Filed pursuant
to Rule 424(b)(3)
Reg. No. 333-108776
REOFFER AND RESALE PROSPECTUS
INTERNATIONAL ISOTOPES INC.
20,000,000 Shares
Common Stock, $.01 par value
This Prospectus relates to Shares (the "Shares") of the Common Stock, $.01 par
value ("Common Stock"), of International Isotopes Inc. ("I3" or the "Company"),
a Texas corporation which may be offered from time to time by certain
stockholders listed on the Selling Stockholders table (the "Selling
Stockholders") for their own benefit. It is anticipated that the Selling
Stockholders will offer the Shares for sale at prevailing prices in the
over-the-counter market on the date of sale. The Company will receive no part of
the proceeds of sales made hereunder. All expenses of registration incurred in
connection with this offering are being borne by the Company, but all selling
and other expenses incurred by the Selling Stockholders will be borne by such
Selling Stockholders. None of the Shares offered pursuant to this Prospectus has
been registered prior to the filing of the Registration Statement of which this
Prospectus is a part.
The Selling Stockholders and any broker executing selling orders on behalf of
the Selling Stockholders may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), in which event
commissions received by such broker may be deemed to be underwriting commissions
under the Securities Act.
The Common Stock of the Company is traded in the over the counter market in the
"pink sheets." On November 4, 2004, the closing bid price of the Company's
Common Stock, as reported on the OTCBB, was $.12 (Symbol: INIS).
The securities offered hereby involve a high degree of risk. Prospective
purchasers should carefully review the matters set forth in "Risk Factors" on
page 7 and in the Company's reports filed with the Securities and Exchange
Commission.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Supplemental Prospectus is November 5, 2004.
No person is authorized to give any information or to make any representations,
other than those contained in this Prospectus, in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or the Selling
Stockholders. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of these securities
by any person in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create an implication
that the information contained herein is correct as of any time subsequent to
the date hereof.
The Company hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus is delivered, upon written or oral request of any such
person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to the President,
International Isotopes Inc., 4137 Commerce Circle, Idaho Falls, Idaho 83401. The
Company's telephone number at that location is (208) 524-5300.
Except for the person set forth in the foregoing paragraph, the Company has not
authorized any person to give any information or make any representations, other
than those contained in this Prospectus, in connection with the Shares. If given
or made, such information or representations must not be relied upon as having
been authorized by the Company.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith shall file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Section of the Commission by calling the SEC at 1-800-SEC-0330. The
Company makes filings pursuant to the Exchange Act with the Commission
electronically, and such materials may be inspected and copied at the
Commission's web site (http://www.sec.gov).
A Registration Statement on Form S-8 (the "Registration Statement") with respect
to the Shares offered by this Prospectus has been filed with the Commission
under the Securities Act. This Prospectus does not contain all of the
information contained in such Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission.
Accordingly, additional information concerning the Company and such securities
can be found in the Registration Statement, including various exhibits and
schedules thereto, which may be inspected at the Public Reference Section of the
Commission. Copies of such material can be obtained from the Commission's Public
Reference Section at prescribed rates.
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INTERNATIONAL ISOTOPES INC.
THE COMPANY
International Isotopes Inc., a Texas corporation, (together with its wholly
owned subsidiary, International Isotopes Idaho Inc. ("I4") hereafter referred to
as "we" or the "Company" or "I3") was initially formed as a Texas corporation in
1995 to produce, market, and distribute a broad range of products used in
diagnostic and therapeutic nuclear medicine, research, and industry. In 2001, we
changed our mission and business strategy somewhat to focus upon other
radioisotope products, manufacture calibration and reference standards for
nuclear medicine, and provide general radiological measurement capability for
processed gemstones. In 2003, we put two new supply agreements in place for
Lu-177 and I-131 radioisotopes and expanded our processing facility to include
processing and distribution capability for these new isotopes. The following
paragraphs provide some additional details on our various business areas.
Radioisotope Products
We offer a selection of radioisotopes and radiochemicals for various
applications including clinical research, life sciences, and industrial
applications. In the past these isotopes have included Cobalt-60 (Co-60),
Cobalt-57 (Co-57), Cesium-137 (Cs-137), and Barium-133 (Ba-133), which were
typically sold as radiochemicals to be used in the manufacture of various
reference or calibration standards for industry or medicine. The Cobalt-60
isotope produced by the Company is unique in that it is very high specific
activity material. This high specific activity material can only be produced in
a few nuclear reactors around the world such as the Department of Energy
Advanced Test Reactor at the Idaho National Laboratory, to which we currently
have access. This high activity cobalt is sold in bulk to General Electric
Nuclear who in turn fabricates sealed sources for the Leksell gamma knife.
