1996 (unaudited) 3
Consolidated Statements of Operations for the Nine
Months and the Three Months Ended September 30,
1997, and 1996 and for the period November 1, 1995
(inception) through September 30, 1997 (unaudited) 4
Consolidated Statements of Cash Flows for the
Nine Months and the Three Months Ended
September 30, 1997 and 1996 and for the period
from November 1, 1995 (inception) through
September 30, 1997 (unaudited) 5
- Notes to Consolidated Financial Statements (unaudited). 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION:
Item 2. Changes in Securities and Use of Proceeds 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARY
(development stage enterprises)
Consolidated Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
Assets
9/30/97 12/31/96
------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 808,295 $ 331,397
Short term investments 13,810,721 --
Restricted certificate of deposit -- 300,000
Accounts receivable 16,250 --
Assets held for sale 538,423 546,613
Inventory 702,691 757,498
Prepaids 72,913 --
Other 14,499 10,855
----------- -----------
Total current assets 15,963,792 1,946,363
Property and Equipment (net):
Land 87,894 87,894
Buildings 340,634 --
Furniture and equipment 1,304,883 972,922
----------- -----------
Total property and equipment 1,733,411 1,060,816
Total assets 17,697,203 3,007,179
=========== ===========
Liabilities
Current liabilities
Accounts payable 343,470 241,341
Accrued liabilities 1,071,083 16,475
Note payable-current portion 10,583 1,850,000
Notes payable to related party -- 20,000
Payable to lending institution -- 594,454
----------- -----------
Total current liabilities 1,425,136 2,697,270
Long Term liability-note payable to banks (net of current portion) 206,058 --
----------- -----------
Total liabilities 1,631,194 2,697,270
Stockholders' equity
Preferred stock, $1.00 par value: 5,000,000 shares authorized;
no shares issued and outstanding at September 30, 1997 and
no shares issued and outstanding at December 31, 1966. -- --
Common stock, $.01 par value: 20,000,000 shares authorized:
6,215,950 shares issued and outstanding at September 30, 1997,
3,766,663 shares issued and outstanding at December 31, 1996. 62,159 37,667
Additional paid-in capital 20,632,777 1,266,688
Accumulated deficit (4,156,927) (834,446)
Receivable from stock sales (472,000) (160,000)
----------- -----------
Total stockholders' equity 16,066,009 309,909
----------- -----------
Total liabilities and stockholders' equity 17,697,203 3,007,179
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
<PAGE>
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARY
(development stage enterprises)
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine Months ended Three Months ended Period from
Sept 30, Sept 30, November 1, 1995
(inception) through
1997 1996 1997 1996 September 30, 1997
<S> <C> <C> <C> <C> <C>
Sale of accelerator components 152,015 1,571,124 16,828 1,571,123 927,117
Cost of sales 79,287 697,448 10,849 697,448 342,727
---------- ---------- ---------- ---------- ----------
Gross Profit 72,728 873,676 5,979 873,675 584,390
General and administrative 467,113 469,599 254,190 141,422 533,987
Sales and Marketing 7,880 0 7,764 7,880
Commissions and fees 0 0 95,315
Consulting fees 34,479 272,962 29,296 99,681 402,228
Legal and professional fees 11,234 16,377 2,809 16,007 70,919
Salaries and contract labor 2,657,724 32,969 729,690 24,786 2,767,613
Rent and security 117,508 29,804 38,513 27,436 215,936
Other 0 85,381
---------- ---------- ---------- ---------- ----------
Total operating expenses 3,295,938 821,711 1,062,262 309,332 4,179,258
---------- ---------- ---------- ---------- ----------
Income (loss) from development stage operations (3,223,210) 51,965 (1,056,283) 564,343 (3,594,868)
Gain on sale of assets held for sale 14,974 0 14,974 -- 14,974
Interest income 71,780 2,090 64,522 1,283 64,522
Other income 317 0 --
Interest expense (186,342) (3,877) (37,039) (3,260) (37,039)
Loan financing fees --
---------- ---------- ---------- ---------- ----------
Income (Loss) before extraordinary item (3,322,481) 50,178 (1,013,826) 562,366 (3,552,412)
Extraordinary gain on debt extinguishment 250,000
---------- ---------- ---------- ---------- ----------
Net income (loss) (3,322,481) 50,178 (1,013,826) 562,366 (3,302,412)
