FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number:
0-22923
INTERNATIONAL ISOTOPES INC.
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(Exact name of registrant as specified in its charter)
Texas
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(State or other jurisdiction of incorporation or organization)
74-2763837
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(IRS Employer Identification Number)
4137 Commerce Circle
Idaho Falls, ID. 83401
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(Address of principal executive offices)
208-524-5300
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act 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 April 15, 2005 the number of shares of Common Stock, $.01 par value,
outstanding was 183,567,347.
INTERNATIONAL ISOTOPES INC.
TABLE OF CONTENTS
Page No.
PART I - FINANCIAL INFORMATION:
Item 1 - Financial Statements:
Unaudited Condensed Consolidated Balance Sheets
at March 31, 2005 and December 31, 2004 3
Unaudited Condensed Consolidated Statements
of Operations for the Three Months Ended
March 31, 2005 and 2004 4
Unaudited Condensed Consolidated Statements
of Cash Flows for the Three Months Ended
March 31, 2005 and 2004 5
Notes to Unaudited Condensed Consolidated
Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3 - Controls and Procedures 12
PART II - OTHER INFORMATION:
Item 6 - Exhibits 13
SIGNATURES 13
CERTIFICATIONS 14
2
Part I. Financial Statements
Item 1. Financial Statements
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
March 31, December 31,
Assets 2005 2004
----------------------------------------------------- ------------ ------------
Current assets:
Cash and cash equivalents $ 697,380 $ 150,051
Accounts receivable 452,554 432,750
Inventories 2,152,159 2,237,421
Prepaids and other current assets 218,827 91,520
------------ ------------
Total current assets 3,520,920 2,911,742
Long-term assets
Restricted certificate of deposit 175,486 152,728
Property, plant and equipment, net 1,207,509 1,123,226
Capitalized lease disposal costs, net of accumulated
amortization of $50,686 and $47,472 respectively 124,059 101,860
Patents, net of accumulated amortization 106,043 98,433
------------ ------------
Total long-term assets 1,613,097 1,476,247
------------ ------------
Total assets $ 5,134,017 $ 4,387,989
============ ============
Liabilities and Stockholders' Equity
-----------------------------------------------------
Current liabilities
Accounts payable $ 226,104 $ 328,589
Accrued liabilities 306,129 226,338
Current installments of mortgage and notes payable 1,517,349 1,520,570
------------ ------------
Total current liabilites 2,049,582 2,075,497
Long-term liabilities
Obligation for lease disposal costs 174,745 149,332
Mortgage and notes payable, excluding current installments 758,775 761,775
Mandatorily redeemable preferred stock, $0.01
par value; 850 shares outstanding 850,000 850,000
------------ ------------
Total long-term liabilities 1,783,520 1,761,107
------------ ------------
Total liabilities 3,833,102 3,836,604
Stockholders' equity
Common stock, $0.01 par value; 250,000,000 shares
authorized; 183,567,347 and 159,077,940 shares
issued and outstanding, respectively 1,835,673 1,590,779
Additional paid-in capital 88,507,799 87,773,992
Retained deficit (89,042,557) (88,813,386)
------------ ------------
Total stockholders' equity 1,300,915 551,385
------------ ------------
Total liabilities and stockholders' equity $ 5,134,017 $ 4,387,989
============ ============
See accompanying notes to condensed consolidated financial statements.
3
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
Three Months ended March 31,
2005 2004
------------- -------------
Sale of product $ 685,567 $ 743,325
Cost of product 352,747 442,955
------------- -------------
Gross profit 332,820 300,370
------------- -------------
Operating costs and expenses:
Salaries and contract labor 219,611 156,734
General, administrative and consulting 292,740 262,743
Research and development 12,194 13,567
------------- -------------
Total operating expenses 524,545 433,044
------------- -------------
Operating loss (191,725) (132,674)
------------- -------------
Other income (expense)
Other income 574 8,699
Interest income 486 750
Interest expense (38,506) (38,262)
------------- -------------
Total other expense (37,446) (28,813)
------------- -------------
Net loss $ (229,171) $ (161,487)
------------- -------------
Net loss per common share - basic and diluted $ (0.00) $ (0.00)
============= =============
Weighted average common shares outstanding -
basic and diluted 175,071,305 140,061,587
============= =============
See accompanying notes to condensed consolidated financial statements.
