The following discussion of our results of operations and financial condition
should be read in conjunction with the accompanying financial statements and
related notes thereto included in Item 8, "Financial Statements and
Supplementary Data," within this Annual Report. Some of the information
contained in this discussion and analysis or set forth elsewhere in this Annual
Report, including information with respect to our plans and strategies for our
business, statements regarding the industry outlook, our expectations regarding
the future performance of our business and the other non-historical statements
contained herein are forward-looking statements. See "Cautionary Note Regarding
Forward-Looking Statements." You should also review the "Risk Factors" in Item
1A. of this Annual Report for a discussion of important factors that could cause
actual results to differ materially from the results described herein or implied
by such forward-looking statements.



Overview



International Isotopes Inc. (the "Company", "we", "us" and "our") produces an
FDA approved generic sodium iodide I-131 drug product, manufactures a wide range
of nuclear medicine calibration and reference standards and provides
radiochemicals for clinical research and life sciences. The Company also
produces a variety of cobalt-60 products and supports clients contract
manufacturing of radiopharmaceutical and radiochemical products. A more detailed
description of each of these product lines and services along with a description
of our business segments can be found in Item 1, "Business" within this Annual
Report.

During 2022, we focused our efforts on achieving profitability in each of our core business segments and reached several significant goals. During 2022, we:

º Increased company revenues by 16%.

º Reached $11.2 million in total revenues which was the largest single year

in company history.

º Increased sales in the Radiochemical segment by 41% due to increases in

sales of our FDA approved generic sodium iodide I-131 drug product.

º Completed sale of unused assets for $4.0 million in cash for a gain of $1.8


     million.



                                      15

º Developed several new products for our Nuclear Medicine products segment

and expanded these products into Positron Emission Tomography (PET) imaging

standards.

º Expanded sales of our nuclear medicine products through exercising our

management opportunity with RadQual, LLC (RadQual). In particular, we

increased our international sales by utilizing the marketing and

distribution expertise of our wholly owned subsidiary TI Services; and

º Continued to pursue viable opportunities to obtain government or commercial

contracts for depleted uranium de-conversion services for our U.S. Nuclear

Regulatory Commission (NRC) licensed de-conversion project in Lea County,

New Mexico.



As a result of the COVID-19 pandemic, we experienced a reduction of sales within
our nuclear medicine calibration standards segment and radiochemicals segment
during 2020 and 2021.  There was no discernable impact from COVID-19 to our
cobalt products business segment during the same period.  The decrease in sales
for 2020 and 2021 for our nuclear medicine calibration standards segment was the
result of the temporary closure of many imaging clinics and suspension of
elective or non-essential imaging procedures. In 2022, our sales in most
segments recovered and we saw very limited continued negative impact related to
COVID-19. The sale of radiochemical products increased during the year 2022;
however, we believe the increases in revenue for 2022 for nuclear medicine could
have been greater in 2022 were it not for the lingering negative impact of
COVID-19 in the first quarter of 2022.



To-date we have not furloughed or terminated any employees as a result of the
financial impact of COVID-19. The Company has only seen a limited impact in our
raw material supply chain related to the COVID-19, primarily some plastics which
have been in strong demand for certain types of PPE. Alternative sources of raw
materials have been obtained without any interruption to production.  With the
heightened concern about corporate liquidity during the COVID-19 pandemic, the
Company believes that it has adequate cash to support continuing operations.

Business Strategy and Core Philosophies





Broadly defined, our business strategy is to continue to build our reputation as
a leader in the radiochemical, cobalt, and nuclear medicine product industries,
and to maximizing the revenue potential of our generic sodium iodine I-131
product and nuclear medicine standards products. We also intend to continually
seek ways to improve our customer service and expand our market share, with the
ultimate goal of providing greater return to our shareholders. Specifically, we
are continuously working with our customers to improve and develop new products
to better serve the needs of the end user which, ultimately, we believe will
boost product sales. A key part of our short-term and long-term business
strategy is to develop and market additional generic drug products, similar to
our sodium iodide I-131 product, and develop additional nuclear medicine
standards products that will offer customers high quality, reliable, and
affordable products as well as increase our revenues. In addition, we will
manage cash reserves and pursue additional financial support that will be
structured in such a way to support further expansion of our products and
services to exploit additional market opportunities.



