INIS 10-Q Quarter ended Sept. 30, 2025

( 1 )       The Company and Basis of Presentation

International Isotopes Inc. (INIS) was incorporated in Texas in November 1995. The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and include all operations and balances of INIS and its wholly-owned subsidiaries, including Radnostix, LLC, an Idaho limited liability company; RadQual, LLC, an Idaho limited liability company (RadQual); TI Services, LLC, an Ohio limited liability company (TI Services); RadVent, LLC, an Idaho limited liability company; International Isotopes Idaho Inc., a Texas corporation; International Isotopes Fluorine Products, Inc., an Idaho corporation; and International Isotopes Transportation Services, Inc., an Idaho corporation. INIS, and its wholly-owned subsidiaries are collectively referred to herein as the “Company,” “we,” “our” or “us.”

Nature of Operations – The Company manufactures a wide range of radioisotope-focused products used in variety of medical and industrial applications. The Company's products include a full range of nuclear medicine calibration and reference standards, a wide range of products, including cobalt teletherapy sources, and an FDA-approved radiopharmaceutical drug product. The Company also holds several patents for a fluorine extraction process that would be used in conjunction with a proposed commercial depleted uranium de-conversion facility which would be located in Lea County, New Mexico (the “De-Conversion Facility”). For 2025 , the Company’s business consists of five major business segments: Theranostics Products, Cobalt Products, Calibration & Reference Products (previously called Nuclear Medicine Standards), Medical Devices, and Fluorine Products. The Company’s headquarters and all operations, with the exception of TI Services, are located in Idaho Falls, Idaho.

With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products could be considered two to three years. Accordingly, preliminary payments received on cobalt contracts, where shipment will not take place for greater than one year, have been recorded as unearned revenue and, depending upon estimated ship dates, classified under either current or long-term liabilities on the Company’s condensed consolidated balance sheets. These unearned revenues are being recognized as revenue in the periods during which the cobalt shipments take place. All assets expected to be realized in cash or sold during the normal operating cycle of business are classified as current assets.

Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements are presented in conformity with GAAP and include all operations and balances of INIS and its wholly-owned subsidiaries including RadQual and TI Services. See Note 4 “Investment and Business Consolidation” for additional information. 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 GAAP for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10 -K for the year ended December 31, 2024 filed with the SEC on March 4, 2025.

Recent Accounting Pronouncements – In December 2023, Financial Accounting Standards Board issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures , which enhances the disclosures required for income taxes in the Company’s annual consolidated financial statements. Notably, this ASU requires entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023 - 09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis. Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023 - 09 on its consolidated financial statements.

( 2 )       Current Developments and Liquidity

Business Condition – Since inception, the Company has incurred substantial losses. During the nine months ended September 30, 2025 , the Company reported a net loss of $ 477,080 and net cash provided by operating activities of $ 210,043 . During the nine months ended September 30, 2024 , the Company reported net loss of $ 237,245 and net cash provided by operating activities of $ 568,215 .

During the three and nine months ended September 30, 2025 , the Company continued its focus on its strongest long-standing core business segments which consist of its Theranostics Products (previously called Radiochemical Products), Cobalt Products, and Calibration & Reference Products (previously called Nuclear Medicine Standards), and in particular, the pursuit of new business opportunities within those segments. Additionally, the Company has begun to focus on the start-up of its Medical Device segment which includes assets purchased from AMICI, Inc. (AMICI) in 2023 and investing in the development of an EasyFill Automated Iodine Capsule System.

