FORM 10-QSB

                                  UNITED STATES
                       SECURITIES AND 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, 2003


                             Commission file number:
                                     0-22923


                           INTERNATIONAL ISOTOPES INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                 Texas                          74-2763837
        ------------------------    ------------------------------------
        (State of incorporation)    (IRS Employer Identification Number)


          4137 Commerce Circle, Idaho Falls, Idaho           83401
          ----------------------------------------         ----------
          (Address of principal executive offices)         (zip code)


                                  208-524-5300
              ----------------------------------------------------
              (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  4, 2003 the number of shares of Common  Stock,  $.01 par value,
outstanding was 139,363,046.








                          INTERNATIONAL ISOTOPES INC.


                               TABLE OF CONTENTS



                                                                       Page No.
PART I - FINANCIAL INFORMATION:

  Item 1 - Financial Statements:

           Unaudited Condensed Consolidated Balance Sheets at
           September 30, 2003 and December 31, 2002                        3

           Unaudited Condensed Consolidated Statements of Operations
           for the Three Months Ended September 30, 2003 and 2002,
           and for the Nine Months Ended September 30, 2003 and 2002       4

           Unaudited Condensed Consolidated Statements of Cash Flows
           for the Nine Months Ended September 30, 2003 and 2002           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                                        11

PART II - OTHER INFORMATION:

  Item 6 - Exhibits and Reports on Form 8-K                               12

SIGNATURES                                                                13





                                       2


Part I.  Financial Statements
    Item 1.  Financial Statements



                  INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
                 Unaudited Condensed Consolidated Balance Sheets

                                                                            September 30,    December 31,
                             Assets                                            2003             2002
         --------------------------------------------------                -------------    -------------
                                                                                      
Current assets:
    Cash and cash equivalents                                              $     423,658    $     441,904
    Accounts receivable                                                          290,390          218,923
    Assets held for sale                                                            --            607,531
    Inventories                                                                2,210,267        2,279,828
    Receivable from Rights Offering                                              406,868             --
    Prepaids and other current assets                                            205,829          128,830
                                                                           -------------    -------------
       Total current assets                                                    3,537,012        3,677,016

Property, plant and equipment, net                                               428,557          236,053

                                                                           -------------    -------------
       Total assets                                                        $   3,965,569    $   3,913,069
                                                                           =============    =============

           Liabilities and Stockholders' Equity (Deficit)
         --------------------------------------------------

Current liabilities
    Accounts payable                                                       $     490,900    $     257,776
    Note payable related to assets held for sale                                    --            345,295
    Accrued liabilities                                                          152,934          342,091
    Current portion of mortgage and notes payable to banks                       893,608        1,226,520
                                                                           -------------    -------------
       Total current liabilites                                                1,537,442        2,171,682
                                                                           -------------    -------------
Long-term liabilities
Mortgage and notes payable to banks, excluding current portion                   852,251          909,738
Mandatorily redeemable preferred stock, $0.01 par value; 850 shares              850,000             --
                                                                           -------------    -------------
       Total long-term liabilities                                             1,702,251          909,738
                                                                           -------------    -------------
       Total liabilities                                                       3,239,693        3,081,420

Mandatorily redeemable preferred stock, $0.01 par value; 850 shares                 --            850,000

Stockholders' equity (deficit)
    Common stock, $0.01 par value; 250,000,000 shares authorized,
       issued and outstanding 139,363,046 shares at September 30, 2003
       and 95,581,135 shares at December 31, 2002                              1,393,630          955,812
    Additional paid-in capital                                                87,179,253       86,416,002
    Accumulated deficit                                                      (87,847,007)     (87,390,165)
                                                                           -------------    -------------
       Total stockholders' equity (deficit)                                      725,876          (18,351)
                                                                           -------------    -------------
       Total liabilities and stockholders' equity (deficit)                $   3,965,569    $   3,913,069
                                                                           =============    =============


     See accompanying notes to condensed consolidated financial statements.