========== ========== ========== ========== ==========
Net income (loss) per common share (0.71) 0.01 (0.19) 0.15
========== ========== ========== ==========
Weighted average shares used to compute net
loss per share 4,669,575 3,660,836 5,433,279 3,806,353
========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements
</TABLE>
<PAGE>
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARY
(development stage enterprises)
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Nine months Three months Period from
ended September 30, ended September 30, November 1, 1995
1997 1996 1997 1996 (inception) through
September 30,1997
<S> <C> <C> <C> <C> <C>
Cash Flows from operating activities
Net income (loss) (3,322,481) 50,177 (1,013,826) 562,370 (4,156,927)
Adjustments to reconcile net loss to net cash used in --
operating activities: --
Depreciation and amortization 7,153 -- 2,317 8,813
Gain of Sale of Assets (14,974) -- (14,974) (351,338)
Services compensated by stock issuances 1,557,920 -- 386,537 1,818,806
Changes in operating assets and liabilties: -- -- --
Accounts Receivable (16,250) (94,046) (16,250) (94,946) (16,250)
Other assets (3,644) (108,370) 248 (4,100) (14,499)
Inventory 54,807 -- -- (702,691)
Prepaids (72,913) -- 269,285 (72,913)
Accounts payable 102,129 179,944 129,877 59,172 343,470
Accrued Liabilities 1,054,608 304,053 378,758 11,471 1,071,083
---------- --------- ---------- ---------- ----------
Net cash used in operating activities (653,645) 331,758 121,972 533,967 (2,072,446)
Cash flows from investing activities:
Proceeds from redemption of certificate of deposit 300,000 -- 100,000 300,000
Purchase of certificate of deposit (100,000) -- (100,000) (400,000)
Building Construction costs (340,634) -- (190,800) (340,634)
Purchase of assets for resale and furniture and -- -- --
equipment held for operations (282,616) (2,596,877) (158,702) (1,252) (2,171,289)
Proceeds from sale of assets held for sale, net --
of related expenses -- 582,033 581,863 691,051
---------- --------- ---------- ---------- ----------
Net cash used in investing activities (423,250) (2,014,844) (349,502) 580,611 (1,920,872)
Cash Flows from financing activities:
Proceeds from issuance of notes payable to chairman 100,000 100,000 120,000
Proceeds from sale of Common Stock 17,982,730 8,466 17,722,730 18,786,096
Proceeds from issuance of debt 3,666,317 3,100,000 -- 8,416,317
Principal payments on notes payable (6,264,533) (1,269,505) (3,221,329) (1,269,505) (8,595,079)
Payments on notes payable from chairman (20,000) (21,960) (20,000) (115,000)
---------- --------- ---------- ---------- ----------
Net cash from financing activities 15,364,514 1,917,001 14,481,401 (1,169,505) 18,612,334
------------------------------------ ---------- ----------
Net increase (decrease) in cash and cash equivalents 14,287,619 233,915 14,253,871 (54,927) 14,619,016
Cash and cash equivalents at beginning of period 331,397 -- 365,145 288,842 --
------------------------------------ ---------- ----------
Cash and cash equivalents at end of period 14,619,016 233,915 14,619,016 233,915 14,619,016
==================================== ========== ==========
Supplemental disclosure of cash flow activities
Cash paid for interest 195,011 82,601 407,838
========== ========== ==========
Cash paid for financing fees 15,261 515,261
========== ==========
Supplemental disclosure of noncash transactions
Conversion of notes payable to common stock 5,000
==========
Acquisition of subsidiary through issuance
of common stock 75,003
==========
Acquisition of patent through common stock 110 110
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
<PAGE>
Item 1 - NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(1) THE COMPANY AND BASIS OF PRESENTATION
International Isotopes Inc. (the "Company") was incorporated on November 15,
1995 and is a development stage enterprise. The Company's primary activities
have been to acquire assets to be used in the production of radioisotopes and to
obtain funding to complete the reconfiguration and reassembly of its linear
accelerator, to construct or purchase facilities, to actively seek strategic
alliances in the marketing of its planned product lines and to develop
associations with major universities.