During 2003 we put two new supply agreements in place with two independent
producers to supply the additional isotopes of Lutetium-177 (Lu-177) and
Iodine-131 (I-131) radiochemical. Lutetium-177 is currently being investigated
in several different clinical applications including treatment of colon cancer,
metastic bone cancer, Non-Hodgkin's Lymphoma, and lung cancer. In published
cancer statistics, it is estimated that there are over half a million new cases
of these cancers occurring each year in the U. S. and nearly two million cases
worldwide. Clinical research with Lutetium-177 has been ongoing for several
years and the isotope has demonstrated certain chemical and radiological
properties which make it potentially very well suited as a cancer therapy
product. We are obtaining our Lutetium-177 through an agreement with the
University of Missouri Research Reactor (MURR), which has been a leading
developer of radioisotopes suitable for patient trials and has also been a very
reliable production source for these isotopes.
Also in 2003, we entered into a distribution agreement with a major global
supplier of Iodine-131 radiochemical and started distribution in 2004.
Iodine-131 is currently being used on a large commercial scale within the U.S.
for the treatment and diagnosis of various diseases of the thyroid such as
Graves disease, thyroid cancer, and hyperthyroidism. Iodine-131 is also being
used in a host of investigational and clinical trials such as for the treatment
of breast, lung, prostate, and ovarian cancers.
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Calibration and Reference Standards
We are a contract manufacturer for a wide range of NIST traceable calibration
standards and Quality Assurance check sources for various nuclear pharmacy and
SPECT related equipment. These items include flood sources, dose calibrators,
rod sources, flexible and rigid rulers, spot markers and penpoint markers. I3 is
an exclusive contract manufacturer for Radqual LLC for these products. There are
over 5,000 nuclear medicine centers around the country that require these types
of products on a regular basis.
General Measurement and Radiological Services
The Company provides a host of analytical, measurement, and processing services
on a contract basis to clients. Some of these services offered include detailed
radioactivity analysis, gamma assay, ICP analysis, Type A package development
and testing, and Health Physics consulting. The largest single product service
in this area involves our packaging and post irradiation examination process for
gemstone that has undergone irradiation for color enhancement. We have had an
exclusive contract with Quali-Tech Inc. since 2001 to provide this service.
Fluorine products
We initiated evaluation and acquisition in 2003 of seven patents related to an
entirely new product line for the Company - fluorine extraction process (FEP).
We closed this acquisition on January 30, 2004. The FEP patents and intellectual
property will be used for production of several high purity fluorine products
and we will establish a new fluorine products division to capitalize upon this
technology.
High purity fluorine gases are in ever-increasing demand for ion-implantation or
chemical vapor deposition processes for microelectronics components and
high-speed silicon chip manufacture. The FEP fluorine product is equal to or
greater than 99.99% pure with no detectable uranium in the product gas. This
makes our FEP products ideally suited to these specialty applications where
ultra high purity gases are required. In addition, we anticipate that the
production costs of FEP products will be low in comparison with ultra pure
fluorine products manufactured by other common commercial methods, enabling us
to effectively compete with existing high purity fluorine product suppliers both
on cost and purity.
To support the start-up of FEP we have entered into a marketing and technology
consulting agreement with individuals knowledgeable and experienced with the
processing technology and market applications for FEP products and leased an
additional industrial facility for production of FEP gases. We believe that the
market size and growth outlook for high purity fluorine products is excellent
and should provide the Company an opportunity to grow our revenue substantially
in coming years.
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We believe that revenues generated from these business activities can be
expected to have a positive effect upon our projections for continued growth in
2004 and should produce sufficient cash to meet our operational needs. However,
prospective investors are cautioned regarding the speculative nature of any
forward-looking projections. Also see "Risk Factors," below, for a discussion of
these and other risk factors relating to the Company when considering an
investment in our securities.