                                       3





                  INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
            Unaudited Condensed Consolidated Statements of Operations



                                                   Three Months ended September 30,       Nine Months ended September 30,
                                                   --------------------------------       --------------------------------
                                                       2003               2002                2003               2002
                                                   -------------      -------------       -------------      -------------
                                                                                                 
Revenue:
   Sales of product                                $     552,020      $     396,819       $   1,696,703      $   1,547,215

Cost of revenue:
   Cost of products                                      320,761            182,079             962,412            754,319
                                                   -------------      -------------       -------------      -------------
     Gross profit                                        231,259            214,740             734,291            792,896
                                                   -------------      -------------       -------------      -------------

 Operating costs and expenses:
   Salaries and contract labor                           129,196            107,867             342,948            362,947
   General, administrative and consulting                191,377            195,776             767,940            736,603
                                                   -------------      -------------       -------------      -------------
     Total operating expenses                            320,573            303,643           1,110,888          1,099,550
                                                   -------------      -------------       -------------      -------------
     Operating loss                                      (89,314)           (88,903)           (376,597)          (306,654)

Other income (expense):
   Other income (expense)                                 (1,438)            29,196              34,467            594,906
   Interest expense                                      (32,512)           (48,590)           (114,712)          (137,201)
                                                   -------------      -------------       -------------      -------------
     Net income (loss)                                  (123,264)          (108,297)           (456,842)           151,051

Preferred stock dividend, deemed dividends
   and accretion of discount                                --                 --                  --             (349,242)
                                                   -------------      -------------       -------------      -------------

Net loss applicable to common shareholders         $    (123,264)     $    (108,297)      $    (456,842)     $    (198,191)
                                                   =============      =============       =============      =============

Basic and diluted common loss per share            $        --        $        --         $        --        $        --
                                                   =============      =============       =============      =============

Weighted common shares used in per
   share calculation                                 102,871,252         95,164,468          98,007,969         83,678,357
                                                   =============      =============       =============      =============



     See accompanying notes to condensed consolidated financial statements.



                                       4





                  INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
            Unaudited Condensed Consolidated Statements of Cash Flows

                                                                        Nine Months ended September 30,
                                                                        -------------------------------
                                                                            2003               2002
                                                                        ------------       ------------
                                                                                     
Cash flows from operating activities:
     Net income (loss)                                                  $   (456,842)      $    151,051
     Adjustments to reconcile net earnings (loss)
     to net cash used in operating activities
         Depreciation and amortization                                        69,099             59,418
         Loss on disposal of property, plant and equipment                       394               --
         Release of contingent debt                                             --             (500,000)
         Changes in operating assets and liabilities:
            Accounts receivable                                              (71,467)             3,925
            Prepaids and other assets                                        (76,999)           146,584
            Inventories                                                       69,561            217,982
            Accounts payable                                                 233,124            123,416
            Checks written in excess of cash in bank                            --             (101,714)
            Accrued liabilities                                             (141,330)           (11,672)
                                                                        ------------       ------------
              Net cash provided by (used in) operating activities           (374,460)            88,990
                                                                        ------------       ------------

Cash flows from investing activities:
     Purchase of property, plant and equipment                              (244,473)           (33,676)
     Proceeds from sale of assets held for sale                              262,235               --
                                                                        ------------       ------------
              Net cash provided by (used in) investing activites              17,762            (33,676)
                                                                        ------------       ------------

Cash flows from financing activities:
     Repurchase of preferred stock                                              --              (86,832)
     Offering costs                                                         (112,695)              --
     Proceeds from issuance of debt                                          760,000             75,000
     Principal payments on notes payable                                    (308,853)           (90,476)
                                                                        ------------       ------------
              Net cash provided by (used in) financing activities            338,452           (102,308)
                                                                        ------------       ------------

Net decrease in cash and cash equivalents                                    (18,246)           (46,994)
Cash and cash equivalents at beginning of period                             441,904            293,969
                                                                        ------------       ------------
Cash and cash equivalents at end of period                              $    423,658       $    246,975
                                                                        ============       ============

Supplemental disclosure of cash flow activities:
     Cash paid for interest, net of amounts capitalized                 $     84,684       $     81,877
                                                                        ============       ============

Supplemental disclosure of noncash transactions:
     Acquisition of equipment for note payable                          $     17,523       $       --
     Sale of assets held for sale through assumption of debt                 345,295               --
     Common stock issued in preferred stock conversion                          --           16,080,923
     Conversion of debt and accrued interest to rights offering              906,895            132,737
     Common stock issued in rights offering for note receivable              406,868               --