The Company holds a Nuclear Regulatory Commission (NRC) construction and operating license for the depleted uranium facility in, as well as the property agreement with, Lea County, New Mexico, where the plant is intended to be constructed. The NRC license for the de-conversion facility is a forty ( 40 ) year operating license and is the first commercial license of this type issued in the United States. On February 8, 2024, the Company entered into a definitive agreement to sell all of its assets related to the Fluorine Products segment and the Planned Uranium De-Conversion Facility, including the Lea County land. The definitive agreement provides that the maximum date for closing is March 31, 2026 ( the "Outside Date"), subject to further extension pursuant to the terms of the agreement. In July 2025, the Buyer requested an extension of the Outside Date, which the Company determined was not in the best interests of the Company, and therefore, the Outside Date remains March 31, 2026. Closing is contingent on various conditions being met, including the Buyer obtaining financing plus approvals and agreements with the NRC and other third parties. On September 30, 2025, the Company and the Buyer submitted an application to the NRC requesting consent to transfer the Company's NRC license to the Buyer. This application for transfer and closing of the transaction remain subject to the NRC's review process. The Company is currently evaluating any effects the current government shutdown might have on this review process and approval for license transfer. Proceeds from this sale if it closes by the Outside Date would be $ 12.5 million in total.

The Company expects that cash from operations, equity or debt financing, and its current cash balance will be sufficient to fund operations for the next twelve months. Future liquidity and capital funding requirements will depend on numerous factors, including commercial relationships, technological developments, market factors, available credit, and management of redeemable convertible preferred stock. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.

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

For the three and nine months ended September 30, 2025 , the Company had 26,637,500 stock options outstanding, 3,000,000 restricted stock units outstanding, and 4,063 outstanding shares of Series C redeemable convertible preferred stock (Series C Preferred Stock), each of which were not included in the computation of diluted income (loss) per common share because they would be anti-dilutive.

For the three and nine months ended September 30, 2024 , the Company had 27,012,500 stock options outstanding, 5,250,000 restricted stock units outstanding, and 4,063 outstanding shares of Series C Preferred Stock, each of which were not included in the computation of diluted income (loss) per common share because they would be anti-dilutive.

The table below shows the calculation of diluted shares:

The table below summarizes common stock equivalents outstanding at September 30, 2025 and September 30, 2024 :

( 4 )       Investment and Business Consolidation

In June 2023, the Company acquired several medical devices with related assets and intellectual property rights from AMICI and has been working on FDA 510k transfers, and start-up of manufacturing. In January 2025, the parties amended the Asset Purchase Agreement whereby the Company received additional product rights and related assets to make up for a shortfall by AMICI in deliverable assets originally contemplated in the Asset Purchase Agreement.

On June 3, 2024, the Company entered into a Strategic Development and Distribution Agreement with Alpha Nuclide Inc for the rights to manufacture and distribute the Company’s Theranostics Products and Nuclear Medicine Products in mainland China as part of a 50/50 joint Venture between the Company and Alpha Nuclides. The parties will begin with the distribution of the Company’s Calibration & Reference Products as part of phase I of the strategic alliance, with further planned milestones for the establishment of a joint venture to register the Company’s Theranostics and Calibration & Reference Products with the CFDA for local manufacturing and distribution. The parties envision commercializing INIS's radiopharmaceutical Iodine- 131, radiochemical API, and theranostics API I- 131 for 3 ^rd party therapeutic applications in China. The parties intend to manufacture and distribute the products from Alpha Nuclide's Jiaxing facility, which Alpha Nuclides is responsible for establishing. The parties also intend to enter into a supply agreement for raw material isotopes to be supplied from Alpha Nuclide to the Company to be used in the Company’s manufacturing process at the Company’s Idaho Falls, Idaho facility.

On August 6, 2024, the Company entered into a joint venture agreement with Phantech LLC to form PhanQual. PhanQual will leverage INIS’s and Phantech’s technologies, facilities, experience, and global network to design, manufacture, and distribute sealed sources, including adapting Phantech's patented and cutting-edge fillable calibration source technology, into sealed source calibration devices to better serve the R&D and theranostics community. Additionally, RadQual will globally distribute Phantech’s entire portfolio of fillable sources through RadQual’s global network of distributors. PhanQual’s revenues and operations will operate through RadQual and will be included in our Calibration & Reference Products segment.