4
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months ended March 31,
----------------------------
2005 2004
----------- -----------
Cash flows from operating activities:
Net loss $ (229,171) $ (161,487)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
Depreciation and amortization 54,091 39,356
Loss on disposal of property, plant and equipment -- 186
Changes in operating assets and liabilities:
Restricted certificate of deposit (22,758) (582)
Accounts receivable (19,805) (34,509)
Prepaids and other current assets (127,307) 16,600
Inventories 85,262 95,855
Accounts payable and accrued liabilities (22,694) 60,636
----------- -----------
Net cash provided by (used in) operating activities (282,382) 16,055
----------- -----------
Cash flows from investing activities:
Purchase of patents (10,287) (105,000)
Purchase of property, plant and equipment (132,482) (156,228)
----------- -----------
Net cash used in investing activites (142,769) (261,228)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of warrants 979,894 92,689
Redemption of Warrants (1,193) --
Proceeds from issuance of debt -- 603,950
Principal payments on notes payable (6,221) (4,880)
----------- -----------
Net cash provided by financing activities 972,480 691,759
----------- -----------
Net increase in cash and cash equivalents 547,329 446,586
Cash and cash equivalents at beginning of period 150,051 160,216
----------- -----------
Cash and cash equivalents at end of period $ 697,380 $ 606,802
=========== ===========
Supplemental disclosure of cash flow activities:
Cash paid for interest $ 35,135 $ 16,011
=========== ===========
Supplemental disclosure of noncash transactions:
Note payable converted from interest payable $ -- $ 46,050
=========== ===========
See accompanying notes to condensed consolidated financial statements.
5
INTERNATIONAL ISOTOPES INC. AND SUBSIDIARY
Notes to Unaudited Condensed Consolidated Financial Statements
(1) The Company and Basis of Presentation
International Isotopes Inc (the Company) was incorporated in Texas in November
1995. The Company owns 100% of the outstanding common shares of International
Isotopes Idaho, Inc.
Nature of Operations - The Company's business consists of five major business
segments which include: Nuclear Medicine Reference and Calibration Standards,
Cobalt Products, Radiochemical Products, Fluorine Extraction Process Products,
and Radiological Processing Services.
With the exception of certain unique products, the Company's normal operating
cycle is considered to be one year. Due to the time required to produce some
cobalt products, the Company's operating cycle for those products is considered
to be three years. All assets expected to be realized in cash or sold during the
normal operating cycle of business are classified as current assets. As of March
31, 2005, the Company had nineteen full time employees.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary International Isotopes
Idaho, Inc. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Interim Financial Information - The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements. In the opinion
of management, all adjustments and reclassifications considered necessary for a
fair and comparable presentation have been included and are of a normal
recurring nature. Operating results for the three-month period ended March 31,
2005 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2005. The accompanying financial statements should be
read in conjunction with the Company's most recent audited financial statements.
Stock-based Compensation Plans - The Company accounts for stock options issued
to directors, officers and employees under Accounting Principles Board Opinion
No. 25 and related interpretations ("APB 25").
The Company accounts for options and warrants issued to non-employees at their
fair value in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123").
6
No compensation cost has been recognized for stock options in the accompanying
consolidated financial statements. Had the Company determined compensation cost
based on the fair value at the grant date for its stock options under SFAS No.