Our core philosophy is to strive to provide high quality products and services
as a profitable and environmentally conscious business, while offering excellent
customer service and providing a safe and productive working environment for our
employees. We operate in accordance with an ISO Quality Management System and in
accordance with all current Good Manufacturing Practices under which we seek to
maintain the highest level of quality and continuously improve our product

manufacturing processes.



Results of Operations

Following is a summary of results of operations for 2022:

· Revenue in 2022 was approximately $11.2 million, which was a 16% increase

compared to 2022 and was the largest annual revenue generated in the company's


   history;

· Our 2022 sales in our Radiochemical Products increased by approximately 41% as


   compared to 2021;

· Our 2022 sales in Cobalt Products and Nuclear Medicine Standards segments


   decreased by approximately 15% and 1% respectively as compared to 2021;

· Our total gross profit rate decreased to 56% in 2022 from 59% in 2021; and

· Our operating costs for 2022 increased approximately 17% as compared 2021; and

· We had a net profit of $303,238 in 2022 compared to a net loss of $902,347 in


   2021




                                      16

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021





The following table presents comparative revenues for the years ended December
31, 2022 and 2021:



                               For the year                           For the year
                                  ended                                  ended
                               December 31,        % of Total         December 31,        % of Total
Revenues                           2022           Revenues 2022           2021           Revenues 2021
Radiochemical Products        $    6,045,767                  54 %   $    4,275,044                  44 %
Cobalt Products                    1,157,536                  10 %        1,354,517                  14 %
Nuclear Medicine Standards         3,978,685                  36 %        4,002,606                  42 %
Flourine Products                         -                    0 %           29,775                   0 %
Total Segments                $   11,181,988                 100 %   $    9,661,942                 100 %




Revenues



Total revenues in 2022 were $11,181,988, compared to $9,661,942 in 2021, which
represents an increase of $1,520,046, or approximately 16%. The performance of
each segment is discussed in the following paragraphs.



                                 For the year       For the year
                                    ended              ended
                                 December 31,       December 31,
Revenues                             2022               2021           $ change        % change
Radiochemical Products          $    6,045,767     $    4,275,044     $ 1,770,723              41 %
Cobalt Products                      1,157,536          1,354,517        (196,981 )           -15 %
Nuclear Medicine Standards           3,978,685          4,002,606         (23,921 )            -1 %
Flourine Products                           -              29,775         (29,775 )          -100 %
Total Segments                      11,181,988          9,661,942       1,520,046              16 %
Corporate revenue                           -                  -               -               -
Total Consolidated              $   11,181,988     $    9,661,942     $ 1,520,046              16 %




Radiochemical Products




Sales of radiochemical products accounted for approximately 54% in 2022 as
compared to 44% of our total sales revenue in 2021. Sales in this segment
increased by $1,770,723, or approximately 41% to $6,045,767 in 2022 as compared
to $4,275,044 in 2021. The increase is primarily the result of sales of our new
generic sodium iodide I-131 drug product which was launched in March 2020. We
expect sales of our new product to continue to trend upward.



In February 2020, we received approval of an ANDA to the FDA for a sodium iodide
radiopharmaceutical product for use in treatment of hyperthyroidism and
carcinoma of the thyroid. We began sales of this product in March 2020, and
these sales have had a significant positive impact on our revenues for 2021 and
2022. We expect continued growth in sales for this product in 2022 and beyond.
This is the first of several potential generic drug products we plan to submit
to the FDA in the coming years. Within this segment, we also currently
distribute sodium iodide (I-131) as a radiochemical product. The radiochemical
product is being used for a variety of applications including industrial use and
use in investigational and clinical trials. We believe that the product
enhancements we have made, in addition to the generic drug products we plan to
submit to the FDA, should increase future sales in this business segment.



In 2019, we entered into a manufacturing and supply agreement with a company and
completed an expansion of our existing facility to support contract
manufacturing activities. Because of changing market conditions that company
requested a termination of that contract manufacturing arrangement, and a
settlement agreement was reached with that company in December 2020. As part of
the settlement agreement, we received a termination payment consisting of cash
and the other company's relinquishment on all claims to expansion of our
facility and all the equipment purchased by them. The settlement resulted in a
significant one-time gain for us in 2020. In February 2022, we were able to sell
these assets we received in the settlement agreement for another significant
one-time gain as detailed under Other Income (Expense) below. We are currently
developing a business plan to produce additional radiopharmaceutical products or
explore new contract manufacturing opportunities utilizing the cash from that
sale.