      See accompanying notes to condensed consolidated financial statements



                                       5


                  INTERNATIONAL ISOTOPES INC. AND SUBSIDIARIES
         Notes to Unaudited Condensed Consolidated Financial Statements


(1)  The Company and Basis of Presentation

International Isotopes Inc. (the Company) was incorporated in Texas in 1995. The
Company  manufactures a wide range of nuclear medicine calibration and reference
standards,  processes and distributes radioisotopes for medical, industrial, and
research  applications;  and processes Gemstones.  As of September 30, 2003, the
Company had 12 full time employees.

Principles of Consolidation - The consolidated  financial statements include the
accounts of the Company and its wholly owned subsidiaries,  Gazelle Realty, Inc.
and 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 nine-month period ended September
30, 2003 are not necessarily  indicative of the results that may be expected for
the year ending December 31, 2003. 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").  Under  APB 25,  compensation
expense is recognized if an option's  exercise price on the measurement  date is
below the fair value of the Company's common stock. For options that provide for
cashless exercise or that have been modified, the measurement date is considered
the date the options are exercised or expire. Those options are accounted for as
variable options with compensation  adjusted each period based on the difference
between  the market  value of the  common  stock and the  exercise  price of the
options at the end of the period.  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").

On September 12, 2003, the Company filed an S-8 Registration  statement with the
Securities and Exchange  Commission in order to register up to 20,000,000 shares
of common stock in relation to the Company's 2002 long term incentive program.

No  compensation  cost  has  been  recognized  for  its  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  applicable  to  common
shareholders  would have been increased to the pro forma amounts indicated below
for the three and nine months ended September 30, 2003 and 2002:



                                       6


Options issued during the nine months ended  September 30, 2003 had a fair value
of $0.03 per share using the following weighted average  assumptions:  risk free
interest  rate 3.4%,  volatility  159.0%,  expected life 10.0 years and expected
dividend yield of 0%.

Recent  Accounting  Pronouncements  - In May 2003 the FASB  issued SFAS No. 150,
"Accounting  for Certain  Financial  Instruments  with  Characteristics  of both
Liabilities and Equity",  which requires that certain  financial  instruments be
presented  as  liabilities  that  were  previously  presented  as  equity  or as
temporary equity.  Such instruments include mandatory  redeemable  preferred and
common  stock,  and certain  options and  warrants.  SFAS 150 is  effective  for
financial  instruments  entered  into or  modified  after May 31,  2003,  and is
generally effective at the beginning of the first interim period beginning after
June 15, 2003. The Company  adopted SFAS 150 at July 1, 2003,  that required the
Company to reclassify its 850 shares of mandatorily  redeemable  preferred stock
with a redemption value and carrying amount of $850,000 from temporary equity to
long-term liabilities. The adoption of this standard had no effect on net loss.

In November 2002, the FASB issued Financial  Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others."  FIN 45 sets  forth  the  disclosures
required by a guarantor in its financial  statements about its obligations under
certain  guarantees  that it has issued.  It also  clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee. The Company adopted
the requirements FIN 45 in the accompanying financial statements.

(2)  Current Developments and Liquidity

Business  Condition - Since  inception,  the Company  has  suffered  substantial
losses.  During the nine month period ended September 30, 2003 the Company had a
loss of  $456,842.  During the period ended  September  30, 2002 the Company had
earnings of $151,051 before preferred  dividends and a loss applicable to common
shareholders of $198,191.  During the nine-month period ended September 30, 2003
and 2002, the Company's operations used cash in operating activities of $374,460
and provided cash in operating  activities of $88,990  respectively.  Management
expects to generate  sufficient cash flows to meet operational  needs during the
remainder of 2003 through  product  sales,  financing,  and  operating  capital;
however, there is no assurance that these cash flows will occur.

