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EX-31.1 - CEO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002 - VIVOS INCexhibit_31-1.htm
EX-31.2 - CFO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002 - VIVOS INCexhibit_31-2.htm
EX-32 - CEO AND CFO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. - VIVOS INCexhibit_32.htm


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q /A
(Amendment No. 1)
 
(Mark One)
   
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED:  SEPTEMBER 30, 2009
   
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM __________ TO __________
 
COMMISSION FILE NUMBER 0-53497
 
 
ADVANCED MEDICAL ISOTOPE CORPORATION

 (Exact name of registrant as specified in its charter)

Delaware
80-0138937
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
8131 W. Grandridge Blvd.  Suite 101,
Kennewick WA 99336

 (Address of principal executive offices, Zip Code)

(509) 736-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
The number of shares of registrant’s common stock outstanding, as of November 20, 2009 was 51,933,379.

 

 
1

 

 
TABLE OF CONTENTS
 
   
Page
 
PART I - FINANCIAL INFORMATION
 
       
Item 1.       Financial Statements
    3  
Balance Sheets as of September 30, 2009 and December 31, 2008
    3  
Statements of Operations for the nine months and three months ended September 30, 2009 and September 30, 2008
    4  
Statements of Shareholders’ Equity (Deficit) for the nine months ended September 30,2009
    5-6  
Statements of Cash Flows for the nine months ended September 30, 2009 and September 30, 2008
    7-8  
Notes to Condensed Consolidated Financial Statement
    9-17  
Item 2.       Management’s Discussion and Analysis or Plan of Operation
    18-29  
Item 3.       Quantitative and Qualitative Disclosures About Market Risk
     
Item 4T.    Controls and Procedures
     
       
PART II - OTHER INFORMATION
       
Item 1.       Legal Proceedings
    29  
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds
    29-33  
Item 3.       Defaults Upon Senior Securities
    33  
Item 4.       Submission of Matters to a Vote of Security Holders
    33  
Item 5.       Other Information
    33  
Item 6.       Exhibits
    33  
      35  
SIGNATURES
     
 
 
 

 
 
 
 
 
 
 
 
 
 

 


 
2

 

 
Item 1.   Financial Statements.
 
Advanced Medical Isotope Corporation
(A Development Stage Company)
Balance Sheets
 
   
September 30, 2009
 
December 31, 2008
 
   
(unaudited)
     
ASSETS
         
           
Current Assets:
         
Cash and cash equivalents
 
$
1,773
 
86,631
 
Accounts receivable
   
29,660
 
35,747
 
Prepaid expenses
   
-
 
3,000
 
Prepaid expenses paid with stock, current portion
   
155,632
 
140,579
 
Inventory
   
17,050
 
7,100
 
Total current assets
   
204,115
 
273,057
 
             
Fixed assets, net of accumulated depreciation
   
1,869,531
 
2,272,784
 
             
Other assets:
           
License fees, net of amortization
   
8,333
 
27,083
 
Patents
   
93,886
 
24,594
 
Prepaid expenses paid with stock, long-term portion
   
131,250
 
96,875
 
Deposits
   
390,406
 
155,406
 
Total other assets
   
623,875
 
303,958
 
Total assets
 
$
2,697,521
 
2,849,799
 
             
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
 
             
Current liabilities:
           
Accounts payable
 
$
629,786
 
580,258
 
Accrued interest payable
   
88,040
 
188,956
 
Payroll liabilities payable
   
5,585
 
9,098
 
Preferred stock redeemable as common
   
-
 
3,182,405
 
Loans from shareholder
   
172,034
 
194,599
 
Convertible notes payable
   
1,147,574
 
257,481
 
Current portion of capital lease obligations
   
1,923,883
 
352,119
 
Total current liabilities
   
3,966,902
 
4,764,916
 
             
Long term liabilities:
           
Capital lease obligations, net of current portion
   
-
 
1,786,734
 
Total liabilities
   
3,966,902
 
6,551,650
 
             
Shareholders’ Equity (Deficit):
     
Preferred stock, $.001 par value; 100,000 authorized;
 
 0 and 95,000 shares issued and outstanding, respectively
   
-
 
95
 
Common stock, $.001 par value; 100,000,000 shares authorized;
 
51,773,490 and 36,778,612 shares issued and outstanding,
 
 respectively
   
51,773
 
36,779
 
Subscriptions receivable
   
-
 
-
 
Paid in capital
   
15,073,428
 
9,546,087
 
Accumulated deficit prior to the development stage
   
(2,884,043
)
(2,884,043
Deficit accumulated during the development stage
   
(13,510,539
)
(10,400,769
Total shareholders’ equity (deficit)
   
(1,269,381
)
(3,701,851
 Total liabilities and shareholders’ equity (deficit)
   
2,697,521 
 
2,849,799 
 

The accompanying notes are an integral part of these financial statements


 
 
3

 

dvanced Medical Isotope Corporation
(A Development Stage Company)
Statements of Operations
(unaudited)
 
                           
From inception of
 
                           
development stage
 
   
Three months ended
   
Nine months ended
   
on January 1, 2006
 
   
September 30,
   
September 30,
   
through September 30,
 
   
2009
   
2008
   
2009
   
2008
   
2009
 
                               
Revenues
 
$
102,245
   
$
103,985
   
$
242,387
   
$
187,406
   
$
640,684
 
Cost of goods sold
   
44,607
     
48,461
     
95,706
     
124,101
     
307,004
 
Gross profit
   
57,638
     
55,524
     
146,681
     
63,305
     
333,680
 
                                         
Operating expenses
                                       
Sales and marketing expenses
   
1,200
     
2,752
     
6,627
     
34,279
     
58,360
 
Start up costs
   
-
     
-
     
-
     
-
     
62,510
 
Write off of impaired assets
   
-
     
-
     
-
     
-
     
903,535
 
Depreciation and amortization
   
140,668
     
445,726
     
422,003
     
1,086,623
     
3,411,016
 
 Professional fees
   
318,628
     
198,088
     
621,127
     
937,237
     
3,089,271
 
Stock options granted
   
183,746
     
127,086
     
395,018
     
880,226
     
2,338,857
 
Payroll expenses
   
92,306
     
114,870
     
300,263
     
383,453
     
1,072,048
 
General and administrative
                                 
expenses
   
115,482
     
180,681
     
348,229
     
396,279
     
1,095,982
 
Total operating expenses
   
852,030
     
1,069,203
     
2,093,267
     
3,718,097
     
12,031,579
 
Operating loss
   
(794,392
)
   
(1,013,679
   
(1,946,586
)
   
(3,654,792
)
   
(11,697,899
)
                                         
Non-operating income (expense):
                                 
Interest expense
   
(209,514
)
   
(50,703
)
   
(589,839
   
(106,372
)
   
(1,141,796
)
Investment loss
   
-
     
-
     
-
     
-
     
(28,500
)
Gain on extinguishment of debt
   
-
     
-
     
33,600
     
-
     
33,600
 
Loss on conversion of shareholder
                                 
      loan
 
-
   
-
     
(606,944
)
 
-
     
(675,944
)
Non-operating income
                                     
(expense), net
   
(209,514
)
   
(50,703
)
   
(1,163,183
)
   
(106,372
)
   
(1,812,640
)
Loss before Income Taxes
   
(1,003,906
)
   
(1,064,382
)
   
(3,109,769
)
   
(3,761,164
)
   
(13,510,539
)
Income Tax Provision
   
-
     
-
     
-
     
-
     
-
 
Net loss
 
$
(1,003,906
)
 
$
(1,064,382
)
 
$
(3,109,769
)
 
$
(3,761,164
)
 
$
(13,510,539
)
Loss per common share
 
$
(0.02
)
 
$
(0.03
)
 
$
(0.07
)
 
$
(0.11
)
       
Weighted average common shares
                                 
Outstanding
   
51,016,791
     
35,085,000
     
46,908,553
     
34,281,967
         

The accompanying notes are an integral part of these financial statements

 
 
4

 

 
Advanced Medical Isotope Corporation
(A Development Stage Company)
Statement of Changes in Shareholders’ Equity (Deficit) (unaudited)

           
                                       
Accumulated
   
Deficit
       
                                       
Deficit
   
Accumulated
       
   
Series A Preferred
                           
Prior to
   
During
       
   
Stock
   
Common Stock
   
Paid in
   
Subscriptions
   
Development
   
Development
       
 Balances at ,
 
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Receivable
   
Stage
   
Stage
    Total  
December 31, 2008
    95,000     $ 95       36,778,612     $ 36,779     $ 9,546,087     $ -     $ (2,884,043 )   $ (10,400,769 )   $ (3,701,851 )
Common stock issued for:
                                                         
Debt settlement January
                                                         
 2009 ($.27 per share)
    -       -       190,000       190       51,110       -       -       -       51,300  
Services February 2009
                                                         
  ($.42 per share)
    -       -       80,000       80       33,520       -       -       -       33,600  
Debt settlement March
                                                         
   2009 ($.35 per share)
    -       -       150,000       150       52,350       -       -       -       52,500  
Debt settlement March
                                                         
 2009 ($.35 per share)
    -       -       33,333       33       11,633       -       -       -       11,666  
Services March 2009
                                                         
 ($.35 per share)
    -       -       25,000       25       8,725       -       -       -       8,750  
Loan fee March 2009
                                                         
 ($.28 per share)
    -       -       40,000       40       10,992       -       -       -       11,032  
Cash March 2009
                                                                 
($.27 per share)
    -       -       37,037       37       9,963               -       -       10,000  
Cash March 2009
                                                                 
 ($.15 per share)
    -       -       1,500,000       1,500       223,500       -       -       -       225,000  
Cash April 2009
                                              -                  
 ($.27 per share)
    -       -       55,556       56       14,944       -       -       -       15,000  
Cash April 2009
                                                                 
($.20 per share)
    -       -       525,000       525       104,475       -       -       -       105,000  
Rent April 2009
                                                                 
($.31 per share)
    -       -       50,000       50       15,450       -       -       -       15,500  
Loan fee April 2009
                                                                 
($.31 per share)
    -       -       20,000       20       6,120       -       -       -       6,140  
Loan fee May 2009
                                                                 
 ($.28 per share)
    -       -       20,000       20       3,855       -       -       -       3,875  
Loan fee June 2009
                                                         