123, the Company's net loss would have been increased to the pro forma amounts
indicated below for the three months ended March 31, 2005 and 2004:
2005 2004
---------- ----------
Net loss applicable to common shareholders, as reported $ (229,171) $ (161,487)
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects (90,573) (17,176)
---------- ----------
Pro forma net loss $ (319,744) $ (178,663)
========== ==========
Loss per share, basic and diluted:
As reported $ - $ -
========== ==========
Pro forma $ - $ -
========== ==========
(2) Current Developments and Liquidity
Business Condition - Since inception, the Company has suffered substantial
losses. During the period ended March 31, 2005, the Company had a loss of
$229,171. During the period ended March 31, 2004, the Company had a loss of
$161,487. During the period ended March 31, 2005, the Company's operations used
cash in operating activities of $282,382. During the period ended March 31,
2004, the Company's operations provided cash in operating activities of $16,055.
The Company has taken steps to improve financial performance and diversify its
customer base. The Company believes that additional hot cells and new production
contracts for isotope sales, source recycling, and cobalt source fabrication
will lead to increased revenue and improved cash flow. In addition, the
Company's plans to develop manufacturing capability for high purity fluorine
gases, which the Company believes will begin to contribute to Company revenue in
the fourth quarter of 2005. Based upon these improvements to business condition
management expects to generate sufficient cash flows to meet operational needs
during 2005; however, there is no assurance that these cash flows will occur.
(3) Net Loss Per Common Share - Basic and Diluted
As of March 31, 2005 and 2004 there were 60,553,548 and 101,518,850 options and
warrants outstanding respectively and 850 shares of Series B redeemable
convertible preferred stock that were not included in the computation of diluted
net loss per common share as their effect would have been anti-dilutive, thereby
decreasing the net loss per common share.
(4) Inventories
Inventories consist of the following at March 31, 2005 and December 31, 2004
March 31, 2005 December 31, 2004
-------------- -----------------
Raw materials $ 267,225 $ 267,850
Work in progress 1,884,934 1,968,177
Finished goods - 1,394
-------------- -----------------
$ 2,152,159 $ 2,283,752
============== =================
7
(5) Acquisition of license rights
During the three months ended March 31, 2005, the Company filed a patent
application for a radioactive materials transportation container design. The
cost of this patent application preparation and filing was $10,287. The cost of
this patent application will be amortized over the next year or until the patent
is granted at which time the cost would be amortized over its estimated useful
life, which is 10 years for patents.
(6) Stockholders' Equity and Warrants
Warrants
In January 2005, the Company announced that the Series A warrants would be
redeemed at a redemption price of $0.001 per warrant. Prior to the redemption
date, 24,461,672 of Series A warrants were exercised for cash proceeds of
$978,467. The Company redeemed the remaining 971,457 Series A warrants for
$1,193.
During the three months ended March 31, 2005, 27,735 Series B warrants were
exercised for cash proceeds of $1,387. At March 31, 2005, the Company had
42,403,548 Series B warrants outstanding.
Stock Option Plan
In January 2005, the Company granted 150,000 options to an employee to purchase
shares of common stock with an exercise price of $0.07 per share, which was
equal to the closing market price of the common stock on the date of grant.
(7) Commitments and Contingencies
Litigation
During April 2005, the Company was named as a defendant in a lawsuit filed in
the District Court of Texas for Denton County, by a former employee. The former
employee alleges breach of employment contract, stating that the Company failed
to provide him six months continuation pay upon termination, and seeks damages
of approximately $57,500, plus attorneys' fees and court costs. This suit is
still in the discovery stage and the Company intends to vigorously defend this
action.
The Company is party to a lawsuit filed by Iso-Science Laboratories, Inc.
against the Company, one of its customers and certain officers of this customer.