( 5 )       Stockholders’ Equity, Options, and Warrants

Employee Stock Purchase Plan

The Company has an employee stock purchase plan pursuant to which employees of the Company may participate to purchase shares of common stock at a discount. During the nine months ended September 30, 2025 and 2024 , the Company issued 521,102 and 290,625 shares of common stock, respectively, to employees under the employee stock purchase plan for proceeds of $ 14,883 and $ 8,627 , respectively. As of September 30, 2025 , 1,314,527 shares of common stock remain available for issuance under the employee stock purchase plan.

Stock-Based Compensation Plans

2015 Incentive Plan - In April 2015, the Company’s Board of Directors approved the International Isotopes Inc. 2015 Incentive Plan (as amended, the 2015 Plan), which was subsequently approved by the Company’s shareholders in July 2015. The 2015 Plan was amended and restated in July 2018 to increase the number of shares authorized for issuance under the 2015 Plan by an additional 20,000,000 shares. The 2015 Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock or cash-based awards. At September 30, 2025 , there were 18,900,685 shares available for grant and 48,538,185 shares available for issuance under the 2015 Plan.

Employee/Director Grants - The Company accounts for issuances of stock-based compensation to employees by recognizing, as compensation expense, the cost of employee services received in exchange for equity awards. The compensation expense is based on the grant date fair value of the award. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).

Non-Employee Grants - The Company accounts for its issuances of stock-based compensation to non-employees by recognizing compensation expense based on the grant date fair value of the award. Stock option compensation expense is recognized over the vesting period for the award.

Option awards outstanding as of September 30, 2025 , and changes during the nine months ended September 30, 2025 , were as follows:

The intrinsic value of outstanding and exercisable shares is based on the closing price of the Company’s common stock on the OTCQB of $ 0.06 per share on September 30, 2025 .

As of September 30, 2025 , there was $ 58,492 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of 1.77 years.

Total stock-based compensation expense for the nine months ended September 30, 2025 and 2024 was $ 95,364 and $ 136,601 , respectively.

During the nine months ended September 30, 2025 , the Company granted an aggregate of 725,000 qualified stock options to nine of its employees. These options vest over a five -year period with the first vesting on the first anniversary of the date of grant, with an expiration at the ten -year anniversary for each grant. The exercise price for these granted options was between $ 0.04 and $ 0.11 per share. The options issued during the nine months ended September 30, 2025 have a fair value of $ 25,116 as estimated on the date of issue using the Black-Scholes options pricing model with the following weighted-average assumptions: risk free interest rate of 3.95 % to 4.52 %, expected dividend yield rate of 0 %, expected volatility of 72.53 % to 85.29 % and an expected life between 5 and 7 years.

Restricted Stock Units outstanding as of September 30, 2025 , and changes during the nine months ended September 30, 2025 , were as follows:

As of September 30, 2025 , there was $ 21,788 of unrecognized compensation expense related to Restricted Stock Units that will be recognized over a weighted-average period of 0.545 years.

Preferred Stock

At September 30, 2025 , there were 4,063 total shares of the Series C Preferred Stock outstanding. The Series C Preferred Stock are convertible at the option of the investors at any time into shares of the Company's 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 the Company’s common stock over a period of 90 consecutive trading days is greater than $ 0.25 per share, the Company may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per share ($ 1,000 ) 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 the Company 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 a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2023. In December 2022, based on approval of a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2025. In September 2024, based on approval of a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2027. 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.

During the nine months ended September 30, 2025 and 2024 , dividends paid to holders of the Series C Preferred Stock totaled $ 243,780 and $ 243,030 respectively. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. For the nine months ended September 30, 2025 and 2024 , the Company issued an aggregate of 1,743,457 and 1,808,400 shares of common stock in lieu of dividend payments of $ 90,660 and $ 90,420 , respectively, with the remaining dividend payable settled in cash of $ 153,120 and $ 152,610 , respectively.