(3)  Net Loss Per Common Share - Basic and Diluted

Basic  earnings  (loss) per share  excludes  dilution for  potentially  dilutive
securities  and is computed by dividing  earnings  (loss)  applicable  to common
stockholders by the weighted average number of common shares  outstanding during
the period. Diluted earnings (loss) per share, which is computed on the basis of
the  weighted  average  number of common  shares  and all  potentially  dilutive
securities  outstanding  during  the  period,  factors in  potentially  dilutive
securities  and adding back any  convertible  dividend  (except if the effect is
anti-dilutive).

For the three and nine months ended  September 30, 2003,  16,000,000  options to
acquire common stock,  850 Series B shares of redeemable  convertible  preferred
stock and  87,580,306  warrants to acquire common stock were not included in the
computation  of  diluted  net loss per  share as their  effect  would  have been
anti-dilutive.

For the three and nine months ended  September 30, 2002,  17,746,646  options to
acquire common stock and 850 Series B shares of redeemable convertible preferred
stock were not  included  in the  computation  of diluted  net loss per share as
their effect would have been anti-dilutive.


                                       7


(4)  Inventories

Inventories consist of the following at September 30, 2003 and December 31, 2002

                                September 30, 2003      December 31, 2002
                                ------------------      -----------------
      Raw materials             $          268,265      $         294,662
      Work in progress                   1,932,283              1,971,551
      Finished goods                         9,719                 13,615
                                ------------------      -----------------
                                $        2,210,267      $       2,279,828
                                ==================      =================


(5)  Notes Payable

In January 2003,  the Company  entered into an agreement to sell the  Waxahachie
real  estate  for the  assumption  of the  $345,295  debt  associated  with  the
property.  As a result of the debt assumption,  the Company remains contingently
liable on the note with Texas  State Bank for the  remainder  of the term should
the purchaser default on this note.

In accordance with Financial  Accounting  Standards Board Interpretation No. 45,
Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,  Including
Indirect  Guarantees of  Indebtedness  of Others,  the Company has  recognized a
$10,000  obligation under the guarantee that consists of the obligation to stand
ready to reassume  the note held at Texas State Bank in the event the  purchaser
defaults on the note.  The  obligation  is based on the cost  necessary  for the
purchaser to refinance the note,  which would release Company from the guarantor
position. Should the purchaser default on the note and the Company reassumes the
liability, they would also regain the real estate.

During the quarter  ended June 30, 2003,  as part of an  agreement  with certain
shareholders,   the  Company  increased  its  short-term  borrowing  from  these
shareholders  to $790,000.  During the quarter ended  September 30, 2003,  these
notes were  converted to common stock as part of the rights  offering  mentioned
below.

(6)  Stockholders' Equity, Options and Warrants

During  the  quarter   ended  March  31,  2003,  as  part  of  a  licensing  and
manufacturing settlement agreement,  Bracco Diagnostics returned 8,242 shares of
the Company's common stock. The shares were immediately canceled.

During the nine months ended September 30, 2003,  3,027,326  warrants to acquire
common  stock  with  exercise   prices  ranging  from  $4.00  to  $5.50  expired
unexercised.

Stock Options

During the quarter ended June 30, 2003, the Company granted 2,000,000 options to
certain  directors to purchase  shares of common stock with an exercise price of
$0.03 per share, which was equal to the closing market price of the common stock
on the date of grant. These options vest through 2006.

At September  30, 2003 there were  16,000,000  options  with a weighted  average
exercise  price of $0.03 per  share.  Also at  September  30,  2003  there  were
8,000,000  options  exercisable  with a weighted average exercise price of $0.03
per share.


                                       8


Stock Rights Offering

During the quarter  ended  September  30, 2003,  the Company  completed a rights
offering to shareholders.  The Securities and Exchange  Commission  declared the
registration  statement for the rights offering  effective on July 28, 2003. The
Company  commenced the offering on August 12, 2003 and concluded it on September
12, 2003. Under the offering the Company offered 38,229,157 units.  Shareholders
received  one Right for each share owned and could  purchase  one unit for every
2.5 rights received,  at the subscription price of $0.03 per unit.  Shareholders
who fully subscribed were provided the additional  privilege of over subscribing
for up to an additional  14,500,000  units.  Each unit included (i) one share of
common  stock,  (ii) one warrant to purchase  another  share of common stock for
$0.04, and (iii) one warrant to purchase an additional share of common stock for
$0.05.

The total amount raised from the rights  offering was  $1,313,763.  Of the total
amount  received by the Company,  $906,806 was  subscribed  through  shareholder
tendering  debt to equity and an additional  $390,183  ($406,868 net of transfer
agent costs of $16,685) was  provided as a receivable  which was settled in cash
in October.  The Company  incurred an additional  $96,010 in offering costs paid
directly by the Company. The total offering costs were $112,695. Under the terms
of the rights offering the Company issued  43,790,153  shares of common stock to
participants bringing the total number outstanding to 139,363,046.  In addition,
the  participants  of the rights offer will  receive an aggregate of  43,790,153
Series A  warrants  and  43,790,153  Series  B  warrants,  which  can be used to
purchase additional shares of common stock for $0.04 and $0.05 respectively.

Warrants

At September 30, 2003, the Company has 87,580,306 warrants outstanding.

(7)  Commitments and Contingencies

Employment Contract

The Company has a five-year  employment  contract with the Company's  president.
This is a standard employment  agreement without special terms or provisions and
extends through February 2007.

Lease Agreement

Effective May 2, 2003, the Company  entered into a new five year lease agreement
for the Company's operating  facility.  This new lease offers the same terms and
first  rights to purchase  considerations  that  existed in the  previous  lease
agreement but increases the monthly lease rate and the purchase  option price by
an amount proportional to the square footage of the new facility expansion.

Dependence on Third Parties

Many of the  isotopes  used in the Company  products  are  dependent  upon other
entities  and  organizations  that  directly  control  the  production  of those
isotopes and the operation of those facilities.  Action,  or inaction,  by those
operators could cause an interruption or delay in the Company's  production that
could  result in a loss of  revenues  to the  Company and a loss of the value of
Work in  Process  material.  The  gemstone  production  is tied to an  exclusive
agreement  with Quali Tech Inc. who in turn has contracts with other clients for
gemstone  processing.  A loss of the contract with Quali Tech Inc. would require
the Company to seek other  clients for gemstone  processing.  The Company has an
obligation to purchase certain isotope production  material through October 2004
from a materials supplier for $180,000.


                                       9


Contingencies

All of the  Company  products  share  the  common  link of  requiring  stringent
controls both from a quality and radiological control viewpoint. The Company has
an  operating  license  from  the  Nuclear  Regulatory  Commission  ("NRC")  and
specially  trained staff to handle these  products.  An  irrevocable,  automatic
renewable  letter of credit  against a  Certificate  of Deposit has been used to
provide   decommissioning   financial  assurance  as  required  by  the  Nuclear
Regulatory Commission.


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 including those
set forth in the "Risk Factors"  section  included in the Company's Form 10-KSB,
filed with the  Securities  Exchange  Commission  (SEC) on March 24, 2003 ("Form
10-KSB").   The  following   discussion  should  be  read  in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" included in the Form 10-KSB.

RESULTS OF OPERATIONS

Three and  nine-month  periods ended  September 30, 2003 and 2002. The Company's
losses from operations for the three and nine-month  periods ended September 30,
2003 were  $123,264 and $456,842  respectively,  as compared to earnings  (loss)
from  operations of $(108,297) and $151,051 for the comparable  periods of 2002.
The change in earnings for the nine-month period was principally attributable to
the one time  removal of a $500,000  contingent  liability  the  Company  had in
connection  with the sale of the Linac  facility  in Denton  Texas.  During  the
second quarter of 2002 the Company was released from this  contingent  liability
and recognized  this  transaction in other income.  Without this one time event,
the Company  would have  experienced  losses  from  operations  of $108,297  and
$348,949 for the three and nine-month  periods  respectively ended September 30,
2003. The change in earnings for the three-month period was largely attributable
to costs  associated  with the launch of new products.  Net earnings  (loss) per
common share for the three and nine month periods ended  September 30, 2003 were
$0.00  and  $0.00  respectively,  as  compared  to $0.00  and $0.00 for the same
periods  of 2002.  The  reason  there is no change in this  figure is related to
rounding.  Both the 2002 income and 2003 loss are relatively small in comparison
to the number of outstanding shares of Company stock.