Company Licensing, Capabilities, and Qualifications
We are a participating member of the National Institute of Standards and
Technology/ Nuclear Energy Institute's (NIST/NEI) Measurement Assurance Program
(MAP) for the radiopharmaceutical industry. This program participation ensures
that we can provide analytical methods and standards necessary for accurate
radioactivity measurement and is a requirement for most of the products
manufactured for nuclear medicine reference and calibration standards. We are
also a registered Food and Drug Administration (FDA) medical device manufacturer
for Class I medical devices, including Nuclear Sealed Calibration Sources
(892.1400) and Nuclear Flood Source Phantoms (892.1380), and have a fully
implemented Quality Assurance program which meets the requirements of ANSI/ASME
NQA-1 and 10 CFR 830.120.
We have an operating license issued from the Nuclear Regulatory Commission which
defines the types and amounts of radioactive materials permitted within our
facility. In 2003 the Company completed two additional revisions to this
licensing to allow expanded production of our new radioisotopes, Lutetium-177
and Iodine -131.
Industry Overview, Target Markets, and Competition
The industries and markets that require or involve the use of radioactive
material are diverse. Our current operations involve products that are used in a
wide variety of applications and in various markets.
Radioisotope products are supplied typically in a bulk form and are highly
competitive. The target market's for these products are customers who 1)
incorporate them into finished industrial or medical devices 2) use these
products in clinical trials for various medical applications, or 3) further
process and include the material into a pharmaceutical product for FDA approved
therapy or imaging.
Calibration and Reference Standards are required for the daily operational
checks and calibration of the measurement of SPECT imaging devices frequently
used in nuclear medicine. This calibration and quality assurance testing is
required as a routine part of the normal operations of this equipment to ensure
its reliability and accuracy. We exclusively manufacture these products for
Radqual LLC, which in turn sells the products to several distributors around the
U.S. We directly ship these products to all 50 states and Canada. There are two
other major producers of these products within the U.S. that directly compete
with us for these products.
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Most of our general measurement and radiological services are performed in
support of gemstone processing. This material has undergone color enhancement by
irradiation at the University of Missouri Research reactor. The gemstones are
used in commercial jewelry manufactured by other companies in overseas
locations. The color enhancement process is a highly competitive industry and
there are several alternatives to irradiation treatment. There are also other
reactors located in other regions of the world that also offer this irradiation
service capability. The jewelry manufacturing industry is also a highly
competitive industry.
We are developing our fluorine products in 2004 to address an opportunity we see
in the increased market demand for certain high purity fluorine compounds in the
microelectronics industry. Emerging technologies such as the increased use of
silicon germanium processing chips for the wireless industry will require the
use of high purity fluorine compounds such as germanium tetra fluoride. We plan
to establish some manufacturing capacity for at least one of these compounds in
2004. Several of these fluorine compounds are already under production by other
businesses. Since the cost of the FEP process is low we anticipate being able to
be very price competitive with our fluorine products. However, this price
advantage may initially be our only competitive advantage in this market.
Government Regulation
The Company has obtained a license from the Nuclear Regulatory Commission,
Region IV that permits use and possession of by-product material. The scope of
this license includes calibration and reference standard manufacturing and
distribution, radioisotope processing and distribution, radioactive gemstone
processing, environmental sample analysis, and various research and development
activities. The existing license and permit's are adequate to allow all of our
business operations. Expansion into FEP production will require additional
permitting both through the NRC, State of Idaho, and the EPA. We will make every
effort to prepare well planned and detailed applications for these additional
permits, however, there can be no assurance of the time frame required for the
various governmental agencies to review and approve these permits.
Regulation of Radioisotope Production Radioactive Waste
All of our manufacturing processes result in the generation of some radioactive
waste. We must handle these wastes pursuant to the Low Level Radioactive Waste
Policy Act of 1980, which states we are required to assure the safe disposal of
mildly radioactive materials. The estimated costs for storage and disposal of
these materials have been included into the manufacturing and sales price of our
products. However, actual disposal costs are subject to change at the discretion
of the disposal site and are ultimately applied at the time of disposal. The
operating permit from the NRC also requires that we maintain an adequate cash
reserve, in the form of a certificate of deposit and irrevocable letter of
credit to the NRC to support our estimated decommissioning and disposal costs
for the facility. We do not handle "special nuclear materials" (i.e. nuclear
fuels and weapons grade uranium, thorium and plutonium) and, therefore, our
facility is not designated as a "nuclear" facility.