 ($.27 per share)
    -       -       110,000       110       21,200       -       -       -       21,310  
Cash June 2009
                                                                 
 ($.27 per share)
    -       -       100,000       100       26,900       -       -       -       27,000  
 
 
 
 
 
5

 
 
Statement of Changes in Shareholders’ Equity (Deficit) (unaudited) - continued
 
Services July 2009                                                  
 ($ .28 per share     -       -       50,000       50       139,950       -       -       -       14,000  
Services August 2009                                                                  
 ($ .30 per share     -       -       500,000       500       149,500       -       -       -       150,000  
Loan Fee September 2009                                                                  
 ($ 31 per share     -       -       90,560       91       30,462       -       -       -       30,552  
Cash September 2009                                                                  
 ($ .25 per share     -       -       60.000       60       14,940       -       -       -       15,000  
Services September 2009                                                                  
 ($ .39 per share     -       -       345,000       345       134,205       -       -       -       134,550  
Services September 2009                                                                  
($  .32 per share)
    -       -       156,250       156       49,844       -       -       -       50,000  
Convert 95,000 convertible                                                                  
preferred shares ($.351
                                                                 
per share)      (95,000 )     (95 )     10,857,142       10,857       3,800,095       -       -       -       3,810,857  
       
Debt settlement January
                                           
2009 through issuance
                                           
of 500,000, 3 year, stock
                                           
options exercisable at
                                           
  $.50 per share
    -       -       -       -       228,654       -       -       -       228,654  
Intrinsic value of convertible
                                                         
  debt issued March 2009             
    -       -       -       -       14,365       -       -       -       14,365  
Intrinsic value of convertible
                                                         
  debt issued April 2009
    -       -       -       -       12,592       -       -       -       12,592  
Intrinsic value of convertible
                                                         
  debt issued September 2009
    -       -       -       -       88,978       -       -       -       88,978  
                                                           
                                                                         
Vesting of stock options
                                                         
  March 2009
    -       -               -       87,236       -       -       -       87,236  
Vesting of stock options
                                                         
  June 2009
    -       -       -       -       124,037       -       -       -       124,037  
Vesting of stock options
                                                         
September 2009
    -       -       -       -       183,746       -       -       -       183,746  
Net loss
    -       -                       -                       (3,109,769 )     (3,109,769 )
 Balances at September 30,
  2009 (unaudited)   
    -     $ -       51,773,490     $ 51,773     $ 15,073,428     $ -     $ (2,884,043 )   $ (13,510,539 )   $ (1,269,381 )
 
The accompanying notes are an integral part of these financial statements
 

 
 
 
 
6

 

Advanced Medical Isotope Corporation
(A Development Stage Company)
Statements of Cash Flow
(unaudited)
 
                     
From inception of
 
                     
development stage on
 
     
Nine months ended
     
Nine months ended
     
January 1, 2006 through
 
     
September 30, 2009
     
September 30, 2008 
     
September 30, 2009
 
CASH FLOW FROM OPERATING ACTIVITIES:
                       
                         
Net Loss
 
$
(3,109,769
 
$
(3,761,164
)
 
$
(13,510,539
)
                         
Adjustments to reconcile net loss to net cash
         
used by operating activities:
                 
Depreciation of fixed assets
   
403,252
     
154,405
     
713,821
 
Amortization of licenses and intangible assets
   
18,750
     
932,218
     
2,719,507
 
Amortization of convertible debt discount
   
416,034
     
4,557
     
455,232
 
Amortization of prepaid expenses paid with stock
   
112,197
     
170,066
     
645,994
 
Impairment of intangible assets
   
-
     
-
     
903,535
 
Common stock issued for services
   
182,150
     
224,105
     
1,925,862
 
Common stock issued for rent
   
-
     
-
     
-
 
Stock options issued for services
   
395,019
     
880,226
     
1,474,888
 
Stock issued for repairs and maintenance
   
-
     
-
     
7,875
 
Net loss on settlement of debt
   
606,944
     
-
     
646,944
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
6,087
     
(40,737
)
   
(29,660
)
Inventory
   
(9,950
   
18,638
     
(17,050
Prepaid expenses
   
3,000
     
(23,652
   
-
 
Deposits
   
(235,000
)
   
(4,784
)
   
(390,408
)
Accounts payable
   
299,456
     
224,443
     
806,476
 
Payroll liabilities
   
(3,513
)
   
(45,163
)
   
5,585
 
Other payables
   
-
     
178,544
     
-
 
Stock based consulting fees payable
   
(31,800
)
   
-
     
180,844
 
Accrued interest rolled into notes payable
   
-
     
-
     
142,375
 
Accrued interest
   
70,712
     
15,525
     
259,668
 
Net cash used by operating activities
   
(876,431
)
   
(1,072,773
)
   
(3,059,051
)
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
         
Cash acquired from investment
   
-
     
-
     
310,000
 
Cash used to acquire equipment
   
-
     
(1,698,496
)
   
(2,583,353
)
Cash used to acquire patents
   
(69,292
)
   
-
     
(93,886
)
Cash used to acquire intangible assets
   
-
     
16,320
     
(658,750
)
Net cash used in investing activities
   
(69,292
)
   
(1,714,816
)
   
(3,025,989
)
                         
 
The accompanying notes are an integral part of these financial statements

 
 
 
7

 

Statements of Cash Flow (unaudited) - continued
 
                     
From inception of
 
                     
development stage on
 
     
Nine months ended
     
Nine months ended
     
January 1, 2006 through
 
     
September 30, 2009
     
September 30, 2008 
     
September 30, 2009
 
CASH FLOWS FROM FINANCING ACTIVITIES:
         
Bank overdraft
      -      
6,117
        -  
Proceeds received from bank line of credit
   
-
     
179,000
     
219,908
 
Payments on line of credit
   
-
     
(20,000
)
   
(219,908
)
Proceeds from Washington Trust debt
   
-
     
-
     
199,908
 
Payments on Washington Trust debt
   
(22,565
)
   
-
     
(27,874
)
Proceeds from capital lease
   
-
     
1,622,874
     
2,445,156
 
Principal payments on capital lease
   
(214,970
)
   
(192,690
)
   
(521,273
)
Proceeds from convertible note
   
701,400
     
195,312
     
1,376,400
 
Proceeds from officers related party debt
   
22,800
     
-
     
70,800
 
Payments on officers related party debt
   
(22,800
)
   
-
     
(70,800
)
Proceeds received from shareholder loan
   
-
     
-
     
80,000
 
Proceeds from cash sales of common shares
   
397,000
     
709,968
     
2,206,996
 
Proceeds from exercise of options and warrants
   
-
     
72,500
     
125,000
 
Proceeds from subscription shares payable
   
-
     
160,000
     
202,500
 
Net cash provided by financing activities
   
860,865
     
2,773,081
     
6,086,813
 
Net increase (decrease) in cash and cash equivalents
   
(84,858
   
(54,508
   
1,773
 
                         
Cash and cash equivalents, beginning of period   
   
86,631
     
54,508
     
-
 
                         
CASH AND CASH EQUIVALENTS, END OF PERIOD  
 
 $
1,773
   
 $
-
   
 $
1,773
 
                         
                         
Supplemental disclosures of cash flow information:
                       
Cash paid for interest     
 
 $
228,582
   
 $
3,879
   
 $
226,144
 
Cash paid for income taxes  
 
 $
-
   
 $
-
   
 $
-
 
 
The accompanying notes are an integral part of these financial statements

 

 
 
8

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008

 
NOTE 1:                      BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of the Company have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures required by accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.  These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations of the Company for the period presented. The results of operations for the nine months ended September 30, 2009, are not necessarily indicative of the results that may be expected for any future period or the fiscal year ending December 31, 2009.

Reclassification

Certain expenses for the period ended September 30, 2008 were reclassified to conform with the expenses for the period ended September 30, 2009.

NOTE 2:                      GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  As shown in the accompanying financial statements, the Company has suffered recurring losses and used significant cash in support of its operating activities and the Company’s cash position is not sufficient to support the Company’s operations. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate we will continue to require funding from investors for working capital as well as business expansion during this fiscal year and we can provide no assurance that additional investor funds will be available on terms acceptable to us. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable time. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which we operate.

We anticipate a requirement of $1 million in funds over the next twelve months to maintain current operation activities. In addition we anticipate a requirement of approximately $7 million in funds over the next twelve months due to the anticipation of adding additional staff in the future assuming we are successful in selling our medical isotopes and/or the start of development by us on future manufacturing sites or other projects. Currently we have $1,773 cash on hand which means there will be an anticipated shortfall of nearly the full $10 million requirement in additional funds over the next twelve months. There are currently commitments to vendors for products and services purchased, plus, the employment agreements of the CFO and other employees of the company and our current lease commitments that will necessitate liquidation of the Company if we are unable to raise additional capital. The current level of cash is not enough to cover the fixed and variable obligations of the Company.

Assuming we are successful in our sales/development effort we believe that we will be able to raise additional funds through the sale of our stock to either current or new shareholders. There is no guarantee that we will be able to raise additional funds or to do so at an advantageous price.

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability.  The Company plans to seek additional funding to maintain its operations through debt and equity financing and to improve operating performance through a focus on strategic products and increased efficiencies in business processes and improvements to the cost structure.  There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


 
9

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 3:                      FIXED ASSETS

Fixed assets consist of the following at September 30, 2009 and December 31, 2008:
 
   
September 30, 2009
   
December 31, 2008
 
Production equipment
  $ 2,113,218     $ 2,113,218  
Building
    446772       446772  
Leasehold improvements
    3,235       3,235  
Office equipment
    20,128       20128  
      2,583,353       2,583,353  
Less accumulated depreciation
    (713,822       (310,569 )
    $ 1,869,531     $ 2,272,784  

Accumulated depreciation related to fixed assets is as follows:
 
   
December 31, 2008
   
December 31, 2008
 
Production equipment
  $ 569,742     $ 252,759  
Building
    136,766       54,707  
Office equipment
    6,194       2,543  
Leasehold improvements
    1,120       560  
    $ 713,822     $ 310,569  
 
Depreciation expense for the above fixed assets for the nine months ended September 30, 2009 and the nine months ended September 30, 2008, respectively, was $403,253 and $154,405.
 