Revenue  for the three and  nine-month  periods  ended  September  30, 2003 were
$552,020 and $1,696,703 respectively, as compared to $396,819 and $1,547,215 for
the same  periods in 2002 an  increase of $155,801  and  $149,488  respectively.
Gross profit for the three and nine-month  periods ended  September 30, 2003 was
$231,259 and $734,291 respectively, as compared to $214,740 and $792,896 for the
same periods in 2002.

Operating  expenses were $320,573 and $1,110,888  respectively for the three and
nine-month  periods ended September 30, 2003 compared to $303,643 and $1,099,550
for the same  periods of 2002,  an increase of $16,930 and 11,338  respectively.
Salaries and contract labor expenses for the three and nine-month  periods ended
September  30, 2003 were  $129,196  and  $342,948  respectively,  as compared to
$107,867 and  $362,947for the same periods of 2002, an increase of $21,329 and a
decrease  of  $19,999  respectively.   General,  administrative  and  consulting
expenses totaled $191,377 and $767,940 respectively for the three and nine-month
periods  ended  September  30, 2003 as compared to $195,776 and $736,603 for the
same  periods  of  2002  a  decrease  of  $4,399  and  an  increase  of  $31,337
respectively.


                                       10


Interest  expense for the three and nine-month  period ended  September 30, 2003
was $32,512 and $114,712 as compared to $48,590 and $137,201 for the  comparable
periods in 2002 a decrease of $16,078 and $22,849 respectively. The decrease was
attributable to reductions in current and long-term debt.

Liquidity and Capital Resources

On  September  30, 2003 the Company  had cash and cash  equivalents  of $423,658
compared to $441,904 at December 31, 2002.  For the nine months ended  September
30,  2003,  operating  activities  used cash of $374,460,  investing  activities
provided cash of $17,762 and financing activities provided cash of $338,452.

The Company has financed its operations  primarily by bank loans, product sales,
sales of excess  equipment,  its  initial  public  offering,  sales of shares of
common and  preferred  stock in private  placements  to investors and the recent
rights  offering.  Of the  $1,312,514 of capital raised through the rights offer
$406,568 was provided as new cash and $906,836 was conversion of debt to equity.
Most of this cash is being invested into equipment,  hardware, and facilities in
order to further  expand  production  capability  as evidenced by the  Company's
August 2003 announcement of the start of Lutetium-177 sales.

The Company's future liquidity and capital funding  requirements  will depend on
numerous factors,  including, but not limited to: continued improvement in sales
of existing products and sale of several new products in 2004.Although there can
be no assurance,  the Company expects that revenues from existing  products will
continue to increase and new products will be launched to provide more funds for
operations and capital expenditures.


ITEM 3. CONTROLS AND PROCEDURES

(a)     Evaluation  of  disclosure  controls  and  procedures.  Based  on  their
        evaluation  of the  Company's  disclosure  controls and  procedures  (as
        defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
        "Exchange  Act")),  the  Company's   principal   executive  officer  and
        principal  financial  officer have  concluded  that as of the end of the
        period covered by this Quarterly  Report of Form 10-QSB such  disclosure
        controls  and  procedures  are  effective  to  ensure  that  information
        required  to be  disclosed  by the  Company in reports  that it files or
        submits under the Exchange Act is recorded,  processed,  summarized  and
        reported  within the time periods  specified in Securities  and Exchange
        Commission rules and forms.

(b)     Changes in internal control over financial reporting. During the quarter
        under report, there was no change in the Company's internal control over
        financial  reporting  that has  materially  affected,  or is  reasonably
        likely  to  materially  affect,  the  Company's  internal  control  over
        financial reporting.


PART II. OTHER INFORMATION

        Item 6. Exhibits and Reports on Form 8-K

        Exhibits:

                31    Certification  by the Chief  Executive and Chief Financial
                      Officer Pursuant to Section 302 of the  Sarbanes-Oxley Act
                      of 2002

                32    Certification  by the Chief  Executive and Chief Financial
                      Officer  Pursuant  to  18  U.S.C.   Section  1350  Adopted
                      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Reports on Form 8-K:

                On September 17, 2003 the Company  submitted a form 8-K in order
                to report  the  conclusion  and  results of the  Company  rights
                offering.



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                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  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: November 4, 2003





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