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Other Regulations
Our sale of the isotopes Lutetium-177 and Iodine -131 for medical applications
could cause us to be subject to additional regulations of the Food and Drug
Administration (FDA). The Company is registered as a medical device manufacturer
through the U.S. FDA for several of our nuclear medicine reference and
calibration standards.
RISK FACTORS
An investment in the securities offered hereby involves a high degree of risk.
In addition to the other information in this Prospectus, the following Risk
Factors should be considered carefully in evaluating an investment in the
securities offered hereby.
International Isotopes has incurred and may continue to incur losses. With the
exception of the three-month and six-month periods ended June 30, 2002, we have
incurred net losses for most fiscal periods since our inception. From inception
(November 1995) through December 31, 2003 the Company generated $19,316,817 in
revenues and had an accumulated deficit (including preferred stock dividends and
returns) in the amount of $87,968,650. However, although we cannot provide any
assurance we believe the Company's continued growth and our new business
products will produce sufficient revenue to meet our 2004 cash flow and
operational needs.
We may need additional financing to continue operations. As of December 31, 2003
we have an outstanding debt of $733,595 on a short term note with Texas State
Bank. That note matures on February 1, 2006 and is secured with our accounts
receivable and fixed assets. The Company also has a ten-year note for $840,753
at 7% interest to our former Chairman of the Board. Principal and interest
payments on this note are to be paid annually based upon net profits of the
Company (annual principal payment to equal 30% of net pre-tax profits).
Remaining Company Obligations on the Texas State Bank Loan for the Waxahachie
Property. In 2002 the Company and Texas State Bank agreed to have our loan
assumed by an individual in consideration of our sale of the Waxahachie
property. As of December 31, 2003 the remaining outstanding balance on this loan
was $329,357. Should this individual default on the assumed note, the liability
for the loan would revert to the Company.
We will continue to be dependent upon our remaining facilities and equipment to
function properly in order to provide consistent, timely shipments of products
that meet our customers' specifications. If we experience equipment failures or
breakdowns we may be unable to satisfy our customers, which could result in the
cancellation of contracts and the loss of revenues.
There is no long-term contract in place with the DOE Contractor for continued
HSA Cobalt production. The Company has put short term specific "work for
non-government sponsor agreements" in place with the DOE contractor to continue
sales of HSA cobalt irradiated at the Idaho reactor facility. We expect that
these agreements will continue, however, there is no assurance these contracts
will be equitable or continuing.
Operational hazards (i.e., spills, faults, ventilation failure, etc.) could
result in the spread of contamination within our facility and require additional
funding to correct. An irrevocable, automatic renewable letter of credit against
a $150,000 Certificate of Deposit at Texas State Bank has been used to provide
the financial assurance required by the Nuclear Regulatory Commission for our
Idaho facility license. If a contamination event resulted in greater liability
to us we would have to borrow money or fund the liability from our future
revenue.
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Government regulation could adversely affect our business. Operations within our
Idaho facility are subject to the U.S. Nuclear Regulatory Commission and Food
and Drug Administration regulations. Nuclear medicine calibration and reference
standards are licensed and regulated. To the extent these regulations are or
become burdensome, our business development could be adversely affected.
We are dependent upon key personnel. Our ongoing operations are dependent on
Steve T. Laflin, President and Chief Executive Officer. The Company is highly
dependent upon this person and the loss of this individual could have a material
adverse effect on us. We have a $2 million dollar key man life insurance policy
on Mr. Laflin and a 5-year employment agreement with him extending through
February 2007. The Company has revised our employee stock options to assist with
offering incentives and retaining key personnel. In addition, there is no
assurance the Company will be able to retain our existing personnel or attract
additional qualified employees. Loss of any of these relationships would result
in a significant decline in revenue.
We are dependent on various third parties in connection with our business
operations. The production of HSA Cobalt is dependent upon the Department of
Energy, and its prime-operating contractor, who controls the Idaho reactor and
laboratory operations. Our gemstone production is tied to an exclusive agreement
with Quali Tech Inc. and this current agreement expires in November 2004.
Nuclear medicine calibration and reference standard manufacturing is conducted
under an exclusive contract with RadQual, LLC, which in turn has agreements in
place with several companies for marketing and sales.