Cobalt Products



Cobalt products sales accounted for approximately 10% of our total sales revenue
in 2022 and approximately 14% in 2021. Sales in this segment decreased by
$196,981, or approximately 15%, in 2022 to $1,157,536, as compared to $1,354,517
in 2021. The decrease in revenue within this segment was the result of decreased
Cobalt Sealed Source Manufacturing due to timing of receipt of additional cobalt
material from the ATR in 2022, delays in customer contracts for Cobalt Sealed
Source Manufacturing, and delays due to maintenance and repairs to our
manufacturing equipment. Our sealed source manufacturing generates the majority
of our revenue within this segment and sealed source sales depend on our ability
to produce or procure cobalt material.



                                      17





In October 2014, we entered into a ten-year agreement with the DOE for the
irradiation of cobalt targets. It takes many years to irradiate these cobalt
targets to the desired level of activity and we anticipated having high specific
activity cobalt available for our customers in 2020. However, the material had
lower than expected activity and receipt of material was delayed until about
June 2021. At that point the material still had lower than expected activity,
and we reached an agreement with the DOE to purchase the lower activity material
at a discounted rate. Periodically we have been able to acquire recycled
material that can be used to manufacture sealed sources for customers, and in
some instances, our customers have supplied their own cobalt material for source
fabrication. We will continue to have access to additional low specific activity
material produced by the DOE and expect to obtain, process, and sell additional
cobalt products as a result during 2023.



We have entered into cobalt supply agreements with several customers. The terms
of these cobalt contracts require some advance progress payments from each
customer. The funding received under these contracts has been recorded as
unearned revenue under short- and long-term liabilities in our consolidated
financial statements. We recognized some of this revenue in prior years
including in 2022 and 2021 when we fulfilled contract performance objectives by
supplying sealed sources manufactured with cobalt from the ATR or alternate

suppliers.



Nuclear Medicine Standards



Due to decreased activity in the Radiological Services segment, starting January
1, 2022, this segment was reorganized into our Nuclear Medicine Standards
segment. Additionally, we reclassified our reporting for 2021 to include all
activities for the Radiological Services business segment under the Nuclear
Medicine Standards segment.



Sales in the nuclear medicine standards segment accounted for approximately 36%
and 40%, of our total sales revenue in 2022 and 2021, respectively. Sales in
this segment decreased by $23,921, or approximately 1%, to $3,978,685 in 2022,
as compared to $4,002,606 in 2021. This small decrease in sales in 2022 is due
to a $93,547 decrease in sales related to the discontinued Radiological Services
segment partially offset by an increase of $69,626 in sales related to nuclear
medicine standards products.



In 2017, affiliates of the Company purchased 75.5% of the member units of
RadQual and at that time, we were named as one of the managing members of
RadQual. Because of this change in member ownership and management, we have
consolidated RadQual's operations within the nuclear medicine segment for
financial reporting since that time. For purposes of consolidation, all
significant intercompany activity has been eliminated in the reporting process.
In July 2021, we acquired the remaining 75.5% of the member units of RadQual. As
a result of the acquisition, RadQual and TI Services are now our wholly-owned
subsidiaries and are fully consolidated.



We anticipate that our sales of RadQual products will remain strong and that our
ownership of RadQual will create significant future opportunities through new
product development and expanding markets. Additionally, we will continue to
work closely with TI Services using their expertise in marketing and
distribution strategies to strengthen nuclear medicine product sales.



Radiological Services

Starting in 2022, due to drastically decreased activity in the segment, all remaining activities in our Radiological Services is reported in our Nuclear Medicine Standards segment.





In January 2020, we notified our gemstone processing customer that the service
contract with them was being terminated because the volume of gemstones sent for
processing did not meet contract minimums. The termination activities and wrap
up of this service substantially occurred in 2021 and the Company saw a steady
decline in revenue from this service as production was wrapped up. In the first
half of 2022, we converted the spaces in the facility that were previously used
to perform this contract work into expanded Nuclear Medicine new product
manufacturing. The loss in revenue expected from termination of the gemstone
processing agreement is expected to be more than compensated for by the
expansion of new nuclear medicine source products.

Revenue from field service work for the DOE had accounted for the majority of revenue in this segment. However, Radiological Field Services work was terminated in 2020 and we did not generate any Radiological Field Services revenue in 2021 or 2022. We have removed this type of activity from our NRC license and do not expect to perform this in future years.





