International Isotopes in April secured a $495,500 bank loan via federal COVID-19 relief legislation to help pay its employees, according to a quarterly filing Wednesday with the Securities and Exchange Commission.
The Paycheck Protection Program in the CARES Act, signed into law in March, is intended via forgivable loans to assist small businesses in meeting payroll for up to eight weeks, including to bring back employees who have been laid off, amid the global economic disruption from the pandemic.
The Idaho Falls, Idaho, nuclear medicine company said it has not laid off or furloughed any personnel due to the public health emergency. Only its nuclear medicine calibration standards business took a 5% sales hit resulting from COVID-19, due to lower demand from medical imaging clinics that have reduced services due to COVID-19, management said in its 10-Q report with the SEC. Orders have already picked up since late March, “and we are hopeful orders will trend back towards normal levels as the year unfolds,” the document adds.
Still, a wholly owned International isotopes subsidiary on April 23 received the loan from the KeyBank National Association. The loan has a 1% interest rate and matures on April 22, 2022.
“In accordance with the requirements of the CARES Act and the PPP, the Company intends to use the proceeds from the SBA Loan primarily for payroll costs,” International Isotopes said. “No assurance can be given that the Company will be granted forgiveness of the SBA Loan in whole or in part.”
International Isotopes President and CEO Steve Laflin did not respond by deadline Friday to a query regarding details of how the company used the loan.
For the quarter ended March 31, sales dropped from just over $2.5 million in 2019 to slightly above $2.3 million. The income figures were more stark: International Isotopes’ net loss, net of noncontrolling interest grew from $51,958 in 2019 to $422,494 for the first quarter of 2020. The company attributed the drop to lower revenue for radiological services, higher operating expenses connected to contract manufacturing salaries, and rising interest expenses.
“Like most businesses, the Company faced challenges in the first quarter of 2020 due to COVID-19 outbreak,” Laflin said in the company’s press release Thursday on its first-quarter earnings. “I would encourage our shareholders not to let the short-term negative impact on our first quarter results overshadow the Company’s expectations for increased revenue, and progress towards profitability, for the remainder of the year.”
Radiological services revenue plunged 88% year over year, from $587,609 in the first quarter of 2019 to $73,321 in the same period of 2020. International Isotopes has stopped providing recovery of retired radiological sources for the Department of Energy and United Nations nuclear agency. That came after the Energy Department suspended or canceled all contracts with International Isotopes for this work, following the spill of cesium-137 last May during the company’s removal of a blood irradiator from a hospital research facility in Seattle under contract to Triad National Security, manager of the National Nuclear Security Administration’s (NNSA) Los Alamos National Laboratory in New Mexico.
“The source breach resulted in contamination of personnel, the building, and a release of material to the environment,” personnel form the NNSA and Triad said in a March investigative report. That document, reported Wednesday by an NBC affiliate in Seattle, said the “preventable” incident “was the result of weak and partially implemented processes within” DOE, Triad, and International isotopes.
International isotopes has asked the Energy Department for full indemnity from financial liability for the event, and expects a decision in its favor under federal law, the 10-Q says. The company last year accrued nearly $2.4 million in costs connected to the incident and subsequent remediation – which are ongoing, managed by Perma-Fix Environmental Services. Last year, International Isotopes received $964,958 from its insurance provider for expenses related to the spill, and it expects to recover at least another $1.2 million.
Outside of radiological services, management reported mixed earnings numbers for the first quarter.
Sales of radiochemical products rose a healthy 63%, from $463,232 in first-quarter 2019 to $755,721 in 2020. That was largely due to higher sales of iodine-131 products, particularly a generic version that hit the market in March for treating hyperthyroidism and some carcinoma of the thyroid.
Sales of cobalt products dropped by 19%, year over year, from $376,089 to $305,620. The company continues to face challenges in acquiring the material, used in radiation treatments, via the Energy Department’s Advanced Test Reactor in Idaho.
“Although we have not been able to obtain high specific activity material from the ATR reactor since late 2013, periodically we are able to acquire recycled material or material from alternative suppliers 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,” the 10-Q says.
Nuclear medicine standards revenue dipped slightly, from $1.1 million in the first quarter of 2019 to just over $1 million in the latest earnings period.
As it did in the immediately preceding quarter, International Isotopes in the first quarter reported revenue from its fluorine products business: $160,500, thanks to the supply of engineering and technical services related to its intellectual property, to an unidentified customer. That compares to no revenue in the first quarter of 2019 from the program.
Seven years ago, International Isotopes suspended plans for a depleted uranium hexafluoride (DUF6) deconversion and fluorine extraction facility in Lea County, N.M. The plant is intended to process DUF6 to extract fluorine gases for uses such as microelectronics manufacturing. However, the only existing waste-generating customer, nearby uranium enrichment provider URENCO, simply stores its own waste.