We are subject to competition from other companies. Each of the business areas
of the Company has direct competition from other businesses. HSA cobalt is
supplied by other reactor facilities around the world. Nuclear medicine
calibration and reference standards are being produced by several other
manufacturers in the U.S. and overseas, and there is at least one other gemstone
processor in Europe. Lutetium-177 and I-131 isotope is manufactured by several
other companies in the world, and there are also other suppliers of high purity
fluorine products. Each of our competitors has significantly greater financial
resources than us and that could create a competitive advantage for them over
us.
We are named as Defendant in a lawsuit filed by Iso-Science Laboratories Inc. A
lawsuit has been filed by Iso-Science Laboratories, Inc. dba Isotope Products
Laboratories against International Isotopes Inc. and others. The Company
believes the allegations of the petition are totally without merit. However,
there can be no guarantee of the outcome of this suit and an unfavorable outcome
could result in the loss of a major line of revenues and require substantial
payments to the Plaintiff.
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SELLING STOCKHOLDERS
The following table shows the names of the Selling Stockholders and the number
of Shares to be sold by them pursuant to this Prospectus:
Name Number of Shares
-------------- ----------------
Steve Laflin 11,000,000
Daren Lords 1,500,000
John Miller 1,500,000
Edward Kennedy 1,500,000
Ralph Richart 1,000,000
Chris Grosso 1,000,000
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they intend to
sell all or a portion of the Shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. The Selling Stockholders may also make private sales
directly or through a broker or brokers, who may act as agent or as principal.
In connection with any sales, the Selling Stockholders and any brokers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if such broker acts as agent for
the purchaser of such Shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Stockholders, Broker-dealers may
agree with the Selling Stockholders to sell a specified number of Shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire Shares as principal may
thereafter resell such Shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.
The Company has advised the Selling Stockholders that Regulation M promulgated
under the Exchange Act may apply to sales in the market, has furnished the
Selling Stockholders with a copy of this Regulation and has informed them of the
need for delivery of copies of this Prospectus. The Selling Stockholders may
indemnify any broker-dealer that participates in transactions involving the sale
of the Shares against certain liabilities, including liabilities arising under
the Securities Act. Any commissions paid or any discounts or concessions allowed
to any such broker-dealers, and, if any such broker-dealers purchase Shares as
principal, any profits received on the resale of such Shares, may be deemed to
be underwriting discounts and commissions under the Securities Act.
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Upon the Company's being notified by the Selling Stockholders that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a cross or block trade, the Company may, in its discretion, file a
supplemental prospectus under Rule 424(c) under the Securities Act, setting
forth the name of the participating broker-dealer(s), the number of Shares
involved, the price of which such Shares were sold by the Selling Stockholders,
the commissions paid or discounts or concessions allowed by the Selling
Stockholders to such broker-dealer(s), and where applicable, that such
broker-dealer(s) did not conduct any investigation to verify the information set
out in this Prospectus.
Any securities covered by this Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
There can be no assurances that the Selling Stockholders will sell any or all of
the Shares of Common Stock offered hereunder.
SECURITIES TO BE OFFERED
The Shares offered hereby are Shares of Common Stock, $.01 par value, of the
Company. Holders of Company Common Stock are entitled to one vote per share on
all matters to be voted upon by the stockholders. The holders of Company Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Company's Board of Directors (the "Company Board") out
of funds legally available therefor. In the event of a liquidation, dissolution
or winding up of the Company, the holders of Company Common Stock are entitled
to share ratably in all assets remaining after outstanding Shares of Company
Preferred Stock. There are no redemption or sinking fund provisions applicable
to the Company Common Stock. All outstanding Shares of Company Common Stock are
fully paid and non-assessable.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference into this Registration Statement and
into the Prospectus relating to this Registration Statement pursuant to Rule 428
the following documents and information heretofore filed with the Commission:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2003.
2. The Company's Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 2004 and June 30, 2004.
3. All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, after
the date hereof, and prior to the filing of a post-effective
amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and to be
part of this Registration Statement from the date of filing of
such reports and documents.
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LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be passed upon
for the Company by Locke Liddell & Sapp LLP, Austin, Texas.
EXPERTS
The consolidated balance sheets of International Isotopes Inc. and subsidiaries
as of December 31, 2003, and 2002, and the consolidated statements of
operations, stockholder deficit, and cash flows for the years then ended
incorporated by reference in this prospectus, have been included in reliance
upon the report of Hansen, Barnett & Maxwell, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
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