The accompanying unaudited consolidated financial statements include the results
of operations of the Company and its wholly owned subsidiary, Gazelle Realty.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The unaudited financial statements included herein by the Company
have been prepared without audit and in accordance with generally accepted
accounting principles, and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). These statements
reflect all adjustments which, in the opinion of management, are necessary for a
fair presentation of the Company's financial position as of September 30, 1997
and December 31, 1996, and the results of its operations for the nine and three
months ended September 30, 1997 and 1996 and its cash flows for the nine months
ended September 30, 1997 and 1996. This information should be read in
conjunction with the Company's audited consolidated financial statements for the
period from November 1, 1995 (inception) through December 31, 1996 included in
the Prospectus contained in Amendment No. 2 to the Registration Statement on
form SB-2 filed with the SEC and which became effective on August 12, 1997 and
Form 10QSB filed on September 29, 1997 for the quarter ending June 30, 1997.
Certain information in footnote disclosures, normally included in the financial
statements, was prepared in accordance with generally accepted accounting
principles, and has been condensed or omitted pursuant to the rules and
regulations. The financial data disclosed in the notes to the consolidated
statements is unaudited for these periods.
(2) NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net loss per share attributable to common stockholders is computed using the
weighted average number of shares outstanding. Common equivalent shares from
stock options and warrants are excluded from the computation as their effect is
anti-dilutive, except that, pursuant to the SEC Staff Accounting Bulletin No.
83, common stock issued for consideration below the IPO price and warrants
exercised, warrants granted and stock options granted with exercise prices below
the Company's IPO price of $9.00 during the 12 month period preceding the date
of the initial filing of the registration statement, even when anti-dilutive,
have been included in the calculation of common equivalent shares, using the
treasury stock method based on the IPO price as if they were outstanding for all
periods presented.
<PAGE>
(3) COMMON STOCK
On August 19, 1997, the Company completed an offering (the "Offering"), of
2,200,000 shares of its Common Stock at $9.00 per share. The Company received
proceeds of $17,805,823 after deducting underwriters' discounts and commissions.
Additional expenses associated with the offering due to legal, audit, printing
and other expenses were approximately $1,000,000, resulting in net proceeds of
$16,805,823. The Company had 6,115,950 shares of common stock outstanding
immediately following the Offering.
On September 30, 1997 the Company completed the sale of an additional 100,000
shares of its common stock at $9.00 per share as a result of the exercise of the
overallotment option by the underwriters of the Company's IPO. The Company
received proceeds of $810,000 after subtraction of underwriters' discounts and
commissions. The Company had 6,215,950 shares of common stock outstanding after
this transaction. Additionally, the Company's underwriters completed a purchase
and resale of 100,000 shares of common stock owned by certain selling
stockholders of the Company as a result of the exercise of the underwriter's
overallotment option.
During the six months ended June 1997, the Company agreed to issue a total of
320,000 shares of common stock at a purchase price of $1.60 as incentives to
four recently hired key employees. Of these shares, 170,000 were issued in June
1997. The remaining 150,000 shares are first purchasable at December 31, 1997.
The Company recognized $2,020,625 of compensation expense related to these
incentive grants during the first nine months of 1997.
(4) NOTES PAYABLE TO BANKS
In August 1997 and September 1997, the Company applied approximately $3,250,000
of the proceeds of the Offering to eliminate all guaranteed outstanding bank
loans and other indebtedness, with the exception of the Company's construction
loan for its administration, manufacturing, research and development facility.
As of September 30, 1997, notes payable consisted of an 8.5% Interim
construction note payable to a bank, in the amount of $216,641, secured by land
and improvements, due February 19, 2018. Principal and interest payments with
respect to such note are payable monthly beginning March 19, 1998. Additional
amounts totaling $246,625 were drawn during October 1997.
(5) STOCK OPTIONS
On August 19, 1997 the Board of Directors granted options to purchase 10,000
shares of Common Stock to a member of the Board of Directors and 10,000 shares
of Common Stock to the Chairman of the Science and Technology Advisory Board,
both with an exercise price of 85% of the IPO price. The Company's Common stock
options outstanding at September 30, 1997 totaled 310,000. The Company
recognized $9,662 of consulting expense in the quarter ending September 30, 1997
related to these options. The Company has elected to apply APB 25 for
determination of expense related to employee based compensation.