( 6 )        Debt

In December 2013, the Company entered into a promissory note agreement with the chairman of our board of directors at the time 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. Pursuant to four modifications in the time period between June 2014 and January 2022, the 2013 Promissory Note was modified to extend the maturity date to December 31, 2023, with all remaining terms unchanged. In February 2024, the 2013 Promissory Note was modified again to (i) extend the maturity date to March 31, 2026, ( ii) remove the security provision to allow for the sale of all our assets related to the Fluorine Products segment and the Planned Uranium De-Conversion Facility to American Fuel Resources, LLC (the “DUF6 Asset Sale”), (iii) if reasonably possible, to reinstate a security provision against our Sodium iodide abbreviated new drug application (“ANDA”) and Iodine- 131 Processing Hot Cell, and (iv) to reinstate all security interests if the DUF6 Asset Sale does not close by March 31, 2026, with all remaining terms unchanged. To date, the Company has not yet removed the security interests against any of our assets related to this note. In August 2025, the 2013 Promissory Note was modified again to extend the maturity date to March 31, 2028, with all remaining terms unchanged. At September 30, 2025 , accrued interest payable on the 2013 Promissory Note was $ 354,234 .

In April 2018, the Company borrowed $ 120,000 from our chief executive officer and the current chairman of our board of directors (“Chairman”) through an affiliated entity pursuant to a promissory note (the “2018 Promissory Note”). The 2018 Promissory Note is secured and accrues interest at 6 % per annum, which is payable upon maturity of the 2018 Promissory Note. At any time, the holders of the 2018 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. The 2018 Promissory Note was originally due August 1, 2018. Pursuit to six modifications within the period of June 2018 and December 2023, the 2018 Promissory Note was modified to extend the maturity date to January 31, 2025, with all remaining terms unchanged. In February 2024, the 2018 Promissory Note was modified to (i) extend the maturity date to March 31, 2026, ( ii) remove the security provision to allow for the DUF6 Asset Sale, (iii) if reasonably possible, to reinstate a security provision against our sodium iodide ANDA and iodine- 131 Processing Hot Cell, and (iv) to reinstate all security interests if the DUF6 Asset Sale does not close by March 31, 2026, with all remaining terms unchanged. To date, the Company has not yet removed the security interests against any of our assets related to this note. In August 2025, the 2018 Promissory Note was modified again to extend the maturity date to March 31, 2028, with all remaining terms unchanged. At September 30, 2025 , accrued interest on the 2018 Promissory Note totaled $ 53,570 .

In December 2019 and February 2020, the Company borrowed an aggregate of $ 1,000,000 from our chief executive officer, Chairman, former Chairman, and one of our major shareholders pursuant to a promissory note (the “2019 Promissory Note”). The 2019 Promissory Note bears an interest rate of 4 % annually and was originally due December 31, 2022. According to the terms of the 2019 Promissory Note, at any time, the lenders may settle any or all of the principal and accrued interest with shares of the Company’s common stock based on the average closing price of the Company’s common stock for the 20 days preceding the payment. In December 2022, the 2019 Promissory Note was modified to extend the maturity date to December 31, 2024, with all remaining terms unchanged. In February 2024, the 2019 Promissory Note was modified to (i) extend the maturity date to March 31, 2026, ( ii) remove the security provision to allow for the DUF6 Asset Sale, (iii) if reasonably possible, to reinstate a security provision against our sodium iodide ANDA and Iodine- 131 Processing Hot Cell, and (iv) to reinstate all security interests if the DUF6 Asset Sale does not close by March 31, 2026, with all remaining terms unchanged. To date, the Company has not yet removed the security interests against any of our assets related to this note. In August 2025, the 2019 Promissory Note was modified again to extend the maturity date to March 31, 2028, with all remaining terms unchanged. At September 30, 2025 , the accrued interest on the 2019 Promissory Note totaled $ 229,131 .

In June 2023, the Company executed an asset purchase agreement with AMICI, Inc. for the purchase of medical devices and related assets and intellectual property rights. In connection with the asset purchase agreement, the Company entered a promissory note to AMICI, Inc. with a principal amount of $ 558,593 . According to the terms of the note, the Company made an initial cash payment of $ 100,000 into escrow, issued the seller $ 25,000 in shares of the Company’s common stock, and paid the seller $ 6,493 in a closing cash reimbursement payment. For the remaining principal balance of the promissory note of $ 427,100 , the Company is required to pay the seller a minimum of $ 10,000 per month for a period of 45 months. The amount due was not subject to interest until the 25th month after the anniversary of the closing of the transaction. At September 30, 2025 , the balance of this promissory note was $ 157,100 .

