International Isotopes Inc. (OTC Bulletin Board: INIS) announces the financial results for fiscal year ended December 31, 2010.
Results of Operations
The Company reported total revenue of slightly over $6.1 million for 2010, about 1% less than the previous year. The net loss reported for 2010 increased by approximately 49% driven by the Company's increased expenses related to the engineering consulting, and licensing activities for the proposed uranium de-conversion and fluorine extraction facility. The Company's gross profit rate increased from 33% in 2009 to 41% in 2010. This increase was due primarily to a write-down in cobalt inventory in 2009.
Total revenue in 2010 was $6,107,281, compared to $6,122,844 in 2009, which represents a decrease of $15,563 or less than 1%. The small decrease in revenue was the result of decreases in sales in three business segments: Nuclear Medicine Standards, Radiological Services, and Transportation Services.
Sales of total cobalt products increased by 3% to $2,250,049 in 2010, as compared to $2,180,445 in 2009. Bulk cobalt sales increased by $115,303, or 12%, from 2009 to 2010. Sales of cobalt products excluding bulk cobalt sales decreased by 4% to $1,169,881, as compared to $1,215,580 in 2009. Cobalt recycle decreased by 27% in 2010, as compared to 2009, which was in large part due to a reduction in gamma knife unit source replacements which is believed to be a result of current economic conditions and medical facilities continuing to defer gamma source exchanges as a cost saving measure.
Sales of sealed source products increased 2% in 2010, as compared to 2009, and can be attributed to increased sales of sealed sources in foreign markets, particularly South America. Although world economic conditions will potentially have a significant impact on foreign sales, we believe, with continued marketing efforts and the anticipated availability of our new transportation containers, we should be able to sustain growth in this area for the foreseeable future.
Bulk cobalt sales account for approximately 48% of total Cobalt Products sales. Fluctuations in bulk cobalt sales can create large variations in period-to-period comparisons. The following table presents a year-to-year comparison of total revenue by segment as well as a year-to-year comparison of total revenue by segment excluding bulk cobalt sales. We believe that the total revenue excluding bulk cobalt sales provides meaningful information to investors because of the large period-to-period fluctuations in bulk cobalt sales. However, this information has limitations as an analytical tool and you should not consider it in isolation or as a substitute for total revenue including bulk cobalt sales.
Sales of radiochemical products accounted for approximately 29% of our total sales revenue in 2010 and increased by $32,206, or approximately 2% to $1,746,735 in 2010, as compared to $1,714,529 in 2009. Sales performance in this segment was largely driven by the increase in our sales of iodine-131. In this business segment, sales of iodine-131 in 2010 totaled $1,737,306, or approximately 99% of total radiochemical sales, while the remaining $9,430, or approximately 1% of radiochemical sales, consisted of miscellaneous radiochemical isotopes sales.
Nuclear Medicine Standards
Sales of nuclear medicine standards accounted for approximately 29% of our total sales revenue in 2010. Sales in this segment decreased by approximately 2% to $1,757,564 in 2010, as compared to $1,800,935 in 2009. This decrease is believed to be the result of on-going cuts in health care reimbursement and new laws affecting outpatient imaging, as well as economic trends in 2010.
Revenue from our Radiological Services segment accounted for approximately 3% of our total sales revenue in 2010. Sales in this segment decreased by approximately 18% to $195,917 in 2010, as compared to $239,722 in 2009. This decrease is due to the decline in topaz gemstone processing which accounts for approximately 85% of Radiological Services sales in 2010 and approximately 88% of Radiological Services sales in 2009. This decrease in topaz gemstone processing is due to weak sales of luxury items such as jewelry, and the continued instability of foreign markets, which are a key component in processing products which use irradiated gemstones.
Miscellaneous Radiological Services revenue increased by approximately 6% in 2010, as compared to 2009. The subdued sales in this area are attributable to reductions in the amount of government sponsored field source recovery activities and it is not expected that there will be any significant increase in government spending in this area in 2011.