The lawsuit alleges the defendants are using information and equipment related
to nuclear medicine calibration and reference standards that the plaintiff
acquired from a previous employer of one of the defendants. The plaintiff seeks
(i) an injunction to restrain the Company from manufacturing, marketing, or
selling any of the products in question; (ii) a 55% royalty on the price of all
related products the Company sells; (iii) the return of all equipment and
information in question; (iv) disgorgement of profits received from the
manufacture and sale of the products in question; and (v) general and punitive
damages in an amount to be shown at the time of trial. The Company denied all
allegations and filed a counterclaim against the plaintiff on the basis that the
lawsuit was calculated to interfere with contractual arrangements and
prospective business or the Company.
8
The court established an anticipated trial start date of December 5, 2005. The
likelihood of an outcome favorable to the Company is not determinable at this
time. The Company could lose its major line of revenues and be required to make
substantial payments to the plaintiff if this lawsuit is settled unfavorably to
the Company. The Company has an agreement in place with its customer
indemnifying the Company from any loss arising from this lawsuit. The Company
does not expect the ultimate costs to resolve this matter will have a material
adverse effect on the consolidated financial position, results of operations, or
cash flow in the future. However, there is no guarantee that the customer can
bear the financial burden arising from defending and possible settlement of this
lawsuit.
Dependence on Third Parties
The Company is dependent upon the U.S. Department of Energy, and its prime
operating contractor, who controls the reactor and laboratory operations for
production of HSA Cobalt. The revenue associated with the sale of HSA Cobalt is
largely dependent on the Company's sole customer for this product. Nuclear
Medicine Reference and Calibration Standard manufacturing is conducted under an
exclusive contract with a single company, that in turn has agreements in place
with several product distributors. A loss of either of these customers could
adversely affect operating results by causing a delay in production or a
possible loss of sales.
Contingencies
Because all of the Company's business segments involve radioactive materials,
the Company is required to have an operating license from the Nuclear Regulatory
Commission ("NRC") and specially trained staff to handle these materials. The
Company has an NRC operating license and has amended this license several times
each year to increase the amount of material permitted within the facility.
Additional processing capabilities and license amendments could be implemented
that would permit processing of other reactor produced radioisotopes by the
Company, but this license does not currently restrict the volume of business
performed or projected to be performed in the coming year. An irrevocable,
automatic renewable letter of credit against a Certificate of Deposit at Texas
State Bank has been used to provide the financial assurance required by the NRC
for the Idaho facility license.
(8) Segment Information
Segment information has been prepared in accordance with SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information."
9
The Company has five reportable segments which include: Nuclear Medicine
Reference and Calibration Standards, Cobalt Products, Radiochemical Products,
Fluorine Products, and Radiological Processing Services. Information regarding
the operations and assets of these reportable business segments follows:
Radio- Radio-
Reference Cobalt chemical Fluorine logical Total
March 31, 2005 Standards Products Products Products Services Segments
------------------------------ --------- ---------- --------- --------- -------- ----------
Revenues $ 363,429 $ 76,375 $ 160,460 $ - $ 85,303 $ 685,567
Depreciation and amortization 9,138 10,623 12,903 3,985 7,274 43,923
Segment profit 152,229 36,047 4,751 (139,107) 40,390 94,310
Segment assets 544,298 2,548,916 567,454 393,710 195,655 4,250,033
Expenditures for segment assets - 10,287 1,800 130,682 - 142,769
Radio- Radio-
Reference Cobalt chemical Fluorine logical Total
March 31, 2004 Standards Products Products Products Services Segments
------------------------------ --------- ---------- --------- --------- -------- ----------
