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Business Condition and Liquidity
12 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Condition and Liquidity

NOTE 2 – BUSINESS CONDITION AND LIQUIDITY

 

The Company has a history of recurring losses with an accumulated deficit of $121,939,561 at December 31, 2016, and a net loss of $1,879,112 for the year then ended. The Company’s working capital, which includes inventory that will not be sold for up to three years, has decreased by $4,193,078 from the prior year. The Company has used cash flows from operations of $324,176. During 2016, the Company sought to improve future cash flows from operating activities through execution of new sales agreements, improving operating cost control measures, making improvements in current manufacturing processes, pursuing new service contracts, and developing new products. The Company’s net loss was $1,879,112 in 2016, compared to a net loss of $1,818,225 in 2015. This is an increase in net loss of $60,887.

 

During the year ended December 31, 2016, the Company continued to focus on its long-standing core business segments, which consist of its radiochemical products, cobalt products, nuclear medicine standards, and radiological services segments. Of particular note is the Company’s pursuit of new business opportunities within the radiochemical segment, specifically the filing of an abbreviated new drug application (“aNDA”) for sodium iodide.

 

In October 2014, the Company secured a ten-year cobalt production agreement with the United States Department of Energy (“DOE”). The agreement provides the Company with access to the currently available cobalt production positions in the DOE’s Advanced Test Reactor (“ATR”) located at the Idaho National Laboratory in Idaho Falls, Idaho. The ATR is the only DOE reactor in the United States (“U.S.”) capable of producing large quantities of high specific activity cobalt.

 

In addition to the cobalt production agreement with the DOE, the Company entered into supply agreements in 2015 with several customers for the purchase of cobalt-60. Because it takes approximately two to three years to irradiate cobalt targets to the desired level of activity, the shipment of cobalt-60 product to these customers is anticipated to begin in mid to late 2018. Pursuant to these cobalt-60 supply agreements, the Company will not only supply cobalt-60 to the customers but, in some instances, will also provide on-going services with respect to manufacturing and selling cobalt sources. Each contract requires quarterly progress payments to be paid by most customers to the Company.

 

Due to changes in the nuclear industry over the past few years, the Company’s plans for the design and construction of a large-scale uranium de-conversion and fluorine extraction facility were placed on hold. The Company expects that further activity on this project will remain on hold until the market and industry conditions change to justify resuming design and construction of the facility. The Company will continue to incur some costs associated with the maintenance of licenses and other necessary project investments for the proposed facility, and the Company expects to continue to keep certain agreements in place to support resumption of project activities at the appropriate time. In July 2015, the Company announced that it executed an amendment to its Project Participation Agreement (PPA) with the Lea County, New Mexico Board of Commissioners. The PPA granted to the Company direct and indirect assistance for locating its proposed depleted UF6 de-conversion facility in Hobbs, New Mexico. The principal component of assistance was the conveyance of approximately 640 acres of land for construction and operation of the proposed facility. The conveyance of the land was contingent upon the Company commencing construction on Phase 1 of the facility by December 31, 2014 and hiring a certain number of employees by December 31, 2015. Under the amendment to the PPA, the Lea County, New Mexico Board of Commissioners agreed to extend those dates to December 31, 2016 and December 31, 2017, respectively. The Company did not meet the deadlines set forth in the amended PPA, but is in discussions with the Lea County, New Mexico Board of Commissioners to further extend the milestone dates. If the Company does not succeed in extending the commitment dates or in reaching performance dates set forth in a modified agreement, then we may, at our sole option, either purchase or re-convey the property to Lea County, New Mexico. The purchase price of the property would be $776,078, plus interest at the annual rate of 5.25% from the date of the closing to the date of payment.

 

The Company holds a Nuclear Regulatory Commission (“NRC”) construction and operating license for the depleted uranium facility 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. There are no other companies with a similar license application under review by the NRC. Therefore, the NRC license represents a significant competitive barrier and the Company believes that it provides it with a very valuable asset. During the year ended December 31, 2016, the Company incurred costs of approximately $379,000 to maintain licenses and other necessary project investments. During the same period in 2015, the Company incurred costs of approximately $357,000 for planning and development activities on the project.

 

In February 2017, the Company completed a private placement transaction with certain investors, including two of its directors, for the sale of an aggregate of 3,433 shares of Series C Convertible Redeemable Preferred Stock (the “Series C Preferred Stock”) and Class M warrants to purchase an aggregate of 17,165,000 shares of the Company’s common stock, for gross proceeds of approximately $3.4 million. See Note 15 below for additional information on the private placement.

 

The Company expects that cash from operations 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, contract manufacturing agreements, commercial relationships, technological developments, market factors, available credit, and voluntary warrant redemption by shareholders. There is no assurance that additional capital and financing will be available on acceptable terms to the Company or at all.