We continue to engage in source disposal activities and have begun reporting
these activities under the Nuclear Medicine Standards segment starting January
1, 2022. Additionally, we reclassified our reporting for 2021 to include all
activities for the Radiological Services business segment under the Nuclear

Medicine Standards segment.



                                      18




Fluorine Products



In 2022, we had no revenues related to Fluorine Products as compared to $29,775
in 2021. These revenues were related to an agreement to provide engineering and
technical assistance services related to our fluorine products' intellectual
property. We did not have any revenue from this agreement in 2022. In October
2022, we entered into an option agreement with a Company to sell the NRC license
and other assets related to this business area. The agreement gives the buyer up
to 18 months to purchase these assets. Work on this project had been on hold
since 2013 because of a slowdown in the nuclear industry that specifically
impacted fuel cycle facilities. Until such time that we execute the asset sales
agreement we will limit our expenditures to essential items such as maintenance
of the NRC license, land use agreements, communication with our prospective FEP
product customers, and interface with the State of New Mexico and Lea County
officials.




During 2021, we incurred $144,860 of planning and other expenses related to the
de-conversion project, as compared to $150,196 in 2021. This is a decrease of
$5,336, or approximately 4%, and is the result of decreased professional
services allocated to this project in 2022. The largest expense in this business
segment is $104,379, approximately 72% of the total expenses for 2022, for the
amortization of our NRC license for this project. We expect that our costs in
the future will be limited to essential items such as continued interactions
with our customers, the state of New Mexico, and Lea County, New Mexico.

Cost of Revenues and Gross Profit


Cost of revenues for 2022 was $4,891,927 as compared to $3,924,142 in 2021, an
increase of $967,785, or 25%. Gross profit percentage decreased to 56% for 2022,
from 59% in 2021. The following table presents revenues and cost of revenues
information:



                               For the year                           For the year
                                  ended                                  ended
                               December 31,        % of Total         December 31,        % of Total
                                   2022           Revenues 2022           2021           Revenues 2021

Total Revenues                $   11,181,988                 100 %   $    9,661,942                 100 %
Cost of Revenues
Radiochemical Products        $    2,217,468                  20 %   $    1,698,124                  18 %
Cobalt Products                      577,417                   5 %          546,043                   6 %
Nuclear Medicine Standards         2,097,042                  19 %        1,679,975                  17 %
Fluorine Products                         -                   -                  -                   -
Total Segments                $    4,891,927                  44 %   $    3,924,142                  41 %

Gross Profit                  $    6,290,061                         $    5,737,800
Gross Profit %                                                56 %                                   59 %
                                     967,785                  25 %        2,956,357




During 2022, we continued to monitor and control direct costs. Raw materials
used in our radiochemical products and nuclear medicine standards represented
the bulk of direct costs for 2022. In each of these business segments, we have
purchase agreements in place with suppliers to obtain optimum pricing.
Periodically, the cost increases for these raw materials or we may also use
alternate supply sources for our material which might not carry pricing as
favorable as our contracted suppliers.



The decrease in gross profit percentage in 2022 is a result of increased cost in
raw material and supplies in our Nuclear Medicine Standards segment driven by
recent cost inflation. We have seen these increased costs stabilize somewhat;
and we are working on further offsetting these cost increases with increases to
our product prices. We believe we can increase our sales prices enough to
overcome these cost increases while continuing to be competitive and maintain
sales growth.

Operating Costs and Expenses

Total operating costs and expenses for 2022 were $7,492,958, as compared to $6,418,592 in 2021. This is an increase of $1,074,366, or approximately 17%.





The following table presents operating costs and expenses for 2022 as compared
to 2021:



                                          For the year ended       For the year ended
                                          December 31, 2022        December 31, 2021        % change       $ change
Operating Costs and Expenses:
Salaries and Contract Labor              $          3,390,652     $          2,687,735             26 %   $   702,917
General, Administrative and Consulting              3,568,590              

 3,459,143              3 %       109,447
Research and Development                              533,716                  271,714             96 %       262,002
Total operating expenses                 $          7,492,958     $          6,418,592             17 %   $ 1,074,366




                                      19







Salaries and contract labor expense increased by $702,917, or approximately 26%,
which was the result of an increased number of employees and increases to labor
rates. In addition, non-cash equity compensation expense recorded for the year
ended December 31, 2022, was $352,458 as compared to $84,564 for the same period
in 2021. This is an increase of $267,894, or approximately 317%, and is the
result of equity compensation recorded for outstanding stock options granted to
directors, officers, and employees.