There was no revenue to report from the fluorine products segment for 2010. Revenue from the fluorine products segment for 2009 was $878, which was the sale of an initial qualification lot of material to a prospective customer during the first quarter of 2009. We are developing our fluorine products in conjunction with uranium de-conversion, in order to take advantage of the anticipated need for depleted uranium de-conversion services. Our Fluorine Extraction Process patents provide a unique opportunity to provide certain high-purity fluoride compounds while also offering a "for fee" de-conversion service to the uranium enrichment industry.
Revenue from our Transportation segment accounted for approximately 3% of our total revenue in 2010. Sales in this segment decreased by approximately 16% to $157,016 in 2010, as compared to $186,335 in 2009. There are numerous regulations that apply to, and agencies that monitor, the security and tracking of cobalt shipments and our Transportation segment specializes in the transport of hazardous, radioactive materials including large quantity cobalt shipments. We believe that once the Type B shipping containers are approved by the Nuclear Regulatory Commission and become available, sales in this segment should significantly improve. Aside from revenue from "for hire" transportation service our transportation segment continues to provide significant cost savings for us over the cost of purchasing third party transportation services for our cobalt products.
Cost of Revenue and Gross Profit
Cost of revenue for 2010 was $3,619,759, as compared to $4,073,761 in 2009, a reported decrease of $454,002, or approximately 11%. Gross profit increased 22% overall to 41% in 2010, from 33% in 2009. However, in 2009 we reported a cobalt inventory write-down in the amount of $740,719 that was charged to cobalt products cost of sales.
Operating Costs and Expenses
Total operating costs and expenses for 2010 were $8,821,498, as compared to $6,626,059 in 2009, an increase of $2,195,439 or 33%. Salaries and Contract Labor decreased 10% in 2010, as compared to 2009, due to modest salary and wage adjustments and decreased contract labor costs. General, Administrative and Consulting expenses decreased 11% due to our continued aggressive efforts to economize in all areas of general and administrative costs.
The significant increase in Research and Development expense is a result of costs associated with the planned uranium de-conversion facility. In 2010, Research and Development costs increased by $2,620,730, to $5,230,564, as compared to $2,609,834 in 2009. The increase is almost entirely the result of increased expenses in the planning, design and licensing of the planned de-conversion facility. Research and Development with regard to the de-conversion facility totaled $5,215,351 in 2010, or approximately 99.7% of the all Research and Development expense. This level of Research and Development expense for 2010 was anticipated and was incurred as a result of efforts to support NRC license review and increased subcontractor support for the project. The costs were incurred only to the extent funding became available. We expect to continue to incur significant Research and Development expenses in 2011 based on our ability to raise additional funds for the uranium de-conversion project.
Our Net Loss was $6,802,014 in 2010, compared to a Net Loss of $4,580,925 in 2009. The increase of $2,221,089, or approximately 49%, was primarily attributable to the research and development expense related to the NRC licensing review costs and expanded engineering work incurred on the planned de-conversion facility.
Steve Laflin, President and CEO said, "Obviously this was a flat year for our core business segments but a very important and critical year in our overall business model transition. Given these very challenging financial and economic times I think we not only held our own in the industry we also took steps that should further solidify our leadership in the nuclear sector as we continue to demonstrate our commitment to building the only planned 'green' environmentally friendly option for commercial depleted uranium in the United States. This opportunity should allow us to build a strategic platform for future growth.
"Additionally, I want to emphasize again, the on-going problems at Japan's nuclear power plants, as a result of a devastating earthquake and tsunami, have not changed the Company's plans to build the first commercial, depleted uranium de-conversion facility in the United States. Investors should not confuse the events in Japan as a sign that our Company has, in any way, changed our plans or expectations for the commercial achievement of our depleted uranium processing facility. We firmly believe that recent events do not affect the need for our proprietary solution to safely address depleted uranium and to produce useful products from that material. Although the Company requires significant additional capital to complete construction of the planned depleted uranium de-conversion facility, it has sufficient cash on hand to continue near term planning and will continue to drive the project forward. We believe the initiatives we implemented during 2010 have bolstered our future prospects and we are very excited and optimistic about our future."
International Isotopes Inc.