NOTE 4: INTANGIBLE ASSETS
 
   
Intangible assets consist of the following at September 30, 2009 and December 31, 2008:
 
             
   
September 30, 2009
   
December 31, 2008
 
Intellectual property
  $ -     $ 250,750  
Contracts and agreements
    -       213,000  
Customer lists
    -       195,000  
License Fee
    75,000       2,972,625  
Patents
    93,886       24,594  
      168,886       3,655,969  
Less accumulated amortization
    (66,667 )     (2,700,757 )
Less Impairment Expense
    -       (903,535 )
Intangible assets net of accumulated amortization
  $ 102,219     $ 51,677  
                 
Amortization expense for the above intangible assets for the nine months ended September 30, 2009 and the nine months ended September 30, 2008, respectively, was $18,750 and $932,218.


 
10

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 5:                      RELATED PARTY TRANSACTIONS

Indebtedness from related parties

The Company had a $200,000 revolving line of credit with Washington Trust Bank that was to expire in September 2009. The Company had $199,908 in borrowings under the line of credit as of October 28, 2008 at which time it was paid off and replaced with a loan from two of the major shareholders. The loan calls for $4,066 monthly payments, including 8% interest, beginning November 30, 2008, with a balloon payment for the balance at October 31, 2009. There is no security held as collateral for this loan. As of September 30, 2009, the balance was $172,034 and all payments were current on this shareholder loan.

During the first three months of 2009 the Company received a total of $22,800 from a shareholder and officer in the form of a loan and the Company repaid $4,700 of this loan, leaving a balance of $18,100 as of March 31, 2009. All of the $18,100 balance was repaid in April 2009. There was no interest obligation on this loan to the Company.

Rent expenses

The Company began renting office and warehouse space, known as the Production Facility, effective August 1, 2007, located in Kennewick, Washington from a shareholder holding less that 5% of the total shares outstanding. The lease agreement calls for monthly rental payments starting at $3,500, increasing every August 1st until they become $4,762 as of August 1, 2011. During the nine months ended September 30, 2009 and the nine months ended September 30, 2008 the Company incurred rent expenses for this facility totaling $34,020 and $32,060 respectively. In addition, the lease agreement called for the issuance of $187,500 in common stock valued at $.40 per share for a total of 416,667 shares. The company recognized the issuance of all 416,667 shares in 2007 and will amortize the $187,500 value of that stock over the sixty month term of the lease. For the nine months ended September 30, 2009 and the nine months ended September 30, 2008 the Company amortized $28,125 and $28,125, respectively, of this stock issuance and recognized it as rent expense.

Additionally, in June 2008, the Company entered into two twelve month leases for its corporate offices with three four month options to renew, but in no event will the lease extend beyond May 31, 2010. The lease agreement calls for monthly rental payments of $2,733 and $2,328 per month. During the nine months ended September 30, 2009 and the nine months ended September 30, 2008 the Company incurred rent expenses for this facility totaling $45,552 and $16,523, respectively. Effective November 1, 2009 the Company terminated the portion of the lease consisting of the $2,328 rental payment per month.

Future minimum rental payments required under the Company’s current rental agreements in excess of one year as of September 30, 2009, are as follows:

    Production     Corporate        
    Facility     Offices      Total  
Twelve months ended September 30, 2010   $ 49,642     $ 24,192     $ 73,834  
Twelve months ended September 30, 2011
    53,612       -       53,612  
Twelve months ended September 30, 2012
    47,617       -       47,617  
Twelve months ended September 30, 2013
    -       -       -  
                         
Total
  $ 150,871     $ 24,192     $ 175,063  


 
11

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 5:                      RELATED PARTY TRANSACTIONS - continued

Rental expense for the nine months ended September 30, 2009 and the nine months ended September 30, 2008 consisted of the following:

     Nine Months ended      Nine Months ended  
   
September 30, 2009
   
September 30, 2008
 
             
Office and warehouse lease effective August 1, 2007
           
Monthly rental payments
  $ 34,020     $ 32,060  
Rental expense in the form of stock issuance
    28,125       28,125  
Corporate office
     45,552       16,523  
Total Rental Expense
  $ 107,697     $ 76,708  

NOTE 6:                      PREPAID EXPENSES PAID WITH STOCK

The Company has issued stock to companies for various service agreements extending beyond September 30, 2009. Additionally, the Company issued stock for prepaid rent which will expire annually through July 2012 at the rate of $37,500 per year. Prepaid Expenses are expected to mature as follows:
 
For the twelve month period ending September 30, 2010
  $ 155,632  
For the twelve month period ending September 30, 2011     100,000  
For the twelve month period ending September 30, 2012     31,250  
For the twelve month period ending September 30, 2013     -  
 
  $ 286,882  
 
NOTE 7:                      INCOME TAXES

At September 30, 2009, the Company has net operating loss carry forwards available to offset future taxable income if any of approximately $12,500,000, which will begin to expire in 2028. The utilization of the net operating loss carry forwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized. The Tax Reform Act of 1986 significantly limits the annual amount that can be utilized for certain of these carry forwards as a result of the changes in ownership.

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – and interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Upon review of the Company’s historical tax filings and consultation with its tax advisors, the Company believes that it has taken tax positions in preceding years that could potentially result in reductions to its cumulative net operating loss carry-forwards of approximately $1,395,015. The Company is subject to audit by the IRS and the State of Delaware for the prior three years.

The Company, as a matter of policy, would record any interest and penalties associated with taxes as a component of income tax expenses.

NOTE 8:                      CAPITAL LEASES

The Company was in default on the capital lease obligation as of December 31, 2008 due to failure to maintain the minimum debt service coverage ratio identified in the Lease by an amount of $35,000 as per notice from the debtor. The Company believed at the time of the issuance of the December 31, 2008 financial statements that is had remedied the default which existed at year end. Accordingly the Company had recorded a current and long term portion of the capital leases. Subsequent to the issuance of the December 31, 2008 financial statement, the Company has determined that more likely than not that it is in default of the terms of the capital leases. Accordingly it has recorded value of the leases as a current obligation.

 
12

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 9:                      STOCKHOLDERS’ EQUITY

Common stock sale

In March 2009 the Company issued 37,037 shares for cash of $10,000 at $.27 per share.

In March 2009 the Company issued 1,500,000 shares for cash of $225,000 at $.15 per share. The Company granted 750,000 warrants in conjunction with this transaction. The warrants have an exercise price of $0.15 and a two year life.

In April 2009 the Company issued 55,556 shares for cash of $15,000 at $.27 per share.

In April 2009 the Company issued 525,000 shares for cash of $105,000 at $.20 per share. The Company granted 525,000 warrants in conjunction with this transaction. The warrants have an exercise price of $0.40 and a one year life.

In June 2009 the Company issued 100,000 shares for cash of $27,000 at $.27 per share.

In September 2009 the Company issued 60,000 shares for cash of $15,000 at $.25 per share.

Preferred stock

The Company issued 95,000 shares of preferred stock in September, 2006 to Utek Corporation for the Company’s purchase of technology from Utek. A board member of the Company acquired the 95,000 shares of the Company’s Series A Preferred Stock from Utek in February 2009.  In March 2009 the board member converted the 95,000 shares of the Company’s Series A Preferred Stock and the related accrued interest into 10,857,142 shares of the Company’s common stock. The value of the transaction totaled $3,810,857 based on common stock’s average closing price for the ten trading days before the date of conversion of $0.351 per share.  The Company’s Preferred Stock Redeemable as Common liability was reduced by $3,182,405, accrued interest was reduced by $171,628, preferred stock was reduced by $95, and a loss on settlement of debt of $456,823 has been recognized in the accompanying financial statements for the three months ended March 31, 2009.

Common stock issued for services and debt settlement

During January 2009, the Company issued 190,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $51,300 based on the quoted market price of stock on the transaction date, or $.27 per share. The company’s accounts payable was reduced by $52,500 and a gain on settlement of debt of $1,200 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During February 2009, the Company issued 80,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $33,600 based on the quoted market price of stock on the transaction date, or $.42 per share. Stock-based compensation expense of $33,600 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During March 2009, the Company issued 150,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $52,500 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s account payable was reduced by $50,000 and loss on settlement of debt of $2,500 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.





 
13

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 9:                      STOCKHOLDERS’ EQUITY continued

During March 2009, the Company issued 33,333 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $11,667 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s accounts payable was reduced by $12,000 and gain on settlement of debt of $333 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During March 2009, the Company issued 25,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $8,750 based on the quoted market price of stock on the transaction date, or $.35 per share. Stock-based compensation expense of $8,750 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During April 2009, the Company issued 50,000 shares of its common stock in exchange for rent. The value of the transaction totaled $15,500 based on the quoted market price of stock on the transaction date, or $.31 per share. Rental expense of $15,500 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During July 2009, the Company issued 50,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $14,000 based on the quoted market price of stock on the transaction date, or $.28 per share. Stock-based compensation expense of $14,000 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During August 2009, the Company issued 500,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $150,000 based on the quoted market price of stock on the transaction date, or $.30 per share. Stock-based compensation expense of $12,500 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009. The remaining $137,500 is reported as a reduction of equity in the accompanying financial statements.

During September 2009, the Company issued 285,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $111,150 based on the quoted market price of stock on the transaction date, or $.39 per share. Stock-based compensation expense of $111,150 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During September 2009, the Company issued 60,000 shares of its common stock as bonus compensation to employees. The value of the transaction totaled $23,400 based on the quoted market price of stock on the transaction date, or $.39 per share. Stock-based compensation expense of $23,400 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During September 2009, the Company issued 156,250 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $50,000 based on the quoted market price of stock on the transaction date, or $.32 per share. Stock-based compensation expense of $50,000 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

Common stock issued for convertible debt

In March of 2009, the Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum. The Note matures in March of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.30 per share.  The value of the $100,000 debt plus the $0.35 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $74,603 toward the debt and $11,032 to the shares and $14,365 to the beneficial conversion feature.  The $11,032 value of the shares and the $14,365 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt.  Interest expense of $13,756 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.
 

 
14

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 9:                      STOCKHOLDERS’ EQUITY continued

In April of 2009, the Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum. The Note matures in April of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share.  The value of the $50,000 debt plus the $0.31 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $43,860 toward the debt and $6,140 to the shares and $12,592 to the beneficial conversion feature.  The $6,140 value of the shares and the $12,592 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt.  Interest expense of $7,805 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.

In May of 2009, the Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum. The Note matures in May of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.28 per share.  The value of the $50,000 debt plus the $0.21 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $46,125 toward the debt and $3,875 to the shares and resulted in no beneficial conversion feature.  The $3,875 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $1,373 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.

In June of 2009, the Company issued 110,000 shares of its common stock and a convertible promissory note in the amount of $275,000 with interest payable at 10% per annum. The Note matures in June of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.27 per share. The value of the $275,000 debt plus the $0.21 fair market value of the 110,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $275,000 debt and the value of the 110,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $253,690 toward the debt and $21,310 to the shares and resulted in no beneficial conversion feature.  The $21,310 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $6,659 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.

In September of 2009, the Company issued 90,560 shares of its common stock and a convertible promissory note in the amount of $226,400 with interest payable at 10% per annum. The Note matures in September of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share. The value of the $226,400 debt plus the $0.39 fair market value of the 90,560 shares at the date of the agreement was prorated to arrive at the allocation of the original $226,400 debt and the value of the 90,560 shares and the beneficial conversion feature.  The computation resulted in an allocation of $195,848 toward the debt and $30,552 to the shares and $88,978 to the beneficial conversion feature.  The $30,552 value of the shares and the $88,978 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $9,961 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.


 
15

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 9:                      STOCKHOLDERS’ EQUITY continued

Common stock options

Options granted to non-employees, accounted for under the fair value method

During February 2009, the Company granted three consultants options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $.50 per share. The options are fully vested and expire February 5, 2012. The quoted market price of the common stock at the time of issuance of the options was $.49 per share. The fair value of the options totaled $228,654 using the Black-Scholes option pricing model.  The Company’s accounts payable was reduced by $79,500 and a loss on settlement of debt of $149,154 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate     1.37 %
 Dividend yield      0.00 %
 Volatility factor     211.2 %
 Weighted average expected life   3 years
 
During May 2009, the Company granted a board member options to purchase 200,000 shares of the Company’s common stock, at an exercise price of $.26 per share. The options are fully vested and expire May 8, 2012. The quoted market price of the common stock at the time of issuance of the options was $.26 per share. The fair value of the options totaled $36,800 using the Black-Scholes option pricing model.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate     1.39 %
 Dividend yield      0.00 %
 Volatility factor       120.2 %
 Weighted average expected life   3 years

During August 2009, the Company granted a board member options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $.27 per share. The options are fully vested and expire August 6, 2012. The quoted market price of the common stock at the time of issuance of the options was $.27 per share. The fair value of the options totaled $96,400 using the Black-Scholes option pricing model.

The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate     1.65 %
 Dividend yield      0.00 %
 Volatility factor     98.3 %
 Weighted average expected life   3 years


 
16

 

Advanced Medical Isotope Corporation
Notes to Consolidated Financial Statements
For the nine months ended September 30, 2009 and the year ended December 31, 2008


NOTE 9:                      STOCKHOLDERS’ EQUITY continued

The following schedule summarizes the changes in the Company’s stock option plan:
 
                 Weighted             Weighted  
    Options  Outstanding        Average            Average  
     Number          Exercise         Remaining      Aggregate      Exercise  
     Of        Price       Contractual       Intrinsic      Price  
     Shares      Per Share        Life      Value       Per Share  
                               
Balance at December 31, 2008
    5,609,021     $ 0.15-1.05    
1.52 years
    $ 424,138     $ 0.75  
   Options granted
    2,475,000       0.15-0.50    
2.80 years
      165,000       0.29  
   Options exercised
    -       -       -       -       -  
   Options expired
    (3,204,021 )     0.17-1.05       -       -89,138       -  
Balance at September 30, 2009
    4,880,000     $ 0.15-0.55    
2.03 years
    $ 500,000     $ 0.40  
Exercisable at December 31, 2008
    5,609,021     $ 0.15-1.05    
1.52 years
    $ 424,138     $ 0.75  
Exercisable at September 30, 2009
    4,880,000     $ 0.15-0.55    
2.00 years
    $ 500,000     $ 0.40  
 
NOTE 10:                    OTHER RISKS AND OBLIGATIONS

The Company entered into an agreement effective January 22, 2009 for a two year project to develop and bring to market an innovative compact-systems technology for producing critically needed medical isotopes. The Company is to contribute $760,000 in the form of services to this project. To date, no services have been performed.

NOTE 11:                     SUPPLEMENTAL CASH FLOW INFORMATION

During the nine months ended September 30, 2008, the Company had the following non-cash investing and financing activities:

 
·
Decreased Common Stock Subscriptions Payable by and increased paid in capital by $205,500.
 
·
Decreased Stock Based Consulting Fees Payable and increased Stock Based Consulting Fees Expense by $10,800.

During the nine months ended September 30, 2009, the Company had the following non-cash investing and financing activities:

 
·
Decreased trade accounts payable by $114,500 and increased paid in capital by $115,093 and increased common stock by $373 and decreased loss on settlement of debt by $966.

 
·
Decreased Accrued Interest Payable by $171,628 and decreased Preferred Stock Redeemable by $3,182,405 and decreased Preferred Stock by $95 and increased Paid In Capital by $3,800,095 and increased Common Stock by $10,857 and increased loss on settlement of debt by $456,824.

NOTE 12:                    SUBSEQUENT EVENTS

The Company has evaluated its subsequent events as of November 23, 2009 which is the date the financial statements were issued.

 



 
17

 

Item 2. Management’s Discussion and Analysis or Plan of Operation.

Except for statements of historical fact, certain information described in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “would” or similar words. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other “forward-looking” information. Advanced Medical Isotope Corporation believes that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able accurately to predict or control. Further, we urge you to be cautious of the forward-looking statements which are contained in this Form 10-K because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. The factors listed below in the section captioned “Risk Factors” within Item 1A, “Description of Business,” as well as other cautionary language in this Form 10-K, describe such risks, uncertainties and events that may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. The occurrence of any of the events described as risk factors could have a material adverse effect on our business, results of operations and financial position.

 
Advanced Medical Isotope Corporation (the “Company”) was incorporated under the laws of Delaware on December 23, 1994 as Savage Mountain Sports Corporation (“SMSC”) for the purpose of acquiring or investing in businesses which were developing and marketing active sports products, equipment, and apparel. In April 2000, Earth Sports Products, Inc (“ESP”), a corporation registered in Washington, merged with SMSC. In April 2000, HHH Entertainment, Inc (“HHH”), a Nevada corporation, merged with SMSC. As of the date of merger, HHH was the only stockholder of SMSC.
 
The Company has had limited activity since inception and was considered dormant from the period May 1, 2000 through December 31, 2005. On September 6, 2006, the Company changed its name to Advanced Medical Isotope Corporation. The Company began planned principal operations in August 2007, but has not generated significant revenue. The Company plans to wholesale medical isotopes as well as to develop, produce and market medical isotopes.
 
On September 27, 2006, the Company acquired the assets of Neu-Hope Technologies, Inc (“NHTI”), a Florida corporation and a subsidiary of UTEK Corporation (“UTEK”), a Delaware Corporation, and $310,000 from UTEK for 100,000 shares of Series A Preferred Stock.  95,000 shares of Series Preferred Stock were issued to UTEK and 5,000 shares were issued to Aware Capital Corporation.  At any time after September 27, 2007, UTEK’s 100,000 Series A Preferred Stock shares can be converted to our Common Stock in the amount of $3,350,000. The number of Common Stock shares shall be calculated based on the previous 10-day average closing price on the day of conversion. As of the end of trading on December 31, 2008, the 10-day average closing price was $0.422.  In December 2007, 5,000 shares of the Company’s Series A preferred stock were converted to 299,642 shares of common stock at $.559 per share by Aware Capital Corporation.  UTEK can then receive 7,541,469 shares of our Common Stock for its 95,000 shares of Series A Preferred Stock.
 
In March 2009 one of the members of the Board of Directors converted 95,000 shares of the Company’s Series A Preferred Stock into 10,857,142 shares of the Company’s common stock. The board member acquired the Company’s Series A Preferred Stock from UTEK in February 2009. The Series A Preferred Stock conversion was based on the Company’s common stock’s average closing price for the ten trading days before the date of conversion.
 
The Company conducted the acquisition in order to obtain cash and NHTI’s technology.  UTEK provides its clients with externally developed technologies from universities, university incubators, federal labs, medical centers, and corporate research laboratories worldwide. To effectuate a technology transfer, such as our purchase of NHTI, UTEK creates a newly formed company to acquire a new technology from a university, medical center, corporation or federal research laboratory and then sell this newly formed company to a client, such as Advanced Medical Isotope Corporation for securities or cash.

The assets acquired by the Company were recorded at the value which the preferred stock can be converted into common stock, $3,350,000, as follows:
 
   
As of
September 27, 2006
 
Cash
 
$
310,000
 
License fee  
   
3,040,000
 
Net assets acquired 
 
$
3,350,000
 


 
18

 

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
The Company did not have any relationship with UTEK before the acquisition of Neu Hope Technologies.  UTEK is a public corporation.  It is our understanding that Dr. Clifford M. Gross, PhD, Chairman and Chief Executive Officer, Ms. Carole R. Wright, Chief Financial Officer and Mr. Douglas Schaedler, Chief Operating Officer, make the investment decisions on behalf of UTEK. 

UTEK, a publicly-held corporation, also entered into a technology transfer agreement with Manakoa Services Corporation.  Manakoa Services Corporation has recently changed its name to TeslaVision Corporation.  Mr. Katzaroff is an officer and a director of TeslaVision Corporation.  TeslaVision Corporation is not a shell company but is not current in its reporting.  Other than Mr. Katzaroff’s service as an officer of both corporations, there is no relationship between TeslaVision Corporation and Advanced Medical Isotope Corporation.  
 
On June 13, 2007, the Company acquired the assets of the life sciences business segment of Isonics Corporation (Isonics), a California corporation. Isonics is a non-related business of the Company and neither company owns stock in the other. The Company acquired the assets in exchange for $850,000 cash payment for the purpose of combining the assets into our business of marketing medical isotopes. The assets acquired consist of intellectual property, agreements with third party companies for purchase and marketing of isotopes, customer lists, and equipment located in Buffalo, New York. Intellectual property, agreements with third parties and customer lists are stated at the Companies estimation of fair market value at the time of acquisition.  None of the acquired assets hold any ongoing liabilities or contractual obligations that would result in additional cash transactions required by the Company.

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has a limited amount of revenue which has accumulated deficits since inception.  If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.  
 
General Description
 
We are engaged in the production and distribution of medical isotopes and medical isotope technologies that are changing the practice of medicine and ushering in a new era of improved patient care.  Isotopes are a form of chemical element with the same atomic number as another element but with a different atomic mass.  Medical isotopes are used in molecular imaging, therapy, and nuclear medicine to diagnose, manage and treat diseases.
 
Currently, more than 15 million nuclear medicine procedures are performed each year in the U.S.  Approximately one-third of all patients admitted to U.S. hospitals undergo at least one medical procedure that employs the use of medical isotopes. 
 
We employ innovative production methods to offer a wide range of reliable, domestically produced medical isotopes as well as in vivo delivery systems to aid medical practitioners and medical researchers in the timely diagnosis and effective treatment of diseases such as cancer, heart disease, neurological disorders, and many other medical conditions. 
 
Our objective is to empower physicians, medical researchers, and ultimately, patients, by providing them with essential medical isotopes that, until now, have not been practical or economical to produce, in an effort to detect, manage, and cure human disease, and improve the lives of patients.
 
We currently offer the following products
 
Stable Isotopes:
 
We currently offer worldwide distribution of O-18 enriched water and a wide range of other stable isotopes.  Our product line includes stable isotopes of the following elements: Antimony, Barium, Cadmium, Calcium, Cerium, Chromium, Copper, Dysprosium, Erbium, Europium, Gadolinium, Gallium, Germanium, Hafnium, Indium, Iron, Krypton, Lanthanum, Lead, Lutetium, Magnesium, Mercury, Molybdenum, Neodymium, Nickel, Osmium, Palladium, Platinum, Potassium, Rhenium, Rubidium, Ruthenium, Samarium, Selenium, Silicon, Silver, Strontium, Sulphur, Tellurium, Thallium, Tin, Titanium, Tungsten, Vanadium, Xenon, Ytterbium, Zinc, and Zirconium.

Many of our products are used in connection with Positron Emission Tomography (“PET”).  In cancer, changes in biochemistry occur before tumor mass forms. As a result, PET can often identify the presence of disease earlier than a test which looks for a tumor mass.  Isotopes identified by PET include radiopharmaceutical Fluorodeoxyglucose (“FDG”), a sugar compound that is labeled with radioactive fluoride.
 

 
19

 

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
Radio Pharmaceuticals:
 
F-18 FDG: We currently offer regional distribution of F-18 FDG from our Kennewick, WA production facility.  Other regional production facilities are planned throughout the U.S. and abroad, including Los Angeles, Oahu, Idaho and Montana.
 
Indium-111:  We plan to offer Indium Chloride and Indium Oxine during the first six months of 2010.
 
Radio Chemicals:

 F-18:  We currently offer regional distribution of F-18 from our Kennewick, WA production facility.   Other regional production facilities are planned throughout the U.S. and abroad.  This is the primary PET imaging isotope. It is used for medical and diagnostic purposes, such as cancer detection, heart imaging, and brain imaging.
 
Iodine-124:  This is a radiotracer primarily used in PET imaging and to create images of human thyroid. Other treatment uses include apoptosis, cancer biotherapy, glioma, heart disease, mediastinal micrometastases, and thyroid cancer.
 
Indium-111:  We currently offer In-111 Chloride bulk solution for U.S. distribution.  This radio chemical is used for infection imaging, cancer treatments, and tracer studies.
 
Strontium-82: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers
 
Germanium-68: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction.
 
Actinium-225: Used for advanced research in therapy of leukemia and other cancers. It holds great promise for treating HIV/AIDS.
 
Generators:
 
Strontium-82/Rubidium-82 generators: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers.
 
Germanium-68/Gallium-68 generators: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction.
 
Actinium-225/Bismuth-213 generators: Actinium-225 is the parent of Bismuth-213, an isotope which has been used in animal trials to kill human HIV virus.  Bismuth-213 has been used in human clinical trials for the treatment of Acute Myelogenous Leukemia (AML). 

Within the next three years, we intend to offer the following isotopes:
 
Carbon-11: Used in cancer diagnosis/staging. Radiotracer in PET scans to study normal/abnormal brain functions related to various drug addictions and is also used to evaluate disease such as Alzheimer’s, epilepsy, Parkinson’s and heart disease.

Cobalt-57:  Used for gamma camera calibration. Also used as radiotracer in research and a source for X-ray fluorescence spectroscopy.

Copper-64: PET scanning, planar imaging, SPECT imaging, dosimetry studies, cerebral and myocardial blood flow. This isotope is used in stem cell research, and cancer treatments.

Iodine-123:  Used in brain, thyroid, kidney, and myocardial imaging, cerebral blood flow (ideal for imaging) and neurological disease (Alzheimer's).

Molybdenum-99 / Technitium 99:  It is the favored choice among medical professionals because its chemical properties allow it to be bonded to many different chemical materials, thus allowing use for a wide variety of diagnoses.

Thallium-201:  Used in clinical cardiology, heart imaging, myocardial perfusion studies and cellular dosimetry.


 
20

 

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued 
 
The cornerstone equipment selected for our production center is a proton linear accelerator.  Our proton linear accelerator is designed to replace large and demanding cyclotron systems for the production of positron emitting isotopes. Large amounts of fluorine-18, carbon-11, nitrogen-13, and oxygen-15 can be produced for synthesis into compounds used in oncology, cardiology, neurology, and molecular imaging. The radio-labeled glucose analog, FDG, can be synthesized and distributed for use in Positron Emission Tomography.
 
Based on our experience in the industry, it is our belief that no other accelerator in North America has sufficient flexibility to produce the full spectrum of PET imaging radioisotopes, as well as other high-demand isotopes, both short and long lived, for diagnostic and therapeutic applications.  We are in default on our lease for the PET imaging radioscope If the lessors repossess the equipment, it would have an adverse effect on our revenues, results of operations and financial condition and our ability to implement our future growth plans.
 
We are also engaged in a number of collaborative efforts with U.S. national laboratories and universities, along with several international teaming partners.  These collaborative effort projects include complementary isotope manufacturing technologies as well as isotope devices.  We have entered into agreements to produce isotopes at Idaho State University, the University of Missouri at Columbia, the State University of New York at Buffalo, and the University of Utah. These regional university centers will allow us to become a local supplier for the short-lived isotopes like Fluorine 18 as well as being a domestic supplier of several other isotopes in demand by the medical community.
 
In November 2007, we entered into an agreement with the Idaho Accelerator Center (IAC), located on the campus of Idaho State University in Pocatello, ID, to create a regional medical isotope production center.  The IAC will investigate the production of a variety of isotopes at IAC facilities and we will proceed with conceptual planning for production facility development.  We intend to use the IAC to develop and manufacture medical isotopes.
 
In January 2008, we entered into a five-year agreement with Central Pharmaceutical Services, Inc. (“CRS”) for the joint production and marketing of Indium-111, an isotope used in specialized diagnostic imaging applications. CRS is an advanced biomedical research and development facility established by the State University of New York at Buffalo. By labeling In-111 to antibodies and peptides that transport it to specific parts of the body, physicians can image colorectal cancer, prostate cancer, and neuro-endocrine tumors. In-111 can also be used to radiolabel white blood cells, platelets and red blood cells for diagnostic purposes.  The comprehensive agreement with CRS is designed to enable us to complement production capacity of a variety of high-value medical isotopes with our Kennewick, Wash. facility.  Several other radio-chemicals are also under consideration for production in the near future at the Buffalo, N.Y. facility.  The agreement with CRS allows for the initial product to be Indium-111, a radioisotope produced from the stable isotope cadmium-112. CRS will provide irradiation facilities as well as production expertise and chemical syntheses.

In May 2008, we entered into a research agreement with the University of Utah related to the use of brachytherapy seeds for cancer treatments.  Pursuant to the research agreement, we will pay total project costs that will not exceed $45,150.  We hope to work with the University of Utah to develop and manufacture cancer treatments using brachytherapy seeds.

In June 2008, we entered into a research agreement with the University of Missouri related to the production of radio isotopes.  Pursuant to the research agreement, we will pay total project costs that will not exceed $75,000.  We also entered into an option agreement in June 2008 with the University of Missouri.  The option agreement gives us a one-year option to enter into a licensing agreement to utilize certain intellectual property held by the University of Missouri for the production of medical, research, and industrial radioisotopes.  If the University of Missouri’s intellectual property functions as early analysis have indicated, this production facility could be a manufacturing source of critical health care radio isotopes.
 
Customers
 
Our customers include a broad range of hospitals, universities, research centers and national laboratories, in addition to academic and government institutions.  These customers are located in essentially all major U.S. and international markets.  In July 2008, we began production of F-18 in our production facilities in Kennewick, Washington.  [Sales of F-18 for the quarter ended September 30, 2009 totaled approximately 68% of total revenue.]

The company is also working with United Pharmacy Partners Inc (UPPI). UPPI has a network of approximately 120 nuclear pharmacies within the United States. We have entered into an affiliation agreement with UPPI to provide to the UPPI network preferred prices and special terms and conditions for certain products that we anticipate to manufacture or re-sell during 2009 and 2010.


 
21

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued 
 
Competitors
 
The suppliers of radioisotopes for diagnosis, treatment, and research for a wide variety of diseases, in particular cancer, vary in size and product offerings.  Competition is limited because there are many complications and regulatory hurdles, including licensing, government approvals and capital outlays associated with starting an isotope company.  Many current competitors are international companies.
 
Further, competition is limited as some competitors are closing their facilities or limiting their production. In November 2007, Canadian supplier MDS Nordion was forced to shut down its radioisotope production facility. At one time, the U.S. government was supposed to be the source of medical isotopes, but over the course of the last two decades, it has either closed or failed to adequately fund its production facilities.
 
About 90% of all the non PET radioisotopes used in the United States are imported from two companies.  Approximately half of these were imported directly from the now-defunct MDS Nordion plant and the other half supplied by Covidien (formerly Mallinkrodt).  The remaining 10% that are produced in the United States are manufactured in a fragmented, piecemeal manner with companies producing a single isotope instead of a wide variety.
 
Employees
 
As of September 30, 2009, we had five full time employees.  At any given time, we utilize eight to ten contract employees to assist with the company operations.  We do not have a collective bargaining agreement with any of our employees and we believe our relations with our employees are good.

Research and Development / Intellectual Property
 
The Company has made through acquisitions the following investments in patent licenses and intellectual property during 2007:

 
$75,000 for a patent license fee, good for the life of the patent, for the production of Actinium 225;
 
$3,040,000 of preferred stock issuance for a patent license, good for the life of the patent, of a Neutron Generator; and
 
$658,750 for the purchase of a company in order to acquire the rights of intellectual property related to the process for the production of isotopes, customer lists, contracts and agreements with third party companies, and certain equipment.  The amortization of these items is computed using the straight-line method over the following estimated useful lives:
 
Intellectual property
3 years
Contracts and agreements 
3 years
Customer lists   
2 years
 
In January 2007 AMIC received a license for United States Patent 6,680,993.  The patent concerns methods and processes directed to the preparation of Actinium-225 and daughters having high radiochemical and radionuclidic purity.  These isotopes may be used for the preparation of therapeutic radiopharmaceuticals such as those containing monoclonal antibodies, proteins, peptides, antisense, statin, natural products and hormones.  Additionally, the alpha-emitting radionuclide Actinium-225 and its daughters may be used for both therapeutic and diagnostic purposes.


 
22

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
Results of Operations
 
The following table sets forth information from our statements of operations for the nine months and three months ended September 30, 2009 and 2008.
 
    Nine months      Nine months      Three months      Three months   
     Ended     Ended      Ended      Ended   
     September 30,     September 30,      September 30,      September 30,   
     2009     2008      2009      2008   
Revenues
 
$
242,387
   
$
187,406
   
$
102,245
   
$
103,985
 
Cost of goods sold
   
95,706
     
124,101
     
44,607
     
48,461
 
Gross profit
   
146,681
     
63,305
     
57,638
     
55,524
 
Operating expenses
   
2,093,267
     
3,718,097
     
852,030
     
1,069,203
 
Operating loss
   
(1,946,586)
     
(3,654,792
)
   
(794,392
)
   
(1,013,679
)
Non-operating expenses
   
(573,344
)
   
(-
)
   
(-)
     
-
 
Interest expense
   
(589,839
)
   
(106,372
)
   
(209,514
)
   
(50,703
)
Net income (loss)
 
$
(3,109,769
)
 
$
(3,761,164
)
 
$
(1,003,906
)
 
$
(1,064,382
)

Comparison for the Nine Months Ended September 30, 2009 and September 30, 2008

Revenue
 
Revenue was $242,387 for the nine months ended September 30, 2009 and $187,406 for the nine months ended September 30, 2008.  The increase was the result of F-18 sales.  In July 2008 we established our linear accelerator production center and began the production and marketing of F-18 in August 2008.  F-18 sales accounted for $164,700 of the total nine months ended September 30, 2009 revenues and $29,400 of the nine months ended September 30, 2008 revenues. Stable isotope sales were $77,687 and $158,006 for the nine months ended September 30, 2009 and 2008 respectively. Revenue for stable isotopes were lower in the nine months ended September 30, 2009 as a result of lower volume partially offset by higher pricing.
 
Cost of Goods Sold
 
Cost of Goods Sold for the nine months ended September 30, 2009 was $95,706.  Cost of goods sold for the nine months ended September 30, 2008 was $124,101. The cost of goods sold of $124,101 for the nine months ended September 30, 2008, equal to 66.2% of total revenues, consists of $5,928 for F-18 costs, 20.2% of F-18 revenues, and $118,173 for stable isotopes, 74.8% of stable isotope revenues.  The $95,706 cost of goods sold for the nine months ended September 30, 2009, equal to 39.5% of total revenues, consists of $53,079, 68.3% of associated revenues for stable isotopes and $42,627, 25.9% of associated revenues for F-18 production (consisting mostly of supplies). The reason for the overall decrease in the cost of goods sold percentage from the nine months ended September 30, 2008 (66.2%) to the nine months ended September 30, 2009 (39.5%) was due to an increase in production and distribution of F-18 which has a lower cost of goods sold associated with it.

    Nine months ended September 30, 2009     Nine months ended September 30, 2009  
      F-18        Stable Isotopes        F-18         Stable Isotopes   
 Revenues   $ 164,700       100 %   $ 77,687       100 %   $ 29,400       100 %   $ 158,006       100 %
 Cost of goods sold   $ 42,627       25,9 %   $ 53,079       68.3 %   $ 5,928       20,2 %   $ 118,173       74.8 %
 
 

 
23

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
Operating Expenses
 
Operating expenses for the nine months ended September 30, 2009 and 2008 were $2,093,267 and $3,718,097 respectively.  The decrease in operating expenses from 2008 to 2009 can be attributed largely to amortization of licenses and intangible assets ($18,750 for the nine months ended September 30, 2009 versus $932,218 for the nine months ended September 30, 2008), professional fees ($621,127 for the nine months ended September 30, 2009 versus $937,237 for the nine months ended September 30, 2008), stock options granted ($395,018 for the nine months ended September 30, 2009 versus $880,226 for the nine months ended September 30, 2008) and payroll expense ($300,263 for the nine months ended September 30, 2009 versus $383,453 for the nine months ended September 30, 2008) partially offset by an increase in depreciation ($403,253 for the nine months ended September 30, 2009 versus $154,405 for the nine months ended September 30, 2008).
 
   
Nine months Ended
September 30, 2009
   
Nine months Ended
September 30, 2008
 
Depreciation and amortization expense
 
$
422,003
   
$
1,086,623
 
Professional fees
   
621,127
     
937,237
 
Stock options granted
   
395,018
     
880,226
 
Payroll expenses
   
300,263
     
383,453
 
General and administrative expenses
   
348,229
     
396,279
 
Sales and marketing expense
   
6,627
     
34,279
 
   
$
2,093,267
   
$
3,718,097
 

Non-Operating Expense
 
Non operating expense for the nine months ended September 30, 2009 and 2008 was $1,163,183 and $106,372, respectively. The increase in non-operating loss is due to an increase in interest expense ($589,839 for the nine months ended September 30, 2009 versus $106,372 for the nine months ended September 30, 2008), and loss on settlement of debt ($606,944 for the nine months ended September 30, 2009 versus $0 for the nine months ended September 30, 2008).
 
Net Loss
 
Our net loss for the nine months ended September 30, 2009 and 2008 was $3,109,769, and $3,761,164, respectively, as a result of the items described above.

Comparison for the Three Months Ended September 30, 2009 and September 30, 2008

Revenue
 
Revenue was $102,245 for the three months ended September 30, 2009 and $103,985 for the three months ended September 30, 2008. In July 2008 we established our linear accelerator production center and began the production and marketing of F-18 in August 2008, accounting for $63,000 of the total three months ended September 30, 2009 revenues and $29,400 of the total three months ended September 30, 2008.  During the three months ended September 30, 2008, we marketed our stable isotopes generating $74,585 revenues for that period compared to $39,245 for the three months ended September 30, 2009 revenues attributable to stable isotopes.
 
Cost of Goods Sold
 
Cost of Goods Sold for the three months ended September 30, 2009 was $44,607.  Cost of goods sold for the three months ended September 30, 2008 was $48,461. The cost of goods sold of $48,641 for the three months ended September 30, 2008, equal to 46.7% of total revenues, consists of $5,928 for F-18 costs, 20.2% of F-18 revenues, and $42,534 for stable isotopes, 57.0% of stable isotope revenues.  The $44,607 cost of goods sold for the three months ended September 30, 2009, equal to 43.6% of total revenues, consists of $30,678, 78.2% of associated revenues for stable isotopes and $13,929, 22.1% of associated revenues for F-18 production (consisting mostly of supplies). The reason for the decrease in the cost of goods sold percentage from the three months ended September 30, 2008 (46.8%) to the three months ended September 30, 2009 (43.6%) was due to an increase in production and distribution of F-18 which has a lower cost of goods sold associated with it.
 
    Three months ended September 30, 2009     Three months ended September 30, 2009  
      F-18        Stable Isotopes        F-18         Stable Isotopes   
 Revenues   $ 63,00       100 %   $ 39,245       100 %   $ 39,400       100 %   $ 74,585       100 %
 Cost of goods sold   $ 13,929       22.1 %   $ 30,678       78.2 %   $ 5,928       20.2 %   $ 42,534       57.0 %
 

 
24

 

Item 2. Management’s Discussion and Analysis or Plan of Operation - continued 
 
Operating Expenses
 
Operating expenses for the three months ended September 30, 2009 and 2008 was $852,030 and $1,069,203 respectively.  The decrease in operating expenses from 2008 to 2009 can be attributed largely to amortization of licenses and intangible assets ($6,250 for the three months ended September 30, 2009 versus $310,740 for the three months ended September 30, 2008), professional fees ($318,628 for the three months ended September 30, 2009 versus $198,088 for the three months ended September 30, 2008), stock options granted ($183,746 for the three months ended September 30, 2009 versus $127,086 for the three months ended September 30, 2008) and payroll expense ($92,306 for the three months ended September 30, 2009 versus $114,870 for the three months ended September 30, 2008).
 
   
Three Months Ended
September 30, 2009
   
Three Months Ended
September 30, 2008
 
Depreciation and amortization expense
 
$
140,668
   
$
445,726
 
Professional fees
   
318,628
     
198,088
 
Stock options granted
   
183,746
     
127,086
 
Payroll expenses
   
92,306
     
114,870
 
General and administrative expenses
   
115,482
     
180,681
 
Sales and marketing expense
   
1,200
     
2,752
 
   
$
852,030
   
$
1,069,203
 

Non-Operating Expense
 
Non operating expense, consisting wholly of interest expense, for the three months ended September 30, 2009 and 2008 was $209,514 and $50,703, respectively.  
 
Net Loss
 
Our net loss for the three months ended September 30, 2009 and 2008 was $1,003,906, and $1,064,382, respectively, as a result of the items described above.
 
Liquidity and Capital Resources
 
At September 30, 2009, we had negative working capital of $3,762,787, as compared to $4,491,859 at December 31, 2008. During the nine months ended September 30, 2009 we experienced negative cash flow from operations of $876,431, and we expended $69,292 for investing activities while adding $860,865 of cash flows from financing activities.  As of September 30, 2009, we had $0 commitments for capital expenditures.

Cash used in operating activities was comparable for the nine month periods ending September 30, 2009 and September 30, 2008.  Cash used in operating activities was primarily a result of our net loss, partially offset by non-cash items, such as amortization and depreciation, included in that net loss and common stock and stock options issued for services and other expenses.  Cash used in investing activities decreased from $1,714,816 for the nine month period ended September 30, 2008 to 69,292 for the nine month period ended September 30, 2009.  Cash was used to acquire equipment during the 2008 nine month period.  We generated less cash from investing activities in the nine months ended September 30, 2009 as we had lower proceeds of cash from sales of common stock and proceeds from a capital lease in the nine-month period ended September 30, 2008.
 
We have generated material operating losses since inception. We have incurred a net loss of $13,510,539 from January 1, 2006 (inception) through September 30, 2009, including a net loss of $1,003,906 for the three months ended September 30, 2009. We expect to continue to experience net operating losses. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate raising additional capital within the next twelve months from investors for working capital as well as business expansion and we can provide no assurance that additional investor funds will be available on terms acceptable to us. If we are unable to obtain additional financing to meet our working capital requirements, we may have to curtail our business.
 
Based on the current cash run rate, approximately $1,000,000 will be needed to fund operations for an additional year. As disclosed in the risk factors, we are presently taking steps to raise additional funds to continue operations for the next 12 months and beyond.  We will need to raise an additional $10,000,000 in the next year to develop three isotope manufacturing centers and complete our aggressive growth plans.  We may, however, choose to modify our growth and operating plans to the extent of available funding, if any.
 
The recent economic events, including the substantial decline in global capital markets, as well as the lack of liquidity in the capital markets, could impact our ability to obtain financing and our ability to execute our business plan. As a result of market conditions, the Company modified its growth and operating plans by planning fewer isotope production centers and not developing certain technologies that were written off in 2008. Although market conditions have deteriorated, we believe healthcare institutions will continue to purchase the medical solutions that we distribute. As a development stage company with modest sales from our inception, we are unable to determine the effect of the recent economic crises on our sales.



 

 
25

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued 
 
The recent economic events, including the substantial decline in global capital markets, as well as the lack of liquidity in the capital markets, could impact our ability to obtain financing and our ability to execute our business plan. Although market conditions have deteriorated, we believe healthcare institutions will continue to purchase the medical solutions that we distribute. As a development stage company with modest sales from our inception, we are unable to determine the effect of the recent economic crises on our sales.

Contractual Obligations (payments due by period)

Contractual Obligation
 
Total Payments Due
   
Less than 1 Year
   
1-3 Years
   
3-5 Years
 
More than 5 Years
Capital Lease Obligation
   
1,923,883
     
363,590
     
1,560,293
     
0
   
Production center lease
   
150,871
     
53612
     
47,617
           
Corporate office lease
   
24,192
     
24,192
                   
License agreement with Regents of the University of California
   
385,000
     
25,000
     
120,000
     
180,000
 
60,000 each year

The capital lease obligations represent two lease agreements for $1,875,000 and $631,000, secured by equipment and personal guarantee of two of the major shareholders we obtained during September 2007. The purpose of the lease agreements is to acquire a Pulsar 10.5 PET Isotope Production System for a contracted amount of $1,875,000 plus ancillary equipment and facility for $631,000.

We were in default on the capital lease obligation as of December 31, 2008 due to failure to maintain the minimum debt service coverage ratio identified in the Lease by an amount of $35,000 as per notice from the debtor. We believed at the time of the issuance of the December 31, 2008 financial statements that we had remedied the default which existed at year end. Accordingly we recorded a current and long term portion of the capital leases. Subsequent to the issuance of the December 31, 2008 financial statements, we determined that more likely than not that it is in default of the terms of the capital leases. Accordingly we recorded the entire value of the leases as a current obligation.

Critical Accounting Policies

The Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. However, the following policies could be deemed to be critical within the SEC definition. 

Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


 
26

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
Fixed Assets

Fixed assets are carried at the lower of cost or net realizable value. Production equipment with a cost of $2,500 or greater and other fixed assets with a cost of $1,500 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.  Depreciation is computed using the straight-line method over the following estimated useful lives.  Leasehold improvements and capital lease assets are amortized over the shorter of the life of the lease or the estimated life of the asset.

Management of the Company periodically reviews the net carrying value of all of its equipment on an asset by asset basis. These reviews consider the net realizable value of each asset, as measured in accordance with the preceding paragraph, to determine whether impairment in value has occurred, and the need for any asset impairment write-down.  Although management has made its best estimate of the factors that affect the carrying value based on current conditions, it is reasonably possible that changes could occur which could adversely affect management’s estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

License Fees

License fees are stated at cost, less accumulated amortization. Amortization of license fees is computed using the straight-line method over the estimated economic useful life of the assets.  The Company periodically reviews the carrying values of patents in accordance with SFAS No. 144 and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.
 
Intangible Assets

Intangible assets resulted from the purchase, for cash, from Isonics Corporation, the rights to intellectual property related to the production of isotopes, customer lists, contracts and agreements with third party companies, and certain equipment. The Company allocated the purchase price to each of the assets based upon the Companies believe of the long term value of each of those assets and comparison to replacement cost, where that information was available. Intangible assets are stated at cost, less accumulated amortization. Amortization of intangible assets is computed using the straight-line method over the estimated economic useful life of the assets. The Company periodically reviews the carrying values of intangible assets in accordance with SFAS No. 144 and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.
 
Revenue Recognition
 
The Company applies the provision of SEC Staff Accounting Board (“SAB”) No. 104, Revenue Recognition. SAB No. 104, which supersedes SAB No. 101, Revenue Recognition in Financial Statements, provides guidance on the recognition, presentation and disclosure of revenue in financial statements. SAB No. 104 outlines the basic criteria that must be met to recognize revenue and provides guidance for the disclosure of revenue recognition policies. The Company recognized revenue related to product sales when (i) persuasive evidence of the arrangement exists, (ii) shipment has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

The Company recognizes revenue once an order has been received and shipped to the customer. Prepayments, if any, received from customers prior to the time products are shipped are recorded as deferred revenue. In these cases, when the related products are shipped, the amount recorded as deferred revenue is recognized as revenue. The Company does not accrue for sales returns and other allowances as it has not experienced any returns or other allowances.

Research and Development Costs

Research and developments costs, including salaries, research materials, administrative expenses and contractor fees, are charged to operations as incurred. The cost of equipment used in research and development activities which has alternative uses is capitalized as part of fixed assets and not treated as an expense in the period acquired. Depreciation of capitalized equipment used to perform research and development is classified as research and development expense in the year computed.

Fair value of financial instruments

The carrying amounts of cash, receivables and accrued liabilities approximate fair value due to the short-term maturity of the instruments.

 
27

 
 
Item 2. Management’s Discussion and Analysis or Plan of Operation - continued
 
Stock-based compensation

Effective January 1, 2006, the Company adopted  Update to Codifiation: ASC Topic 505 (SFAS No. 123 (Revised 2004)), Share-Based Payment, which requires that compensation related to all stock-based awards, including stock options, be recognized in the financial statements based on their estimated grant-date fair value. The Company has estimated expected forfeitures, as required by ASC Topic 505, and is recognizing compensation expense only for those awards expected to vest. All compensation is recognized by the time the award vests.
 
Recently Issued Accounting Pronouncements
 
In November of 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may be required in fiscal 2015 to prepare financial statements in accordance with IFRS. However, the SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. We are currently assessing the impact that this potential change would have on our consolidated financial statements, and we will continue to monitor the development of the potential implementation of IFRS.
 
In March 2009, FASB unanimously voted for the FASB “Accounting Standards Codification” (the “Codification”) to be effective beginning on July 1, 2009. Other than resolving certain minor inconsistencies in current United States Generally Accepted Accounting Principles (“GAAP”), the Codification is not supposed to change GAAP, but is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics. Once approved, the Codification will be the single source of authoritative U.S. GAAP. All guidance included in the Codification will be considered authoritative at that time, even guidance that comes from what is currently deemed to be a non-authoritative section of a standard. Once the Codification becomes effective, all non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force (“EITF”), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by us to have a material impact on our present or future financial statements.

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

 
Item 3. Quantitative and Qualitative Disclosures About Market Risk.

N/A.

 
Item 4T. Controls and Procedures.

(a)          Disclosure Controls and Procedures
 
Our principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q.
 
Management is responsible for establishing and maintaining adequate internal controls over financial reporting.  Based upon management’s knowledge of our operations and accounting functions, management’s assessment concerning the effectiveness of our internal controls and disclosure controls and procedures is that those are not effective to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and accumulated and communicated to our senior management, including our CEO, to allow timely decisions regarding required disclosures.

 
28

 

Item 4T. Controls and Procedures - continued
 
Our known material weaknesses include:
 
Resources: As of September 30, 2009 we had one full-time employee in general management and no full-time employees with the requisite expertise in the key functional areas of finance and accounting.  As a result, there is a lack of proper segregation of duties necessary to insure that all transactions are accounted for accurately and in a timely manner.
 
Written Policies & Procedures: We need to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity transactions, and prepare, review and submit SEC filings in a timely manner.
 
Audit Committee: We do not have, and are not required, to have an audit committee.  An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures.
 
Given the existence of these material weaknesses, management believes that other, non-identified material weaknesses may have existed and continue to exist.  These material weaknesses will be remedied as described below.
 
Management is committed to improving its internal controls and will (1) perform an assessment of its internal control using the COSO framework or other framework as deemed appropriate, (2) continue to use third party specialists to address shortfalls in staffing and to assist us with accounting and finance responsibilities, (3) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (4) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (5) may consider appointing an audit committee comprised of independent board members in the future.
 
This annual report does not include an attestation report by our registered public accounting firm regarding our internal controls over financial reporting.
 
(b)         Changes in Internal Controls
 
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


 

Item 1. Legal Proceedings.
 
 

Item 1A. Risk Factors.  

There have been no material changes from the disclosure provided in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.
 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Common stock sale
 
In March 2009 the Company issued 37,037 shares for cash of $10,000 at $.27 per share.

In March 2009 the Company issued 1,500,000 shares for cash of $225,000 at $.15 per share. The Company granted 750,000 warrants in conjunction with this transaction. The warrants have an exercise price of $0.15 and a two year life.
 

 
29

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - continued
 
Common stock sale - continued
 
In April 2009 the Company issued 55,556 shares for cash of $15,000 at $.27 per share.

In April 2009 the Company issued 525,000 shares for cash of $105,000 at $.20 per share. The Company granted 525,000 warrants in conjunction with this transaction. The warrants have an exercise price of $0.40 and a one year life.

In June 2009 the Company issued 100,000 shares for cash of $27,000 at $.27 per share.

In September 2009 the Company issued 60,000 shares for cash of $15,000 at $.25 per share.

Preferred stock
 
The Company issued 95,000 shares of preferred stock in September, 2006 to Utek Corporation for the Company’s purchase of technology from Utek. A board member of the Company acquired the 95,000 shares of the Company’s Series A Preferred Stock from Utek in February 2009.  In March 2009 the board member converted the 95,000 shares of the Company’s Series A Preferred Stock and the related accrued interest into 10,857,142 shares of the Company’s common stock. The value of the transaction totaled $3,810,857 based on common stock’s average closing price for the ten trading days before the date of conversion of $0.351 per share.  The Company’s Preferred Stock Redeemable as Common liability was reduced by $3,182,405, accrued interest was reduced by $171,628, preferred stock was reduced by $95, and a loss on settlement of debt of $456,823 was recognized in the first quarter of 2009 .
 
Common stock issued for services and debt settlement
 
During January 2009, the Company issued 190,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $51,300 based on the quoted market price of stock on the transaction date, or $.27 per share. The company’s accounts payable was reduced by $52,500 and a gain on settlement of debt of $1,200 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
During February 2009, the Company issued 80,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $33,600 based on the quoted market price of stock on the transaction date, or $.42 per share. Stock-based compensation expense of $33,600 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
During March 2009, the Company issued 150,000 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $52,500 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s account payable was reduced by $50,000 and loss on settlement of debt of $2,500 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
During March 2009, the Company issued 33,333 shares of its common stock in payment of accounts payable for business consulting services. The value of the transaction totaled $11,667 based on the quoted market price of stock on the transaction date, or $.35 per share. The Company’s accounts payable was reduced by $12,000 and gain on settlement of debt of $333 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During March 2009, the Company issued 25,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $8,750 based on the quoted market price of stock on the transaction date, or $.35 per share. Stock-based compensation expense of $8,750 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.

During April 2009, the Company issued 50,000 shares of its common stock in exchange for rent. The value of the transaction totaled $15,500 based on the quoted market price of stock on the transaction date, or $.31 per share. Rental expense of $7,750 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009. The remaining $7,750 has been recorded in prepaid expenses at September 30, 2009, and will be amortized to rent expense over the next six months.

During July 2009, the Company issued 50,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $14,000 based on the quoted market price of stock on the transaction date, or $.28 per share. Stock-based compensation expense of $14,000 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
 

 
30

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - continued
 
Common stock issued for services and debt settlement - continued
 
During August 2009, the Company issued 500,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $150,000 based on the quoted market price of stock on the transaction date, or $.30 per share. Stock-based compensation expense of $12,500 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009. The remaining $137,500 is reported as a reduction of equity in the accompanying financial statements.
 
During September 2009, the Company issued 285,000 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $111,150 based on the quoted market price of stock on the transaction date, or $.39 per share. Stock-based compensation expense of $111,150 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
During September 2009, the Company issued 60,000 shares of its common stock as bonus compensation to employees. The value of the transaction totaled $23,400 based on the quoted market price of stock on the transaction date, or $.39 per share. Stock-based compensation expense of $23,400 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
During September 2009, the Company issued 156,250 shares of its common stock in exchange for business consulting services. The value of the transaction totaled $50,000 based on the quoted market price of stock on the transaction date, or $.32 per share. Stock-based compensation expense of $50,000 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
Common stock issued for convertible debt
 
In March 2009, the Company issued 40,000 shares of its common stock and a convertible promissory note in the amount of $100,000 with interest payable at 10% per annum. The Note matures in March of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.30 per share.  The value of the $100,000 debt plus the $0.35 fair market value of the 40,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $100,000 debt and the value of the 40,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $74,603 toward the debt and $11,032 to the shares and $14,365 to the beneficial conversion feature.  The $11,032 value of the shares and the $14,365 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt.  Interest expense of $13,756 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.
 
In April of 2009, the Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum. The Note matures in April of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share.  The value of the $50,000 debt plus the $0.31 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $31,268 toward the debt and $6,140 to the shares and $12,592 to the beneficial conversion feature.  The $6,140 value of the shares and the $12,592 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt.  Interest expense of $7,805 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.

In May of 2009, the Company issued 20,000 shares of its common stock and a convertible promissory note in the amount of $50,000 with interest payable at 10% per annum. The Note matures in May of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.28 per share.  The value of the $50,000 debt plus the $0.21 fair market value of the 20,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $50,000 debt and the value of the 20,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $46,125 toward the debt and $3,875 to the shares and resulted in no beneficial conversion feature.  The $3,875 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $1,373 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.

In June of 2009, the Company issued 110,000 shares of its common stock and a convertible promissory note in the amount of $275,000 with interest payable at 10% per annum. The Note matures in June of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.27 per share. The value of the $275,000 debt plus the $0.21 fair market value of the 110,000 shares at the date of the agreement was prorated to arrive at the allocation of the original $275,000 debt and the value of the 110,000 shares and the beneficial conversion feature.  The computation resulted in an allocation of $253,690 toward the debt and $21,310 to the shares and resulted in no beneficial conversion feature.  The $21,310 value of the shares is then amortized to interest over the twelve month life of the debt. Interest expense of $6,659 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009. 

 
31

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - continued
 
Common stock issued for convertible debt - continued

In September of 2009, the Company issued 90,560 shares of its common stock and a convertible promissory note in the amount of $226,400 with interest payable at 10% per annum. The Note matures in September of 2010. The entire outstanding principal balance and any outstanding fees or interest is due and payable in full on the Maturity Date.  At the option of the holder, the note and interest is convertible into the Company’s common stock at $0.31 per share. The value of the $226,400 debt plus the $0.39 fair market value of the 90,560 shares at the date of the agreement was prorated to arrive at the allocation of the original $226,400 debt and the value of the 90,560 shares and the beneficial conversion feature.  The computation resulted in an allocation of $195,848 toward the debt and $30,552 to the shares and $88,978 to the beneficial conversion feature.  The $30,552 value of the shares and the $88,978 value of the beneficial conversion feature are then amortized to interest over the twelve month life of the debt. Interest expense of $9,961 has been recognized in the accompanying financial statements for the nine months ending September 30, 2009.


Options granted to non-employees, accounted for under the fair value method
 
During February 2009, the Company granted three consultants options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $.50 per share. The options are fully vested and expire February 5, 2012. The quoted market price of the common stock at the time of issuance of the options was $.49 per share. The fair value of the options totaled $228,654 using the Black-Scholes option pricing model.  The Company’s accounts payable was reduced by $79,500 and a loss on settlement of debt of $149,154 has been recognized in the accompanying financial statements for the nine months ended September 30, 2009.
 
The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate        1.37 %
 Dividend yield      0.00 %
 Volatility factor      211.2 %
 Weighted average expected life   3 years
 
 
During May 2009, the Company granted a board member options to purchase 200,000 shares of the Company’s common stock, at an exercise price of $.26 per share. The options are fully vested and expire May 8, 2012. The quoted market price of the common stock at the time of issuance of the options was $.26 per share. The fair value of the options totaled $36,800 using the Black-Scholes option pricing model.
 
The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate         1.39 %
 Dividend yield      0.00 %
 Volatility factor      120.2 %
 Weighted average expected life   3 years

During August 2009, the Company granted a board member options to purchase 500,000 shares of the Company’s common stock, at an exercise price of $.27 per share. The options are fully vested and expire August 6, 2012. The quoted market price of the common stock at the time of issuance of the options was $.27 per share. The fair value of the options totaled $96,400 using the Black-Scholes option pricing model.
 

 
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - continued
 
 
The fair value of the options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
 
 Risk-free interest rate         1.65 %
 Dividend yield      0.00 %
 Volatility factor       98.3 %
 Weighted average expected life   3 years
 
The following schedule summarizes the changes in the Company’s stock option plan:
 
                 Weighted             Weighted  
    Options  Outstanding        Average            Average  
     Number          Exercise         Remaining      Aggregate      Exercise  
     Of        Price       Contractual       Intrinsic      Price  
     Shares      Per Share        Life      Value       Per Share  
                               
Balance at December 31, 2008
    5,609,021     $ 0.15-1.05    
1.52 years
    $ 424,138     $ 0.75  
   Options granted
    2,475,000       0.15-0.50    
2.80 years
      165,000       0.29  
   Options exercised
    -       -       -       -       -  
   Options expired
    (3,204,021 )     0.17-1.05       -       -89,138       -  
Balance at September 30, 2009
    4,880,000     $ 0.15-0.55    
2.03 years
    $ 500,000     $ 0.4  
Exercisable at December 31, 2008
    5,609,021     $ 0.15-1.05    
1.52 years
    $ 424,138     $ 0.75  
Exercisable at September 30, 2009
    4,880,000     $ 0.15-0.55    
2.00 years
    $ 500,000     $ 0.4  
 

Item 3. Defaults Upon Senior Securities.

Not applicable.
 
 
Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

 

Not applicable.
  
 
Item 6. Exhibits.


 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
ADVANCED MEDICAL ISOTOPE CORPORATION
     
Date: January 27, 2010
By:
/s/   James C. Katzaroff
 
Name:
James C. Katzaroff 
 
Title:
Chairman and Chief Executive Officer
Principal Executive Officer
 
 
ADVANCED MEDICAL ISOTOPE CORPORATION
     
Date: January 27, 2010
By:
/s/   L. Bruce Jolliff
 
Name:
L. Bruce Jolliff 
 
Title:
Chief Financial Officer
Principal Financial Officer and
Principal Accounting Officer
 
 
 
 
 
 
 
 
 
 
 
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