General administrative and consulting expenses increased to $3,568,590 in 2022,
as compared to $3,459,143 in 2021, an increase of $109,447, or approximately 3%.
This increase is due to periodic waste disposal costs of $329,237 in 2022 with
no such cost in 2021. Research and development expense was $533,716 for 2022,
compared to $271,714 for 2021. This is an increase of $262,002, or approximately
96%. This increase in research and development expense was the result of
increased costs associated with product development in our Radiochemical and
Nuclear Medicine Standards business segments.



During both 2022 and 2021, we limited further investment in the planned
de-conversion facility and limited further spending on the project only for
expenses necessary to maintain licensing, continue interactions with Lea County,
New Mexico, and supporting a due diligence review of the project by a company
interested in purchasing these project assets. We will continue to delay further
engineering work on the de-conversion project until we are able to secure
additional contracts for de-conversion services.



Other Income (Expense)



The following table presents other income (expense) for 2022 as compared to
2021:



                          For the year ended      For the year ended
                          December 31, 2022        December 31, 2021
Other income (expense)   $          2,110,576     $           683,253
Interest income                         9,502                     111
Interest expense                     (613,943 )              (791,532 )
Total other (expense)    $          1,506,135     $          (108,168 )




Other income was $2,110,576 for 2022 as compared to other income of $683,253 for
2021. This is an increase in other income of $1,427,323. The increase is
primarily due to a $1,797,978 gain on the sale of assets to Pharmalogic Idaho,
LLC. In February 2022, we entered into an Asset Purchase Agreement with
Pharmalogic Idaho, LLC, pursuant to which we sold certain assets for $4,000,000
in cash. The assets consisted primarily of manufacturing equipment and a
sublease acquired by the Company in connection with the previously announced
termination of the manufacturing and supply agreement with another company. In
2021, we recognized "other income" for an anticipated tax refund of
approximately $440,000 for the Employer Retention Credit.



In September 2022, we experienced a fraudulent transactions incident. The
fraudulent charges totaled approximately $85,000. These charges were recorded as
"other expense". Investigations by our bank and by law enforcement are ongoing.
There have been no indications of any involvement within our Company. As we
expected to recoup all fraudulent charges from our bank, we recognized "other
income" to offset the fraudulent charges recorded under "other expense". In
October and November 2022, we recovered all the fraudulent charges from our
bank.

Interest income in 2022 was $9,502 as compared to $111 in 2021. This increase of $9,391 was due to increased interest rates earned for cash balances held at banks and other institutions in interest-bearing accounts.


Interest expense decreased during 2022, to $613,943, from $791,532 in 2021. This
decrease of $177,589, or approximately 22%, was due to a decrease in non-cash
interest expense and the payoff of some notes payable. In 2022, non-cash
interest expense was $274,443 as compared to $401,077 in 2021. This is a
decrease of $126,634. Interest expense includes dividends accrued on our Series
C Preferred Stock (as defined below) issued in 2017. In 2022, we recorded
interest expense of $243,780 for dividends payable on our Series C Preferred
Stock.




In connection with the 2013 Promissory Note (as defined below), we recorded
$30,000 of interest expense for each of 2022 and 2021, and approximately $3,000
and $13,000 of non-cash interest expense related to a debt discount feature on
the 2013 Promissory Note for 2022 and 2021 respectively.



                                      20







In connection with the 2019 Promissory Note (as defined below), we recorded
$40,000 of interest expense for 2022 and 2021, and approximately $256,000 of
non-cash interest expense related to a debt discount feature and issuance of
warrants related to the 2019 Promissory Note for 2022 and 2021. We will have $0
in non-cash interest expense in connection with the 2019 Promissory Note in

2023
and future years.




In connection with our 2017 issuance of Series C Preferred Stock, we issued
Class M Warrants and Class N Warrants. All these warrants expired in 2021. We
recorded approximately $0 and $131,000 of non-cash interest expense for 2022 and
2021 respectively in relation to these warrants.