Revenues $ 345,069 $ 363,510 $ 13,588 $ - $ 21,158 $ 743,325
Depreciation and amortization 8,895 2,988 10,598 - 7,274 29,755
Segment profit (loss) 159,000 163,457 (99,378) (23,498) (6,157) 193,424
Expenditures for segment assets - 86,651 57,751 - - 144,402
Segment Corporate Total
March 31, 2005 Totals Amounts Consolidated
------------------------------ ---------- ---------- ------------
Revenues $ 685,567 $ - $ 685,567
Depreciation and amortization 43,923 10,168 54,091
Net profit (loss) 94,310 (323,481) (229,171)
Total assets 4,250,033 883,984 5,134,017
Expenditures for assets 142,769 - 142,769
Segment Corporate Total
March 31, 2004 Totals Amounts Consolidated
------------------------------ ---------- ---------- ------------
Revenues $ 743,325 $ - $ 743,325
Depreciation and amortization 29,755 9,601 39,356
Net loss 193,424 (354,911) (161,487)
Expenditures for assets 144,402 11,826 156,228
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements, other than
statements of historical fact, including statements regarding industry prospects
and future results of operations or financial position, made in this Quarterly
Report are forward looking. Words such as "anticipates," "believes," "expects,"
"future," and "intends" and similar expressions identify these statements as
forward-looking. In particular, statements regarding: improved financial
performance and business condition; increased revenue and cash flows;
diversification of our customer base; sufficiency of available cash and other
liquidity sources to meet our operating needs and to cover funds necessary for
acquisitions of assets and the development of our FEP facility; and the timing
of the initial release of our FEP products. Forward-looking statements reflect
management's current expectations, plans or projections and are inherently
uncertain. Actual results could differ materially from management's
expectations, plans or projections. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this report. Certain risks and uncertainties that could cause our actual results
to differ significantly from management's expectations are described in the risk
factors set forth in our annual report on Form 10-KSB for the fiscal year ended
December 31, 2004 filed with the Securities and Exchange Commission on March 31,
2005. These factors, describe some but not all of the factors that could cause
actual results to differ significantly from management's expectations. The
company will not publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. Readers are urged, however, to
review the factors set forth in reports that we file from time to time with the
Securities and Exchange Commission.
10
RESULTS OF OPERATIONS
Three-month periods ended March 31, 2005 and 2004.
Revenues for the three-month period ended March 31, 2005 were $685,567 as
compared to $743,325 for the same period in 2004, a decrease of $57,758 or 7.7%.
The decrease in total revenues was attributable solely to the timing of cobalt
product sales in 2004 compared to 2005. Cobalt product sales typically see large
variations caused by cyclic nature of some cobalt products during the course of
the calendar year. The timing of those sales has a significant impact upon
quarterly revenue reports and period comparisons. Excluding cobalt product
sales, revenues for the three-month period ended March 31, 2005 were $609,192 as
compared to $379,815 for the same period in 2004. While total revenues decreased
approximately $60,000, or approximately 8% in the first quarter of 2005, as
compared to the first quarter of 2004, revenues excluding cobalt product sales
increased approximately $230,000 or approximately 60% in the first quarter of
2005, as compared to the first quarter of 2004. Because of the significant
impact of the timing of cobalt product sales, management believes that excluding
sales of cobalt products from the quarter-to-quarter comparison of revenues
provides useful information to investors. Please refer to the table below for a
further analysis of this measure. Despite the overall reduction in revenues for
the first quarter, gross profit for the three-month period ended March 31, 2005,
increased to $332,820 (or 48% of revenue) as compared to $300,370 (or 40% of
revenue) for the same period in 2004. Improved gross profit margin is a result
of improving product cost control measures and implementing process
efficiencies.