<PAGE>
(6) SALARIES AND CONTRACT LABOR
Salaries and contract labor is summarized as follows at September 30, 1997:
Cash paid for salaries and contract labor ..................... $637,099
Non-cash incentive stock compensation 2,020,625
---------
Total salaries and contact labor 2,657,724
=========
(7) BUILDING PURCHASE
In September 1997, the Company entered into negotiations for the purchase of an
80,000 square foot office/manufacturing facility and a 12,000 square foot
warehouse facility located on 12 acres in Denton, Texas. The transaction is
expected to close in November 1997. These facilities will provide space to allow
the Company to supply finished (cGMP) radiopharmaceutical products as well as
manufacturing, processing of therapeutic radioisotope devices, and joint R&D
projects with the University of North Texas and M.D. Anderson Cancer Center. In
addition, inventory and Linac assets currently housed in Fort Worth, Texas in a
32,000 square foot leased warehouse will be consolidated in Denton, Texas to
provide greater efficiency of operation. (See Item 5. - Other information).
(8) SUBSEQUENT EVENTS
On October 15, 1997, the Company completed financing arrangements for a one year
revolving line of credit in the amount of $250,000 and a one year term loan in
the amount of $500,000, both secured by twenty (20) acres of land owned by the
Company. Interest, payable monthly on both loans, is at Chase Manhattan's
"prime" lending rate and adjusts daily. Maturity dates for both loans are
October 15, 1998. No amounts have been drawn on the line of credit. The $500,000
term loan was fully funded on October 15, 1997.
In October 1997, the Company executed a contract to purchase four high-level
radioisotopes processing cells for its radiochemistry operations in the amount
of $990,000 and paid $396,000 as a deposit. Delivery and set up of the equipment
is anticipated by May 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for historical information contained herein, the following contains
forward-looking information that is subject to certain risks and uncertainties.
The Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, set forth in
the "Risk Factors" section included in the Prospectus contained in Amendment No.
2 to the Registration Statement on Form SB-2 filed with the Securities Exchange
Commission (SEC) on August 8, 1997 (the Prospectus) which was approved and
became effective on August 12, 1997. The following discussion should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in the Prospectus.
<PAGE>
OVERVIEW
International Isotopes Inc. (the "Company") is a development stage company which
intends to be the first domestic producer of a full range of pharmaceutical
grade radioactive isotopes ("radioisotopes") and radiopharmaceuticals (on a
contract or joint venture basis) for commercial sale to the nuclear medicine
industry. Radioisotopes, which are indispensable components of nuclear medicine,
are radiation-emitting atoms that are used for both medical diagnostics and
in-the-body ("in vivo") therapeutics. A radiopharmaceutical is produced when a
radioisotope is combined with or tagged to a pharmaceutical component (e.g.
antibody or peptide) that has a natural affinity for a specific internal organ,
tissue or cell in the body. Recent advances in the understanding of molecular
and cellular biology have led to the discovery of new uses for radioisotopes,
generating an increased demand for existing, as well as novel, potential
pharmaceutical radioisotopes for diagnostic and therapeutic uses.
Presently, the most commonly used radioisotopes in the United States are
accelerator produced Thallium-201, Gallium-67, Indium-111, Fluorine-18,
Cobalt-57, Iodine-123 and reactor produced Molybdenum -99. Four domestic major
radiopharmaceutical companies and two foreign manufacturers produce these
isotopes primarily for their own use. Radioisotopes are produced and used either
independently or in various combinations or "cocktails" to assist in the
diagnosis of a myriad of medical conditions, including coronary heart disease,
pulmonary embolism, thyroid carcinoma, bone cancer, brain disorders, acute
cholecystitis (inflammation of the gall bladder), gastrointestinal bleeding,
renal artery stenosis and other diseases. In addition, The Company intends to
commercially produce Palladium-103 and Iodine-125 seeds for therapy and
Iodine-131 and Yttrium-90 labeled radiopharmaceuticals. These are produced as
labeled seeds for implantation in the treatment of prostate, breast, colon and
other cancers.
The Company also intends, under exclusive worldwide licenses, to complete
development, manufacture and marketing of products in 1999 for diagnostic and
therapeutic nuclear medicine. Based on results achieved in industrial
applications of the licensed patented inventions, the Company believes its
medical imaging camera and therapy products will have acceptance in the market.
The Company's activities since inception have been primarily devoted to
acquisition of the Linac assets previously utilized by the State of Texas for
the Super Conducting Supercollider, with a currently appraised market value of
$8,084,000. The Company plans to utilize funds obtained from the offering to
increase its capital assets primarily through the assembly and upgrade of the
Linac for efficient production of radioisotopes and radiopharmaceuticals, as
well as construction and acquisition of manufacturing facilities, and other
production equipment. The Company is actively pursuing strategic alliances with
pharmaceutical companies and universities. In addition, the Company has engaged
in construction of administration, manufacturing and services facilities. The
Company has employed additional key-personnel in the area of Linac
manufacturing, operations, radioisotope and radiopharmaceutical production,
quality assurance and regulatory compliance.
The Company has a limited history of operations and has experienced operating
losses and significant expenses in the acquisition of key-personnel, land and
facilities. The Company expects
<PAGE>
operating losses to continue as it initiates radioisotope and
radiopharmaceutical production, obtains validation and customer approval, and
increases marketing and product development.
RESULTS OF OPERATION
Three months ended September 30, 1997 and 1996
- ----------------------------------------------
The Company reported a net loss of $1,013,826 or ($0.19) per share for the
quarter ending September 30, 1997 as compared to a profit of $562,366 or $.015
per share for the comparable period in 1996 primarily due to increases in
personnel costs as the Company adds the technical staff required to prepare for
operations.
Revenues from sales of accelerator components and equipment and the
corresponding costs of sales for the three months ended September 30, 1997 were
$16,828 and $10,849, respectively, resulting in gross profits of $5,979. Several
large sales and auctions during the same period in 1996 had produced sales of
$1,571,123 and expenses of $697,448, resulting in gross profits of $873,675.
Operating costs and expenses, net of $376,875 in non-cash expenses related to
incentive compensation expense, increased to $685,387 for the three months ended
September 30, 1997 as compared to $309,332 in the comparable period in 1996.
Personnel costs made up 70% of the total operating costs. General and
administrative expenses were $141,422 for the third quarter in 1996 as compared
to $254,190 in the third quarter of 1997.
Nine Months Ended September 30, 1997 and 1996
The Company reported a net loss of $3,322,481 or ($0.71) per share for the nine
months ending September 30, 1997 as compared to a profit of 50,178 or $$0.01 per
share for the comparable period in 1996.
Revenues from sales of accelerator components and equipment and the related
costs of sales for the nine months ended September 30, 1997 were $152,015 and
$79,287, respectively, compared to $1,571,124 and $697,448 for the same period
in 1996. A gross profit of $72,728 for the nine months ended September 30, 1997
was realized as compared to $873,675 in 1996.
Operating costs and expenses, net of $2,020,625 in non-cash expenses related to
employee incentive compensation expense, increased to $1,275,313 for the nine
months ended September 30, 1997 as compared to $821,711 for the comparable
period in 1996. The increase was principally due to additional personnel
salaries and facilities costs. Consulting expense decreased from $272,962 for
the nine-month period ending September 30, 1996 to $34,479 for the same period
in 1997, as the Company hired personnel to assume duties internally. The Company
expects activities for the next twelve months to be centered on capital asset
acquisition related to its linear accelerator assets and construction of
facilities.
Interest expense, primarily relating to loans and bank financing, increased from
$3,877 in 1996 to $186,342 for the nine-month period ending September 30, 1997.
However, interest expense during the third quarter of 1997 decreased by $28,948
from $65,987 in the second quarter as the Company applied proceeds from the
Offering to reduce debt. As of September 30, 1997, the Company had an
accumulated deficit of $4,156,928.
<PAGE>
Liquidity and Capital Resources
From November 1, 1995 (inception) through May 1997, the Company obtained funds
primarily through principal shareholder guaranteed bank loans, sales of
accelerator components and excess equipment, sales of Common Stock in a private
placement to investors and from loans from stockholders and directors. In May of
1997, the Company obtained favorable refinancing which allowed the Company to
decrease interest costs and to commence construction of its administration,
manufacturing, research and development facility. In June of 1997, a company
related to a director granted the Company a $750,000 line of credit for the
purpose of supporting operations and for funding a portion of the costs related
to the Company's public offering.
During the third quarter, the Company completed an underwritten public offering
of 2,200,000 shares of common stock, generating approximately $16,806,000 in net
proceeds to the Company after commissions and expenses. Approximately $3,250,000
of funds from the public offering were utilized to extinguish all Company debt
outstanding at the time of the offering, with the exception of the construction
loan for the administration, manufacturing, research and development facility.