( 7 )       Commitments and Contingencies

Dependence on Third Parties

Sales to the Company’s top three customers for the nine months ended September 30, 2025 were approximately 30 % of its total gross revenue. The Company is making efforts to reduce its dependency on a small number of customers by expanding both domestic and foreign. Approximately 18 % of the Company's total gross revenue was from sales from a single customer as part of our Theranostics Products segment.

The production of Cobalt- 60 is dependent upon the U.S. Department of Energy (DOE), and its prime operating contractor, which controls the Advanced Test Reactor (ATR) and laboratory operations at the ATR located outside of Idaho Falls, Idaho. From 2014 to 2024, the Company had a ten -year contract with the DOE for the irradiation of cobalt targets for the production of cobalt- 60. The Company was able to purchase cobalt targets as available for a fixed price per target and with an annual 5 % escalation in price. The contract term was October 1, 2014, through September 30, 2024, the Company and the DOE continue to work on this supply agreement with amendments. The DOE have informed the Company that they have secured additional feed stock and remain committed to production of cobalt- 60, and the Company continues to source cobalt- 60 from the DOE through amendments to the existing contract.

Sales of our most predominant Theranostics Products are dependent upon a few key suppliers. An interruption in production by any of these individual suppliers could have an immediate negative impact upon Theranostics Products sales until material could be purchased from alternate suppliers including obtaining regulatory approval to use material from alternative suppliers if necessary. In the nine -months ended September 30, 2025 , the Company experienced supply interruptions from our key raw material supplier in July and August. In the nine -months ended September 30, 2025 , the Company received regulatory approval for an additional supplier and in September 2025 started sourcing from two suppliers. The Company has identified other suppliers and continues to search for additional means to produce and procure certain critical isotopes.

The Calibration & Reference Products sold by the Company are dependent upon certain radioisotopes that are supplied to the Company through agreements with several suppliers. A loss of any of these suppliers could adversely affect operating results by causing a delay in production or a possible loss of sales. Beginning in the six months ended June 30, 2024, there was a global shortage of Cobalt- 57 isotopes, a key isotope for this business segment that resulted in significant lost sales. In the third quarter of 2024 our main supply of Cobalt- 57 was restored, and our global isotope supply chain has normalized. In nine months ended September 30, 2025 , a global outage of Gadolinium- 153 isotopes, a key isotope for this business segment, resulted in significant lost sales. While the Company continues to work with industry to restart supply of this key isotope, we are uncertain of the timeframe to restore supply.

Contingencies

Because all the Company’s business segments involve the handling or use of radioactive material, the Company is required to have an operating license from the NRC and specially trained staff to handle these materials. The Company has amended this operating license numerous times to increase the amount of material permitted within the Company’s facility. Although this license does not currently restrict the volume of business operations performed or projected to be performed in the upcoming year, additional processing capabilities and license amendments could be implemented that would permit the processing of other reactor-produced radioisotopes by the Company. The financial assurance required by the NRC to support this license has been provided for with a surety bond held with Swiss Re Corporate Solutions Premier Insurance Corporation which is supported by a restricted money market account held with Merrill Lynch. At September 30, 2025 , the balance of this account was $ 1,477,685 .