Net Income or Loss




Our net income was $303,238 in 2022, compared to a net loss was $902,347 in
2021. This is an increase in net income of $1,205,578. This increase is largely
the result of the approximate $1.8 million gain on sale of assets. Additionally,
the increase in income is the result of the increase in revenue in our
Radiochemical Products segment offset by the increase in operating expense from
salaries and contract labor and expenses from research and development in 2022,
as compared to the same period in 2021.

Liquidity and Capital Resources





On December 31, 2022, we had cash and cash equivalents of $2,375,817 compared to
$474,851 at December 31, 2021. Net cash used in operating activities was
$1,497,719 in 2022, compared to net cash used by operating activities of
$161,914 in 2021. This represents an increase in cash used in operating
activities of approximately $1,335,805. This increase is due to a large increase
in accounts receivable due to the increased sales activity in 2022 as compared
to 2021 and decreased net income from operating activities in the year over

year
comparison.



Accounts receivable at December 31, 2022 were $1,596,886 as compared to $853,675
at December 31, 2021. Our allowance for bad debt at December 31, 2022 was $0 as
compared to $18,910 at December 31, 2021.



Inventories at December 31, 2022 were $744,793 as compared to $924,775 at
December 31, 2021. A large portion of our inventory consists of Cobalt target
inventory. For 2022, our target inventory accounted for approximately 25% of our
work in process inventory. For 2021, our target inventory accounted for
approximately 48% of our work in process inventory.



Included in our work in process inventory are in-process and completed nuclear
medicine products, irradiated cobalt, and nuclear medicine-related materials and
products.



We recognized a net profit of $303,238, for the year ended December 31, 2022,
and have an accumulated deficit of $126,460,843 since inception. To date, our
operations and plant and equipment expenditures have been funded principally
from proceeds from public and private sales of debt and equity as well as
through asset sales.



Net cash provided in investing activities was $3,879,986 for 2022 and net cash
used in investing activities was $205,474 for 2021. During 2022, we used
$120,014 to purchase equipment, and we used $205,474 to purchase equipment in
2021. We had proceeds from sale of equipment of $4,000,000 in 2022, and we had
no proceeds from sale of equipment in 2021.



Financing activities used cash of $472,004 for the year ended December 31, 2022.
We received proceeds from the sale of common stock in the amount of $76,571 and
made principal payment on loans in the amount of $540,032 in 2022. For the year
ended December 31, 2021, financing activities used cash of $78,699. We received
proceeds from the sale of common stock in the amount of $18,890 and issued debt
for proceeds of $351,255. In addition, we made principal payment on loans in the
amount of $437,627 in 2021.



In February 2017, we entered into subscription agreements with certain
investors, including two of our directors, for the sale of (i) an aggregate of
3,433 shares of Series C Preferred Stock, and (ii) Class M warrants to purchase
an aggregate of 17,165,000 shares of our common stock (Class M Warrants), for
gross proceeds of $3,433,000. The Series C Preferred Stock accrues dividends at
a rate of 6% per annum, payable annually on February 17th of each year,
commencing on February 17, 2018. Shares of Series C Preferred Stock are
convertible at the option of the holder at any time into shares of our common
stock at an initial conversion price equal to $0.10 per share, subject to
adjustment. At any time after February 17, 2019, if the volume-weighted average
closing price of our common stock over a period of 90 consecutive trading days
is greater than $0.25 per share, we may redeem all or any portion of the
outstanding Series C Preferred Stock at the original purchase price per



                                      21




share plus any accrued and unpaid dividends, payable in shares of common stock.
All outstanding shares of Series C Preferred Stock must be redeemed by us on
February 17, 2022 at the original purchase price per share, payable in cash or
shares of common stock, at the option of the holder. In February 2022, based on
approval of majority of the Preferred C Holders, we extended the redemption date
of the Series C Preferred Stock to February 17, 2023. In December 2022, based on
approval of majority of the Preferred C Holders, we extended the redemption date
of the Series C Preferred Stock to February 17, 2025. Holders of Series C
Preferred Stock do not have any voting rights, except as required by law and in
connection with certain events as set forth in the Statement of Designation of
the Series C Preferred Stock. The Class M Warrants were exercisable at an
exercise price of $0.12 per share, subject to adjustment as set forth in the
warrant, and expired in February 2022. In February 2022, 515,000 Class M
Warrants were exercised at a price of $0.12. The Company received $61,800 for
the exercise.



In March 2017, we amended our 8% unsecured debentures issued that were scheduled
to mature in July 2017 (the Notes) and gave the noteholders certain additional
rights (the Amendment). Pursuant to the Amendment, the Notes were modified to
provide each holder the right, at the holder's option and exercisable prior to
May 12, 2017, to convert all or any portion of the principal amount of the
Notes, plus accrued but unpaid interest, into shares of our Series C Preferred
Stock at a conversion price of $1,000 per share. Holders that elected to convert
their Notes into Series C Preferred Stock received a warrant to purchase up to
3,750 shares of our common stock for each share of Series C Preferred Stock
received upon conversion of the Notes, with each warrant having a five-year
term, a cashless exercise feature, and an exercise price of $0.10 per share of
common stock. As a result of this modification, an aggregate of $780,000 of the
Notes was converted to 780 shares of Series C Preferred Stock and 2,925,000
Class N Warrants (as defined below). Residual interest was also paid to Note
holders who converted of $1,515. The Notes matured in July 2017 and were repaid
in full.




As discussed above, in May 2017, we issued 780 shares of Series C Preferred
Stock, and Class N warrants to purchase an aggregate of 2,925,000 shares of our
common stock (Class N Warrants) upon conversion of $780,000 of the Notes. The
Series C Preferred Stock accrues dividends at a rate of 6% per annum, payable
annually on February 17th of each year, commencing on February 17, 2018.  Shares
of Series C Preferred Stock are convertible at the option of the holder at any
time into shares of our common stock at an initial conversion price equal to
$0.12 per share, subject to adjustment. At any time after February 17, 2019, if
the volume-weighted average closing price of our common stock over a period of
90 consecutive trading days is greater than $0.25 per share, we may redeem all
or any portion of the outstanding Series C Preferred Stock at the original
purchase price per share plus any accrued and unpaid dividends, payable in
shares of common stock. All outstanding shares of Series C Preferred Stock were
to be redeemed by us on February 17, 2022 at the original purchase price per
share, payable in cash or shares of common stock, at the option of the holder.
In February 2022, based on approval of majority of the Preferred C Holders, we
extended the redemption date of the Series C Preferred Stock to February 17,
2023. In December 2022, based on approval of majority of the Preferred C
Holders, we extended the redemption date of the Series C Preferred Stock to
February 17, 2025. Holders of Series C Preferred Stock do not have any voting
rights, except as required by law and in connection with certain events as set
forth in the Statement of Designation of the Series C Preferred Stock. The Class
N Warrants were exercisable at an exercise price of $0.12 per share, subject to
adjustment as set forth in the warrant, and expired in February 2022.



In December 2013, we entered into a promissory note agreement with our then
Chairman of the Board and one of our major shareholders, pursuant to which we
borrowed $500,000 (the 2013 Promissory Note). The 2013 Promissory Note is
secured and bears interest at 6% per annum and was originally due June 30, 2014.
According to the terms of the 2013 Promissory Note, at any time, the lenders may
settle any or all of the principal and accrued interest with shares of our
common stock. In connection with the 2013 Promissory Note, each of the two
lenders was issued 5,000,000 Class L warrants to purchase shares of our common
stock at an exercise price of $0.06 per share. The warrants were immediately
exercisable. In June 2014, we renegotiated the terms of the 2013 Promissory
Note. Pursuant to the modification, the maturity date was extended to December
31, 2017 and each lender was granted an additional 7,500,000 Class L warrants to
purchase shares of our common stock at an exercise price of $0.06 per share. The
warrants were immediately exercisable. In February 2017, the 2013 Promissory
Note was further modified to extend the maturity date to December 31, 2020, with
all remaining terms unchanged. On December 23, 2018, all 25,000,000 Class L
warrants expired. In December 2019, the 2013 Promissory Note was further
modified to extend the maturity date to December 31, 2021, with all remaining
terms unchanged. In January 2022, the 2013 Promissory Note was further modified
to extend the maturity date to December 31, 2023, with all remaining terms
unchanged.



In April 2018, we borrowed $120,000 from our Chief Executive Officer and
Chairman of the Board pursuant to a promissory note (the 2018 Promissory Note).
The 2018 Promissory Note accrues interest at 6% per annum, which is payable upon
maturity of the 2018 Promissory Note. The 2018 Promissory Note was originally
unsecured and originally matured on August 1, 2018. At any time, the holder of
the 2018 Promissory Note may elect to have any or all the principal and accrued
interest settled with shares of our common stock based on the average price of
the shares over the previous 20 trading days. Pursuant to an



                                      22




amendment to the 2018 Promissory Note in June 2018, the maturity date was
extended to March 31, 2019 with all other provisions remaining unchanged.
Pursuant to a second amendment to the 2018 Promissory Note in February 2019, the
maturity date was extended to July 31, 2019 with all other provisions remaining
unchanged. Pursuant to a third amendment to the 2018 Promissory Note in July
2019, the maturity date was extended to January 31, 2020 with all other
provisions remaining unchanged. Pursuant to a fourth amendment to the 2018
Promissory Note in December 2019, the maturity date was extended to December 31,
2021, the note was modified to become secured by company assets, with all other
provisions remaining unchanged. In December 2021, the 2018 Promissory Note was
further modified to extend the maturity date to December 31, 2023, with all
remaining terms unchanged.



In December 2019, we entered into a promissory note agreement with our Chief
Executive Officer, Chairman of the Board, former Chairman of the Board, and one
of our major shareholders (the 2019 Promissory Note). The 2019 Promissory Note
authorizes us to borrow up to $1,000,000. As of December 31, 2019, we borrowed
$675,000 under the 2019 promissory note; the remaining $325,000 was borrowed in
February 2020. The 2019 Promissory Note is secured and bears interest at 4% per
annum and has a maturity date of December 31, 2022. According to the terms of
the 2019 Promissory Note, at any time, a holder of the 2019 Promissory Note may
elect to have any or all of the principal and accrued interest settled with
shares of our common stock based on the average price of the shares over the
previous 20 trading days. In connection with the 2019 Promissory Note, we are
required to issue up to 30,000,000 Class O Warrants to purchase shares of our
common stock at $0.045 per share (the Class O Warrants). The warrants are
exercisable at an exercise price of $0.045 per share and have a term of five
years. In December 2022, the 2019 Promissory Note was modified to extend the
maturity date to December 31, 2024, with all remaining terms unchanged.



In April 2021, we borrowed $250,000 from its Chief Executive Officer and
Chairman of the Board pursuant to a promissory note (the 2021 Promissory Note).
The 2021 Promissory Note accrued interest at 6% per annum, which was payable
upon maturity of the 2021 Promissory Note. The 2021 Promissory Note was
originally secured and was to mature on December 31, 2022. At any time, the
holders of the 2021 Promissory Note were able to elect to have any or all of the
principal and accrued interest settled with shares of our common stock at a
conversion price of $0.11 per share. On March 31, 2022, the Company repaid the
2021 Promissory Note in full. The payment included $250,000 in principal and
$14,500 in interest.



We expect that cash from operations, cash obtained through securities offerings,
and our current cash balance will be sufficient to fund operations for the next
twelve months. Although we may seek additional debt financing for our projects
and operations in the future, there is no assurance that we will be able to
secure additional debt financing on acceptable terms to us, or at all.



Goals for 2023



Based upon the investments we have made in our facilities and investments we
anticipate making, and based on projects, and products developed thus far in
2023, we have the following goals for the rest of 2023:

· Continue to expand sales of our FDA approved sodium iodide I-131 generic drug


   product;

· Complete development of and launch a fully automated I-131 capsule loading


   system to pharmacies in the U.S and select overseas customers;

· Begin development of one or more new generic drug products to further enhance

revenue production within our Radiochemical segment and identify additional


   future generic product opportunities;

· Expand sales of our nuclear medicine products and increase cash flow by


   offering new products and further expanding our international sales and
   distributor relationships;

· Develop a business plan to produce additional radiopharmaceutical products or


   explore new contract manufacturing opportunities.

· Explore acquisition opportunities to expand our product offerings and increase,


   revenue, cash flow, and profit margin;

· Continue to expand our customer base, increase revenues, reduce production and

operating costs, and attempt to achieve profitability in our core business


   segment operations; and

· Continue to support essential tasks related to our de-conversion project and

continue to pursue any opportunities to benefit from sale of these assets


   through and through royalty payment arrangements.




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Critical Accounting Estimates





Asset retirement obligation - The asset retirement obligation is based on the
expected future cash flows of the decommissioning funding plan.  The
decommissioning funding plan is based on the estimated number of hours of
specific personnel, estimated wages and disposal costs. Once the decommissioning
funding plan has been developed, we use a discount rate to determine the
estimated current value of the liability.

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