All company assets, that had been pledged as collateral were released, with the
exception of 1.6 acres upon which construction was underway. In October 1997,
the Company arranged for an additional $750,000 in additional financing for
short-term cash management purposes.
As a result of the exercise of the underwriters' option to purchase an
additional 100,000 shares of common stock on September 30, 1997, the Company
received another $810,000, net of underwriter's discount and expenses. Funds
from the Offering were invested in cash, cash equivalents and short-term
investments totaling approximately $14,600,000 at the end of the third quarter.
The majority of the funds are invested in short-term instruments with maturity
dates of six months or less.
Management anticipates, based on its currently proposed plans and assumptions
relating to its operations, that the current cash resources will be sufficient
to sustain operations for the next 18 months.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The Company completed the filing requirements of the Securities Exchange Act of
1934 related to its Registration Statements on Form SB-2 and Form 8-A and was
declared effective by the Commission on August 12, 1997. The managing
underwriter for the offering was Keane Securities Co., Inc. On August 19, 1997,
the Company completed the offering of 2,200,000 shares of its Common Stock at
$9.00 per share. The Company received proceeds of $17,805,823 after deducting
underwriters' discounts and commissions. Additional expenses associated with the
offering due to legal, audit, printing and other expenses were approximately
$1,000,000, resulting in net proceeds of $16,805,823. The Company had 6,115,950
shares of common stock outstanding immediately after the offering.
<PAGE>
On September 30, the Company completed the sale of 100,000 additional shares of
its common stock, as a result of the exercise of the underwriters' over
allotment option. The Company had 6,215,950 shares of common stock outstanding
after that transaction.
Prior to the end of the third quarter, Company debts totaling approximately
$3,250,000 were repaid, including a payment of $750,000 which was disbursed to a
company owned by a director in repayment of a loan. The Company invested $
14,500,000 in short term, liquid, investment grade instruments, certificates of
deposit or money market accounts at financial institutions and direct,
guaranteed or insured obligations of the United States or its agencies.
Disbursements of approximately $100,000 were expended for the purposes of
engineering, design, and the purchase and installation of machinery and
equipment. Cash payments related to the Initial Public Offering were $461,128
during the third quarter. Funds in the amount of $274,386 were utilized for
working capital purposes, including personnel, facilities, insurance and other
operating expenses.
Item 5. Other Information
The Company expects completion and occupancy of its 27,000 square foot facility
for administration, manufacturing, research and development operations in
December 1997. In September 1997, the Company entered into negotiations for the
purchase of an 80,000 square foot office/manufacturing facility and 12,000
square foot warehouse facility located on 12 acres of land Denton, Texas. These
facilities will provide additional space required to meet the demand for
finished (cGMP) radiopharmaceutical manufactured products, and to provide for
processing of therapeutic radioisotope devices, and joint R&D facilities with
the University of North Texas and M.D. Anderson Cancer Center. In addition,
inventory and Linac assets currently housed in Fort Worth, Texas in a 32,000
square foot leased warehouse will be consolidated in Denton, Texas to provide
greater efficiency of operation. This will allow the Company to reduce facility
costs by reducing the size of the planned facility for radioisotope production
and radiochemistry from 53,000 square feet to 28,500 square feet. As a result of
this revision, construction of this facility has been rescheduled to begin in
December 1997, with occupancy planned in April 1998.
The Company continues to make arrangements for the moving and re-installation of
the CP-42 accelerator for research, development of new isotopes and production
of research isotopes. M.D. Anderson Health Science Center in Houston, TX donated
the accelerator, which will be located at the Company's facility in Denton, to
the University of North Texas. The Company has a five-year lease agreement with
UNT to operate the accelerator for isotope production and research.
The Company has increased marketing efforts and has had exhibits at meetings of
the International Isotope Conference in Sydney, Australia (October 1997) and the
Oppenheimer Annual Health Care Conference (October 1997), and plans to attend
the American Nuclear Society meeting in Albuquerque, New Mexico, and the
Radiological Society of North America in Chicago, Illinois.
Item 6. Exhibits and Reports on Form 8 - K
Exhibits: (None)
<PAGE>
Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which this report on
Form 10-QSB is filed.
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<NAME> INTERNATIONAL ISOTOPES INC.
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