Financial Measure Reconciliation
------------------------------------------------------------------------------------------------------------|
| | |
| Three months ended March 31, 2004 | Three months ended March 31, 2005 |
----------------------------------|------------------------------------|------------------------------------|
| | |
Total Revenues | $743,325 | $685,567 |
----------------------------------|------------------------------------|------------------------------------|
| | |
Cobalt Products Revenues | $363,510 | $76,375 |
----------------------------------|------------------------------------|------------------------------------|
| | |
Total Revenues Excluding Cobalt | $379,815 | $609,192 |
Products Revenues | | |
------------------------------------------------------------------------------------------------------------|
Operating expenses increased to $524,545 for the three-month period ended March
31, 2005 compared to $433,044 for the same period of 2004, an increase of
$91,501 or 22%. Salaries and contract labor expenses for the three-month period
ended March 31, 2005 were $219,611 as compared to $156,734 for the same period
of 2004, an increase of $62,877 or 40%. General administrative expenses totaled
$292,740 for the three-month period ended March 31, 2005 as compared to $262,743
for the same period of 2004, an increase of $29,997 or 12%. These increases are
attributed to the addition of full time staff and facility operational expense
related our new Fluorine Products division
Our loss for the three-month period ended March 31, 2005 was $229,171 compared
to a loss of $161,487 for the same period in 2004. The increased loss was
primarily attributable to increased operational expenses related to our new
Fluorine Products division.
Interest expense for the three-month period ended March 31, 2005 was $38,506 as
compared to $38,262 for the same period in 2004 due to a small increase in
interest rates.
11
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 2005 we had cash and cash equivalents of $697,380 compared to
$150,051 at December 31, 2004. For the three months ended March 31, 2005, net
cash used in operating activities was $282,382, investing activities used
$142,769, and financing activities provided $972,480.
Our future liquidity and capital funding requirements will depend on numerous
factors, including, contract manufacturing agreements, commercial relationships,
technological developments, market factors, available credit, and voluntary
Series B Warrant exercise by shareholders. In addition to our cash and cash
equivalents we have a $250,000 line of credit that currently has a zero balance
and most of our Series B Warrants are still outstanding. Exercise of those
Series B Warrants would generate approximately $2 million in cash. We believe
that our current cash and cash equivalents, our line of credit, and proceeds
from potential exercises of Series B Warrants will be sufficient to fund our
current operations, to pay down certain of our long-term liabilities, and
continue development of the Fluorine Extraction Process (FEP). This should
continue to improve our financial strength, debt ratio, and attractiveness to
investors or lending institutions.
We have made significant investments into assets necessary to carry out new
revenue-producing operations and to manufacture new products. These include
radiochemical sales and the installation of a large cobalt-60 processing hot
cell that will support a wide range of cobalt products such as cobalt source
recycling services and teletherapy source manufacturing. We expect these areas
to contribute significantly to further growth in revenue and our customer base.
In addition, we continue to make significant investments in and advancement
towards, the start of fluorine producing operations utilizing the patented FEP
process. The first of our FEP products is expected to be launched during 2005.
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the company conducted an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the
principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective to ensure that material
information relating to the company was made known to them by others within the
company, particularly during the period in which this Quarterly Report on Form
10-QSB was being prepared.
There was no change in our internal controls over financial reporting during our
most recently completed fiscal quarter that has materially affected, or is
reasonably likely to affect our internal control over financial reporting.
Our CEO and CFO does not expect that our disclosure controls or our internal
controls will prevent all error and all fraud. Although our disclosure controls
and internal controls were designed to provide reasonable assurance of achieving
their objectives, a control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the
system are met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.
12
PART II. OTHER INFORMATION
Item 6. Exhibits
3.2 Second Amended and Restated Articles of Incorporation
(incorporated by reference to Appendix C to the Company's
definitive proxy statement on Schedule 14A filed on April 28,
2005).
3.3 Bylaws (incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form SB-2 filed on May 1,
1997 (Registration No. 333-26269)).
31.1 Certification under Section 302 of the Sarbanes-Oxley Act of
2002 for Chief Executive Officer.
31.2 Certification under Section 302 of the Sarbanes-Oxley Act of
2002 for Chief Financial Officer.
32.1 Certification under Section 1350 Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act , the registrant caused
this report to be signed on its behalf by the undersigned hereunto duly
authorized.
International Isotopes Inc.
(Registrant)
By: /s/ Steve T. Laflin
------------------------------
Steve T. Laflin
President and Chief Executive Officer
Date: May 12, 2005
13