As noted in Footnote 2 above, on February 8, 2024, the Company entered into a definitive agreement to sell all of its assets related to the Fluorine Products segment and the Planned Uranium De-Conversion Facility, including the Lea County land. The definitive agreement provides that the maximum date for closing is March 31, 2026 ( the "Outside Date"), subject to further extension pursuant to the terms of the agreement. In July 2025, the Buyer requested an extension of the Outside Date, which the Company determined was not in the best interests of the Company, and therefore, the Outside Date remains March 31, 2026. Closing is contingent on various conditions being met, including the Buyer obtaining financing plus approvals and agreements with the NRC and other third parties. In October 2025, the Company and the Buyer submitted an application to the NRC requesting consent to transfer the Company's NRC license to the Buyer. This application transfer and closing of the transaction remain subject to the NRC's review process. The Company is currently evaluating any effects the current government shutdown might have on this review process and approval for license transfer. Proceeds from this sale if it closes by the Outside Date would be $ 12.5 million in total. The Company has not recorded the value of this property as an asset and will not do so until such time that material changes to or sufficient progress on the project has been made to meet the Company’s obligations under the agreements for permanent transfer of the title.

( 8 )      Revenue Recognition

Revenue from Product Sales

The Company’s revenue consists primarily of distribution of theranostics including sodium iodide I- 131 drug product, calibration and reference standards manufactured for use in the nuclear medicine industry, and cobalt source manufacturing. With the exception of certain unique products, the Company’s normal operating cycle is considered to be one year. Due to the time required to produce some cobalt products, the Company’s operating cycle for those products is considered to be two to three years. Accordingly, preliminary payments received on cobalt contracts where shipment has not taken place have been recorded as unearned revenue on the Company’s condensed consolidated balance sheets and classified under current or long-term liabilities, depending upon estimated ship dates. For the nine months ended September 30, 2025 , the Company reported current unearned revenue of $ 484,568 . For the period ended December 31, 2024 , the Company reported current unearned revenue of $ 513,317 . These unearned revenues will be recognized as revenue in the periods during which the cobalt shipments take place.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied.  As of September 30, 2025 , and December 31, 2024 , accounts receivable totaled $ 1,970,807 and $ 1,521,380 , respectively.  For the nine months ended September 30, 2025 , the Company did not incur material impairment losses with respect to its receivables.

( 9 )      Leases

The Company leases office and warehouse space under operating leases. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease, right-of-use assets, and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates with the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires judgement. The company determines its incremental borrowing rate for each lease using its then-current borrowing rate. Certain of the Company’s leases include options to extend or terminate the lease. The Company establishes the number of renewal options periods used in determining the operating lease term based upon its assessment at the inception of the operating lease. The option to renew the lease may be automatic, at the option of the Company, or mutually agreed to between the landlord and the Company. Once the facility lease term has begun, the present value of the aggregate future minimum lease payments is recorded as a right-of-use asset. Lease expense is recognized on a straight-line basis over the term of the lease.

In January 2025, the Company entered into a new operating lease agreement for a second facility across the street from its main headquarters. The initial term of the lease is five years, ending December 2029 and includes the option to extend the lease for two additional terms of five years each. The monthly lease rate increases annually by 3 % each year. The Company has the right of first refusal on this property that allows it to match any offer to purchase this property. The Company recorded an operating lease right-of-use asset and corresponding operating lease right-of-use liability of $ 830,720 for this lease based on a life of 15 years and incremental borrowing rate of 6.75 %. During the nine months ended September 30, 2025 , the Company has been building out the new facility for future production with an expected startup in Q2 2026.

The future minimum payments under these operating lease agreements are as follows:

( 10 )        Segment Information

The Company’s reportable segments are reported in a manner consistent with the way management evaluates the businesses. The results of operations are regularly reviewed by the Company's chief operating decision maker ("CODM"), the Chief Executive Officer. The Company identifies its reportable business segments based on differences in products and services. The accounting policies of the business segments are the same as those described in the summary of significant accounting policies. In order to evaluate each reportable segment's performance, the CODM uses income from operations as a measure of profit and loss. The CODM compares operational performance against management expectations when making decisions regarding allocation of operating and capital resources to each segment.

In 2025 , the Company has five reportable segments which include: Theranostics Products, Cobalt Products, Calibration & Reference Products, Medical Device Products, and Fluorine Products. Information regarding the operations and assets of these reportable business segments is contained in the following table: